Sample Business Contracts

Severance Agreement - Clarent Corp. and Peter Bohacek

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July 30, 2001

Mr. Peter Bohacek
c/o Clarent Corporation
700 Chesapeake Drive
Redwood City, CA  94063

Dear Peter:

I am pleased that we have been able to work out a mutually beneficial
transition. This letter sets forth the substance of the separation and
consulting agreement (the "Agreement") to which you and Clarent Corporation (the
"Company") have agreed.

       1. SEPARATION DATE. Your employment with the Company will terminate
effective July 31, 2001 (the "Separation Date").

       2. ACCRUED SALARY AND VACATION. On the Separation Date, the Company will
pay you all accrued and unpaid salary, and all accrued and unused vacation,
earned through the Separation Date, less standard payroll deductions and
withholdings. You are entitled to these payments regardless of whether you sign
this Agreement.

       3. COMMISSIONS. As part of this Agreement, the Company will pay you
"zero" dollars ($0.00), less standard payroll deductions and withholdings, in
satisfaction of any and all commissions due to you. You will not be entitled to
receive any other commissions after the Separation Date.

       4. BONUS. You will not be eligible to receive any bonus for the year 2001
or thereafter.

       5. SEVERANCE PAYMENT. In exchange for the release of claims and
Supplemental Release described in paragraphs 15 and 17 below, the Company will
make severance payments to you in an amount equal to the continuation of your
base salary as of the Separation Date for twelve (12) months following the
Separation Date, less standard payroll deductions and withholdings. These
payments will be made on the Company's regular payroll dates, commencing after
the Effective Date of this Agreement (as defined in paragraph 16 below).

       6. CONSULTING AGREEMENT. You will serve as a consultant to the Company
under the terms specified below, from August 1, 2001 until July 31, 2002 (the
"Consulting Period").

              (a) CONSULTING SERVICES. You agree to provide consulting services
to the Company during the Consulting Period in any area of your expertise (the
"Consulting Services") at the direction of the Company's Chief Executive
Officer, at the Company's sole discretion. You agree to exercise the highest
degree of professionalism and to utilize your expertise and creative talents in
performing the Consulting Services. The Company agrees to give you


Mr. Peter Bohacek
July 30, 2001
Page 2

reasonable notice of the dates and times on or by which the Consulting Services
are to be rendered, and you agree to make reasonable efforts to perform such
services on or by such requested dates and times. Your compensation for the
Consulting Services shall be the severance and continued benefits provided
during the Consulting Period under paragraphs 5 and 8 herein.

              (b) INDEPENDENT CONTRACTOR STATUS. You agree that during the
Consulting Period (i) you will be an independent contractor to the Company and
not an employee of the Company, and (ii) the Company will not make unemployment
insurance or government sponsored disability insurance contributions, or obtain
workers' compensation insurance, on your behalf.

              (c) LIMITATIONS ON AUTHORITY. You will have no responsibilities or
authority as a consultant to the Company other than as provided above. You agree
not to represent or purport to represent the Company in any manner whatsoever to
any third party unless authorized by the Company, in writing, to do so.

              (d) NON-COMPETITION. In order to protect the trade secrets and
confidential and proprietary information of the Company, you agree that during
the Consulting Period you will not, directly or indirectly, without the prior
written consent of the Company, own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or financing of, or
be connected as an officer, director, employee, partner, principal, agent,
representative, or consultant, in any location(s) worldwide, of any entity that
directly competes with any Company product currently available, or in
development and publicly disclosed, as of the Effective Date of this Agreement
(a "Competitor"). If you engage in any such competitive activity without the
Company's express written consent, the Company may terminate this Agreement, at
its sole election, and the Company's obligations to provide you with any and all
compensation and benefits will cease effective as of the commencement date of
such competitive activity, subject to the provisions of paragraph 21 below. The
foregoing shall not be deemed to prohibit you from holding or acquiring a
passive investment of not more than 2 percent of the capital stock of any
publicly traded or privately held Competitor, and you agree to provide prompt
written notice to the Company of any such investment in any privately held

       7. STOCK OPTIONS. You acknowledge that the Company granted you an option
to purchase 60,000 shares of Company common stock on or about December 1, 1998
(the "December 1998 Option"). You and the Company agree and acknowledge that a
total of 38,750 shares under the December 1998 Option will be vested and
exercisable as of the Separation Date. As part of this Agreement, the remaining
21,250 shares of the December 1998 Option will be accelerated so that all 60,000
shares of such option shall be fully vested and exercisable as of the Separation
Date. Additionally, you will have the right to exercise all vested shares of the
December 1998 Option for six (6) months after the Separation Date. Except as
specifically set


Mr. Peter Bohacek
July 30, 2001
Page 3

forth in this paragraph, the December 1998 Option will continue to be governed
by the applicable stock option grant, stock option agreement and stock option

All other Company stock options you hold (the "Remaining Options") will continue
to vest until and ending on the Separation Date. The Remaining Options will
continue to be governed by the applicable stock option grants, stock option
agreements and stock option plan.

