Exhibit 10.33

 

April 29, 2005

 

Robert P. Verheecke

730 Southampton Drive

Palo Alto, CA 94303

 

Dear Bob:

 

This letter (the “Agreement”) is to confirm the agreement between you and Blue
Coat Systems, Inc., formerly CacheFlow Inc. (the “Company”) regarding the
termination of your employment with the Company.

 

  1. Your employment with the Company will terminate on January 31, 2006, unless
earlier terminated as described in this paragraph. You shall continue as an
employee of the Company until January 31, 2006, provided that you may resign
your employment on any earlier date for any reason or no reason. The Company may
terminate your employment prior to January 31, 2006 only for Cause. “Cause”
means (a) a material failure to comply with the Company’s written policies or
rules, (b) conviction of, or plea of “guilty” or “no contest” to, a felony under
the laws of the United States or any state thereof, or (c) gross misconduct. The
earlier of January 31, 2006 or the earlier date that you resign as an employee
or are terminated for Cause by the Company shall be referred to herein as the
“Termination Date”. From the date of this Agreement through the Termination
Date, you may continue to participate in those employee benefits for which you
are an eligible employee. The Company will continue paying you your current base
salary in accordance with the Company’s standard payroll procedures until the
Termination Date.

 

  2. Effective May 2, 2005 and continuing through and until the Termination
Date, the Company shall employ you in a full-time position reporting directly to
me, responsible for special projects assigned to you at my discretion. You
understand and agree that through and until the Termination Date you will not
commence employment with any other employer and that you will not render any
services as an independent contractor or partner without the Company’s prior
written consent.

 

  3. On the Termination Date you will be paid all of your accrued but unused
vacation and all of your salary earned through the Termination Date. You agree
that prior to the execution of this Agreement you were not entitled to receive
any further monetary payments from the Company, and that the only payments and
benefits that you are entitled to receive from the Company in the future are
those specified in this Agreement.

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  4. On July 31, 2001 the Company granted you an option to purchase 100,000
shares of the Company’s common stock at an exercise price of $16.75 per share
(the “First Option”), on July 10, 2002 the Company granted you an option to
purchase 50,000 shares of the Company’s common stock at an exercise price of
$2.25 per share (the “Second Option”), and also on June 17, 2003 the Company
granted you an option to purchase 40,000 shares of the Company’s common stock at
an exercise price of $5.60 per share (the “Third Option” and together with the
First and Second Option, the “Options”). Each of the Options is evidenced by an
option agreement (collectively, the “Option Agreements”) and is subject to the
terms and conditions of the Company’s 1999 Equity Incentive Plan. As of May 2,
2005, you will be vested in the number of shares indicated below:

 

Grant Date

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   Number of
Shares

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   Exercise
Price

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   Vested
5/02/05

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   Unvested
5/02/05

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7/31/2001

   100,000    $ 16.75    100,000    0

7/10/2002

   50,000    $ 2.25    50,000    0

6/17/2003

   40,000    $ 5.60    20,000    20,000

 

Pursuant to the terms of this Agreement, if you remain employed with the Company
through May 2, 2005 , then on the Effective Date (as defined in paragraph 19
below) you will become vested in additional shares of the Company’s common stock
under the Options such that you are vested in the aggregate number of shares set
forth below.

 

Grant Date

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   Number of
Shares

--------------------------------------------------------------------------------

   Exercise
Price

--------------------------------------------------------------------------------

   Vested as of
Effective
Date

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Unvested as
of

Effective
Date

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7/31/2001

   100,000    $ 16.75    100,000    0

7/10/2002

   50,000    $ 2.25    50,000    0

6/17/2003

   40,000    $ 5.60    40,000    0

 

Pursuant to the Option Agreements, you will have three (3) months following your
Termination Date to exercise the Options with respect to the vested but
unexercised shares. All of the shares acquired pursuant to the exercise of the
Options will continue to be subject to and governed by the Option Agreements.
You acknowledge that under the terms, conditions and limitations of the Option
Agreements, the Options would otherwise expire with respect to the unvested
shares on your Termination Date. You acknowledge that you have no other stock
rights in the Company (or any parent or subsidiary) other than those rights
enumerated in this paragraph and paragraph 12 and further that all terms,
conditions and limitations applicable to the Options pursuant to the Option
Agreements shall remain in full force and effect.

