EXHIBIT 10.11
GADZOOX NETWORKS, INC.
SEVERANCE AGREEMENT AND RELEASE
RECITALS
This Severance Agreement and Release ("Agreement") is made by and
between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Employee") and Gadzoox Networks, Inc., a Delaware
corporation, ("Company") (collectively referred to as the "Parties"):
WHEREAS, Employee was employed by the Company;
WHEREAS, the Company and Employee entered into a Confidential
Information and Invention Assignment Agreement in January 2000 (the
"Confidentiality Agreement");
WHEREAS, the Company and Employee entered into an Employment, Change of
Control and Severance Agreement, dated effective as of September 1, 2000 (the
"Employment Agreement");
WHEREAS, the Company and Employee have entered into ten Stock Option
Agreements, dated January 19, 2000, May 25, 2000, July 14, 2000, October 27,
2000, May 1, 2001, December 19, 2001 (three separate grants) and May 7, 2002
(two separate grants), respectively, granting Employee the option to purchase
shares of the Company's common stock subject to the terms and conditions of the
Company's Amended and Restated 1993 Stock Plan and 2000 Non-Statutory Stock Plan
(the "Stock Agreements");
WHEREAS, Employee resigned from his position as President and Chief
Executive Officer of the Company and as a member of the Board of Directors of
the Company, thereby terminating his employment with the Company, effective May
30, 2002 (the "Termination Date");
WHEREAS, the Parties, and each of them, wish to resolve any and all
disputes, claims, complaints, grievances, charges, actions, petitions and
demands that the Employee may have against the Company as defined herein,
including, but not limited to, any and all claims arising or in any way related
to Employee's employment with, or separation from, the Company;
NOW THEREFORE, in consideration of the promises made herein, the Parties
hereby agree as follows:
COVENANTS
1. Consideration.
(a) Severance Payments. The Company agrees to pay Employee at the
rate of $29,166.67 per month, less applicable withholding and other taxes, for
12 months from the first regular payroll date following the Effective Date (the
"Payment Period") in accordance with the Company's regular payroll practices.
During the Payment Period, Employee will not be entitled to
accrual of any employee benefits, including, but not limited to, vacation
benefits, paid time off or bonuses.
(b) Unemployment Benefits. Subsequent to the Payment Period, the
Company will not contest unemployment benefits.
(c) Stock. The Parties agree that for purposes of determining the
number of shares of the Company's common stock which Employee is entitled to
purchase from the Company, pursuant to the exercise of outstanding options, the
Employee will be considered to have vested on the Termination Date as to that
number of shares as would otherwise have been vested on the 12-month anniversary
of the Termination Date. A schedule of such vested options, after giving effect
to the 12 month vesting acceleration contemplated by the previous sentence, is
attached hereto as Exhibit A and each of the Parties represents that the
information on such schedule is accurate. The exercise of any stock options
shall continue to be subject to the terms and conditions of the applicable Stock
Agreements.
(d) Benefits. Employee's health insurance benefits will cease at the
end of May 2000, subject to Employee's right to continue his health insurance
under COBRA during the Payment Period. Should Employee so elect coverage, the
Company shall pay Employee's COBRA premiums required to continue health care
coverage during the Payment Period. However, any obligation of the Company to
make payments pursuant to this paragraph shall cease upon the date that Employee
commences full time employment with a third party, provided said third party has
comparable medical benefits. Employee's participation in all other benefits and
incidents of employment ceased on the Termination Date. Employee ceased accruing
employee benefits, including, but not limited to, vacation time and paid time
off, as of the Termination Date.
(e) Laptop, Cell Phone, and Voicemail. The Company hereby transfers
all right, title and interest in and to the laptop and cell phone used by
Employee while at the Company. Employee's voicemail extension at the Company
shall remain active for an additional 30 days after the Termination Date.
2. Confidential Information. Employee shall continue to maintain the
confidentiality of all confidential and proprietary information of the Company
and shall continue to comply with the terms and conditions of the
Confidentiality Agreement between Employee and the Company. Employee shall
return all of the Company's property and confidential and proprietary
information in his possession to the Company on the Effective Date of this
Agreement.
3. Payment of Salary. Contemporaneously with the execution and delivery
of this Agreement, the Company is delivering and Employee hereby acknowledges
receipt of a check in the amount of $51,730.66, and, giving effect to the
receipt of such check, Employee hereby acknowledges and represents that the
Company has paid all salary, wages, bonuses, accrued vacation, commissions and
any and all other benefits due to Employee, other than the above noted payments
and benefits that may become due in the future under Sections 1(a) and 1(d)
above.
