Exhibit 10.2


 


[TIER 1 ELIGIBLE OFFICER]


 


WEBSENSE, INC.


 


PARTICIPATION AGREEMENT


 


(OFFICER CHANGE IN CONTROL SEVERANCE BENEFIT
PLAN)


 


Name of Eligible Officer:


 


You have been selected to participate in the Websense, Inc.
Officer Change in Control Severance Benefit Plan (the “Plan”).  Capitalized terms not explicitly defined in
this Participation Agreement (the “Agreement”)
but defined in the Plan shall have the same definitions as in the Plan.


 


Pursuant to the terms of the Plan, a copy of which is attached as Exhibit A
to this Agreement, you may become entitled to receive severance benefits in the
event of a Covered Termination as provided in this Agreement.


 


In accordance with Section 2 of the Plan, you have been designated
as an Eligible Officer.


 


Section 1.              SEVERANCE BENEFITS
FOR COVERED TERMINATIONS DURING THE COVERAGE PERIOD.


 


Subject to the exceptions
set forth in Section 2(c) of the Plan, if during the Coverage Period
you are terminated in a Covered Termination, and meet all the other
requirements set forth in Sections 2(b) and 5 of the Plan, including,
without limitation, executing the applicable required Release within the
applicable time period set forth therein and provided that such Release becomes
effective in accordance with its terms, you will receive the following
severance benefits:


 


(a)           Cash Severance Benefit.  You will be entitled to receive a single lump
sum cash payment equal to: (i) twenty-four (24) months of Base Salary,
plus (ii) your Additional Severance Amount (together the “Cash Severance Benefit”) payable as
provided in Section 6 of the Plan.


 


(b)           Accelerated Vesting of
Stock Awards.


 


(1)           Effective as of the
date of your Covered Termination, (i) the vesting and exercisability of
all outstanding stock options to purchase the Company’s common stock that are
held by you on such date shall be accelerated in full, (ii) any
reacquisition or repurchase rights held by the Company in respect of common
stock issued pursuant to any other stock award granted to you by the Company
shall lapse in full, and (iii) the vesting of any other stock awards
granted to you by the Company, and any issuance of shares triggered by the
vesting of such stock awards, shall be accelerated in full.  Notwithstanding the foregoing, this Section 1(b) shall
not apply to stock awards issued under or held in any Qualified Plan.


 


(2)           If your stock
awards accelerate vesting in accordance with this Section 1(b), such stock
awards will remain exercisable, if applicable, until the earlier of (A) one



 


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(1) year following
the effective date of Covered Termination, or (B) the original maximum
term of the stock award. In order to give effect to the intent of the foregoing
provision, notwithstanding anything to the contrary set forth in your stock
award agreements or the applicable equity incentive plan under which such stock
award was granted that provides that any then unvested portion of your award
will immediately expire upon your termination of service, no unvested portion
of your stock award shall terminate any earlier than two (2) months
following any Covered Termination that occurs prior to a Change in
Control.   Notwithstanding anything to
the contrary set forth herein, your stock awards shall remain subject to
earlier termination in connection with a “Corporate Transaction” as provided in
the Company’s Amended and Restated 2000 Stock Incentive Plan, or substantially
equivalent provisions of any successor or other equity incentive plan adopted
by the Company which govern your stock awards, as applicable.


 


(c)           Payment of Continued
Group Health Plan Benefits.  If you
timely elect continued group health plan continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”),
the Company shall pay the full amount of your COBRA premiums, or shall provide
coverage under any self-funded plan, on behalf of you for your continued
coverage under the Company’s group health plans, including coverage for your
eligible dependents, for eighteen (18) months following your Covered
Termination; provided, however, that no such
premium payments shall be made, and no coverage shall be provided without cost
to you under any self-funded group health plan, following the expiration of
your continued coverage under COBRA or the date that you become eligible to
elect coverage under a group health plan of a subsequent employer.  You will be required to notify the Company
immediately if you become eligible to be covered by a group health plan of a
subsequent employer.  Upon the conclusion
of such period of insurance premium payments made by the Company, or the
provision of coverage under a self-funded group health plan, you will be
responsible for the entire payment of premiums (or payment for the cost of
coverage) required under COBRA for the duration of your eligible COBRA coverage
period.  For purposes of this Section 1(c),
(i) references to COBRA shall be deemed to refer also to analogous
provisions of state law and (ii) any applicable insurance premiums that
are paid by the Company shall not include any amounts payable by you under an
Internal Revenue Code Section 125 health care reimbursement plan, which
amounts, if any, are your sole responsibility.


 


Section 2.              CASH SEVERANCE
BENEFIT FOR COVERED TERMINATIONS OUTSIDE THE COVERAGE PERIOD.