 

  5.

You acknowledge that you have continuing obligations under the Federal and state
securities laws for a period of time following your cessation of employment,

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including (without limitation) under Rule 144 and Section 16, and that you may
not sell shares of the Company’s common stock in violation of the Company’s
insider trading policy or in violation of Rule 10b-5.

 

  6. In consideration for receiving the stock option vesting acceleration
described in paragraph 4 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,
stockholders, officers, directors, agents, consultants, attorneys, employees and
assigns, and employee benefit plans with respect to any matter (without
limitation) arising out of or connected with your employment with the Company or
the termination of that employment, including without limitation, claims to
attorneys’ fees or costs, claims of wrongful discharge, constructive discharge,
emotional distress, defamation, invasion of privacy, 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, as amended, the California Fair Employment and Housing Act, the Age
Discrimination in Employment Act of 1967, the Americans with Disabilities Act,
and all other laws and regulations relating to employment. However, this release
covers only those claims that arose prior to the execution of this Agreement.
Execution of this Agreement does not bar any claim that arises hereafter,
including (without limitation) a claim for breach of this Agreement.

 

  7. You expressly waive and release any and all rights and benefits under
Section 1542 of the Civil Code of the State of California, 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
debtor.”

 

  8. You agree that you will never, individually or with any other person,
commence, aid in any way (except as required by legal process) or prosecute, or
cause or permit to be commenced or prosecuted, any action or other proceeding
based on any claim that is the subject of this Agreement.

 

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

 

  10. 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 May 1, 2001, or any
applicable insurance policy for officers and directors liability.

 

  11. At all times in the future, you will remain bound by the Company’s
Proprietary Information and Invention Agreement signed by you on May 1, 2001, a
copy of which is attached as Exhibit A.

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  12. You acknowledge that you have no other stock rights in the Company (or any
parent or subsidiary) other than those rights enumerated in this paragraph and
in paragraph 4 above and other than shares you own and that are in your
possession. All terms, conditions and limitations applicable to the purchase
rights pursuant to the Company’s Employee Stock Purchase Plan shall remain in
full force and effect.

 

  13. You agree that you will not disclose to others the fact or terms of this
Agreement, except that you may disclose such information to your attorney or
accountant in order for such individuals to render services to you if such
individuals agree that they will not disclose to others the existence or terms
of this Agreement or unless otherwise required by law and only to the extent
required.

 

  14. You agree that except as expressly provided in this Agreement, this
Agreement renders null and void any and all prior agreements between you and the
Company, including, but not limited to, the agreement entered into between you
and the Company on November 4, 2004 regarding the termination of your employment
and certain severance benefits which is hereby expressly rendered null and void
and of no effect at any time in the future. You and the Company agree that this
Agreement constitutes the entire agreement between you and the Company regarding
the subject matter of this Agreement, and that this Agreement may be modified
only in a written document signed by you and a duly authorized officer of the
Company.

 

  15. This Agreement shall be construed and interpreted in accordance with the
laws of the State of California.

 

  16. You agree that this Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one
agreement. Execution of a facsimile copy shall have the same force and effect as
execution of an original, and a facsimile signature shall be deemed an original
and valid signature.

 

  17. Any controversy involving the construction or application of any terms,
covenants or conditions of this Agreement, or any claims arising out of any
alleged breach of this Agreement, will be governed by the rules of the American
Arbitration Association and submitted to and settled by final and binding
arbitration in Santa Clara County, California, except that any alleged breach of
the Company’s Proprietary Information and Inventions Agreement shall not be
submitted to arbitration and instead the Company may seek all legal and
equitable remedies, including without limitation, injunctive relief.

