exv10w31






Exhibit 10.31




MCAFEE, INC.

CHANGE OF CONTROL RETENTION PLAN




Introduction




     It is possible that the Company may from time to time receive acquisition proposals by other
entities. The Compensation Committee of the board of directors of the Company (the
“Committee”) recognizes that consideration of any such proposals can be a distraction to
employees and can cause the employees to consider alternative employment opportunities. The
Committee has determined that it is in the best interests of the Company and its stockholders to
assure that the Company will have the continued dedication and objectivity of the participants in
the Plan (the “Participants”), notwithstanding the possibility, threat or occurrence of a
“Change of Control” (as defined herein) of the Company.



     The Committee believes that it is in the best interests of the Company and its stockholders to
provide each Participant with an incentive to continue his or her employment and to motivate the
Participants to maximize the value of the Company upon a Change of Control for the benefit of its
stockholders.



     The Committee believes that it is imperative to provide the Participants with certain benefits
upon the Participants’ termination of employment following a Change of Control. These benefits will
provide the Participants with enhanced financial security and incentive and encouragement to remain
with the Company notwithstanding the possibility, threat or occurrence of a Change of Control.



SECTION 1.

ESTABLISHMENT OF PLAN




     A. Establishment of Plan. As of the Effective Date, the Company hereby establishes a
Change of Control Retention plan to be known as the “Change of Control Retention Plan” (the
“Plan”), as set forth in this document. The purposes of the Plan are as set forth in the
Introduction.



     B. Contractual Right to Benefits. Subject to the terms of the Plan, the Plan
establishes and vests in each Participant a contractual right to the benefits to which he or she is
entitled pursuant to the terms thereof, enforceable by the Participant against the Company.



SECTION 2.

DEFINITIONS AND CONSTRUCTION




     A. Definitions. Whenever used in the Plan, the following terms shall have the meanings
set forth below and, when the meaning is intended, the initial letter of the term is capitalized.



          1. Base Salary means the rate of annual base salary paid to the Participant
immediately prior to a Change of Control, provided that such amount shall in no event be less than
the highest rate of annual base salary paid to the Participant during the one (1) year period
immediately prior to the Change of Control.




          2. Target Bonus means the bonus amount (percentage multiplied by annual base salary or
dollar figure) established for the Participant by the Committee or other party with the authority
to establish such bonus amount.




 









 








          3. Cause means:





          (a) The Participant’s commission of an act of material fraud or dishonesty against the
Company;




          (b) Any intentional refusal or willful failure to carry out the reasonable instructions
of the Participant’s supervisor, the Chief Executive Officer or the Board of Directors;




          (c) The Participant’s conviction of, guilty plea or “no contest” plea to a felony or to
a misdemeanor involving moral turpitude. Moral turpitude means so extreme a departure from
ordinary standards of honesty, good morals, justice, or ethics as to be shocking to the
moral sense of the community;




          (d) The Participant’s gross misconduct in connection with the performance of his or her
duties;




          (e) The Participant’s improper disclosure of confidential information or violation of
material Company policy or the Company code of ethics;




          (f) The Participant’s breach of his or her fiduciary duty to the Company; or




          (g) The Participant’s failure to cooperate with the Company in any investigation or
formal proceeding or the Participant being found liable in a Securities and Exchange
Commission enforcement action or otherwise being disqualified from serving in his or her
role.



          4. Change of Control means the occurrence of any of the following, in one or a series
of related transactions:





          (a) Change in ownership of the Company;




          (b) Change in effective control of the Company; or




          (c) Change in the ownership of a substantial portion of the Company’s assets (with an
asset value change in ownership exceeding more than 50% of the total gross fair market value
replacing the 40% default rule);


all as defined under Code Section 409A and the final Treasury Regulations thereunder.




          5. Change of Control Date means the date on which a Change of Control occurs.




          6. Change of Control Period means the eighteen (18) month period beginning on the
Change of Control Date. 




          7. Company means McAfee, Inc., any subsidiary corporations, any successor entities,
and any parent or subsidiaries of such successor entities.




          8. Disability means:





          (a) the Participant has been incapacitated by bodily injury, illness or disease so as
to be prevented thereby from engaging in the performance of the Participant’s duties;



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          (b) such total incapacity shall have continued for a period of six (6) consecutive
months; and




          (c) such incapacity will, in the opinion of a qualified physician, be permanent and
continuous during the remainder of the Participant’s life.



          9. Employee means an individual employed by the Company.




          10. Good Reason means any of the following that occurs without the Participant’s
consent:





          (a) a material reduction of the Participant’s Base Salary below the amount set forth in
his or her offer letter agreement or as increased during the course of his or her employment
with the Company;




          (b) a material reduction in the Participant’s Target Bonus below the amount set forth
in the offer letter agreement or as increased during the course of his or her employment
with the Company;




          (c) a material reduction in the Participant’s duties, authority, reporting relationship
or responsibilities, including:




               (i) the assignment of responsibilities, duties, reporting relationship or position that
are not at least the substantial functional equivalent of the Participant’s position
occupied immediately preceding the Change of Control, including the assignment of
responsibilities, duties, reporting relationship or position that are not in a substantive
area that is consistent with the Participant’s experience and the position occupied prior to
the Change of Control; or




               (ii) a material diminution in the budget and number of subordinates over which the
Participant retains authority;




except that, notwithstanding the foregoing, any change in duties, authority, or
responsibilities that is solely attributable to the change in the Company’s status from that
of an independent company to that of a subsidiary of the newly controlling entity shall not
constitute a change in duties, authority, or responsibilities so long as the subsidiary
structure is maintained in all material respects for at least eighteen (18) months after the
change of control.