 


Subject to the exceptions
set forth in Section 2(c) of the Plan, if you meet all the requirements set
forth in Sections 2(b) and 5 of the Plan, including, without limitation,
executing the applicable required Release within forty-five (45) days following
your termination, and provided that such Release becomes effective in
accordance with its terms, you will receive the severance benefits set forth in
this Section 2.  If your employment
terminates due to a Covered Termination that does not occur during the Coverage
Period, you will be entitled to receive a single lump sum cash payment equal to
six (6) months of your Base Salary.  
Such payment shall be made to you within ten (10) days of the
effective date of the Release.   In the
event that within the two month period following your Covered Termination there
is a Change in Control, such that your Covered Termination occurred during the
Coverage Period, then you will be entitled to 


 


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receive benefits under Section 1 of this
Agreement, which will be offset by any payments that you may have previously
received under this Section 2.


 


Section 3.              4999 GROSS-UP
PAYMENTS.   [INCLUDE THIS SECTION FOR
U.S. RESIDENTS ONLY]


 


(a)           Subject to the
limitations of Section 3(b) below, if any payment, distribution or
benefit you would receive from the Company or otherwise, but determined without
regard to any additional payment required under this Section 3, pursuant
to a Change in Control (each a “Payment” and
collectively the “Payments”), would (i) constitute
a “parachute payment” within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”),
and (ii) be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties payable with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”),
then you shall be entitled to receive from the Company (or have the Company pay
on your behalf) an additional payment (the “Gross-Up Payment”)
in an amount that shall fund your payment of any Excise Tax on the Payments as
well as all income and employment taxes imposed on the Gross-Up Payment, any
Excise Tax imposed on the Gross-Up Payment and any interest or penalties
imposed with respect to income and employment taxes imposed on the Gross-Up
Payment.


 


(b)           The Company shall
make no Gross-Up Payment if the Payments do not exceed 110% of the Safe Harbor
Amount, as defined below, and instead the Payments due and made under the Plan
shall be reduced so that the Payments, in the aggregate, equal the Safe Harbor
Amount. Safe Harbor Amount” means 2.99 times your “base amount,” within the
meaning of Section 280G(b)(3) of the Code, so that no amount of the
Payments is subject to the Excise Tax. 
The reduction of the Payments due and made hereunder, if applicable,
shall be made by first reducing the severance benefits provided under Section 1(a),
1(c), and 1(b) of this Agreement, in that order, unless an alternative
method of reduction is elected by you prior to a Change in Control, and subject
to approval by the Company.  “In the
event that acceleration of vesting of stock award compensation is to be
reduced, such acceleration of vesting shall be cancelled in the reverse order
of the date of grant of your stock awards unless you elect in writing a
different order for cancellation. 
Notwithstanding anything to the contrary set forth herein, you may not
elect the order in which the reduction in your payments or benefits will occur
if such election would cause any such amounts to constitute “nonqualified
deferred compensation” within the meaning of Section 409A of the Code such
that you would incur the additional 20% tax under Section 409A of the Code.


 


(c)           The accounting firm
engaged by the Company for general audit purposes as of the day prior to the
effective date of the Change in Control shall perform the foregoing
calculations.  If the accounting firm so
engaged by the Company is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, the Company shall appoint a
nationally recognized accounting firm to make the determinations required
hereunder.  The Company shall bear all
expenses with respect to the determinations by such accounting firm required to
be made hereunder.


 


(d)           The accounting firm
engaged to make the determinations hereunder shall provide its calculations,
together with detailed supporting documentation, to the Company and 


 


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you within fifteen (15)
calendar days after the date on which your right to a Payment is triggered (if
requested at that time by you or the Company) or such other time as requested
by you or the Company.  If the accounting
firm determines that no Excise Tax is payable with respect to a Payment, it
shall furnish you and the Company with an opinion reasonably acceptable to you
that no Excise Tax will be imposed with respect to such Payment.  Any good faith determinations of the
accounting firm made hereunder shall be final, binding and conclusive upon you
and the Company.


 


Section 4.              DEFINITIONS.


 


(a)           “Additional Severance Amount” shall
mean the greatest of the following amounts: (A) the average of your last
three annual bonuses paid prior to your Covered Termination; (B) your last
annual bonus paid prior to your Covered Termination; (C) the average of
your last three annual bonuses paid prior to the effective date of the Change
in Control; (D) your last annual bonus paid prior to the effective date of
the Change in Control, and (E) your last target bonus in effect prior to
your Covered Termination.  For such
purposes, your “annual bonus” means the aggregate bonus paid or payable with
respect to the applicable fiscal year of the Company, or any portion of such
fiscal year.


 


(b)           “Base Salary” shall mean your base
pay (excluding incentive pay, premium pay, commissions, overtime, bonuses and
other forms of variable compensation), at the rate in effect during the last
regularly scheduled payroll period immediately preceding the date of your
Covered Termination, and prior to any reduction in your base salary that would
permit you to voluntarily terminate employment for Good Reason (as defined
below).


