Exhibit 10.10
SEVERANCE AGREEMENT
AND MUTUAL RELEASE OF ALL CLAIMS
This Severance Agreement and Mutual Release of All Claims ("Agreement")
is made this 8th day of June, 1998 by and between ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ("NHK")
and Catapult Communications Corporation, a California corporation,
("Company"). The "Effective Date" of this Agreement shall be June 15th,
1998.
WITNESSETH:
WHEREAS, during the period 1985 to December 1997, NHK performed various
valuable services to the Company in the areas of human resources, business
planning, accounting management, bookkeeping, office manager, facilities
management, customer relations in support of sales/marketing, corporate
communications/operations, corporate secretary and director (the collective
valuable services referenced hereinabove shall hereinafter be referred to as
the "Services").
WHEREAS, NHK and the Company desire to settle fully and finally all
differences between them, including, but in no way limited to, those
differences related to NHK's claim that she is owed past due bonus and
compensation for all Services performed by her during the period 1985 to 1997
and that she had an implied in fact employment contract that guaranteed her
continued employment with the Company absent a good cause termination;
WHEREAS, the Company expects shortly to change its state of
incorporation from California to Nevada by merging into a wholly-owned
subsidiary incorporated in Nevada ("Catapult Nevada") and this Agreement is
intended to apply equally to such successor corporation;
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained and other good and valuable consideration, receipt of which
is hereby acknowledged, it is hereby agreed by and among the parties as
follows:
1. OBLIGATIONS OF THE COMPANY
The parties agree that references in this Agreement to the Company shall
include Catapult Nevada to the extent necessary to bind Catapult Nevada to
perform the obligations of the Company under this Agreement and to give
Catapult Nevada the full benefit of NHK's obligations and agreements under
this Agreement.
(a) SEVERANCE COMPENSATION: The Company agrees to make a general
severance payment to NHK in a lump sum of eighty thousand dollars
($80,000) (subject to withholding) in return for the general
release and waiver of claims contained in paragraph 3 below;
1
(b) The Company agrees to pay to NHK, without deduction, a one time
fee of seven thousand five hundred dollars ($7,500) as an expense
reimbursement to defer any costs incurred by NHK in retaining a
career counseling and employment transition consulting firm;
(c) Upon authorization and instruction from NHK, the Company will pay
a portion of NHK's attorneys fees, in the amount of $10,000,
directly to Flicker & ▇▇▇▇▇, LLP;
(d) All payments set forth in paragraph 2(a) through 2(c) inclusive
shall be due and payable by the Company to NHK on the Effective
Date of this Agreement;
(e) The Company will reimburse NHK up to five hundred dollars $500 per
month (or the actual cost, whichever is less) for the cost of
converting her medical, dental and life insurance to an individual
coverage plan. Said health insurance and life insurance premium
reimbursements shall be paid for a period of one year from the
Effective Date of this Agreement.
(f) The Company agrees to permit NHK to include her shares among the
shares to be sold by selling shareholders in any initial public
offering ("IPO") initiated by the Company to the extent of (i) 75%
of the maximum amount allocated to NHK and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, (ii)
an additional 38,000 shares (pre-split) to be received by NHK from
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ pursuant to the terms of NHK and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇'▇
Partial Marital Settlement Agreement executed concurrently
herewith and (iii) the entire amount of any shares sold pursuant
to an exercise of the underwriters' over-allotment option. NHK
agrees to sell the foregoing shares in the IPO to the extent
permitted by the underwriters.
(g) The Company further agrees that if the IPO is not completed by
December 31st, 1998, it will commence a program of repurchasing
NHK's shares at the rate of up to 50,000 shares per annum, in
quarterly installments of up to 12,500 shares, beginning on March
31st, 1999 and continuing for each calendar quarter thereafter
until the earlier of (i) the death of NHK or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
(ii) NHK receives a cumulative five million dollars ($5,000,000)
(pre-tax) from sales of her stock, (iii) NHK remarries, (iv) the
Company's IPO, (v) the Company is acquired or (vi) twelve (12)
years have elapsed from March 31st, 1999.