 

  18. You have up to twenty-one (21) days after receipt of this Agreement within
which to review it and to discuss with an attorney of your own choosing, at your
own expense, whether or not you wish to sign it. Furthermore, you have seven (7)
days after you have signed this Agreement during which time you may revoke this
Agreement.

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  19. If you wish to revoke this Agreement, you may do so by delivering a letter
of revocation to me. Because of this revocation period, you understand that this
Agreement shall not become effective or enforceable until the eighth day after
the date you sign this Agreement (the “Effective Date”).

 

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

 

Sincerely,

 

/s/ Brian M. NeSmith

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Brian NeSmith President & CEO

 

My agreement with the above terms is signified by my signature below.
Furthermore, I acknowledge that I have read and understand this Agreement 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
Agreement.

 

Signed:  

/s/ Robert P. Verheecke

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  Dated:  

4/29/05

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    Robert P. Verheecke        

 

Exhibit A – PIIA

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PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

 

The following confirms an agreement between me Robert P. Verheecke and Blue Coat
Systems, Inc., a Delaware corporation (the “Company”), which is a material part
of the consideration for my employment by Company:

 

1. I have not entered into, and I agree I will not enter into, any agreement
either written or oral in conflict with this Agreement or my employment with
Company. I will not violate any agreement with or rights of any third party or,
except as expressly authorized by Company in writing hereafter, use or disclose
my own or any third party’s confidential information or intellectual property
when acting within the scope of my employment or otherwise on behalf of Company.
Further, I have not retained anything containing any confidential information of
a prior employer or other third party, whether or not created by me.

 

2. Company shall own all right, title and interest (including patent rights,
copyrights, trade secret rights, mask work rights and all other intellectual and
industrial property rights of any sort throughout the world) relating to any and
all inventions (whether or not patentable), works of authorship, mask works,
designs, know-how, ideas and information made or conceived or reduced to
practice, in whole or in part, by me during the term of my employment with
Company to and only to the fullest extent allowed by California Labor Code
Section 2870 (which is attached as Appendix A) (collectively “Inventions”) and I
will promptly disclose all Inventions to Company. I will also disclose anything
I believe is excluded by Section 2870 so that the Company can make an
independent assessment. I hereby make all assignments necessary to accomplish
the foregoing. I shall further assist Company, at Company’s expense, to further
evidence, record and perfect such assignments, and to perfect, obtain, maintain,
enforce, and defend any rights specified to be so owned or assigned. I hereby
irrevocably designate and appoint Company as its agents and attorneys-in-fact to
act for and in my behalf to execute and file any document and to do all other
lawfully permitted acts to further the purposes of the foregoing with the same
legal force and effect as if executed by me. If I wish to clarify that something
created by me prior to my employment that relates to Company’s actual or
proposed business is not within the scope of this Agreement, I have listed it on
Appendix B. If I use or (except pursuant to this Section 2) disclose my own or
any third party’s confidential information or intellectual property when acting
within the scope of my employment or otherwise on behalf of Company, Company
will have and I hereby grant Company a perpetual, irrevocable, worldwide
royalty-free, non-exclusive, sublicensable right and license to exploit and
exercise all such confidential information and intellectual property rights.

 

3. To the extent allowed by law, paragraph 2 includes all rights of paternity,
integrity, disclosure and withdrawal and any other rights that may be known as
or referred to as “moral rights,” “artist’s rights,” “droit moral,” or the like
(collectively “Moral Rights”). To the extent I retain any such Moral Rights
under applicable law, I hereby ratify and consent to any

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action that may be taken with respect to such Moral Rights by or authorized by
Company and agree not to assert any Moral Rights with respect thereto. I will
confirm any such ratifications, consents and agreements from time to time as
requested by Company.

