Amended and Restated International Assignment Agreement – Cisco
Cisco Systems, Inc
170 West Tasman Drive
San Jose, CA 95134-1706
Phone: 408 526 4000
Fax: 408 526 1400
http://www.cisco.com
September 16, 2011
Wim Elfrink
[ADDRESS]
| Re: | Amended and Restated International Assignment Agreement |
Dear Wim:
I am pleased to confirm the amendment and restatement of your international
assignment to San Jose, California, United States. This letter of agreement
outlines the terms and conditions of the amendment and restatement of your
international assignment. Your international assignment is also subject to the
terms of Cisco153s Long Term International Assignment Policy (the
“International Assignment Policy”) and the Tax Equalization Policy as
they apply to international assignees generally. However, where an express term
of this Agreement and the International Assignment Policy conflict, this
Agreement will govern.
Your point of origin is the Netherlands (the “home country”) and your country
of reference during your assignment is the United States (the “host country”).
We understand you are a resident of the United States for tax purposes.
This Agreement supersedes and replaces, in its entirety, your previous
Amended and Restated International Assignment Agreement dated February 15, 2010
and your previous Agreement of International Assignment from the Netherlands to
the United States dated November 9, 2001 and any prior employment agreement
except to the extent set forth in Exhibit A or as otherwise required by the laws
of the Netherlands.
Assignment
Your international assignment began on July 31, 2011.
Your job title is Executive Vice President, Emerging Solutions and Chief
Globalization Officer. In this capacity, you report to John Chambers, or his
successor(s) and/or designee(s). As the Executive Vice President, Emerging
Solutions and Chief Globalization Officer, you are
responsible for such duties and responsibilities as Mr. Chambers or his
successor or designee assign. You are required to travel internationally during
your international assignment.
Term
Although neither this assignment nor this letter alters your status as an
at-will employee, it is anticipated that your international assignment will last
for up to two years from July 31, 2011. Your international assignment may be
extended if expressly agreed upon in writing by you and Cisco.
Salary and Bonus
You will remain an employee of the home country and be paid on its payroll.
Your annual base salary will continue to be EUR 592,772 (USD 853,651 as of July
31, 2011) as approved by the Compensation and Management Development Committee
effective as of August 1, 2010. You will also continue to be eligible to
participate in Cisco153s Executive Incentive Plan (“EIP”). Your continued
participation in the EIP will be subject to the terms and conditions of the EIP.
Your target bonus percentage under the EIP for fiscal year 2012 will continue to
be 125 percent (125%) of your annual base salary.
Your salary and bonuses will be paid to you in Euro from your home country
less applicable deductions and withholdings; however, pursuant to the Tax
Equalization Policy, you will receive a Host Country Tax Payment to off-set any
additional amounts you are required to pay in taxes due to your international
assignment on the same basis as other international assignees.
Benefits
Life insurance, business travel accident insurance, retirement plans, and
disability coverage will be provided from the home country while on assignment.
Your health benefits will be provided by Cigna International while on
assignment. For additional information about benefits coverage, please refer to
the Benefits section on Cisco153s intranet and access the link to Worldwide Plans.
Your vacation entitlements will continue to be governed by the policies in
effect for the home country and your PTO accrual will remain unchanged. However,
working hours, public holidays and sick leave will follow policies in effect for
the host country, the United States.
Please be aware that in the case of a medical or security emergency, Cisco
has contracted with International SOS (“ISOS”) to provide employees working
abroad with access to a full range of medical information and emergency
services, including medical assistance, international healthcare, security
services and outsourced customer care. Additional information about ISOS, is
available on Cisco153s intranet at wwwin.cisco.com/employee/benefits/isos.shtml.