          (d) requiring the Participant to relocate to a location more than thirty-five (35)
miles from his or her then current office location;




          (e) material violation of material term of any employment, severance, or change of
control agreement between the Participant and the Company; or




          (f) failure by successor entity to assume agreement;




provided, however, that Good Reason shall not exist unless the Participant has provided the
Company with written notice of the purported grounds for such Good Reason within ninety (90)
days of its initial existence and such purported grounds, after good faith negotiations, are
not cured within thirty (30) days of the Company’s receipt of such written notice.



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          11. Potential Change of Control means the earliest to occur of





          (a) the execution of a definitive agreement or letter of intent, in which the
consummation of the transactions described would result in a Change of Control;




          (b) the approval by the Board of a transaction or series of transactions, the
consummation of which would result in a Change of Control; or




          (c) the public announcement of a tender offer for the Company’s voting stock, the
completion of which would result in a Change of Control;



     provided, that no such event shall be a “Potential Change of Control” unless




          (d) in the case of any agreement or letter of intent described in clause (a), the
transaction described therein is subsequently consummated by the Company and the other party
or parties to such agreement or letter of intent and thereupon constitutes a “Change of
Control”;




          (e) in the case of any Board-approved transaction described in clause (b), the
transaction so approved is subsequently consummated and thereupon constitutes a “Change of
Control”; or




          (f) in the case of any tender offer described in clause (c), such tender offer is
subsequently completed and such completion thereupon constitutes a “Change of Control”.



          12. Potential Change of Control Date means the date on which a Potential Change of
Control occurs.




          13. Participant means an individual classified by the Committee as either a Tier 2B or
Tier 3 Participant.




          14. Participation Agreement means an agreement in the form attached hereto as
Exhibit A.




          15. Plan means this McAfee, Inc. Change of Control Retention Plan.




          16. Release means a standard release of claims with the Company in substantially the
Form attached hereto as Exhibit B.




          17. Tier 2B Participant means a Participant designated as such in a Participation
Agreement.




          18. Tier 3 Participant means a Participant designated as such in a Participation
Agreement.




SECTION 3.

ELIGIBILITY




     Subject to the terms of the Plan, the benefits provided by the Plan shall be available to
certain key employees of the Company as approved by the Committee, until the Plan terminates in
accordance with the



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provisions of Section 9. A Participant shall cease to be a Participant in the
Plan when he or she ceases to be an Employee, unless such Participant is entitled to benefits
hereunder at such time.



SECTION 4.

SEVERANCE BENEFITS




     A. In addition to the benefits described below, the Participant will be entitled to receive
payment for:



          1. Accrued Salary and Vacation. All salary and accrued vacation earned through the
Termination Date, less applicable federal and state withholding.




          2. Expense Reimbursement. Within thirty (30) days of submission of proper expense
reports by the Participant, the Company shall reimburse the Participant for all expenses incurred
by the Participant, consistent with past practices, in connection with the business of the Company
prior to the Participant’s termination of employment.




          3. Employee Benefits. Benefits, if any, under any 401(k) plan, nonqualified deferred
compensation plan, employee stock purchase plan and other Company benefit plans under which the
Participant may be entitled to benefits, payable pursuant to the terms of such plans.




     B. Severance Retention Benefits. If within the Change of Control Period, (i) a
Participant resigns his or her employment with the Company (or any parent or subsidiary of the
Company) for “Good Reason” (as defined herein), or (ii) the Company (or any parent or
subsidiary of the Company) terminates the Participant’s employment for other than “Cause”
(as defined herein), the Participant’s death or the Participant’s Disability (as defined herein),
and, the Participant (X) complies with the Company’s sub-certification requirements that have been
implemented to ensure compliance with the Sarbanes Oxley Act 2002 in form and substance determined
by the Company in its complete discretion, and (Y) signs and does not revoke a Release, then the
Participant shall receive the following severance benefits from the Company:



          1. Severance Payment. The Participant shall receive a lump-sum severance payment (less
applicable tax withholding) equal to a number of months set forth on Exhibit A of the
Participant’s Base Salary plus an amount equal to a percentage of the Participant’s Target Bonus
(as set forth on Exhibit A) for the fiscal year in which the Change of Control or the
Participant’s termination occurs, whichever is greater.




          2. Equity Awards. All of the Participant’s then-outstanding equity awards covering
shares of the Company’s common stock (“Equity Awards”) shall vest a percentage set forth on
Exhibit A as of the date of termination.




          3. Additional Severance Payment. If the Participant is covered by the Company health
care plan, the Participant shall receive a cash payment equal to a number of months set forth on
Exhibit A multiplied by the cost of a single month of COBRA coverage at the rates in effect
on the date of termination. If such coverage included the Participant’s dependents immediately
prior to the Participant’s termination of employment with the Company, such payment shall also
include the cost of COBRA coverage for the Participant’s dependents.




     C. Treatment of Performance-Based Equity. Upon the occurrence of a Change of Control,
all of the Participant’s outstanding Equity Awards scheduled to vest based on performance shall
convert to be awards with time-based vesting. As of the date of the Change of Control, the awards
will be vested as to the extent that they would have been vested if they had been granted
originally with a four year time-based vesting schedule with annual vesting. The vesting of such
Equity Awards will continue after the Change of



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Control, assuming continuous service, based upon the same time-based vesting schedule. To the extent that such Equity Awards are not fully vested at
the 18-month anniversary of the Change of Control, on such 18-month anniversary they will be 100% vested. The acceleration provisions of Section 4.B will
govern any terminations of employment prior to the 18-month anniversary of the Change of Control.