       8. BENEFITS. You will continue to receive health insurance, special life
insurance and disability insurance (other than government sponsored disability
insurance), for six (6) months after the Separation Date. The Company will
provide these continued benefits by continuing your participation in such
benefit plans and/or reimbursing you for the cost of such benefits, in the
Company's sole discretion and to the Company's ability consistent with current
practices and the terms of the applicable plans. The Company's obligation to
provide these benefits will cease immediately if you accept employment with a
new employer that provides comparable benefits for which you are eligible. You
agree to notify the Company immediately in writing upon your acceptance of such
new employment.

       9. OTHER COMPENSATION OR BENEFITS. You acknowledge that you will not
receive from the Company any additional compensation, severance or benefits of
any kind (including but not limited to salary, commissions, bonuses or stock
option grants) after the Separation Date, except as expressly provided in this

       10. EXPENSE REIMBURSEMENTS. You agree that within ten (10) business days
after the Separation Date you will submit your final documented expense
reimbursement statement reflecting all business expenses you have incurred
through the Separation Date, if any, for which you seek reimbursement. The
Company will reimburse you for these expenses pursuant to its regular business
practice. Also pursuant to its regular business practice, the Company will
reimburse you for reasonable business expenses incurred during the Consulting
Period, provided that such expenses are routinely reimbursed for executives of
the Company and you comply with standard Company requirements relating to
expense reimbursement, including but not limited to requirements regarding
verification of expenses.

       11. RETURN OF COMPANY PROPERTY. On 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, training materials,
computer-recorded information, tangible property including, but not limited to,
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); provided, however, that you may
retain your Company cell phone for two (2) months after the Separation Date, and
you may retain any such documents or property during the


Mr. Peter Bohacek
July 30, 2001
Page 4

Consulting Period that are necessary for you to perform the Consulting Services,
in the Company's sole discretion.

       12. COMPANY E-MAIL AND VOICE MAIL. Your Company e-mail and voice mail
accounts will remain active for four (4) months after the Separation Date, for
the sole purpose of notifying the senders of any such messages of your new
contact information, and of the contact information of appropriate Company
personnel for Company business matters.

       13. PROPRIETARY INFORMATION OBLIGATIONS. You acknowledge your continuing
obligations under your Employee Proprietary Information and Inventions Agreement
(Exhibit A hereto) at all times hereafter, including but not limited to all
times during and after the Consulting Period. Among other obligations in said
agreement, you agree not to use or disclose, at any time, any confidential or
proprietary information of the Company without prior written authorization from
a duly authorized officer of the Company.

       14. NONDISPARAGEMENT. Both you and the Company (by its officers and
directors) agree not to disparage the other party, and the other party's
officers, directors, employees, shareholders, affiliates, and agents, in any
manner likely to be harmful to them or their business, business reputation or
personal reputation; provided, however, that both you and the Company shall
respond accurately and fully to any question, inquiry or request for information
when required by legal process.

       15. RELEASE OF CLAIMS. In exchange for the severance benefits, stock
option vesting arrangement and other consideration under this Agreement to which
you would not otherwise be entitled, you hereby release, acquit and forever
discharge the Company and its officers, directors, 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, 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 date you sign this
Agreement, including but not limited to: any and 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, sabbatical benefits, severance benefits, or any other form of
compensation; claims pursuant to any federal, state, local law, statute or cause
of action including, but not limited to, the federal Civil Rights Act of 1964,
as amended; the federal Americans with Disabilities Act of 1990; the federal Age
Discrimination in Employment Act of 1967, as amended ("ADEA"); the California
Fair Employment and Housing Act, as amended; tort law; contract law; wrongful
discharge; discrimination; fraud; defamation; harassment; emotional distress;
and breach of the implied covenant of good faith and fair dealing. The releases
given herein shall not bar any claim for breach of the terms of this Agreement.


Mr. Peter Bohacek
July 30, 2001
Page 5

       16. ADEA WAIVER. You acknowledge that you are knowingly and voluntarily
waiving and releasing any rights you may have under the ADEA. You also
acknowledge that the consideration given for the waiver and release in the
preceding paragraph is in addition to anything of value to which you were
already entitled. You further acknowledge that you have been advised by this
writing, as required by the ADEA, that: (a) your waiver and release do not apply
to any rights or claims that arise after the date you sign this Agreement; (b)
you should consult with an attorney prior to executing this Agreement; (c) you
have twenty-one (21) days to consider this Agreement (although you may choose to
voluntarily execute this Agreement earlier); (d) you have seven (7) days
following the date you sign this Agreement to revoke the Agreement; and (e) this
Agreement will not be effective until the date upon which the revocation period
has expired, which will be the eighth day after the date you sign and deliver
this Agreement to the Company, provided that the Company has also signed the
Agreement by that date ("Effective Date").