On-Going Allowances and Reimbursements
Cisco has adopted a “Balance Sheet Approach” in compensating employees on
international assignments, to ensure that assignees can maintain purchasing
power similar to that which they would have enjoyed in their home country,
assuming the same salary, grade level and family size. Therefore, during your
international assignment, you will continue to be entitled to the following
allowances or reimbursements to cover additional costs incurred as a result of
your
international assignment. In addition, any amount of allowance/reimbursement
that is not used by you in any given month shall be carried over to the next
month(s) and made available to you (in addition to the maximum allowance
specified) in the subsequent month(s). Notwithstanding the foregoing, with
respect to any allowance/reimbursement that would otherwise be treated as a
deferred compensation arrangement under Section 409A of the Internal Revenue
Code of 1986, as amended (“Section 409A”) if the amount were carried over into a
subsequent taxable year, any portion of such allowance/reimbursement that is
unused as of each December 31 (including amounts carried over from a prior month
in the same calendar year) shall not be carried-over into the next calendar year
and made available to you. Cisco will reimburse you for business expenses in
accordance with Cisco153s applicable reimbursement policies; however, if you incur
any business related travel expenses that are not reimbursed by Cisco under such
policies, any of the allowances below may be used to cover such expenses.
Housing Assistance:
Cisco will provide housing and utilities assistance in the United States.
This housing and utilities assistance will be paid from the Netherlands payroll
in the monthly amount not to exceed EUR 13,020 (USD 18,750 as of July 31, 2011)
beginning July 31, 2011 (or whenever you occupy your long term housing).
Goods and Services:
Cisco will pay you a goods and services differential of USD 1,035 per month
beginning in August 2011. The goods and services differential will be increased
to USD 3,333 per month beginning in August 2012 and throughout your
international assignment.
Property Management:
If you elect not to sell or rent your home country residence, Cisco will
reimburse you for the costs for property management of that residence in
accordance with the International Assignment Policy.
Dependent Education Reimbursement:
Cisco will pay direct bill costs of annual tuition for each of your dependent
children attending elementary or secondary school at the host location with a
cost not to exceed USD 50,000 in the aggregate per school year.
Annual Dependent Visit:
Cisco will pay you a USD 10,000 annual allowance for your dependents to visit
you and the family in the United States.
Home Leave Travel Allowance:
Cisco will pay you a USD 50,000 annual allowance for you, your spouse, and
your children to return to your home in the Netherlands. As a guideline, this
allowance typically covers three trips per year.
Automobile Assistance:
The costs for the rent or purchase of two family-style automobiles, for you
and your spouse will be paid on your behalf by Cisco. The annual cost is not to
exceed USD 36,000.
Relocation Misc Expense Allowance:
Cisco will provide you a lump sum relocation allowance equal to EUR 34,720
(USD 50,000 as of July 31, 2011) beginning July 31, 2012 per year paid through
payroll in the Netherlands for relocation, adjustment and transition assistance.
Payment shall continue to be made on or about each anniversary of the
commencement of your international assignment. This payment shall be in lieu of
the Miscellaneous Relocation Payment set forth in the International Assignment
Policy.
Maximum Benefits
The maximum value of benefits pursuant to the On-Going Allowances and
Reimbursements section of this Agreement and including the value of any payments
for fees associated with tax services provided by EY and other tax consulting
services and the value of any benefits pursuant to Cisco153s Tax Equalization
Policy, but excluding the value of any benefits under the Repatriation section
of this Agreement upon completion of your international assignment, is not to
exceed USD 508,420 with respect to benefits for fiscal year 2012 and USD 536,000
with respect to benefits for fiscal year 2013, based on the currency exchange
rate of 1 EUR to 1.4401 USD in effect as of July 31, 2011.
Repatriation
Upon completion of your international assignment, Cisco will provide you with
relocation assistance related to your move back to the Netherlands. This will
include one-way business class travel for you and your qualifying dependents;
shipment of household goods and personal effects and temporary living in your
home country.