     D. Other Terminations By Company.



          1. If a Participant’s employment with the Company terminates (i) voluntarily by the
Participant other than for Good Reason or Disability, (ii) for Cause by the Company, or (iii)
pursuant to the Participant’s death or Disability, then the Participant shall not be entitled to
receive severance or other benefits except for those (if any) as may then be established under the
Company’s then existing severance and benefits plans and practices or pursuant to other written
agreements with the Company.




          2. In the event that a Participant’s employment otherwise is terminated by the Company for any
reason, either prior to the occurrence of a Change of Control or after the 18-month period
following a Change of Control, then the Participant shall be entitled to receive severance benefits
only as may then be established under the Company’s existing severance and benefit plans and
policies at the time of such termination.




     E. Special Termination. If a Participant’s employment is terminated by the Company
without Cause prior to the Change of Control Date but on or after a Potential Change of Control
Date, then the Company will provide to the Participant the payments and benefits as provided in
Section 4.B.; provided, however, that if the Company reasonably demonstrates that the Participant’s
termination of employment (X) was not at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control, and (Y) would have occurred absent the Change
of Control, then Section 4.F. shall apply. Solely for purposes of determining the timing of
payments and the provision of benefits under the circumstances described in this Section 4.G., the
Participant’s date of termination shall be deemed to be the Change of Control Date.



     F. Timing of Severance Payments. Other than with respect to the payments made under
Section 4.A., the severance payments to which the Participant is entitled will be subject to the
Participant signing and not revoking the Release and provided that such Release is effective within
sixty (60) days following the termination of employment. Such payments will be made to the
Participant in cash and in full, not later than seven (7) calendar days after the effective date of
any Release. In the event the termination occurs at a time during the calendar year where it would
be possible for the Release to become effective in the calendar year following the calendar year in
which the Participant’s termination occurs, any severance that would be considered Deferred
Compensation Separation Benefits (as defined in Section 5) will be paid on the first payroll date
to occur during the calendar year following the calendar year in which such termination occurs, or
such later time as required by the payment schedule applicable to each payment or benefit, or
Section 5.



     G. Exclusive Remedy. In the event of a termination of the Participant’s employment,
the provisions of this Section 4 are intended to be and are exclusive and in lieu of any other
rights or remedies to which the Participant or the Company may otherwise be entitled, whether at
law, tort or contract, in equity, or under the Plan. The Participant shall be entitled to no
benefits, compensation or other payments or rights upon termination of employment other than those
benefits expressly set forth in this Section 4.



     H. Severance Payment Offset. The amount of any cash severance otherwise payable
hereunder shall be offset by any severance payment required by law or contractual cash severance
payments paid to a Participant. This offset shall only apply specifically to cash severance pay,
and shall not apply to other amounts due upon termination of employment, such as accrued paid time
off or expense reimbursements.



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SECTION 5.

SECTION 409A




     A. Code Section 409A.



          1. Notwithstanding anything to the contrary in the Plan, if the Participant is a “specified
employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”) and the final regulations and any guidance promulgated thereunder (“Section
409A”) at the time of the Participant’s termination of employment (other than due to death) or
resignation, then the severance payable to the Participant, if any, pursuant to the Plan, when
considered together with any other severance payments or separation benefits that are considered
deferred compensation under Section 409A (together, the “Deferred Compensation Separation
Benefits”) that are payable within the first six (6) months following the Participant’s
termination of employment, will become payable on the first payroll date that occurs on or after
the date six (6) months and one (1) day following the date of the Participant’s termination of
employment. All subsequent Deferred Compensation Separation Benefits, if any, will be payable in
accordance with the payment schedule applicable to each payment or benefit. Notwithstanding
anything herein to the contrary, if the Participant dies following his or her termination but prior
to the six (6) month anniversary of his or her termination, then any payments delayed in accordance
with this paragraph will be payable in a lump sum as soon as administratively practicable after the
date of the Participant’s death and all other Deferred Compensation Separation Benefits will be
payable in accordance with the payment schedule applicable to each payment or benefit. Each payment
and benefit payable under the Plan is intended to constitute a separate payment for purposes of
Section 1.409A-2(b)(2) of the Treasury Regulations.




          2. Any amount paid under the Plan that satisfies the requirements of the “short-term deferral”
rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations shall not constitute Deferred
Compensation Separation Benefits for purposes of clause (1) above.




          3. Any amount paid under the Plan that qualifies as a payment made as a result of an
involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury
Regulations that do not exceed the Section 409A Limit shall not constitute Deferred Compensation
Separation Benefits for purposes of clause (1) above. “Section 409A Limit” will mean the
lesser of two (2) times: (i) the Participant’s annualized compensation based upon the annual rate
of pay paid to the Participant during the Participant’s taxable year preceding the Participant’s
taxable year of the Participant’s termination of employment as determined under, and with such
adjustments as are set forth in, Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and any Internal
Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken
into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in
which the Participant’s employment is terminated.




          4. The foregoing provisions are intended to comply with the requirements of Section 409A so
that none of the severance payments and benefits to be provided hereunder will be subject to the
additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so
comply. The Company and the Participant agree to work together in good faith to consider amendments
to the Plan and to take such reasonable actions which are necessary, appropriate or desirable to
avoid imposition of any additional tax or income recognition prior to actual payment to the
Participant under Section 409A.




