Document:

exv10w1

 

Exhibit 10.1

February 27, 2008

Mr. E. Wayne Jackson, III

Sourcefire, Inc.

9770 Patuxent Woods Drive

Columbia, MD. 21046

     Re: Transition Agreement

Dear Wayne:

     1. This letter sets forth the substance of the Transition Agreement (the “Agreement”) which
Sourcefire, Inc. (the “Company”) is offering to you. The date your employment ends for any reason
is your “Separation Date.”

     2. Expiration of Employment Agreement. You are currently employed by the Company as its Chief
Executive Officer pursuant to an Employment Agreement between you and the Company effective as of
May 6, 2002 (the “Employment Agreement”). The Employment Agreement expires at close of business on
May 5, 2008 (the “Agreement Expiration Date”)and you and the Company have elected not to renew it.

     3. Severance Payments upon Termination of Employment. Upon termination of your employment by
either you or the Company for any reason after your execution and non-revocation of this Agreement
(including any termination under the terms of the Employment Agreement”), if you then execute the
Certificate and Release of Claims attached to this Agreement as Exhibit A and made a part of this
Agreement (the “Certificate”) and the Resignation Letter attached as Exhibit B, the Company will
provide you an amount equal to six (6) months of your then current Base Salary, paid subject to
standard payroll deductions and withholdings and will be made on the Company’s ordinary payroll
dates, beginning with the first such date which occurs at least eight days following your
Separation Date provided that, if any such payments would otherwise be paid after March 15, 2009,
they shall be paid on or before March 15, 2009.

     4. Transition Period and Additional Severance Payments and Benefits. Following the Agreement
Expiration Date, you are being offered the opportunity to continue employment, on the terms and
conditions described below, on an interim, at-will basis in the position of Chief Executive Officer
on a full time basis performing those services you are currently performing and that are consistent
with your position to assist the Company in transiting to new leadership. If you execute this
Agreement and do not revoke it and either (a) are employed from the Agreement Expiration Date
through the earlier of September 5, 2008, or such earlier date chosen by the Company should a new
CEO be available to commence employment sooner (the “Transition Period”); or (b) are terminated
during the Transition Period by the Company for reasons other than Cause (as defined below) or
your death or your failure due to a physical or mental condition to perform the essential functions
of your position for a period of four (4)

 

 

Mr. E. Wayne Jackson, III

February 27, 2008

Page 2 of 9

consecutive weeks or four (4) weeks in the aggregate during any six (6) week period; then, if
you then execute the Certificate and Release of Claims attached to this Agreement as Exhibit A and
made a part of this Agreement (the “Certificate”) and the Resignation Letter attached as Exhibit B,
the Company will provide you, in addition to the severance benefits described in Section 3 above,
an amount equal to six (6) months of your then current Base Salary, paid in equal installments on
the Company’s regular payroll dates between the Separation Date and March 15, 2009, and, if your
employment ends for the reasons set forth in (b) above sooner than September 5, 2008, will also pay
you an additional amount equal to additional payments you would have received had you worked
through September 5, 2008, also paid in equal installments on the Company’s regular payroll dates
between the Separation Date and March 15, 2009, all subject to standard payroll deductions and
withholdings; and will accelerate the vesting of all your unvested stock options and restricted
stock such that you are 100% vested.

     5. Employment Status during Transition Period. If you accept transition employment,
following the Agreement Expiration Date you will be employed at-will on the terms and conditions
described in this Agreement and either you or the Company may terminate the employment relationship
at any time for any reason. Your employment during the Transition Period will be at the same
salary and with the same benefit eligibility in effect prior to the Agreement Expiration Date,
provided however, that your bonus eligibility will be based on the Executive Compensation Structure
presented by Compensia and approved without change by the Compensation Committee of the Board of
Directors of the Company on February 26, 2008, and will be prorated based on the number of months
you are employed in 2008, paid on or before March 15, 2009.

     6. Definition of “Cause.” For purposes of this Agreement, “Cause” for termination shall mean
that you have engaged in any of the following: (i) a material breach of any covenant or condition
under this Agreement; (ii) any act constituting dishonesty, fraud, immoral or disreputable conduct
which is harmful to the Company or its reputation; (iii) any conduct which constitutes a felony
under applicable law; (iv) any act of misconduct which is injurious to the Company; (v) refusal to
follow or implement a clear and reasonable directive of the Board or its designee; or (vi) breach
of fiduciary duty.

     7. Accrued Salary and Vacation. On the next regular payroll date following the Separation
Date, the Company will pay you all accrued salary, and all accrued and unused paid time off earned
through the Separation Date, subject to standard payroll deductions and withholdings; you will
receive these payments regardless of whether or not you sign this Agreement.

 

 

Mr. E. Wayne Jackson, III

February 27, 2008

Page 3 of 9

     8. Benefit Plans.

If you are currently participating in the Company’s group health insurance plans as of the
Separation Date, to the extent provided by the federal COBRA law or, if applicable, state insurance
laws, and by the Company’s current group health insurance policies, you will be eligible to
continue your group health insurance benefits at your own expense. Later, you may be able to
convert to an individual policy through the provider of the Company’s health insurance, if you
wish. If you execute this Agreement and do not revoke it, and do not accept transition employment,
and if you timely elect and remain eligible for continued coverage under COBRA, the Company, as
part of this Agreement, will pay that portion of your COBRA premiums it was paying prior to the
Separation Date for 6 months following the Separation Date or through the date you commence
employment with another employer, whichever first occurs. If you execute this Agreement and do not
revoke it, and if you timely elect and remain eligible for continued coverage under COBRA, if you
either commence and complete the Transition Period or are terminated by the Company during the
Transition Period for reasons other than Cause, the Company, as part of this Agreement, in addition
to the six (6) months of COBRA premiums described above, will pay the portion of your COBRA
premiums it was paying prior to the Separation Date through the date the above coverage ends and
either April 30, 2009, or the date you commence employment with another employer, whichever first
occurs.