Assuming your international assignment is successful, upon its termination
Cisco will attempt to employ you in a position comparable to your then current
position and which utilizes the skills and experience you gained during your
international assignment. If Cisco is unable to provide you with a position
comparable to your then current position, Cisco will attempt to provide you with
a position comparable to your position immediately prior to the commencement of
your international assignment. Your base salary and target bonuses, in either
case, will be at a level commensurate with the position offered. If Cisco is
unable to offer you a position, your employment will terminate and Cisco will
pay you an amount equal to 225 percent (225%) of your then current annual salary
(the “Severance”). Cisco153s obligation to pay the Severance will be contingent
upon your execution and the effectiveness of a release agreement in a form
provided by Cisco within 30 days of your “separation from service” from Cisco as
that term is defined in Section 409A. This Severance would be in lieu of any
entitlement you may have to notice of termination, to pay in lieu of notice of
termination, or to any other severance payment from any source. This section
supersedes any termination of employment provision of the International
Assignment Policy.
Taxes
Your international assignment will be covered by Cisco153s Tax Equalization
Policy and you hereby acknowledge that you have accepted all the terms and
conditions set forth in Exhibit B. Your pay will be subject to annual
hypothetical tax deductions in amounts determined by Ernst & Young (“EY”).
Cisco153s philosophy regarding tax equalization is that as an international
assignee, you will neither materially gain nor lose from the differences in
income and social tax costs between your home and host country, within certain
parameters. Tax equalization applies to Cisco equity awards as described in the
Tax Equalization Policy. Cisco has retained EY, an independent tax accounting
firm, to provide assistance with the preparation of both your home and local
country tax filing obligations and to prepare annual tax equalization
calculations. Please contact [ ] in EY153s Tax Department [ ] for any questions.
Fees associated with tax services provided by EY and other tax consulting
services, including any services provided by your tax advisor in the
Netherlands, shall be paid on your behalf by Cisco not to exceed USD 75,000 per
year.
Notwithstanding the foregoing, if this Agreement or any benefit payable to
you hereunder is subject to Section 409A and you are a “specified employee”
(within the meaning of Section 409A) as of the date you separate from service
from Cisco, then any payments scheduled to be made to you pursuant to this
Agreement during the first six months following your separation from service
shall be delayed and shall accrue interest at the applicable federal rate for
such six month period. The delayed payments (and including any accrued interest)
shall be paid immediately following the end of the six month delay. In no event
shall Cisco be liable for any taxes or penalties imposed under Section 409A with
respect to any benefit(s) paid to you pursuant to this Agreement. All
reimbursements under this Agreement that are subject to Section 409A shall be
made no later than the end of the calendar year next following the calendar year
in which the applicable expenses are incurred and the Severance, if any, shall
be paid no later than the 15th day of the third month following the year in
which your international assignment terminates. Any tax equalization payments
shall be paid within the time periods described in Section 1.409A-1(b)(8)(iii)
of the Treasury Regulations under Section 409A.
Dispute Resolution
You and Cisco acknowledge and agree that any and all disputes or claims
arising from or relating to your recruitment to or employment with Cisco
(including but not limited to disputes or claims arising from or relating to
this Agreement), or the termination of your employment, will be resolved solely
and exclusively pursuant to final and binding arbitration in lieu of any
evidentiary hearing before a government agency and/or a court trial before a
judge or jury, pursuant to the terms of Cisco153s Arbitration Agreement and
Policy, a copy of which can be found at
http://wwwin.cisco.com/HR/employee/proprietary_info/agreement2arbitrate.shtml.
The agreement to arbitrate means that both you and Cisco have expressly waived
any and all rights to a trial before a court or a jury.
General
Cisco153s personnel policies and standards of business apply to your
assignment, unless a written exception is provided by a company representative
authorized to make that exception or is otherwise set forth in this Agreement.
This Agreement sets forth the entire agreement between you and Cisco
regarding your international assignment except that existing agreements with
Cisco such as your agreement to arbitrate, your proprietary information and
inventions agreement and agreement(s) establishing at-will employment are not
superseded by this agreement, unless expressly provided to the contrary herein.