SECTION 6.

GOLDEN PARACHUTE EXCISE TAX AND

NON-DEDUCTIBILITY LIMITATIONS




     Golden Parachute Excise Tax Best Results. In the event that the severance and other
benefits provided for in the Plan or otherwise payable to the Participant (X) constitute “parachute
payments” within



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the meaning of Code Section 280G, and (Y) would be subject to the excise tax imposed by
Section 4999 of the Code, then such benefits shall be either:



          1. delivered in full, or




          2. delivered as to such lesser extent which would result in no portion of such severance
benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing
amounts, taking into account the applicable federal, state and local income and employment taxes
and the excise tax imposed by Section 4999, results in the receipt by the Participant, on an
after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of
such benefits may be taxable under Section 4999 of the Code. Unless the Company and the Participant
otherwise agree in writing, the determination of the Participant’s excise tax liability and the
amount required to be paid under this Section 6 shall be made in writing by a nationally-recognized
independent accounting firm selected by the Company (the “Accountants”). For purposes of
making the calculations required by this Section 6, the Accountants may make reasonable assumptions
and approximations concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and
the Participant shall furnish to the Accountants such information and documents as the Accountants
may reasonably request in order to make a determination under this Section. The Company shall bear
all costs the Accountants may reasonably incur in connection with any calculations contemplated by
this Section 6. Any reduction in payments and/or benefits required by this Section 6 shall occur in
the following order: (1) reduction of cash payments; (2) reduction of acceleration of vesting of
equity awards; and (3) reduction of other benefits paid to the Participant. In the event that
acceleration of vesting of equity awards is to be reduced, such acceleration of vesting shall be
cancelled in the reverse order of the date of grant for the Participant’s equity awards.




SECTION 7.

EMPLOYMENT STATUS; WITHHOLDING




     A. The Company and the Participant acknowledge that the Participant’s employment is and shall
continue to be at-will, as defined under applicable law, except as otherwise may be provided
specifically under the terms of any written formal employment agreement or offer letter between the
Company and the Participant (an “Employment Agreement”). If the Participant’s employment
terminates for any reason, including (without limitation) any termination prior to a Change of
Control, the Participant shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by the Plan, or as may otherwise be available in accordance
with the Company’s established employee plans other than any Employment Agreement. To the extent
the Participant has entered into an employment agreement or other written employment related
document with the Company, its applicability will not be changed by the Plan, except with respect
to any provisions that provide for payments or other benefits upon termination of employment.



     B. Taxation of Plan Payments. All amounts paid pursuant to the Plan shall be subject
to regular payroll and withholding taxes.



SECTION 8.

SUCCESSORS TO COMPANY AND PARTICIPANTS




     A. The Company’s Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, merger, consolidation, liquidation or otherwise), shall assume the
obligations under the Plan and agree expressly to perform the obligations under the Plan in the
same manner and to the same extent as the Company would be required to perform such obligations in
the absence of a succession. For all purposes under the Plan, the term “Company” shall
include any successor to the Company’s business and/or



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assets which executes and delivers the assumption agreement described in this Section 8 or
which becomes bound by the terms of the Plan by operation of law.



     B. The Participant’s Successors. The terms of the Plan and all rights of the
Participant hereunder shall inure to the benefit of, and be enforceable by, the Participant’s
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.



SECTION 9.

DURATION, AMENDMENT AND TERMINATION




     A. Term of Plan. The term of the Plan shall commence on the Effective Date and
continue through February 29, 2012. If a Potential Change in Control Date has occurred prior to the
expiration of the Plan, the Plan shall remain in effect until the earliest of:



          1. eighteen (18) months after the Change of Control Date, if a Change of Control has been
completed, and automatically terminate following the 18-month anniversary of the Change of Control
Date, so long as all payments due under Section 4 of the Plan have been made; or




          2. twelve (12) months after the Potential Change of Control Date if no Change of Control has
been completed; provided, however, that in the event of a protracted regulatory clearance process
with respect to a Potential Change of Control, such term shall be extended so long as the Company
is pursuing the Potential Change of Control in good faith.




     B. Amendment or Termination. Except with respect to amendments that are not adverse to
Participants, the Plan is not subject to any amendment, change, substitution, deletion, revocation
or termination in any respect whatsoever prior to the Plan’s expiration.



SECTION 10.

NOTICE AND ADMINISTRATION




     A. General. All notices and other communications required or permitted hereunder shall
be in writing, shall be effective when given, and shall in any event be deemed to be given upon
receipt or, if earlier, (a) five (5) days after deposit with the U.S. Postal Service or other
applicable postal service, if delivered by registered mail, postage prepaid, (b) upon delivery, if
delivered by hand, (c) one (1) business day after the business day of deposit with Federal Express
or similar overnight courier, freight prepaid, or (d) one (1) business day after the business day
of facsimile transmission, if delivered by facsimile transmission with copy by first class mail,
postage prepaid, and shall be addressed (i) if to the Participant, at his or her last known
residential address, and (ii) if to the Company, at the address of its principal corporate offices
(attention: General Counsel), or in any such case at such other address as a party may designate by
ten (10) days’ advance written notice to the other party pursuant to the provisions above.