The repurchase price will be the fair market value of the Common
Stock as determined in good faith by the Board of Directors at
least on an annual basis. Repurchase will be effected on the last
day of each fiscal quarter provided NHK gives notice to the
Company not less than ten (10) days before each such date that she
elects to sell her shares on that date. The
2
Company will not be obligated to repurchase shares on any date
except to the extent that (i) the repurchase may be made in
compliance with applicable California and Nevada statutes
governing distributions to shareholders and (ii) the amount to be
paid will not exceed thirty percent (30%) of the difference
between (a) the Company's cash and cash equivalents, short-term
investments and accounts receivable (net of allowance for doubtful
accounts) and (b) current liabilities excluding deferred revenue,
all as set forth on the Company's balance sheet at the end of the
prior fiscal quarter immediately preceding the quarter for which
the repurchase is being effected.
2. (a) NHK agrees that the foregoing payments shall constitute the entire
amount of monetary consideration provided to her under this Agreement
and that she will not seek any further compensation for any other
claimed damage, costs, or attorney's fees in connection with the matters
encompassed in this Agreement. NHK further expressly agrees in light of
the payment (as set forth in paragraph l(a)) by the Company to NHK that
all wages, bonuses, accrued vacation, commissions and any and all other
benefits due her of any kind have been paid and that California Labor
Code Section 206.5 is not applicable to her and the Company.
California Labor Code Section 206.5 provides as follows:
NO EMPLOYER SHALL REQUIRE THE EXECUTION OF ANY RELEASE OF ANY
CLAIM OR RIGHT ON ACCOUNT OF WAGES DUE, OR TO BECOME DUE, OR MADE
AS AN ADVANCE ON WAGES TO BE EARNED, UNLESS PAYMENT OF SUCH WAGES
HAS BEEN MADE. ANY RELEASE REQUIRED OR EXECUTED IN VIOLATION OF
THE PROVISIONS OF THIS SECTION SHALL BE NULL AND VOID AS BETWEEN
THE EMPLOYER AND THE EMPLOYEE AND THE VIOLATION OF THE PROVISIONS
OF THIS SECTION SHALL BE A MISDEMEANOR.
(b) NHK acknowledges and agrees that the Company has made no
representations to her regarding the tax consequences of any
amounts received by her pursuant to this Agreement. NHK agrees to
pay federal or state taxes, if any, which are required by law to
be paid by her with respect to this settlement. NHK further agrees
to indemnify and hold the Company harmless from any claims,
demands, deficiencies, levies, assessments, executions, judgments
or recoveries by any governmental entity against the Company on
account of any failure to pay any tax required to be paid for any
amounts claimed due on account of this Agreement or pursuant to
claims made under any federal or state tax laws sustained by the
Company by reason of any such claims, including any amounts paid
as taxes, attorney's fees, deficiencies, levies, assessments,
fines, penalties, or interest. Notwithstanding the foregoing, the
Company
3
shall be responsible for paying any amounts due with respect to
the employer's liability for social security.
3. GENERAL RELEASE AND WAIVER OF CLAIN4S
a. RELEASED CLAIMS. For value received, the adequacy and sufficiency
of which is hereby acknowledged, each of NHK and the Company, on behalf
of themselves and their respective officers, directors, supervisors,
agents, representatives, employees, executors, attorneys,
administrators, successors in interest and assigns, fully release and
discharge the other, including their predecessors, successors, assigns,
shareholders, affiliates, partners, officers, directors, supervisors,
employees, agents, underwriters and attorneys, past and present, and
each of them, from:
(i) any and all CLAIMS, liens, demands, causes of action,
obligations, damages and liabilities of any nature whatsoever,
known or unknown, that each has had in the past or now has or may
have in the future against the other, or any other persons or
entities, arising directly or indirectly out of, or related in any
way to the Services performed by NHK, NHK's employment with the
Company or related in any way to NHK's status, duties or actions as
an officer, director, employee and/or shareholder of the Company
from approximately 1985 to June 8th, 1998. It is the intent of the
undersigned to release each other to the fullest extent possible as
to all Claims.
The undersigned agree and understand that the word "CLAIMS" shall
include, without limitation, any claims related to any wrongful discharge
claims, any claims based on contracts of employment, express or implied, any
covenant of good faith and fair dealing, express or implied, any tort of any
nature, sexual harassment claims, breach of fiduciary duty claims, claims of
interference with prospective economic advantage, lost earnings and benefits
claims, defamation claims, punitive damages claims, claims for intentional or
negligent infliction of emotional distress, negligence claims, any claims or
actions based upon any federal, state or local laws, statutes or ordinances,
including but not limited to any claims arising under the Fair Employment and
Housing Act (Ca. Govt. Code Sections 12900 et seq., the Age Discrimination in
Employment Act of 1967 (29 U.S.C. Sections 129 et seq.), the 1991 Civil
Rights Act, the Americans with Disabilities Act, the California Health and
Safety Code, the California Constitution and the ▇▇▇▇▇ Civil Rights Act,
California Workers' Compensation laws, and all other statutes, regulations,
ordinances or case law relating to employment, shareholders, officers or
directors in any way whatsoever.