This Agreement can only be modified by a written document signed in writing
by Randy Pond or his successor(s) or designee(s) and approved by the
Compensation and Management Development Committee of the Board of Directors.
Please note that Cisco reserves the right to unilaterally modify the provisions
of this Agreement and/or the documents incorporated herein as legal requirements
may dictate, new practices may require or for other reasons at the discretion of
Cisco. In the event such modifications are made, notification will be provided
to you.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California (except its choice-of-law provisions).
We are excited to have you join our operations in the United States. If you
are in agreement with the terms and conditions of your assignment as outlined in
this letter and in the attached policies, please sign the two originals and
return one to the person listed below.
|
BY CISCO SYSTEMS, INC. |
APPROVED & ACCEPTED |
|
/s/ Randy Pond |
9/16/11 |
/s/ Wim Elfrink |
9/16/11 |
|||||
|
Randy Pond |
Date |
Wim Elfrink |
Date |
|||||
|
Executive Vice President, Operations, Processes and Systems |
Executive Vice President, Emerging Solutions and Chief Globalization Officer |
|||||||
EXHIBIT A
|
1. |
Termination of the Employee153s home country employment agreement will be |
|
2. |
The Employee shall be entitled to an annual holiday allowance of 8% of the |
|
3. |
The Employee shall be entitled to 25 days153 holiday a year, which the Employee |
In principle, accrued holidays must be taken in the calendar year in which
they accrue. Excess holidays (i.e., holidays accrued during a certain year which
have not been taken during the calendar year in which they accrued) must be
taken between 1 January and 1 April of the subsequent calendar year in
consultation with the Employer. If, after consultation, the holidays are not
taken during the said period, the Employer shall designate the period during
which the holidays must be taken. If, in spite of this, the designated holiday
period is not taken, the claim to the excess holidays shall lapse.
Upon termination of the employment relationship, the Employee shall not be
entitled to any salary over holidays and/or hours which have been taken but
which have not yet accrued. The Employee shall be obliged to repay the Employer
any salary already received over such holidays and/or hours at the end of the
employment relationship.
|
4. |
If the Employee is ill or unable to perform work for any other reason, he |
If the Employee is unable to perform his work as a result of illness, he
shall remain entitled to 100% of his last earned salary for a period of 52
weeks, unless the illness was caused intentionally by him or ensued from an
infirmity in respect of which he intentionally gave the Employer false
information when he entered into the employment agreement, in the event he
causes an obstruction of or delay in the recovery process, or if the
Employee:despite being able to do so:refuses to perform other suitable work for
his own Employer or:with the prior approval of the Industrial Insurance
Board:for another employer.
The wages will be reduced by:
– the amount of any financial benefit which the Employee receives under any
statutorily prescribed insurance or under any insurance or from many fund which
was agreed upon in or results from the employment agreement;
– the amount of income earned by the Employee, whether in or outside the
employer-employee relationship, from work which he has performed in the period
during which the
contractually agreed work could have been performed if he had not been
prevented from doing so.
If the Employee153s incapacity for work was caused by a third party, the
Employer shall not be obliged to pay the Employee153s salary or a supplement to
his social security benefits. If, in that case, the Employee can hold a third
party liable for loss of income in connection with his incapacity for work, he
shall assign his claim against the third party to the Employer, for which he
will receive an amount equal to the amount which he would have received if the
third party had not been involved in the incapacity for work. The Employer will
pay the amount to which the Employee is in that case entitled in monthly
installments, the amount of which shall be determined by the Employer.