Your participation in other employer-sponsored insurance plans will cease as of the Separation
Date; however, you may be able to convert all or some of these to individual coverage.

If you are a participant in the Company’s 401(k) Plan, deductions will end with your last regular
paycheck. You will be notified of rollover procedures for your 401(k) investment should you be a
participant in this program.

     9. Equity Awards. You were granted 559,729 shares of restricted stock pursuant to the
Sourcefire, Inc. 2002 Stock Incentive Plan (the “2002 Plan”) and 3,115 shares of restricted stock
pursuant to the Sourcefire, Inc. 2007 Stock Incentive Plan (the “2007 Plan” and, collectively with
the 2002 Plan, the “Plans”). You have also been granted an option to purchase 98,522 shares of the
Company’s common stock pursuant to the 2002 Plan and an option to purchase 28,037 shares of the
Company’s common stock pursuant to the 2007 Plan. Your rights and obligations concerning these
shares, including but not limited to the vesting thereof, are governed by the terms of the Plans,
as applicable, and any stock agreements executed by you, subject to the potential acceleration of
vesting contemplated by Section 2 hereof. All share numbers in this Section 8 are post
stock-split. If you accept transition employment you will be considered to be engaged in
continuous service for the purpose of vesting under the Plans. Notwithstanding anything to contrary
contained in any equity incentive plan, restricted stock agreement, stock option agreement or
similar arrangement regarding equity awards of the Company, the provisions contained herein
regarding acceleration of vesting of your restricted stock awards and stock options shall supersede
any other provisions regarding your rights under

 

 

Mr. E. Wayne Jackson, III

February 27, 2008

Page 4 of 9

such awards and options as a result of termination of your employment and the exercise period
for any options granted pursuant to the 2002 Plan shall be extended from thirty (30) to ninety (90)
days following termination. In addition, notwithstanding anything to the contrary contained in any
such agreement or arrangement, upon the termination of your employment for any reason, any stock
option awards pursuant to the Plans shall not be subject to any risk of forfeiture as a result of
such termination.

     10. Other Compensation or Benefits/Resignation by You. You acknowledge that, except as
expressly provided in this Agreement, you will not receive any additional compensation, severance
or benefits after the Separation Date.

     11. Expense Reimbursements. If you have been issued any Company credit or calling cards, the
Company will cancel these card(s) effective as of the Separation Date. You agree that, within ten
(10) days of the Separation Date, you will submit your final documented expense reimbursement
statement reflecting all business expenses you incurred through the Separation Date, if any, for
which you seek reimbursement. The Company will reimburse you for reasonable business expenses
pursuant to its regular business practice.

     12. Return of Company Property. By the Separation Date, you agree to return to the Company
all Company documents (and all copies thereof) and other Company property that you have had in your
possession at any time, including, but not limited to, Company files, notes, drawings, records,
business plans and forecasts, financial information, specifications, computer-recorded information,
tangible property (including, but not limited to, computers), credit cards, entry cards,
identification badges and keys; and, any materials of any kind that contain or embody any
proprietary or confidential information of the Company (and all reproductions thereof). Please
coordinate return of Company property with Doug McNitt. Receipt of the Severance described in this
Agreement is expressly conditioned upon return of all Company Property.

     13. Proprietary Information Obligations. Both during and after your employment you
acknowledge your continuing obligations under your Amended and Restated Assignment of Inventions,
Non-Disclosure, Non-Solicitation and Non-Competition Agreement not to use or disclose any
confidential or proprietary information of the Company and to refrain from certain solicitation and
competitive activities. A copy of your Amended and Restated Assignment of Inventions,
Non-Disclosure, Non-Solicitation and Non-Competition Agreement is attached hereto as Exhibit C.

     14. Confidentiality. The provisions of this Agreement will be held in strictest
confidence by you and the Company and will not be publicized or disclosed in any manner whatsoever;
provided, however, that: (a) you may disclose this Agreement to your immediate family; (b) the
parties may disclose this Agreement in confidence to their respective attorneys, accountants,
auditors, tax preparers, and financial advisors; (c) the Company may disclose this

 

 

Mr. E. Wayne Jackson, III

February 27, 2008

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Agreement as necessary to fulfill standard or legally required corporate reporting or
disclosure requirements; and (d) the parties may disclose this Agreement insofar as such disclosure
may be necessary to enforce its terms or as otherwise required by law. In particular, and without
limitation, you agree not to disclose the terms of this Agreement to any current or former Company
employee.

     15. Non-Disparagement. Both you and the Company agree not to disparage the other party, and
the other party’s officers, directors, employees, shareholders and agents, in any manner likely to
be harmful to them or their business, business reputation or personal reputation; provided that
both you and the Company will respond accurately and fully to any question, inquiry or request for
information when required by legal process. The Company’s obligations under this section are
limited to Company representatives with knowledge of this provision.

     16. Cooperation after Termination. Following the Separation Date and during the time that you
are receiving any benefits under this Agreement, you agree to cooperate fully with the Company by
making yourself reasonably available during regular business hours, up to twenty (20) hours per
month until you obtain full time employment and after that based on your best efforts consistent
with your other obligations, in all matters relating to the transition of your work and
responsibilities on behalf of the Company, including, but not limited to, any present, prior or
subsequent relationships and the orderly transfer of any such work and institutional knowledge to
such other persons as may be designated by the Company.