4. Release of Claims. Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company and its officers, managers, supervisors, agents and employees.
Employee, on his own behalf, and on behalf of his
-2-
respective heirs, family members, executors, agents, and assigns, hereby fully
and forever releases the Company and its officers, directors, employees, agents,
investors, shareholders, administrators, affiliates, divisions, subsidiaries,
predecessor and successor corporations, and assigns, from, and agree not to ▇▇▇
concerning, any claim, duty, obligation or cause of action relating to any
matters of any kind, whether presently known or unknown, suspected or
unsuspected, that Employee may possess arising from any omissions, acts or facts
that have occurred up until and including the Effective Date of this Agreement
including, without limitation:
(a) any and all claims relating to or arising from Employee's
employment relationship with the Company and the termination of that
relationship;
(b) any and all claims relating to, or arising from, Employee's right
to purchase, or actual purchase of shares of stock of the Company, including,
without limitation, any claims for fraud, misrepresentation, breach of fiduciary
duty, breach of duty under applicable state corporate law, and securities fraud
under any state or federal law;
(c) any and all claims under the law of any jurisdiction including,
but not limited to, wrongful discharge of employment; constructive discharge
from employment; termination in violation of public policy; discrimination;
breach of contract, both express and implied; breach of a covenant of good faith
and fair dealing, both express and implied; promissory estoppel; negligent or
intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; unfair business practices; defamation; libel;
slander; negligence; personal injury; assault; battery; invasion of privacy;
false imprisonment; and conversion;
(d) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor
Standards Act, the Employee Retirement Income Security Act of 1974, The Worker
Adjustment and Retraining Notification Act, Older Workers Benefit Protection
Act; the California Fair Employment and Housing Act, and the California Labor
Code;
(e) any and all claims for violation of the federal, or any state,
constitution;
(f) any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination;
(g) any claim for any loss, cost, damage, or expense arising out of
any dispute over the non-withholding or other tax treatment of any of the
proceeds received by Employee as a result of this Agreement; and
(h) any and all claims for attorneys' fees and costs.
The Company and Employee agree that the release set forth in this
section shall be and remain in effect in all respects as a complete general
release as to the matters released. This release does not extend to any
obligations incurred under this Agreement.
-3-
Employee acknowledges and agrees that any breach of any provision of
this Agreement shall constitute a material breach of this Agreement and shall
entitle the Company immediately to recover and cease the severance benefits
provided to Employee under this Agreement.
5. Acknowledgement of Waiver of Claims Under ADEA. Employee acknowledges
that he is waiving and releasing any rights he may have under the Age
Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Employee and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
ADEA after the Effective Date of this Agreement. Employee acknowledges that the
consideration given for this waiver and release Agreement is in addition to
anything of value to which Employee was already entitled. Employee further
acknowledges that he has been advised by this writing that
(a) he should consult with an attorney prior to executing this
Agreement;
(b) he has up to 21 days within which to consider this Agreement;
(c) he has seven (7) days following his execution of this Agreement
to revoke this Agreement;
(d) this Agreement shall not be effective until the revocation period
has expired; and,
(e) nothing in this Agreement prevents or precludes Employee from
challenging or seeking a determination in good faith of the validity of this
waiver under the ADEA, nor does it impose any condition precedent, penalties or
costs for doing so, unless specifically authorized by federal law.
6. Civil Code Section 1542. The Parties represent that they are not
aware of any claim by either of them other than the claims that are released by
this Agreement. Employee acknowledges that he had the opportunity to seek the
advice of legal counsel and is familiar with the provisions of California Civil
Code Section 1542, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
Employee, being aware of said code section, agrees to expressly waive
any rights he may have thereunder, as well as under any other statute or common
law principles of similar effect.
7. Indemnification. Sections 4 and 6 above notwithstanding, Employee
shall continue to be entitled to indemnification, in accordance with the
applicable provisions of the Company's articles of incorporation and bylaws, his
indemnification agreement with the Company.
8. No Pending or Future Lawsuits. Each Party represents to the other
that he or it has no lawsuits, claims, or actions pending in his or its name, or
on behalf of any other person or entity,
-4-
against the other Party or any other person or entity referred to herein. Each
Party also represents to the other that as of the Effective Date, he or it does
not have any knowledge of any basis for, and does not intend to bring any claims
on his or its behalf or on behalf of any other person or entity against the
other Party or any other person or entity referred to herein.
9. Application for Employment. Employee understands and agrees that, as
a condition of this Agreement, he shall not be entitled to any employment with
the Company, its subsidiaries, or any successor, and he hereby waives any right,
or alleged right, of employment or re-employment with the Company, its
subsidiaries or related companies, or any successor.