The Employer will not invoke the provisions contained above, if and insofar
as the Employee cannot hold the third party liable.
|
5. |
The Employer shall compensate 50% of the Employee153s premium payable for the |
The Employer has taken out accident insurance, i.e. “Cisco153s Worldwide
Business Travel Accident Insurance (BTA)”, for the benefit of the Employee.
|
6. |
As required, the Employee has joined the employer153s pension scheme in the |
|
7. |
Neither during the employment term nor upon termination of the employment |
Any violation of the obligation to maintain confidentiality as set forth in
the preceding paragraph shall carry a penalty of NLG 10,000, immediately payable
by the Employee to the Employer and without prejudice to any other claims which
the Employer may have, including the right to full damages.
|
8. |
Insofar as the rights specified hereinafter are not vested in the Employer by |
|
9. |
The foregoing provisions on this Exhibit A shall be governed by the laws of |
EXHIBIT B
CISCO SYSTEMS, INC.
INTERNATIONAL ASSIGNMENT TAX EQUALIZATION POLICY
AGREEMENT
I acknowledge having read the Tax Equalization Policy of Cisco Systems, Inc.
(“Cisco”), located at
http://wwwin.cisco.com/FinAdm/Tax/StockOptions/stock_faq.shtml, and
understand the personal impact of the Policy. Any questions concerning this
Policy with Cisco have been fully explained to my satisfaction. I accept that
all interpretations under this agreement shall be controlled by the Policy of
Cisco, which is included as part of this agreement. Cisco shall have the right
and privilege at any time it deems necessary and proper to amend, add, or delete
provisions to and from this Policy without prior notice.
I understand and agree that all tax positions affecting income, deductions
and credits outside the scope of the Policy (i.e., amounts not covered by the
Policy) are the responsibility of the employee. Cisco is not liable for any
taxes, penalties, or interest resulting from a successful challenge by any tax
authority of any item not covered by the Policy.
In addition, I understand the employee is fully responsible for all penalties
and interest charges assessed by any tax authority due to the employee153s failure
to (1) provide information to Ernst & Young on a timely basis, (2) notify
Ernst & Young of any significant personal income or investment transactions,
or (3) cooperate with Cisco with respect to the tax equalization process.
I understand and agree that Cisco will reduce my compensation by an estimated
hypothetical tax. The estimated hypothetical tax is an amount which approximates
my periodic estimated tax deductions calculated with reference to compensation,
benefits, deductions and credits otherwise available to me had I remained in my
home country, except as otherwise provided in this Policy. In return, Cisco will
advance wages that I have not yet earned to assist with the payment of my actual
home and host country tax liabilities within the limits prescribed by the
Policy.
I understand that these wage advances provided by Cisco for payment of taxes
constitutes an obligation by me to Cisco, which will be reconciled with the
final liabilities that are Cisco153s responsibility through the annual tax
equalization settlement calculation. After completion of the tax equalization
settlement statement for each taxable year, I agree to repay any obligation for
each taxable year within thirty (30) days. If I fail to repay any obligation to
Cisco within thirty (30) days after completion of the tax equalization
settlement statement, then, unless Cisco and I have agreed otherwise in writing,
Cisco shall have the right to:
|
a) |
reduce any foreign assignment allowances or reimbursements due to me, and/or |
|
b) |
reduce future amounts paid to me whether as wages, salary or other |
The total obligation will become immediately due and payable if my employment
with Cisco or any of its affiliate corporations is terminated, whether
voluntarily or involuntarily.
If I fail to furnish tax records in response to a request by Cisco pursuant
to the Policy, or cease employment with Cisco or any of its subsidiaries for any
reason before the tax records needed to complete the year-end tax equalization
settlement statement under the Policy are available, then Cisco shall have the
right to calculate such amounts by making reasonable assumptions of probable
taxes. If an amount is owed to Cisco, Cisco shall also have the right to require
immediate payment of such amount, including the right to reduce future amounts
paid to me whether as wages, salary or other compensation for services performed
in light of my having received wage advances that I have not yet earned, unless
Cisco and I have agreed otherwise in writing.
Stay Up-to-Date With How the Law Affects Your Life