 

4. I agree that all Inventions and all other business, technical and financial
information (including, without limitation, the identity of and information
relating to customers or employees) I develop, learn or obtain during the term
of my employment that relate to Company or the business or demonstrably
anticipated business of Company or that are received by or for Company in
confidence, constitute “Proprietary Information.” I will hold in confidence and
not disclose or, except within the scope of my employment, use any Proprietary
Information. However, I shall not be obligated under this paragraph with respect
to information I can document is or becomes readily publicly available without
restriction through no fault of mine. Upon termination of my employment, I will
promptly return to Company all items containing or embodying Proprietary
Information (including all copies), except that I may keep my personal copies of
(i) my compensation records, (ii) materials distributed to shareholders
generally and (iii) this Agreement. I also recognize and agree that I have no
expectation of privacy with respect to Company’s telecommunications, networking
or information processing systems (including, without limitation, stored
computer files, email messages and voice messages) and that my activity and any
files or messages on or using any of those systems may be monitored at any time
without notice.

 

5. Until one year after the term of my employment, I will not encourage or
solicit any employee or consultant of Company to leave Company for any reason
(except for the bona fide firing of Company personnel within the scope of my
employment).

 

6. I agree that during the term of my employment with Company (whether or not
during business hours), I will not engage in any activity that is in any way
competitive with the business or demonstrably anticipated business of Company,
and I will not assist any other person or organization in competing or in
preparing to compete with any business or demonstrably anticipated business of
Company.

 

7. I agree that this Agreement is not an employment contract for any particular
term and that I have the right to resign and Company has the right to terminate
my employment at will, at any time, for any or no reason, with or without cause.
In addition, this Agreement does not purport to set forth all of the terms and
conditions of my employment, and, as an employee of Company, I have obligations
to Company which are not set forth in this Agreement. However, the terms of this
Agreement govern over any inconsistent terms and can only be changed by a
subsequent written agreement signed by the President of Company.

 

8. I agree that my obligations under paragraphs 2, 3, 4 and 5 of this Agreement
shall continue in effect after termination of my employment, regardless of the
reason or reasons for termination, and whether such termination is voluntary or
involuntary on my part, and that Company is entitled to communicate my
obligations under this Agreement to any future employer or potential employer of
mine. My obligations under paragraphs 2, 3 and 4 also shall be binding upon my
heirs, executors, assigns, and administrators and shall inure to the benefit of
Company, it subsidiaries, successors and assigns.

 

2

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9. Any dispute in the meaning, effect or validity of this Agreement shall be
resolved in accordance with the laws of the State of California without regard
to the conflict of laws provisions thereof. I further agree that if one or more
provisions of this Agreement are held to be illegal or unenforceable under
applicable California law, such illegal or unenforceable portion(s) shall be
limited or excluded from this Agreement to the minimum extent required so that
this Agreement shall otherwise remain in full force and effect and enforceable
in accordance with its terms. I also understand that any breach of this
Agreement will cause irreparable harm to Company for which damages would not be
a adequate remedy, and, therefore, Company will be entitled to injunctive relief
with respect thereto in addition to any other remedies.

 

I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS
WHICH IT IMPOSES UPON ME WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS
HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT. I SIGN THIS AGREEMENT
VOLUNTARILY AND FREELY, IN DUPLICATE, WITH THE UNDERSTANDING THAT ONE
COUNTERPART WILL BE RETAINED BY COMPANY AND THE OTHER COUNTERPART WILL BE
RETAINED BY ME.

 

        Employee:        

/s/ Robert P. Verheecke

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        Signature        

Robert P. Verheecke

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        Name (Printed)        

May 1, 2001

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        Date Accepted and Agreed to:     BLUE COAT SYSTEMS, INC.     By  

/s/ Susan H. Thornton

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        Susan H. Thornton    

 

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APPENDIX A

 

California Labor Code Section 2870. Application of provision providing that
employee shall assign or offer to assign rights in invention to employer.

 

(a) Any provision in an employment agreement which provides that an employee
shall assign, or offer to assign, any of his or her rights in an invention to
his or her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer’s equipment,
supplies, facilities, or trade secret information except for those inventions
that either:

 

(1) Relate at the time of conception or reduction to practice of the invention
to the employer’s business, or actual or demonstrably anticipated research or
development of the employer; or

 

(2) Result from any work performed by the employee for his employer.

 

(b) To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.

 

 

4

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APPENDIX B

 

PRIOR MATTER