     B. Notice of Termination. Any termination by the Company for Cause or resignation by
the Participant voluntarily or for Good Reason shall be communicated by a notice of termination to
the other party hereto given in accordance with Section 10 of the Plan. Such notice shall indicate
the specific termination provision in the Plan relied upon, shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination under the provision so
indicated, and shall specify the termination date (which shall be not more than thirty (30) days
after the giving of such notice). The failure by the Participant to include in the notice any fact
or circumstance which contributes to a showing of Good Reason shall not waive any right of the
Participant hereunder or preclude the Participant from asserting such fact or circumstance in
enforcing his or her rights hereunder.



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     C. Administration



          1. The Company shall have discretionary authority to construe and interpret the terms of the
Plan, and to determine eligibility and the amount and manner of any payment of benefits hereunder.




          2. A Participant who disagrees with his or her benefits under this Plan may file a written
appeal with the Company’s designated representative. Any claim relating to this Plan shall be
subject to this appeal process. If a Participant or his or her representative (the
“Claimant”) submits a written claim for a benefit under the Plan and the claim is denied in
whole or in part, the Company shall provide the Claimant with a written or electronic notification
that complies with Department of Labor Regulation Section 2520.104b-1(c)(1). The denial notice will
include:





          (a) specific reason(s) for the denial;




          (b) reference to the specific Plan provision(s) on which the denial is based;




          (c) a description of any additional material or information necessary for the Claimant
to perfect the claim, and an explanation of why the material or information is necessary;
and




          (d) an explanation of the Plan’s claims review procedure and the time limits applicable
to such procedures, including a statement of the Claimant’s right to bring a civil action
under ERISA Section 502(a) following a denial on review (as set forth in Section 12.4
below).



          3. The denial notice shall be furnished to the Claimant no later than ninety (90)-days after
receipt of the claim by the Company, unless the Company determines that special circumstances
require an extension of time for processing the claim. If the Company determines that an extension
of time for processing is required, then notice of the extension shall be furnished to the Claimant
prior to the termination of the initial ninety (90)-day period. In no event shall such extension
exceed a period of ninety (90)-days from the end of such initial period. The extension notice shall
indicate the special circumstances requiring an extension of time and the date by which the Plan
expects to render the benefits determination.




          4. Claim Review Procedure. The Claimant may request review of the denial at any time
within sixty (60) days following the date the Claimant received notice of the denial of his or her
claim. The Company shall afford the Claimant a full and fair review of the decision denying the
claim and, if so requested, shall:





          (a) provide the Claimant with the opportunity to submit written comments, documents,
records and other information relating to the claim for benefits;




          (b) provide that the Claimant shall be provided, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other information (other
than documents, records and other information that is legally-privileged) relevant to the
Claimant’s claim for benefits; and




          (c) provide for a review that takes into account all comments, documents, records and
other information submitted by the Claimant relating to the claim, without regard to whether
such information was submitted or considered in the initial benefit determination.



          5. Review Rights. If the claim is subsequently also denied by the Company, in whole or
in part, then the Claimant shall be furnished with a denial notice that shall contain the
following:




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          (a) specific reason(s) for the denial;




          (b) reference to the specific Plan provision(s) on which the denial is based; and




          (c) an explanation of the Plan’s claims review procedure and the time limits applicable
to such procedures, including a statement of the Claimant’s right to bring a civil action
under ERISA Section 502(a) following the denial on review.



          6. The decision on review shall be issued within sixty (60) days following receipt of the
request for review. The period for decision may, however, be extended up to one hundred twenty
(120) days after such receipt if the Company determines that special circumstances require
extension. In the case of an extension, notice of the extension shall be furnished to the Claimant
prior to the expiration of the initial sixty (60)-day period. In no event shall such extension
exceed a period of sixty (60) days from the end of such initial period. The extension notice shall
indicate the special circumstances requiring an extension of time and the date by which the Plan
expects to render the benefits determination.




     D. If the appeal of a Participant is denied, such Participant shall have the right and option
to elect (in lieu of litigation) to have any dispute or controversy arising under or in connection
with the Plan settled pursuant to Section 11.M.



     E. ERISA REQUIRED INFORMATION



          1. The Plan sponsor and administrator is:



McAfee, Inc.

3965 Freedom Circle

Santa Clara, CA 95054

(408) 988-3832




          2. Designated agent for service of process:



General Counsel

McAfee, Inc.

3965 Freedom Circle

Santa Clara, CA 95054

(408) 988-3832




          3. Plan records are kept on a fiscal year basis. The Plan shall be funded from the Employer’s
general assets only.




SECTION 11.

MISCELLANEOUS PROVISIONS




     A. Confidentiality. The Participant shall retain in confidence under the conditions of
the Company’s confidentiality agreement with the Participant any proprietary or other confidential
information known to the Participant concerning the Company and its business so long as such
information is not publicly disclosed and disclosure is not required by an order of any
governmental body or court. If required, the Participant shall return to the Company any memoranda,
documents or other materials proprietary to the Company. The Participant shall be specifically
required to continue to comply with the terms of any Participant Inventions and Proprietary Rights
Assignment Agreement including its provisions regarding the use of the Company’s trade secrets
and/or confidential information to directly or indirectly request, induce or



-11-









 







attempt to influence any past, current or future customer of the Company, or any current or
future supplier of goods or services to the Company, to avoid, curtail or cancel any business it
transacts with the Company and such agreement is hereby incorporated by reference.



     B. Non-Solicitation. While employed by the Company and for a period of two (2) years
following the termination of such employment after a Change of Control, the Participant shall not
directly or indirectly request, induce or attempt to influence any current or future employee of,
or independent contractor or consultant to, the Company to terminate his or her employment with or
services to the Company.