10. Confidentiality. Except as otherwise required by law or regulation
(which for purposes of the Company shall include the rules and regulations of
The Nasdaq National Market or Nasdaq SmallCap Market), the Parties hereto each
agrees (a) to use his or its best efforts to maintain in confidence: (i) the
contents and terms of this Agreement, (ii) the consideration for this Agreement,
and (iii) any allegations relating to the Company or its officers or employees
with respect to Employee's employment with the Company, except as otherwise
provided for in this Agreement (hereinafter collectively referred to as
"Settlement Information"), (b) to take every reasonable precaution to prevent
disclosure of any Settlement Information to third parties, and agrees that there
will be no publicity, directly or indirectly, concerning any Settlement
Information; and (c) to take every precaution to disclose Settlement Information
only to those attorneys, accountants, governmental entities, and family members
who have a reasonable need to know of such Settlement Information. The Parties
each agrees that if it proves that the other Party breached this Confidentiality
provision, it shall be entitled to an award of its costs spent enforcing this
provision, including all reasonable attorneys' fees associated with the
enforcement action, without regard to whether that Party can establish actual
damages from the breach by the other Party.
11. No Cooperation. Employee agrees that he will not counsel or assist
any attorneys or their clients in the presentation or prosecution of any
disputes, differences, grievances, claims, charges, or complaints by any third
party against the Company and/or any officer, director, employee, agent,
representative, shareholder or attorney of the Company, unless under a subpoena
or other court order to do so. Employee further agrees both to immediately
notify the Company upon receipt of any court order, subpoena, or any legal
discovery device that seeks or might require the disclosure or production of the
existence or terms of this Agreement, and to furnish, within three (3) business
days of its receipt, a copy of such subpoena or legal discovery device to the
Company.
12. Non-Disparagement. Each Party agrees to refrain from any defamation,
libel or slander of the other Party or tortious interference with the contracts
and relationships of the other Party. All inquiries by potential future
employers of Employee will be directed to the Vice President, Human Resources.
Upon inquiry, the Company's Vice President, Human Resources shall only state the
following: Employee's last position, dates of employment, and that he resigned
13. Non-Solicitation. Employee agrees that for a period of 12 months
immediately following the Effective Date of this Agreement, Employee shall not
either directly or indirectly solicit, induce, recruit or encourage any of the
Company's employees to leave their employment, or attempt to solicit, induce,
recruit or encourage employees of the Company to leave their employment, either
for himself or any other person or entity.
-5-
14. No Admission of Liability. The Parties understand and acknowledge
that this Agreement constitutes a compromise and settlement of disputed claims.
No action taken by the Parties hereto, or either of them, either previously or
in connection with this Agreement shall be deemed or construed to be: (a) an
admission of the truth or falsity of any claims heretofore made or (b) an
acknowledgment or admission by either party of any fault or liability whatsoever
to the other party or to any third party.
15. No Knowledge of Wrongdoing . Employee represents that he has no
knowledge of any wrongdoing involving improper or false claims against a federal
or state governmental agency, or of any acts of illegal conduct that involves
Employee or other present or former Company employees.
16. Costs. The Parties shall each bear their own costs, expert fees,
attorneys' fees and other fees incurred in connection with this Agreement.
17. Indemnification. Employee agreed to indemnify and hold harmless the
Company from and against any and all loss, costs, damages or expenses,
including, without limitation, attorneys' fees or expenses incurred by the
Company arising out of the breach of this Agreement by Employee, or from any
false representation made herein by Employee, or from any action or proceeding
which may be commenced, prosecuted or threatened by Employee or for Employee's
benefit, upon Employee's initiative, or with Employee's aid or approval,
contrary to the provisions of this Agreement. Employee further agrees that in
any such action or proceeding, this Agreement may be pled by the Company as a
complete defense, or may be asserted by way of counterclaim or cross-claim.
18. Arbitration. The Parties agree that any and all disputes arising out
of, or relating to, the terms of this Agreement, their interpretation, and any
of the matters herein released, shall be subject to binding arbitration in Santa
▇▇▇▇▇ County before the American Arbitration Association under its National
Rules for the Resolution of Employment Disputes. The Parties agree that the
prevailing party in any arbitration shall be entitled to injunctive relief in
any court of competent jurisdiction to enforce the arbitration award. The
Parties agree that the prevailing party in any arbitration shall be awarded its
reasonable attorneys' fees and costs. The Parties hereby agree to waive their
right to have any dispute between them resolved in a court of law by a judge or
jury. This section will not prevent either party from seeking injunctive relief
(or any other provisional remedy) from any court having jurisdiction over the
Parties and the subject matter of their dispute relating to Employee's
obligations under this Agreement and the agreements incorporated herein by
reference.