     17. Release. In exchange for the payments and other consideration under this Agreement, to
which you would not otherwise be entitled, and except as otherwise set forth in this Agreement, you
hereby generally and completely release, acquit and forever discharge the Company, its parents and
subsidiaries, and its and their officers, directors, managers, partners, agents, servants,
employees, attorneys, shareholders, successors, assigns and affiliates, of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages,
indemnities and obligations of every kind and nature, in law, equity, or otherwise, both known and
unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related
to agreements, events, acts or conduct at any time prior to and including the execution date of
this Agreement, including but not limited to: all such claims and demands directly or indirectly
arising out of or in any way connected with your employment with the Company or the termination of
that employment; claims or demands related to salary, bonuses, commissions, stock, stock options,
or any other ownership interests in the Company, vacation pay, fringe benefits, expense
reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal,
state or local law, statute, or cause of action; tort law; or contract law. The claims and causes
of action you are releasing and waiving in this Agreement include, but are not limited to, any and
all claims and causes of action that the Company, its parents and subsidiaries, and its and their
respective officers, directors, agents, servants, employees, attorneys, shareholders, successors,
assigns or affiliates:

 

 

Mr. E. Wayne Jackson, III

February 27, 2008

Page 6 of 9

	 	•	 	has violated its personnel policies, handbooks, contracts of employment, or
covenants of good faith and fair dealing;
	 
	 	•	 	has discriminated against you on the basis of age, race, color, sex (including
sexual harassment), national origin, ancestry, disability, religion, sexual
orientation, marital status, parental status, source of income, entitlement to
benefits, any union activities or other protected category in violation of any local,
state or federal law, constitution, ordinance, or regulation, including but not limited
to: Title VII of the Civil Rights Act of 1964, as amended; 42 U.S.C. § 1981, as
amended; the Equal Pay Act; the Americans With Disabilities Act; the Family Medical
Leave Act; the Maryland Human Relations Commission Act; the Employee Retirement Income
Security Act; Section 510; and the National Labor Relations Act;
	 
	 	•	 	has violated any statute, public policy or common law (including but not
limited to claims for retaliatory discharge; negligent hiring, retention or
supervision; defamation; intentional or negligent infliction of emotional distress
and/or mental anguish; intentional interference with contract; negligence; detrimental
reliance; loss of consortium to you or any member of your family and/or promissory
estoppel).

Notwithstanding the foregoing, you are not releasing any right of indemnification you may have
under the Company’s organizational documents, agreements or otherwise. Also excluded from this
Agreement are any claims which cannot be waived by law. You are waiving, however, your right to any
monetary recovery should any governmental agency or entity, such as the EEOC or the DOL, pursue any
claims on your behalf. You acknowledge that you are knowingly and voluntarily waiving and releasing
any rights you may have under the ADEA, as amended. You also acknowledge that (i) the
consideration given to you in exchange for the waiver and release in this Agreement is in addition
to anything of value to which you were already entitled, and (ii) that you have been paid for all
time worked, have received all the leave, leaves of absence and leave benefits and protections for
which you are eligible, and have not suffered any on-the-job injury for which you have not already
filed a claim. You further acknowledge that you have been advised by this writing that: (a) your
waiver and release do not apply to any rights or claims that may arise after the execution date of
this Agreement; (b) you have been advised hereby that you have the right to consult with an
attorney prior to executing this Agreement; (c) you have been given more than twenty-one (21) days
to consider this Agreement (if you wish to accept Transition Period employment you may choose to
voluntarily execute this Agreement earlier and if you do you will sign the Consideration Period
waiver below and if you elect not to accept Transition Period employment you must execute this
Agreement on the Agreement Expiration Date); (d) you have seven (7) days following your execution
of this Agreement to revoke the Agreement by notifying Doug McNitt; and (e) this Agreement shall
not be effective until the date upon which the revocation period has expired unexercised (the
“Effective Date”), which shall be the eighth day after this Agreement is executed by you.

 

 

Mr. E. Wayne Jackson, III

February 27, 2008

Page 7 of 9

     18. Indemnification Rights. The Company agrees that all rights of indemnification you may
have under the Company’s certificate of incorporation and bylaws and under any indemnification
agreement between you and the Company shall survive the execution of this Agreement or any actions
taken by either the Company (including any actions by the Company relating to benefits provided to
you under this Agreement), and such rights are hereby reaffirmed by the Company to the maximum
extent provided by law. The Company agrees that such rights of indemnification shall not be
modified at any time in a manner that would provide you any lesser indemnification rights than the
maximum protection permitted by applicable law.

     19. No Admission. This Agreement does not constitute an admission by the Company or by you of
any wrongful action or violation of any federal, state, or local statute, or common law rights,
including those relating to the provisions of any law or statute concerning employment actions, or
of any other possible or claimed violation of law or rights.

     20. Breach. You agree that upon a material breach of your obligations to the Company under
paragraphs 12, 13, 14, 15, 16 or 17 of this Agreement and under the Certificate, which is not
subject to legitimate dispute and is not cured within ten (10) days of written notice of such
breach, you will forfeit all amounts paid or owing to you based on your execution of the Agreement,
and where applicable, the Certificate with the exception of wage payments to you for performing
services as an employee of the Company and the payments described in paragraph 3. Further, you
acknowledge that it may be impossible to assess the damages caused by your violation of the terms
of paragraphs 11, 12, 13 and 14 of this Agreement and further agree that any threatened or actual
violation or breach of those paragraphs of this Agreement may, given the nature and circumstances
of such actual or threatened violation, constitute immediate and irreparable injury to the Company.
You therefore agree that any such breach of this Agreement is a material breach of this Agreement,
and, in addition to any and all other damages and remedies available to the Company upon your
breach of this Agreement, the Company shall be entitled to seek an injunction to prevent you from
violating or breaching this Agreement. Should the Company materially breach any payment obligation
to you under this Agreement that is not subject to legitimate dispute and is not cured within ten
(10) days of written notice of such breach, you shall be relieved of your non-solicitation and
non-competition obligations to the Company under your Amended and Restated Assignment of
Inventions, Non-Disclosure, Non-Solicitation and Non-Competition Agreement until such breach is
cured. You and the Company agree that if either party is successful in whole or part in any legal
or equitable action against the other under this Agreement, the enforcing party shall be able to
recover the costs, including reasonable attorney’s fees, incurred by that party in enforcing the
terms of this Agreement.

