Sample Business Contracts

Severance Agreement - CacheFlow Inc. and Michael A. Malcolm

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November 9, 2000

Dear Michael:

          This letter confirms the agreement between you and CacheFlow Inc. (the
"Company") regarding your resignation from the Company.

          1.  You agree that effective November 9, 2000 ("Resignation Date") you
                 voluntarily resigned as a member of the Board of Directors of
                 the Company and from all other positions you held with the
                 Company immediately prior to your resignation.

          2.  You agree that the only payments and benefits that you are
                 entitled to receive from the Company in the future are those
                 specified in this letter.

          3.  The Company will provide you with two (2) CF 500 series machines
                 ("Machines") for your personal use, at no charge within ninety
                 (90) days after you have executed and delivered the Company's
                 standard purchase and license agreement for those machines (a
                 copy of which is attached hereto). The Company will provide you
                 with technical support for the Machines, including upgrades to
                 new software releases that are generally available, for a
                 period of three years from the Resignation Date at no expense.
                 The Company will reimburse you for Board and Company related
                 flight travel expenses, based on a rate of $1,000 per flight
                 hour, upon receipt of documentation supporting such expenses
                 within 30 days of the Resignation Date.

          4.  The Company agrees that it shall continue to automatically forward
                 to [email address] any email that it receives addressed to
                 [email address] and that it shall not read or intercept any of
                 these email messages. If you believe any such forwarded email
                 messages concern the Company's business you will forward such
                 email messages directly to me for my information. The Company
                 further agrees that for ninety (90) days following the
                 Resignation Date, it shall allow you to operate on the
                 Company's premises the NT server that runs the email server and
                 web server for [website] ("NT Server"). You agree that


                 during that ninety (90) day period you will arrange for hosting
                 of the NT Server on another premise outside of the Company and
                 the Company agrees to return the NT Server to you upon your
                 request. You also understand and agree that you shall solely be
                 responsible for any maintenance, insurance or other service on
                 the NT Server.

          5.  The Company will issue a mutually agreed upon press release
                 regarding your resignation within fourteen days of the
                 Resignation Date in the form attached hereto.

          6.  You and the Company understand and agree that nothing in this
                 agreement shall modify in any manner any indemnification and/or
                 insurance rights you may have pursuant to the Company's
                 Certificate of Incorporation, Bylaws, the Indemnification
                 Agreement between you and the Company dated November 17, 1999,
                 or any applicable insurance policy for officers and directors

          7.  You understand and agree that you were granted the following
                 rights to purchase shares and options to purchase shares of the
                 Company's common stock. You have previously exercised all of
                 your options. As of November 3, 2000, you are currently vested
                 in the number of shares indicated.

                                             Number of       Exercise        Vested        Unvested
Grant Date                                     Shares          Price        11/03/00       11/03/00

06/07/96 RSP                                 2,000,000       $ 0.005       2,000,000              0
06/18/97 ISO                                   250,000       $ 0.075         250,000              0
10/14/98 NSO                                 1,000,000       $  0.50         833,333        166,667
10/13/99 NSO                                   100,000       $  6.00          25,000         75,000
08/30/00 NSO                                     5,000       $105.00               0          5,000

                 After you sign this letter and assuming you are fully in
                 compliance with the terms of this letter, the Company will
                 immediately vest you in the balance of the shares. You
                 acknowledge that you have no other stock rights in the Company
                 other than those rights enumerated in this paragraph and all
                 terms, conditions and limitations applicable to the stock
                 pursuant to the applicable stock purchase or stock option
                 agreement, except for time-based vesting provisions, shall
                 remain in full force and effect. Immediately following the
                 execution of this letter, the Company shall promptly seek to
                 remove all restrictive legends from your stock that are no
                 longer legally applicable in light of the agreements set forth

                 including, but not limited to, any legends which will no longer
                 be relevant in light of your resignation from the Company's
                 Board of Directors.