All such "CLAIMS" (including related attorney's fees and costs) are
forever barred by this Agreement.
4
(ii) Any and all other claims, liens, demands, causes of action,
obligations, damages and liabilities of any nature whatsoever,
known or unknown, that each has had in the past or now has against
the other, whether related or unrelated to the above-referenced
CLAIMS. Both NHK on the one hand and the Company on the other hand
expressly understand and acknowledge that it is possible that
unknown losses or claims exist or that present losses may have been
underestimated in amount or severity, and both parties hereto
explicitly took into account in agreeing to execute this Agreement
and the covenants contained herein, having been bargained for
between the parties with the knowledge of the possibility of such
unknown claims, were given in exchange for a full accord,
satisfaction and discharge of all such claims. Consequently, NHK on
the one hand and the Company on the other hand each knowingly waive
all rights under Section 1542 of the Civil Code of the State of
California, 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.
b. RELEASE EXCLUSIVE OF OBLIGATIONS UNDER THIS AGREEMENT.
Notwithstanding the above, the Parties expressly agree that this release
does not extend to the legal obligations created by this Agreement, the
Consulting and Non-Competition Agreement dated June 8th, 1998, the
Catapult Communications Corporation Voting Trust Agreement dated June
8th, 1998 and the Partial Marital Settlement Agreement dated June 8th,
1998 (collectively referred to as the "Other Agreements") and shall not
constitute a defense to any action to enforce such obligations.
4. DENIAL AND COMPROMISE OF CLAIMS. It is understood and agreed that this
Agreement is a compromise of disputed claims and that the liability for
any Claims is denied by the parties herein released. This Agreement is
not intended to nor will it be alleged to constitute evidence or be an
admission by any party of any liability, omission or wrongdoing of any
kind whatever, nor shall this Agreement be offered or received into
evidence or otherwise filed or lodged in any proceeding against any
party hereto, except as may be necessary to prove the terms of the
Agreement or to enforce the same.
5. NHK represents she has not filed any complaints, claims, or actions
against the Company, its officers, agents, directors, supervisors,
employees, or representatives with any state, federal, or local agency
or court, and that she will not do so at any time hereafter.
5
6. Each Party hereto agrees that she/it will keep the facts, terms, and
amount of this Agreement completely confidential and that each Party
will not hereafter disclose any information concerning this Agreement to
anyone except their spouse, professional advisors and attorneys,
provided that any Party hereto may make such disclosures as are required
by law and as are necessary for legitimate law enforcement or compliance
purposes. The parties acknowledge that the material terms of this
Agreement will be disclosed by the Company in a registration statement
to be filed under the Securities Act of 1933 and that a copy of this
Agreement will be publicly filed with the Securities and Exchange
Commission.
7. NHK understands and agrees that she:
(a) Has been given the opportunity to have a full twenty-one (21)
days within which to consider this Agreement before executing it
but may choose to waive the right to take the full twenty-one (21)
days and in fact has knowingly waived her opportunity to have a
full twenty-one (21) days to consider this Agreement.
(b) Has carefully read and fully understands all of the provisions of
this Agreement.
(c) Knowingly and voluntarily agrees to all of the terms set forth in
this Agreement.
(d) Knowingly and voluntarily intends to be legally bound by the same.
(e) Was advised and hereby is advised in writing to consider the terms
of this Agreement and consult with her attorney of record prior to
executing this Agreement.
(f) Acknowledges and warrants to the Company that she has a full seven
(7) days following her execution of this Agreement on June 8th,
1998 to revoke this Agreement and has been and is hereby advised
in writing that this Agreement shall not become effective or
enforceable until the revocation period has expired, which is June
15th, 1998.
(g) INTEGRATION. This Agreement and the Other Agreements,
collectively, sets forth the entire agreement between the parties
and supersedes any and all prior agreements or understandings,
written or oral, between the parties pertaining to the subject
matter of this Agreement and/or the Other Agreements. The Parties
agree that except as expressly set forth herein, neither Party has
made any representation or promise to the other that was material
to the decision to enter into this Agreement or the Other
Agreements, or upon which the other Party relied in any way.