     21. Miscellaneous. This Agreement, including Exhibits A, B, and C, constitutes the complete,
final and exclusive embodiment of the entire agreement between you and the Company with regard to
this subject matter. It is entered into without reliance on any promise or

 

 

Mr. E. Wayne Jackson, III

February 27, 2008

Page 8 of 9

representation, written or oral, other than those expressly contained herein, and it
supersedes any other such promises, warranties or representations. This Agreement may not be
modified or amended except in a writing signed by both you and a duly authorized officer of the
Company. This Agreement will bind the heirs, personal representatives, successors and assigns of
both you and the Company, and inure to the benefit of both you and the Company, their heirs,
successors and assigns. If any provision of this Agreement is determined to be invalid or
unenforceable, in whole or in part, this determination will not affect any other provision of this
Agreement and the provision in question will be modified by the court so as to be rendered
enforceable. This Agreement will be deemed to have been entered into and will be construed and
enforced in accordance with the laws of the State of Maryland as applied to contracts made and to
be performed entirely within Maryland.

 

 

Mr. E. Wayne Jackson, III

February 27, 2008

Page 9 of 9

If this Agreement is acceptable to you, please sign below and return the original to me.

I thank you for your efforts to date on behalf of the Company and thank you in advance for your
cooperation in successfully completing the Transition Period. I also wish you good luck in your
future endeavors.

	 	 	 	 	 
	Sincerely,	 	 
	 
	 	 	 	 
	Sourcefire, Inc.	 	 
	 
	 	 	 	 
	By:
	 	/s/ Joseph R. Chinnici	 	 
	 

	 	 

Joseph Chinnici, Chairman
	 	 

Agreed to and Accepted: 

	 	 	 
	/s/
E. Wayne Jackson, III

	 	 
	 

    E. Wayne Jackson, III

	 	 

Consideration Period

I, E. Wayne Jackson, III, understand that I have the right to take at least 21 days to consider
whether to sign this Agreement, which I received on February 27, 2008. If I elect to sign
this Agreement before 21 days have passed, I understand I am to sign and date below this paragraph
to confirm that I knowingly and voluntarily agree to waive the 21-day consideration period.

	 	 	 
	 
	 
	/s/  E.
Wayne Jackson, III

	 	February 27, 2008
	 

	 	 
	Signature

	 	Date

 

 

Exhibit A

CERTIFICATE AND RELEASE OF CLAIMS

     E. Wayne Jackson, III (the “Employee”) entered into a Transition Agreement with Sourcefire,
Inc., dated February 27, 2008 (“Agreement”). The Employee hereby further agrees as follows:

     1. A blank copy of this Certificate and Release of Claims (“Certificate”) was attached to the
Agreement as Exhibit A.

     2. In consideration of the provision to the Employee of the separation payments and benefits
described in the Agreement for which he becomes eligible only if he signs this Certificate, the
Employee hereby extends the release of claims in paragraph 14 of the Agreement to any claims that
arose through the date he signs this Certificate and extends the representations he has made in
paragraph 16 of the Agreement through the date he signs this Certificate.

     4. The Employee agrees that this Certificate is a part of the Agreement.

	 	 	 	 	 
	 
	 
	 	 	 
	E. Wayne Jackson, III	 	 
	 
	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 

	 	 

 

 

Exhibit B

Resignation Letter

To the Board of Directors of Sourcefire, Inc:

I hereby resign from all positions I hold as an Officer and Director of Sourcefire, Inc.,
effective immediately.

	 	 	 	 	 
	Sincerely yours,	 	 
	 
	 	 	 	 
	E. Wayne Jackson, III	 	 
	 
	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 

	 	 

 

 

Exhibit C

Amended and Restated Assignment of Inventions, Non-Disclosure, Non-Solicitation and 
Non-Competition
Agreementexv10w2

 

Exhibit 10.2

SOURCEFIRE, INC.

2008 EXECUTIVE ANNUAL INCENTIVE PLAN

SECTION 1

ESTABLISHMENT AND PURPOSE

     1.1 Purpose. Sourcefire, Inc. hereby establishes the Sourcefire, Inc. 2008 Executive
Annual Incentive Plan (the “Plan”). The Plan is intended to increase stockholder value and
the success of the Company by motivating our employees (a) to perform to the best of their
abilities, and (b) to achieve the Company’s objectives. The Plan’s goals are to be achieved by
providing such employees with incentive awards based on the achievement of goals relating to
performance of the Company and its individual business units.

     1.2 Effective Date. The Plan shall be effective as of February 26, 2008. The Plan
constitutes the entire understanding of the Company and the Participants with respect to the
subject matter hereof and supersedes in its entirety all prior undertakings and arrangements of the
Company, including, but not limited to, the Company’s existing annual incentive plan.

SECTION 2

DEFINITIONS

     The following words and phrases shall have the following meanings unless a different meaning
is plainly required by the context:

     2.1 “Actual Award” means as to any Performance Period, the actual award (if any)
payable to a Participant for the Performance Period. The Actual Award is determined by the Payout
Formula for the Performance Period, subject to the Committee’s authority under Section 3.5 to
reduce or increase the award otherwise determined by the Payout Formula.