          8.  In consideration for receiving the additional stock option vesting
                 described above, you waive and release and promise never to
                 assert any claims or causes of action, whether or not now
                 known, against the Company or its predecessors, successors, or
                 past or present subsidiaries, officers, directors, agents,
                 employees, assigns and employee benefit plans, with respect to
                 any matter, including but not limited to, any matter related to
                 your employment or other relationship with the Company or the
                 voluntary termination of that employment or other relationship,
                 including without limitation, claims of wrongful discharge,
                 emotional distress, defamation, fraud, breach of contract,
                 breach of the covenant of good faith and fair dealing, any
                 claims of discrimination or harassment based on sex, age, race,
                 national origin, disability or on any other basis, under Title
                 VII of the Civil Rights Act of 1964, the California Fair
                 Employment and Housing Act, the Age Discrimination in
                 Employment Act of 1967, and all other laws and regulations
                 relating to employment.

          9.  In consideration for your full release of claims, the Company
                 agrees to waive and release and promises never to assert any
                 claims or causes of action, whether or not now known, against
                 you or any of your heirs, executors, administrators, assigns
                 and successors, with respect to any matter, including but not
                 limited to, any matter arising out of or connected with your
                 employment or other relationship with the Company or the
                 voluntary termination of that employment or other relationship;
                 provided, however, that such waiver, release and promises shall
                 not include or extend to any claims or causes of action arising
                 out of your trading in the Company's securities.

          10.  You and the Company each expressly waive and release any and all
                 rights and benefits under Section 1542 of the Civil Code of the
                 State of California (or any analogous law of any other state),
                 which reads 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

          11.  Nothing contained in this letter shall constitute or be treated
                 as an admission by you or the Company of liability, of any
                 wrongdoing, or of any violation of law.

          12.  You acknowledge and agree that you have returned to the Company
                 all items containing or embodying business, technical or
                 financial information

                 (including, without limitation, the identity of or information
                 relating to customers or employees) that you have developed,
                 learned or obtained during the term of your service to the
                 Company that relate to the Company or the business or
                 demonstrably anticipated business of the Company, except that
                 you may keep your personal copies of (i) your compensation
                 records, (ii) materials and documents distributed to Board
                 members in order to fulfill their fiduciary duties, such as
                 documents distributed prior to Board meetings, provided that
                 you keep all such information, material and documents
                 confidential and not disclose them to any other individual or
                 entity and (iii) materials distributed to shareholders

          13.  You understand and agree that Sections 2 through 9, inclusive of
                 the Consulting Agreement between you and the Company dated June
                 8, 1996 shall remain in effect in accordance with the terms of
                 such agreement, which agreement terminated on June 1, 1999.

          14.  You agree that you will not make any derogatory statements about
                 the Company, its products, officers, directors or employees or
                 business practices. The Company and its officers and directors
                 agree they will not make any derogatory statements about you to
                 any party inside or outside the Company.

          15.  You agree that you will comply with the Company's insider trading
                 policy, including not trading in the Company's securities,
                 until two days following the Company's announcement of its
                 earnings for the second quarter ended October 31, 2000.

          16.  This agreement shall be construed and interpreted in accordance
                 with the laws of the State of California.

          17.  You agree that except as expressly provided in this letter, this
                 letter renders null and void any and all prior agreements
                 between you and the Company. You and the Company agree that
                 this letter constitutes the entire agreement between you and
                 the Company regarding the subject matter of this agreement, and
                 that this letter may be modified only in a written document
                 signed by you and a duly authorized officer of the Company.

          18.  This Agreement may be executed in counterparts, each of which
                 shall be an original, but all of which together shall
                 constitute one agreement.

          Please indicate your agreement with the above terms by signing below.


                                     David W. Hanna, on behalf of CacheFlow Inc.
                                     Board of Directors

          My agreement with the terms of this letter is signified by my
signature below.  Furthermore, I acknowledge that I have read and understand
this letter and that I sign this release of all claims voluntarily, with full
appreciation that at no time in the future may I pursue any of the rights I have
waived in this letter.

Signed ____________________________                  Dated:  November 9, 2000
            Michael A. Malcolm