     C. Remedy. The Participant acknowledges that a breach of any of the covenants
contained in Section 11.A. and 11.B. may result in material irreparable injury to the Company for
which there is no adequate remedy at law, that it may not be possible to measure damages for such
injuries precisely and that, in the event of such a breach, any payments remaining under the terms
of the Plan shall cease and the Company may be entitled to obtain a restraining order and/or an
injunction restraining the Participant from engaging in activities prohibited by Section 11.A. and
11.B.or such other relief as may be required to specifically enforce any of the covenants in
Section 11.A. and 11.B. This Section 11.C. shall survive any termination of this Plan.



     D. Conflict in Benefits; Nonduplication of Benefits.



          1. No Limitation of Regular Benefit Plans. Except as provided in Section 11.D.2.
below, the Plan is not intended to and shall not affect, limit or terminate any plans, programs, or
arrangements of the Company that are regularly made available to a significant number of employees
or officers of the Company, including, without limitation, the Company’s stock option plans.




          2. Nonduplication of Benefits. The Participant may not accumulate cash severance
payments, and/or equity vesting under both the Plan and another plan or policy of the Company. If
the Participant has any other binding written agreement with the Company which provides that upon a
termination of employment or change of control the Participant shall receive termination or change
of control benefits, then the Participant’s execution of the Plan is a complete and unconditional
waiver of such rights to such benefits. If the Participant is entitled to any payments or benefits
by operation of a statute or government regulations, any severance payable pursuant to the Plan
will be reduced by such payments or benefits.




     E. No Duty to Mitigate. The Participant shall not be required to mitigate the amount
of any payment contemplated by the Plan, nor shall any such payment be reduced by any earnings that
the Participant may receive from any other source.



     F. Waiver. No provision of the Plan shall be modified, waived or discharged unless the
modification, waiver or discharge is agreed to in writing and signed by the Participant and by an
authorized officer of the Company (other than the Participant). No waiver by either party of any
breach of, or of compliance with, any condition or provision of the Plan by the other party shall
be considered a waiver of any other condition or provision or of the same condition or provision at
another time.



     G. No Assignment of Benefits. The rights of any person to payments or benefits under
the Plan shall not be made subject to option or assignment, either by voluntary or involuntary
assignment or by operation of law, including (without limitation) bankruptcy, garnishment,
attachment or other creditor’s process, and any action in violation of this subsection shall be
void.



     H. Assignment by Company. The Company may assign its rights under the Plan to an
affiliate, and an affiliate may assign its rights under the Plan to another affiliate of the
Company or to the Company; provided, however, that no assignment shall be made if the net worth of
the assignee is less than the net worth of the Company at the time of assignment; provided,
further, that the Company shall guarantee all benefits



-12-









 







payable hereunder. In the case of any such assignment, the term ACompany@ when
used in the Plan means the corporation that actually employs the Participant.



     I. Headings. All captions and section headings used in the Plan are for convenient
reference only and do not form a part of the Plan.



     J. Entire Agreement. The Plan constitutes the entire agreement of the parties hereto
and supersedes in their entirety all prior representations, understandings, undertakings or
agreements (whether oral or written and whether expressed or implied) of the parties, and shall
specifically supersede any severance payment provisions of any Offer Letter entered into between
the Participant and Company, and the Plan with respect to the subject matter hereof.



     K. No Oral Modification. The Plan may only be amended in writing signed by the
Participant and the CEO of the Company or his or her designee.



     L. Choice of Law. The validity, interpretation, construction and performance of the
Plan shall be governed by the laws of the State of California. The Superior Court of Santa Clara
County and/or the United States District Court for the Northern District of California shall have
exclusive jurisdiction and venue over all controversies in connection with the Plan. Any provision
in the Plan which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof in such jurisdiction, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.



     M. Arbitration. After exhaustion of the Plan’s claims procedures, any dispute,
controversy or claim between the parties arising out of or relating to the Plan (whether based in
contract or tort, in law or equity), or any breach or asserted breach thereof, shall be determined
and settled exclusively by arbitration in San Jose, California, in accordance with the rules for
dispute resolution of JAMS. Judgment on the award may be entered in any court of competent
jurisdiction. Notwithstanding this Section 11.M., the parties may apply to any court of competent
jurisdiction for a temporary restraining order, preliminary injunction or other interim or
provisional relief as may be necessary, without breach of the Plan and without abridgment of the
powers of the arbitrator. The parties hereby submit themselves to the Superior Court of California
in and for the County of Santa Clara as the sole and exclusive venue for the purpose of enforcing
the Plan. This Section 11.M. shall survive any termination of the Plan.



     N. Severability. The invalidity or unenforceability of any provision or provisions of
the Plan shall not affect the validity or enforceability of any other provision hereof, which shall
remain in full force and effect.



     O. Withholding. All payments made pursuant to the Plan will be subject to withholding
of applicable income and employment taxes.



     P. Counterparts. The Plan may be executed in counterparts, each of which shall be
deemed an original, but all of which together will constitute one and the same instrument.




-13-









 








EXHIBIT A




MCAFEE, INC.

CHANGE OF CONTROL RETENTION PLAN

PARTICIPATION AGREEMENT




     This Participation Agreement (“Agreement”) is made and entered into by and between
[INSERT NAME] (“Participant”) on the one hand, and McAfee, Inc. (the “Company”) on
the other, and is effective as of [INSERT DATE] (the “Effective Date”).