     2.2 “
Base Salary” means as to any Performance Period, 100% of the Participant’s salary rate
then in effect. Such Base Salary shall be before both (a) deductions for taxes or benefits,
and (b) deferrals of compensation pursuant to Company-sponsored plans.

     2.3 “Beneficiary” shall mean the person(s) or entity(ies) designated to receive
payment of an Actual Award in the event of a Participant’s death in accordance with Section 4.5 of
the Plan. The Beneficiary designation shall be effective when it is submitted in writing to and
acknowledged by the Company during the Participant’s lifetime on the Beneficiary designation form
provided by the Company. The submission of a new Beneficiary designation form shall cancel all
prior Beneficiary designations.

     2.4 “Board” means the Company’s Board of Directors.

     2.5 “Code” means the Internal Revenue Code of 1986, as amended. Reference to a
specific Section of the Code shall include such Section, any valid regulation promulgated
thereunder, and any comparable provision of any future legislation or regulation amending,
supplementing or superseding such Section or regulation.

 

 

     2.6 “Committee” means, with respect to a Participant who is the Chief Executive
Officer of the Company, shall mean a committee comprised of at least two (2) members of the Board
appointed by the Board. With respect to a Participant who is not the Chief Executive Officer of
the Company, the Committee may delegate its powers to the Company’s Chief Executive Officer.

     2.7 “Company” means Sourcefire, Inc., a Delaware corporation.

     2.8 “Corporate Transaction” means any of the following transactions, provided,
however, that the Committee shall determine under parts (d) and (e) whether multiple transactions
are related, and its determination shall be final, binding and conclusive:

          (a) a merger or consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the jurisdiction in which the Company is
incorporated;

          (b) the sale, transfer or other disposition of all or substantially all of the assets of the
Company;

          (c) the complete liquidation or dissolution of the Company;

          (d) any reverse merger or series of related transactions culminating in a reverse merger
(including, but not limited to, a tender offer followed by a reverse merger) in which the Company
is the surviving entity but (A) the shares of Company common stock outstanding immediately prior to
such merger are converted or exchanged by virtue of the merger into other property, whether in the
form of securities, cash or otherwise, or (B) in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Company’s outstanding securities are
transferred to a person or persons different from those who held such securities immediately prior
to such merger or the initial transaction culminating in such merger; or

          (e) acquisition in a single or series of related transactions by any person or related group
of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of
securities possessing more than fifty percent (50%) of the total combined voting power of the
Company’s outstanding securities but excluding any such transaction or series of related
transactions that the Board determines shall not be a Corporate Transaction.

     2.9 “Determination Date” means as to any Performance Period, the first day of the
Performance Period or such other date as determined by the Committee.

     2.10 “Disability” means as defined under the long-term disability policy of the
Company or the Related Company for which the Participant is employed regardless of whether the
Participant is covered by such policy. If the Company or the Related Company for which the
Participant is employed does not have a long-term disability plan in place, “Disability” means that
a Participant is unable to carry out the responsibilities and functions of the position held by the
Participant by reason of any medically determinable physical or mental impairment for a

2

 

period of not less than ninety (90) consecutive days. A Participant will not be considered to
have incurred a Disability unless he or she furnishes proof of such impairment sufficient to
satisfy the Administrator in its discretion.

     2.11 “Maximum Award” means as to any Participant for any Performance Period, a
percentage of the Participant’s Base Salary as determined by the Committee. The Maximum Award is
the maximum amount which may be paid to a Participant for any Performance Period.

     2.12 “Participant” means as to any Performance Period, an employee of the Company or
an affiliate of the Company who has been selected by the Committee for participation in the Plan
for that Performance Period.

     2.13 “Payout Formula” means as to any Performance Period, the formula or payout matrix
established by the Committee pursuant to Section 3.4, below, in order to determine the Actual
Awards (if any) to be paid to Participants. The formula or matrix may differ from Participant to
Participant.

     2.14 “Performance Goals” means the goal(s) (or combined goal(s)) determined by the
Committee (in its discretion) to be applicable to a Participant for a Performance Period. As
determined by the Committee, the Performance Goals applicable to each Participant shall provide for
a targeted level or levels of achievement using one or more of the following measures: (a)
increase in share price, (b) earnings per share, (c) total stockholder return, (d) operating
margin, (e) gross margin, (f) return on equity, (g) return on assets, (h) return on investment, (i)
operating income, (j) net operating income, (k) pre-tax income, (l) cash flow, (m) revenue, (n)
expenses, (o) earnings before interest, taxes and depreciation, (p) economic value added, (q)
market share, (r) corporate overhead costs, (s) return on capital invested, (t) stockholders’
equity, (u) income (before income tax expense), (v) residual earnings after reduction for certain
compensation expenses, (w) net income, (x) profitability of an identifiable business unit or
product, (y) performance of the Company relative to a peer group of companies on any of the
foregoing measures, (z) individual objectives and (aa) any other goals established by the
Committee. The Performance Goals may be applicable to the Company and/or any of its subsidiaries
or individual business units or an individual Participant or team and may differ from Participant
to Participant. In addition, the Committee shall have the authority to make appropriate
adjustments in Performance Goal(s) to reflect the impact of extraordinary items not reflected in
such goals.

     2.15 “Performance Period” means any fiscal period of the Company. Unless otherwise
determined by the Committee, a Performance Period shall generally mean a six (6) month period in
any Plan Year.

     2.16 “Plan Year” means the fiscal year of the Company beginning in 2008 and each
succeeding fiscal year of the Company.

     2.17 “Related Company” means any entity that may be treated as part of the group of
entities including the Company under Code Sections 414(b) and 414(c) using the fifty percent (50%)
ownership level as set forth in Treasury Regulation Section 1.409A-1(h)(3).

3

 

Notwithstanding the foregoing, the Committee may designate a lower ownership level (but not
less than twenty percent (20%)) in compliance with Treasury Regulation Section 1.409A-1(h)(3).