6
(h) NON-ASSIGNMENT OF CLAIMS. Each Party represents that it has not
assigned any claim relating to NHK's employment with the Company
to any third party.
8. COVENANT NOT TO ▇▇▇. As of the effective date of this Agreement, the
Parties each covenant and agree not to assert in any procedural form or
forum, whether initially or by way of defense, offset, cross-, counter-
or third-party claim, any Released Claim against any person or entity
then entitled to a release hereunder. The Parties shall indemnify,
defend and hold harmless every person and entity then entitled to a
release hereunder from and against any and all claims resulting from its
own actual or alleged breach of this covenant not to ▇▇▇.
9. CONSULTATION WITH COUNSEL. Each Party represents and acknowledges that
it has discussed this Agreement with its counsel, and has read carefully
and fully understands the provisions of this Agreement.
10. ATTORNEYS' FEES. Each Party will bear its own attorneys' fees and costs
except as otherwise provided for in this Agreement.
11. INTERPRETATION OF AGREEMENT. This Agreement shall be construed without
regard to the drafter of same and shall be construed as though both
Parties participated equally in the drafting of the Agreement.
12. AMENDMENTS. This Agreement may be modified or amended only by a writing
signed by the Party to be charged.
13. WAIVER OF BREACH. The waiver by one Party of any breach of this
Agreement by the other Party shall not be deemed a waiver of any prior
or subsequent breach of this Agreement.
14. RELIEF FOR VIOLATION. The Parties agree that if, at any time, a
violation of any term of this Agreement is asserted by any Party hereto,
that Party shall have the right to seek specific performance of that
term and/or any other necessary and proper relief, including but not
limited to damages, from any court of competent jurisdiction, and the
prevailing party shall be entitled to recover its reasonable costs and
attorney's fees.
15. SEVERABILITY. Should any provision of this Agreement be declared or be
determined by any court of competent jurisdiction to be wholly or
partially illegal, invalid, or unenforceable, the legality, validity,
and enforceability of the remaining parts, terms, or provisions shall
not be affected thereby, and said illegal, unenforceable, or invalid
part, term, or provision shall be deemed not to be a part of this
Agreement.
7
16. AUTHORIZATION. Each person or entity signing this Agreement represents
and warrants that he or she is duly authorized and has legal capacity to
execute and deliver this Agreement. Each Party represents and warrants
to the other that the execution and delivery of the Agreement and the
performance of such party's obligations hereunder have been duly
authorized and that the Agreement is a valid and legal Agreement binding
on such Party and enforceable in accordance with its terms.
17. EXECUTION IN COUNTERPARTS AND BY FACSIMILE. This Agreement may be
executed in counterparts. Executed signature pages exchanged by
facsimile transmission shall have the same force and effect as the
original executed signature pages.
18. CHOICE OF LAW AND EXCLUSIVE VENUE. The interpretation or performance of
this Agreement shall be construed and enforced in accordance with the
laws of the State of California. The parties hereto agree that all
actions or proceedings arising in connection with this Agreement shall
be tried and litigated exclusively in the State and Federal courts
located in the County of Santa ▇▇▇▇▇, State of California. The
aforementioned choice of venue is intended by the parties to be
mandatory and not permissive in nature, thereby precluding the
possibility of litigation between the parties with respect to or
arising out of this Agreement in any jurisdiction other than that
specified in this paragraph. Each party hereby waives any right it may
have to assert the doctrine of forum non conveniens or similar doctrine
or to object to venue with respect to any proceeding brought in
accordance with this paragraph, and stipulates that the State and
Federal courts located in the County of Santa ▇▇▇▇▇, State of California
shall have in personam jurisdiction and venue over each of them for the
purpose of litigating any dispute, controversy, or proceeding arising
out of or related to this Agreement. Each party hereby authorizes and
accepts service of process sufficient for personal jurisdiction in any
action against it as contemplated by this paragraph by registered or
certified mail, return receipt requested, postage prepaid, to its
address for the giving of notices as set forth in this Agreement. Any
final judgment rendered against a party in any action or proceeding
shall be conclusive as to the subject of such final judgment and may be
enforced in other jurisdictions in any manner provided by law.
WHEREFORE, the undersigned have executed this Agreement on the date and
year first written above.
/s/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
CATAPULT COMMUNICATIONS CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------
Title: President
8