RECITALS




     The Company adopted a Change of Control Retention Plan (the “Plan”) to assure that the
Company will have the continued dedication and objectivity of the participants in the Plan (the
“Participants”), notwithstanding the possibility, threat or occurrence of a “Change of
Control.”



     The Company has designated Participant as eligible for protection under the Plan and this
Agreement.



     Unless otherwise defined herein, the terms defined in the Plan, which is hereby incorporated
by reference, shall have the same defined meanings in this Agreement.



AGREEMENT




     NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto
agree as follows:



Participation.



Participant has been designated as a Participant in the Plan, a copy of which is attached hereto.
Participant’s participation in the Plan is contingent upon Participant agreeing to the terms of
this Agreement and the Plan. Participant’s months of service and benefits will be [                    ].
Participant’s Target Bonus and acceleration percentage will be [                    ].



The terms and conditions of Participant’s participation in the Plan are as set forth in the Plan.




Other Provisions.



Participant agrees that the Plan constitutes the entire agreement of the parties hereto and
supersedes in their entirety all prior representations, understandings, undertakings or agreements
(whether oral or written and whether expressed or implied) of the parties, and shall specifically
supersede any severance payment provisions of any offer letter entered into between the Participant
and Company, and the Plan.



Participant specifically agrees that the covenants of Section 11 will apply to him.



This Agreement may be executed in counterparts, each of which will be deemed an original, but all
of which together will constitute one and the same instrument.




[Remainder of Page Intentionally Left Blank]




 









 








     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the day and year set forth below.



	 	 	 	 	 	 	 	 	 	 	 	 	 
	McAFEE, INC.	 	[PARTICIPANT NAME]	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	 	 	 	 	Signature:	 	[PARTICIPANT SIGNATURE]	 	 
	 	 	 
	 	 	 	 
	 	 
	 

	 	Title:
	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 
	 	 
	 

	 	Date:	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 






A-2









 






EXHIBIT B




McAFEE, INC.




RELEASE OF CLAIMS




     This Release of Claims (“Agreement”) is made by and between McAfee, Inc. (the “Company”), and
                                        
(“Employee”).



     WHEREAS, Employee has agreed to enter into a release of claims in favor of the Company upon
certain events specified in the Change of Control Retention Plan Participant Agreement by and
between Company and Employee (the “Change of Control Agreement”);



     NOW, THEREFORE, in consideration of the mutual promises made herein, the Parties hereby agree
as follows:



     1. Termination. Employee’s employment from the Company terminated on                          .



     2. Confidential Information. Employee shall retain in confidence under the conditions
of the Company’s confidentiality agreement with Employee any proprietary or other confidential
information known to Employee concerning the Company and its business so long as such information
is not publicly disclosed and disclosure is not required by an order of any governmental body or
court. If required, Employee shall return to the Company any memoranda, documents or other
materials proprietary to the Company. Employee shall be specifically required to continue to comply
with the terms of any Employee Inventions and Proprietary Rights Assignment Agreement and such
agreement is hereby incorporated by reference.



     3. Payment of Salary. Employee acknowledges and represents that the Company has paid
all salary, wages, bonuses, accrued vacation, commissions and any and all other benefits due to
Employee.



     4. Release of Claims. Except as set forth in the last paragraph of this Section 4,
Employee agrees that the foregoing consideration represents settlement in full of all outstanding
obligations owed to Employee by the Company. Employee, on behalf of him- or herself, and Employee’s
respective heirs, family members, executors and assigns, hereby fully and forever releases the
Company and its past, present and future officers, agents, directors, employees, investors,
shareholders, administrators, affiliates, divisions, subsidiaries, parents, predecessor and
successor corporations, and assigns, from, and agrees not to sue or otherwise institute or cause to
be instituted any legal or administrative proceedings concerning any claim, duty, obligation or
cause of action relating to any matters of any kind, whether presently known or unknown, suspected
or unsuspected, that Employee may possess arising from any omissions, acts or facts that have
occurred up until and including the Effective Date of this Agreement including, without limitation,



          (a) any and all claims relating to or arising from Employee’s employment relationship with the
Company and the termination of that relationship;




          (b) any and all claims relating to, or arising from, Employee’s right to purchase, or actual
purchase of shares of stock of the Company, including, without limitation, any claims for fraud,
misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law,
and securities fraud under any state or federal law;




 









 








          (c) any and all claims for wrongful discharge of employment; termination in violation of
public policy; discrimination; breach of contract, both express and implied; breach of a covenant
of good faith and fair dealing, both express and implied; promissory estoppel; negligent or
intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent
or intentional interference with contract or prospective economic advantage; unfair business
practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of
privacy; false imprisonment; and conversion;




          (d) any and all claims for violation of any federal, state or municipal statute, including,
but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair
Labor Standards Act, the Employee Retirement Income Security Act of 1974, The Worker Adjustment and
Retraining Notification Act, the California Fair Employment and Housing Act, and Labor Code section
201, et seq. and section 970, et seq. and all amendments to each such Act as well as the
regulations issued thereunder;




          (e) any and all claims for violation of the federal, or any state, constitution;




          (f) any and all claims arising out of any other laws and regulations relating to employment or
employment discrimination; and




          (g) any and all claims for attorneys’ fees and costs.




     Employee agrees that the release set forth in this section shall be and remain in effect in
all respects as a complete general release as to the matters released. This release does not extend
to any severance obligations due Employee under the Change of Control and Severance Agreement.
Nothing in this Agreement waives Employee’s rights to indemnification or any payments under any
fiduciary insurance policy, if any, provided by any act or agreement of the Company, state or
federal law or policy of insurance.