     2.18 “Retirement” means the termination of a Participant’s employment with the Company
or a Related Company on or after the Participant has attained age 72 and has at least 10 years
of service with the Company or a Related Company.

     2.19 “Target Award” means the target award payable under the Plan to a Participant for
the Performance Period, expressed as a percentage of his or her Base Salary or an amount, as
determined by the Committee in accordance with Section 3.3.

SECTION 3

SELECTION OF PARTICIPANTS AND DETERMINATION OF AWARDS

     3.1 Selection of Participants. On or prior to the Determination Date, the Committee,
in its sole discretion, shall select the individuals who shall be Participants for the Performance
Period. In selecting Participants, the Committee shall choose individuals who are likely to have a
significant impact on the performance of the Company. Participation in the Plan is in the sole
discretion of the Committee, and on a Performance Period by Performance Period basis. Accordingly,
an individual who is a Participant for a given Performance Period in no way is guaranteed or
assured of being selected for participation in any subsequent Performance Period or Periods.

     3.2 Determination of Performance Goals. On or prior to the Determination Date, the
Committee, in its sole discretion, shall establish the Performance Goals for each Participant for
the Performance Period. Such Performance Goals shall be set forth in writing.

     3.3 Determination of Target Awards. On or prior to the Determination Date, the
Committee, in its sole discretion, shall establish a Target Award for each Participant. Each
Participant’s Target Award shall be determined by the Committee in its sole discretion, and each
Target Award shall be set forth in writing.

     3.4 Determination of Payout Formula or Formulae. On or prior to the Determination
Date, the Committee, in its sole discretion, shall establish a Payout Formula or Formulae for
purposes of determining the Actual Award (if any) payable to each Participant. Each Payout Formula
shall (a) be in writing, (b) be based on a comparison of actual performance to the Performance
Goals, (c) provide for the payment of a Participant’s Target Award if the Performance Goals for the
Performance Period are achieved, and (d) provide for an Actual Award greater than or less than the
Participant’s Target Award, depending upon the extent to which actual performance exceeds or falls
below the Performance Goals.

     3.5 Determination of Actual Awards. Within sixty (60) days following the end of each
Performance Period, the Committee shall certify in writing the extent to which the Performance
Goals applicable to each Participant for the Performance Period were achieved or exceeded. The
Actual Award for each Participant shall be determined by applying the Payout Formula to the level
of actual performance which has been certified by the Committee. Notwithstanding any contrary
provision of the Plan, (a) the Committee, in its sole discretion, may eliminate, reduce or increase
the Actual Award payable to any Participant from that which

4

 

otherwise would be payable under the Payout Formula, (b) if a Participant terminates
employment with the Company prior to the date the Actual Award for the Performance Period is paid,
the Committee shall reduce his or her Actual Award proportionately based on the date of termination
(and subject to further reduction or elimination under clause (a) of this sentence).

SECTION 4

PAYMENT OF AWARDS

     4.1 Right to Receive Payment. Each Actual Award that may become payable under the
Plan shall be paid solely from the general assets of the Company. Nothing in this Plan shall be
construed to create a trust or to establish or evidence any Participant’s claim of any right other
than as an unsecured general creditor with respect to any payment to which he or she may be
entitled.

     4.2 Timing of Payment.

          (a) Payment of each Actual Award shall be made within thirty (30) days after the Committee
determines the amount of the Actual Award (if any) under Section 3.5.

          (b) The Company shall delay the payment of any Actual Award to the extent necessary to comply
with Section 409A(a)(2)(B)(i) of the Code (relating to payments made to certain “specified
employees” of certain publicly-traded companies); in such event, an Actual Award will be paid on
the first business day following the expiration of the six (6) month period following a
Participant’s separation from service.

     4.3 Form of Payment. Each Actual Award normally shall be paid in cash (or its
equivalent) in a single lump sum.

     4.4 Other Deferral of Actual Awards. The Committee may establish one or more programs
under the Plan to permit selected Participants the opportunity to elect to defer receipt of Actual
Awards. The Committee may establish the election procedures, the timing of such elections, the
mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts so
deferred, and such other terms, conditions, rules and procedures that the Committee deems advisable
for the administration of any such deferral program.

     4.5 Termination of Employment During a Performance Period.

          (a) For Reasons Other Than Retirement, Leave of Absence, Disability or Death. If the
Participant’s employment with the Company (or a Related Company) terminates for any reason (other
than Retirement, an approved leave of absence, Disability or death) during any Performance Period,
the Committee may, in its discretion, determine that the Participant will be entitled to any
Target Award for that Performance Period; otherwise the Participant will not receive a prorated Actual
Award calculated in accordance with Section 4.5(d). Generally, the Committee will use its negative
discretion so that any Participant who chooses to terminate his or her employment with the Company
(or a Related Company) for any reason other than Retirement, Disability, death or the failure of a
Participant to return to employment with the Company (or a Related Company) following the
expiration of an approved leave of absence, during a Performance Period will not receive any Actual
Award for such Performance Period.

5

 

          (b) Payment in the Event of Death. If a Participant dies prior to the payment of an
Actual Award earned by him or her for a Performance Period, the Actual Award shall be paid to the
Participant’s Beneficiary. In addition, if a Participant dies prior to the completion of a
Performance Period, the Performance Goal for such Performance Period will be deemed achieved and a
Participant’s Target Award shall be paid to the Participant’s Beneficiary; provided, however, the
Committee, in its sole discretion, may eliminate or reduce the Target Award payable to any
Participant’s Beneficiary below that which otherwise would be payable. If a Participant fails to
designate a Beneficiary or if each person designated as a Beneficiary predeceases the Participant
or dies prior to distribution of the Participant’s benefits, then the Committee shall direct the
distribution of such benefits to the Participant’s estate.