 


(c)           “Good Reason”
shall mean  any one of the following events occurs
without your consent on or after the commencement of your employment, provided
that you have first provided written notice to the Company (or the surviving
corporation, as applicable) within 90 days of the first such occurrence of such
condition specifying the event(s) constituting Good Reason and specifying
that you intend to terminate your employment not earlier than 30 days after
providing such notice, and the Company (or surviving corporation) has not cured
such event(s) within 30 days (or such longer period as may be specified by
you in such notice) after your written notice is received by such member of the
Board (or by the surviving corporation) (the “Cure Period”),
and you resign within thirty (30) days following the end of the Cure
Period:  (i) a material breach by
the Company of any provision of the Plan or this Agreement or any other
material agreement between you and the Company concerning the terms and
conditions of your employment; (ii) any material reduction in your
duties[, authority and/or responsibilities][include bracketed terms only for
CEO, President, CFO and General Counsel]; (iii) a material reduction by
the Company in your annual base salary; provided, however,
that Good Reason shall not be deemed to have occurred in the event of a
reduction in your annual base salary that is pursuant to a salary reduction
program affecting substantially all of the employees of the Company and that
does not adversely affect you to a greater extent than other similarly situated
employees; (iv) a relocation of your business office to a location that
requires a one-way increase in your driving distance of more than thirty-five
(35) miles, except for required travel by you on the Company’s business to an
extent substantially consistent with your business travel obligations prior to
the effective date of the Change in Control.


 


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Notwithstanding anything to the contrary set forth herein, any
definition of “Good Reason” contained in any individually negotiated written
agreement between you and the Company shall apply in lieu of the foregoing
provision if such other definition would trigger your right to resign and
receive benefits under the Plan (“Alternate Good Reason
Definition”).  In the
event that the Company’s Compensation Committee and Company’s counsel determine
that any Alternate Good Reason Definition applicable to you does not meet the
requirements for payments made upon conditions that constitute a “substantial
risk of forfeiture” as defined in Treas. Reg. 1.409A-1(d), any Cash Severance
Benefit payment will be subject to the distribution requirements of Section 409A(a)(2)(A) of
the Code, including, without limitation, the requirement of Section 409A(a)(2)(B)(i) of
the Code that such payment be delayed until 6 months after your separation from
service if you are a “specified employee” within the meaning of the aforesaid
section of the Code at the time of such separation from service.


 


(d)           “Qualified Plan” means a plan sponsored
by the Company or an affiliate that is intended to be qualified under Section 401(a) of
the Internal Revenue Code.


 


Section 5.              OTHER AGREEMENTS.


 


By signing this Agreement, you agree that any severance benefits that
may become payable under the Plan shall be offset by any severance benefits
that may become payable under any individual written agreement between you and
the Company (“Other Agreement”), if applicable.   Notwithstanding anything to the contrary set
forth herein, to the extent that any Other Agreement provides you with a more
favorable severance benefit, you will receive the greater benefit provided
under such individual agreement in lieu of the lesser benefit provided under
the Plan and this Agreement, as well as, without duplication of benefits, any benefits
provided under this Agreement not included in such Other Agreement, including,
without limitation, a Gross-Up Payment calculated with respect to the more
favorable cash severance benefit as if those payments were made under this Agreement.  With respect to Covered Terminations that
occur prior to January 1, 2009, any severance amounts otherwise payable
under this Plan that are offset by severance benefits payable under any Other
Agreement shall be paid at the time provided in such other Agreement.  Notwithstanding anything to the contrary set
forth in any Other Agreement, any severance amounts payable under this Plan
that are offset by amounts payable under any Other Agreement pursuant to this Section shall
be paid at the time set forth in Section 6 of the Plan with respect to
Covered Terminations that occur on or after January 1, 2009.


 


If you elect not to sign this Agreement, the terms of any Other
Agreement will solely control the provision of your severance benefits, and you
will not be an Eligible Officer that may receive additional severance benefits
under the Plan.


 


Section 6.              AMENDMENT.


 


The foregoing severance benefits are subject to such change as the
Company, pursuant to Section 8(b) of the Plan, may determine in its
sole and absolute discretion.  Any such
change in severance benefits shall be set forth in a revised version of this
Agreement.


 


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Section 7.              REDUCTIONS.


 


The severance benefits set forth in this Participation Agreement are
subject to certain reductions under Section 3 of the Plan.


 


****************


 


To participate in the Plan, please sign and date this Agreement in the
space provided below and return it to Susan Brown, Vice President, Human
Resources no later than [                  ],
2008.


 


The extra copy is for your file. 
On behalf of Websense Inc., I am pleased to welcome you as an Eligible
Officer under the Plan.


 


 


	
  Sincerely,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Gene Hodges

  	
   

  	
   

  
	
  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Participant’s
  Signature

  	
   

  	
  Date

  



 


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EXHIBIT A


 


WEBSENSE,
INC. OFFICER CHANGE IN CONTROL SEVERANCE BENEFIT PLAN


 


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