     5. Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges that Employee
is waiving and releasing any rights Employee may have under the Age Discrimination in Employment
Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary. Employee and the
Company agree that this waiver and release does not apply to any rights or claims that may arise
under the ADEA after the Effective Date of this Agreement. Employee acknowledges that the
consideration given for this waiver and release Agreement is in addition to anything of value to
which Employee was already entitled. Employee further acknowledges that Employee has been advised
by this writing that (a) Employee should consult with an attorney prior to executing this
Agreement; (b) Employee has at least twenty-one (21) days within which to consider this Agreement;
(c) Employee has seven (7) days following the execution of this Agreement by the parties to revoke
the Agreement; (d) this Agreement shall not be effective until the revocation period has expired;
and (e) nothing in this Agreement prevents or precludes Employee from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor does it impose any
condition precedent, penalties or costs for doing so, unless specifically authorized by federal
law. Any revocation should be in writing and delivered to the Vice-President of Human Resources at
the Company by close of business on the seventh day from the date that Employee signs this
Agreement.



     6. Civil Code Section 1542. Employee represents that Employee is not aware of any
claims against the Company other than the claims that are released by this Agreement. Employee
acknowledges that Employee has been advised by legal counsel and is familiar with the provisions of
California Civil Code 1542, below, which provides as follows:




A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH

THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN



B-2









 







HIS OR HER FAVOR AT THE TIME OF EXECUTING THE 

RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE

MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH

THE DEBTOR.



          Employee, being aware of said code section, agrees to expressly waive any rights Employee may
have thereunder, as well as under any statute or common law principles of similar effect.




     7. No Pending or Future Lawsuits. Employee represents that Employee has no lawsuits,
claims, or actions pending in Employee’s name, or on behalf of any other person or entity, against
the Company or any other person or entity referred to herein. Employee also represents that
Employee does not intend to bring any claims on Employee’s own behalf or on behalf of any other
person or entity against the Company or any other person or entity referred to herein.



     8. Application for Employment. Employee understands and agrees that, as a condition of
this Agreement, Employee shall not be entitled to any employment with the Company, its
subsidiaries, or any successor, and Employee hereby waives any right, or alleged right, of
employment or re-employment with the Company.



     9. No Cooperation. Employee agrees that Employee will not counsel or assist any
attorneys or their clients in the presentation or prosecution of any disputes, differences,
grievances, claims, charges, or complaints by any third party against the Company and/or any
officer, director, employee, agent, representative, shareholder or attorney of the Company, unless
under a subpoena or other court order to do so.



     10. No Admission of Liability. No action taken by the Company, either previously or in
connection with this Agreement shall be deemed or construed to be (a) an admission of the truth or
falsity of any claims heretofore made, or (b) an acknowledgment or admission by the Company of any
fault or liability whatsoever to the Employee or to any third party.



     11. Costs. The Parties shall each bear their own costs, expert fees, attorneys’ fees
and other fees incurred in connection with this Agreement.



     12. Authority. Employee represents and warrants that Employee has the capacity to act
on Employee’s own behalf and on behalf of all who might claim through him to bind them to the terms
and conditions of this Agreement.



     13. No Representations. Employee represents that Employee has had the opportunity to
consult with an attorney, and has carefully read and understands the scope and effect of the
provisions of this Agreement. Neither party has relied upon any representations or statements made
by the other party hereto which are not specifically set forth in this Agreement.



     14. Severability. In the event that any provision hereof becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect without said provision.



     15. Entire Agreement. This Agreement, along with the Change of Control Agreement, the
Employee Inventions and Proprietary Rights Assignment Agreement, and Employee’s written Equity
Award agreements with the Company, represents the entire agreement and understanding between the
Company and Employee concerning Employee’s separation from the Company.



B-3









 





     16. No Oral Modification. This Agreement may only be amended in writing signed by
Employee and the CEO of the Company.



     17. Governing Law. This Agreement shall be governed by the internal substantive laws,
but not the choice of law rules, of the State of California and its enforceability shall be subject
to Section 9(k) of the Change of Control Agreement.



     18. Effective Date. This Agreement is effective eight (8) days after it has been
signed by both Parties.



     19. Counterparts. This Agreement may be executed in counterparts, and each counterpart
shall have the same force and effect as an original and shall constitute an effective, binding
agreement on the part of each of the undersigned.



     20. Voluntary Execution of Agreement. This Agreement is executed voluntarily and
without any duress or undue influence on the part or behalf of the Parties hereto, with the full
intent of releasing all claims. The Parties acknowledge that:



          (a) They have read this Agreement;




          (b) They have had the opportunity of being represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of their own choice or that they have voluntarily
declined to seek such counsel;




          (c) They understand the terms and consequences of this Agreement and of the releases it
contains; and




          (d) They are fully aware of the legal and binding effect of this Agreement.




B-4









 








     IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth
below.




	 	 	 	 	 
	 	McAFEE, INC.
 	 
	 	 	 	 	 
	Dated:                      , 20__ 	By:  	TO BE EXECUTED ONLY UPON
 TERMINATION OF EMPLOYMENT
 	 
	 	 	 	 
	 	 	 	 
	 	                                            , an individual

 	 
	 
	Dated:                      , 20__ 	  	TO BE EXECUTED ONLY UPON
 TERMINATION OF EMPLOYMENT
 	 
	 	 	 	 
	 	 	 	 
	 




B-5