          (c) For Retirement, Leave of Absence or Disability. If a Participant’s employment
with the Company or a Related Company is terminated because of Retirement or Disability prior to
the payment of an Actual Award earned by him or her for a Performance Period, or if a Participant
is on an approved leave of absence at the time of payment of an Actual Award earned by him or her
for a Performance Period, the Actual Award shall be paid to the Participant. In addition, if a
Participant’s employment with the Company (or a Related Company) is terminated because of
Retirement or Disability or a Participant is on an approved leave of absence prior to the
completion of a Performance Period, the Performance Goal for such Performance Period will be deemed
achieved and a Participant’s Target Award shall be paid to the Participant; provided, however, the
Committee, in its sole discretion, may eliminate or reduce the Target Award payable to any
Participant below that which otherwise would be payable.

          (d) Calculation and Payment of Prorated Actual Awards and Target Awards for Termination
During a Performance Period. Any prorated Actual Award or Target Award to be paid in
accordance with Section 4.5(a), (b) or (c) above shall be calculated as if the Performance Period
ended on the last day of the year in which the Participant’s employment terminated (or the last day
of the Participant’s approved leave of absence). The Committee shall certify the achievement of
the Performance Goals based upon the applicable criteria as if the Performance Period has ended.
The portion of the Actual Award to be paid to the Participant or his or her Beneficiary shall then
be determined by multiplying the Target Award amount times a fraction, the numerator of which shall
be the number of months of the Performance Period that elapsed prior to the termination of
employment or the last day of the approved leave of absence, as applicable (rounding up to the next
whole number) and the denominator of which shall be the number of months in the applicable
Performance Period. The prorated amount shall be paid in accordance with Sections 3.5 and 4.2
above. Such prorated amount shall be paid in a cash lump sum.

     4.6 Payment in the Event of a Corporate Transaction. In the event of a Corporate
Transaction, the Performance Goal for the Performance Period in which such Corporate Transaction
takes place shall be deemed achieved as of the date immediately prior to the effective date of such
Corporate Transaction and a Participant’s Target Award shall be paid on the effective date of such
Corporate Transaction; provided, however, the Committee, in its sole discretion, may eliminate or
reduce the Target Award payable to any Participant below that which otherwise would be payable.

6

 

SECTION 5

ADMINISTRATION

     5.1 Administrator. The Plan shall be administered by the Board, or if so delegated,
by the Committee.

     5.2 Committee Authority. The Committee shall have all discretion and authority
necessary or appropriate to administer the Plan and to interpret the provisions of the Plan. Any
determination, decision or action of the Committee in connection with the construction,
interpretation, administration or application of the Plan shall be final, conclusive, and binding
upon all persons, and shall be given the maximum deference permitted by law. In addition, the
Committee makes no representation that the Plan will comply with Section 409A of the Code and makes
no undertaking to prevent Section 409A of the Code from applying to the Plan or any Actual Award or
to mitigate its effects on any deferrals or payments made in respect of any Actual Award.
Participants are encouraged to consult a tax adviser regarding the potential impact of Section 409A
of the Code.

     5.3 Tax Withholding. The Company shall withhold all applicable taxes from any
payment, including any non-U.S., federal, state, and local taxes.

SECTION 6

GENERAL PROVISION

     6.1 Nonassignability. A Participant shall have no right to assign or transfer any
interest under this Plan.

     6.2 No Effect on Employment. The establishment and subsequent operation of the Plan,
including eligibility as a Participant, shall not be construed as conferring any legal or other
rights upon any Participant for the continuation of his or her employment for any Performance
Period or any other period. Generally, employment with the Company is on an at will basis only.
Except as may be provided in an employment contract with the Participant, the Company expressly
reserves the right, which may be exercised at any time during a Performance Period, to terminate
any individual’s employment without cause and without regard to the effect such termination might
have upon the Participant’s receipt of an Actual Award under the Plan.

     6.3 No Individual Liability. In addition to such other rights of indemnification as
they may have as members of the Board or as officers or employees of the Company, members of the
Board and any officers or employees of the Company to whom authority to act for the Board, the
Committee or the Company is delegated shall be defended and indemnified by the Company to the
extent permitted by law on an after-tax basis against all reasonable expenses, including attorneys’
fees, actually and necessarily incurred in connection with the defense of any claim, investigation,
action, suit or proceeding, or in connection with any appeal therein, to which they or any of them
may be a party by reason of any action taken or failure to act under or in connection with the Plan
and against all amounts paid by them in settlement thereof (provided such settlement is approved by
the Company) or paid by them in satisfaction of a judgment in any such claim, investigation,
action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such
claim, investigation, action, suit or proceeding that such person is

7

 

liable for gross negligence, bad faith or intentional misconduct; provided, however, that
within thirty (30) days after the institution of such claim, investigation, action, suit or
proceeding, such person shall offer to the Company, in writing, the opportunity at the Company’s
expense to defend the same.

     6.4 Severability; Governing Law. If any provision of the Plan is found to be invalid
or unenforceable, such provision shall not affect the other provisions of the Plan, and the Plan
shall be construed in all respects as if such invalid provision has been omitted. The provisions
of the Plan shall be governed by and construed in accordance with the laws of the State of
Maryland, without giving effect to any choice of law rule that would cause the application of the
laws of any jurisdiction other than the internal laws of the State of Maryland.

     6.5 Affiliates of the Company. Requirements referring to employment with the Company
or payment of awards may, in the Committee’s discretion, be performed through the Company or any
affiliate of the Company.

SECTION 7

AMENDMENT AND TERMINATION

     7.1 Amendment and Termination. The Board may amend or terminate the Plan at any time
and for any reason.

8

 

SOURCEFIRE, INC.