       17. SUPPLEMENTAL RELEASE. In further consideration of the severance
benefits, stock option vesting arrangement and other consideration under this
Agreement to which you would not otherwise be entitled, you agree to sign and
return to the Company a supplemental release of claims (the "Supplemental
Release"), in the form attached hereto as Exhibit B, on or after July 31, 2002.

       18. WAIVER. In granting the release herein, you acknowledge that you
understand that you are waiving the benefit of California Civil Code section
1542, which states:


You hereby expressly waive and relinquish all rights and benefits under that
section and any law or legal principle of similar effect in any jurisdiction
with respect to the release of unknown and unsuspected claims granted in this

       19. 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 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 will not
disclose the provisions of this Agreement to any current or former Company
employee or any other Company personnel.


Mr. Peter Bohacek
July 30, 2001
Page 6

       20. PUBLIC STATEMENTS. Notwithstanding the provisions of paragraph 19
above, the Company will issue a statement or make other public comment on your
consulting services within two (2) months after the Separation Date.

       21. DISPUTE RESOLUTION. To ensure rapid and economical resolution of any
and all disputes that may arise in connection with this Agreement, you and the
Company agree that any and all disputes, claims, and causes of action, in law or
equity, arising from or relating to this Agreement or its enforcement,
performance, breach, or interpretation, will be resolved solely and exclusively
by final, binding, and confidential arbitration, by a single arbitrator, in San
Francisco, California, and conducted by Judicial Arbitration & Mediation
Services, Inc. ("JAMS") under its then-existing employment rules and procedures.
Nothing in this section, however, is intended to prevent either party from
obtaining injunctive relief in court to prevent irreparable harm pending the
conclusion of any such arbitration. The Company shall not terminate any
compensation or benefits provided hereunder pending the outcome of such
arbitration; provided, however, that in the event the Company prevails in such
arbitration on any claim resulting in the termination of such compensation
and/or benefits, you will be liable to the Company for an amount equal to the
compensation and value of benefits you received hereunder from the earliest date
of the conduct giving rise to said claim(s) until the date of the arbitration

       22. ENTIRE AGREEMENT. This Agreement, including all exhibits, constitutes
the complete, final and exclusive embodiment of the entire agreement between you
and the Company with regard to the subject matters hereof. It supersedes and
merges any and all agreements entered into by and between you and the Company.
It is entered into without reliance on any promise or representation, written or
oral, other than those expressly contained herein. It may not be modified except
in a writing signed by you and a duly authorized officer of the Company. Each
party has carefully read this Agreement, has been afforded the opportunity to be
advised of its meaning and consequences by his or its respective attorneys, and
signed the same of his or its own free will.

       23. SUCCESSORS AND ASSIGNS. This Agreement will bind the heirs, personal
representatives, successors, assigns, executors and administrators of each
party, and will inure to the benefit of each party, its heirs, successors and

       24. WARRANTIES. You warrant and represent that there are no liens or
claims of lien or assignments in law or equity or otherwise on or against any
potential claims or causes of action released herein, and, further, that you are
fully entitled and duly authorized to give this complete and final general
release and waiver.

       25. APPLICABLE LAW. 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 California as applied


Mr. Peter Bohacek
July 30, 2001
Page 7

to contracts made and to be performed entirely within California, without regard
to conflicts of laws.

       26. SEVERABILITY. If a court of competent jurisdiction determines that
any term or provision of this Agreement is invalid or unenforceable, in whole or
in part, then the remaining terms and provisions hereof will be unimpaired. The
court or arbitrator will then have the authority to modify or replace the
invalid or unenforceable term or provision with a valid and enforceable term or
provision that most accurately represents the parties' intention with respect to
the invalid or unenforceable term or provision.

       27. COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which will be deemed an original, all of which together constitutes one
and the same instrument.


Mr. Peter Bohacek
July 30, 2001
Page 8

       28. CONSTRUCTION. This Agreement will be deemed drafted by both parties,
and shall not be construed against either party as the drafter of the document.

If this Agreement is acceptable to you, please sign below and return the
original to me. Please sign and return the Supplemental Release (Exhibit B) to
me on or after July 31, 2002.

I wish you luck in your future endeavors.



By:   /s/ Charles Spears
      Charles Spears
      Sr. Director, Human Resources

Exhibit A   Employee Proprietary Information and Inventions Agreement
Exhibit B   Supplemental Release


/s/ Peter K. Bohacek
Peter Bohacek

Date: August 31, 2001