19. Authority. The Company represents and warrants that the undersigned
has the authority to act on behalf of the Company and to bind the Company and
all who may claim through it to the terms and conditions of this Agreement.
Employee represents and warrants that he has the capacity to act on his own
behalf and on behalf of all who might claim through him to bind them to the
terms and conditions of this Agreement. Each party warrants and represents that
there are no liens or claims of lien or assignments in law or equity or
otherwise of or against any of the claims or causes of action released herein.
-6-
20. No Representations. Each party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.
21. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision so long as the remaining provisions remain intelligible and continue
to reflect the original intent of the Parties.
22. Entire Agreement. This Agreement represents the entire agreement and
understanding between the Company and Employee concerning the subject matter of
this Agreement and Employee's relationship with the Company, and supersedes and
replaces any and all prior agreements and understandings between the Parties
concerning the subject matter of this Agreement and Employee's relationship with
the Company (including, but not limited to, the Employment Agreement), with the
exception of the Confidentiality Agreement, the Stock Agreements and Employee's
indemnification agreement with the Company.
23. No Waiver. The failure of any party to insist upon the performance
of any of the terms and conditions in this Agreement, or the failure to
prosecute any breach of any of the terms and conditions of this Agreement, shall
not be construed thereafter as a waiver of any such terms or conditions. This
entire Agreement shall remain in full force and effect as if no such forbearance
or failure of performance had occurred.
24. No Oral Modification. Any modification or amendment of this
Agreement, or additional obligation assumed by either party in connection with
this Agreement, shall be effective only if placed in writing and signed by both
Parties or by authorized representatives of each party.
25. Governing Law. This Agreement shall be deemed to have been executed
and delivered within the State of California, and it shall be construed,
interpreted, governed, and enforced in accordance with the laws of the State of
California, without regard to conflict of law principles. To the extent that
either party seeks injunctive relief in any court having jurisdiction for any
claim relating to the alleged misuse or misappropriation of trade secrets or
confidential or proprietary information, each party hereby consents to personal
and exclusive jurisdiction and venue in the state and federal courts of the
State of California.
26. Attorneys' Fees In the event that either Party brings an action to
enforce or effect its rights under this Agreement, the prevailing party shall be
entitled to recover its costs and expenses, including the costs of mediation,
arbitration, litigation, court fees, plus reasonable attorneys' fees, incurred
in connection with such an action.
27. Effective Date. This Agreement is effective after it has been signed
by both parties and after eight (8) days have passed since Employee has signed
the Agreement (the "Effective Date"), unless revoked by Employee within seven
(7) days after the date the Agreement was signed by Employee.
-7-
28. Counterparts. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.
29. Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:
(a) They have read this Agreement;
(b) They have been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of their own choice or that they
have voluntarily declined to seek such counsel;
(c) They understand the terms and consequences of this Agreement and
of the releases it contains; and
(d) They are fully aware of the legal and binding effect of this
Agreement.
*****
-8-
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.
GADZOOX NETWORKS, INC.
Dated: May , 2002 By
---- -------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Vice President and
Chief Financial Officer
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual
Dated: May , 2002
---- ----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
EXHIBIT A
VESTED OPTION SCHEDULE
TOTAL SHARES
GRANT DATE PLAN TYPE SHARES GRANTED PRICE VESTED
---------- -------- -------- -------------- -------- ------------
1/19/00 1993 ISO 9,520 $ 42.00 5,751
1/19/00 1993 NQ 120,480 $ 42.00 102,581
5/25/00 1993 ISO 4,237 $ 23.625 4,235
5/25/00 1993 NQ 60,763 $ 23.625 44,514
7/14/00 1993 NQ 65,000 $11.8125 46,042
10/27/00 1993 ISO 13 $ 4.125 8
10/27/00 1993 NQ 499,987 $ 4.125 322,908
5/1/01 1993 ISO 56,826 $ 1.76 5
5/1/01 1993 NQ 693,174 $ 1.76 374,995
12/17/01 2000 NQ NQ 400,000 $ 0.25 400,000
12/17/01 1993 ISO 344,000 $ 0.63 344,000
12/17/01 2000 NQ NQ 56,000 $ 0.63 56,000
5/7/02 1993 ISO 160,000 $ 0.25 160,000
5/7/02 2000 NQ NQ 640,000 $ 0.25 640,000
TOTAL 3,110,000 TOTAL 2,501,039