2008 EXECUTIVE ANNUAL INCENTIVE PLAN

PARTICIPATION AGREEMENT

     THIS AGREEMENT is entered into as of this ___ day of ___, 200_, by and between Sourcefire,
Inc., a Delaware corporation (the “Company”) and ____________ (the
“Participant”).

     WHEREAS, the Company has adopted the Sourcefire, Inc. 2008 Executive Annual Incentive Plan
(the “Plan”) and unless otherwise defined herein, the terms defined in this Agreement shall
have the same defined meanings as in the Plan; and

     WHEREAS, the Participant provides valuable services for the benefit of the Company; and

     WHEREAS, in consideration of the foregoing, the Participant has been designated by the
Committee to be eligible to participate in the Plan;

     NOW, THEREFORE, the Company and the Participant agree as follows:

     1. Purpose. The purpose of the Plan and this Agreement is to provide critical focus on
specific, measurable corporate goals and provide performance-based compensation based upon the
level of attainment of such goals by the Participant.

     2. Participant in the Plan. The Participant is designated as a Participant in the Plan for
the following Performance Period beginning ____________ and ending ___ and the
Performance Period beginning _________ and ending ____________ with the following terms:

	 	 	 
	Award Components:

	 	___ Performance Goals will be used to determine the
Target Award for the applicable Performance Period as
determined by the Committee.
	 
	 	 
	Performance Goals:

	 	The following Performance Goals shall be applicable for
the two Performance Periods occurring in the [2009]
Plan Year:

Company Revenue – [insert threshold and how much this
components makes up the award]

Earnings Per Share — [insert threshold and how much
this components makes up the award]

1

 

	 	 	 
	 

	 	The annual Target Award for this executive position is
___% of the annual Base Salary. Payments will be
subject to applicable payroll taxes and withholdings.

	 
	 	 
	Target Award:

	 	The calculation of the annual Target Award shall be
based on eligible Base Salary for the Plan Year. The
Committee has the discretion to prorate an Actual Award
based on the number of days a Participant is employed
during the applicable Performance Period as set forth
in the Plan.
	 
	 	 
	Maximum Award:
	 	 

3. Award Payments. The payment of an Actual Award shall be made within thirty (30) days following
the date the Committee certifies the extent to which the Performance Goals were achieved or
exceeded. The Committee shall make such determination within sixty (60) days following the end of
the applicable Performance Period as set forth in Section 3.5 of the Plan. Any payment due under
the Plan is at the sole discretion of the Committee.

4. Achievement Schedule. The established threshold must be exceeded for the applicable Performance
Goal before the Actual Award applicable to such Performance Goal will be paid. The Company’s
Revenue and Earnings Per Share targets are uncapped.

5. Adjustments to Performance Goals. The Committee shall have the authority to make appropriate
adjustments in the Performance Goals to reflect the impact of extraordinary items not reflected in
such goals.

6. Exchange Rates. The Performance Goals shall not be adjusted for any fluctuating foreign
currency exchange rates.

7. Incorporation of Plan. The Plan, a copy of which is attached, is incorporated into, and made a
part of this Participation Agreement as though set forth in full herein. Terms and phrases used
herein shall have the same definitions or usage as in the Plan. The parties shall be bound by, and
have the benefit of, each and every provision of the Plan.

8. Taxes. The Participant is ultimately liable and responsible for all taxes owed by the
Participant in connection with the payment of any Actual Award, regardless of any action the
Company takes with respect to any tax withholding obligations that arise in connection with an
Actual Award. No member of the Company makes any representation or undertaking regarding the
treatment of any tax withholding in connection with the payment of an Actual Award. The Company
does not commit and is under no obligation to structure any Actual Award to reduce or eliminate the
Participant’s tax liability.

9. No Effect on Terms of Employment Relationship. Neither the Plan nor this Agreement shall confer
upon the Participant any right with respect to the Participant’s employment with the Company or a
Related Company, nor shall it interfere in any way with his or her right or the right of the
Company or any Related Company to terminate the Participant’s employment at any time, with or
without cause, and with or without notice. Participation in the Plan does not guarantee
participation in other or future incentive or bonus plans sponsored or adopted in the future by the
Company.

2

 

10. Entire Agreement: Governing Law. The Plan and this Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and the Participant with respect to the subject matter
hereof. These agreements are to be construed in accordance with and governed by the internal laws
of the State of Maryland. Should any provision of this Agreement be determined to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and shall remain
enforceable.

11. Administration and Interpretation. Any question or dispute regarding the administration or
interpretation of the Plan or this Agreement shall be submitted by the Participant or by the
Company to the Committee. The resolution of such question or dispute by the Committee shall be
final and binding on all persons. In the event of a conflict between the terms of the Plan and
this Agreement, the Plan shall control. The Board reserves the right to alter or cancel all or any
portion of the Plan for any reason at any time.

     IN WITNESS WHEREOF, the parties hereto have entered into this Participation Agreement as of
the day and year first above written.

	 	 	 	 	 
	 	 	SOURCEFIRE, INC.,

a Delaware corporation
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Its	 	 
	 

	 	 	 	 

     The Participant acknowledges receipt of a copy of the Plan, and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts the opportunity to receive an
Actual Award subject to all of the terms and limitations hereof and thereof. The Participant has
reviewed this Participation Agreement and the Plan in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Participation Agreement, and fully
understands all provisions of this Participation Agreement and the Plan. The Participant
hereby agrees that all disputes arising out of or relating to this Participation Agreement and the
Plan shall be resolved in accordance with Section 5.2 of the Plan.

	 	 	 	 	 	 	 
	Dated:

	 	 	 	Signed:	 	 
	 

	 	 
	 	 	 	 

3

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