**EXHIBIT 10.20.2**

 

 

**MCDATA CORPORATION**

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**FORM EXECUTIVE SEVERANCE AGREEMENT**

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This Agreement is made byand between **McDATA Corporation**(the “Company”), and you,                          .  This Agreement is effective as of May 24,2004 (the “Effective Date”).  Forpurposes of this Agreement, the “Company” shall include any parent orsubsidiary of the Company, unless the context clearly requires otherwise.

 

This Agreement isintended to strongly encourage you to remain with the Company by providing youwith certain severance benefits in the event that your employment with theCompany terminates under certain circumstances.  This Agreement also is intended to provide you with enhancedfinancial security in recognition of your past and future service to the Company.

 

# 1.             Eligibilityfor Severance Benefits.  You will beentitled to the payments and benefits described in Section 2 only if both:(a) either (1) the Company terminates your employment for a reasonother than Cause, death or Disability, or (2) you voluntarily terminateyour employment with the Company for Good Reason, and (b) you(1) sign and deliver to the Company a Release of Claims satisfactory tothe Company, (2) do not subsequently revoke your signature on the Releaseof Claims, and (3) comply with all of the terms of this Agreement,including (but not limited to) Section 7 regarding Non-Solicitation ofEmployees and Section 8 regarding Non-Competition.  Notwithstanding the preceding, if your termination of employmentwould qualify you for payments and benefits under a  Change of Control Severance Agreement (if applicable to you) withthe Company  (the “Change of ControlSeverance Agreement”), you will receive none of the payments and benefitsdescribed herein.  Instead, you would(if applicable)  receive the paymentsand benefits to which you are entitled under a Change of Control SeveranceAgreement (if applicable to you).

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# 2.             SeveranceBenefits.  If you meet theeligibility requirements described in Section 1, you will receive thefollowing.

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### **(a)            Cash Payments. You will receive severance pay equal to [one year][nine months][sixmonths] of your  base salary and targetbonus in effect immediately prior to the date of your termination of employment(the “Termination Date”) for a period of [one year][nine months][six months]following the Termination Date.  Theseverance pay with respect to your [one year][nine months][six months] basesalary will be paid in accordance with the Company’s standard payroll practicesand the severance pay with respect to your target bonus will be paid at thesame time as bonuses are scheduled to be paid to the Company’s other seniorexecutives. No lump sum payment will be made. The payments will commence withinthree (3) days after the Release of Claims becomes effective and no longer issubject to revocation. You are responsible for any applicable taxes on suchpayments.**

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### **(b)           Option Exercisability.  You will have one year following the Termination Date to exerciseyour Company Class B stock options and any Company stock options granted to youon or after the Effective Date, *but in eachcase only to the extent that such option is vested and unexpired on theTermination Date*. Moreover, in no event may any such option beexercised after the original maximum term of the option. **

 

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### **Anyoptions that are unvested on the Termination Date will be forfeited on thatdate. With regard to your Executive Performance Incentive Bonus (“EPIB”)restricted Class B stock shares, *you wouldbe entitled to those shares that by their own terms become unrestricted withinone year following the Termination Date*.**

 

### **(c)           Other Benefits. The Company will provide you with health, dental and vision benefitscoverage for up to [one year][nine months][six months] following TerminationDate or until you become eligible for group insurance benefits from anotheremployer, whichever comes first, but only if you elect continuation coverageunder the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended(“COBRA”), within the time period prescribed pursuant to COBRA.  For the duration of the one-year coverageperiod, the Company will pay the COBRA premiums otherwise payable by you (forcoverage for yourself and your eligible dependents).  After the [one-year][nine months][six months] coverage period,you will be responsible for the payment of any COBRA premiums.  The Company will not reimburse you for anytaxable income imputed to you because the Company has paid your COBRA premiums(or those of your eligible dependents).**

 

### **(d)           Accrued Wages and Paid-Time Off; Expenses. TheCompany will pay you: (1) any unpaid base salary due for periods prior tothe Termination Date, (2) all of your accrued and unused paid-time off(“PTO”) through the Termination Date, (3) following your submission ofproper expense reports, the total unreimbursed amount of all expenses incurredby you in your duties of employment with the Company that are reimbursable inaccordance with the Company’s then-existing policies, and (4) any otherbenefits due to you through the Termination Date under the Company’s formalemployee benefit plans (for example, the Company’s “401(k)” plan).  These payments will be made promptly uponyour employment termination and within the period of time mandated by law or asprovided in the applicable plan document.**

 

# 3.             OtherTerminations of Employment.  If youremployment with the Company is terminated by the Company for Cause, death orDisability, or if you voluntarily terminate your employment other than for GoodReason, you will not be entitled to receive any of the payments or benefitsdescribed in Section 2 of this Agreement. However, you may be eligible for other benefits under other Companyplans or policies that may exist on the Termination Date. In addition, the Companywill pay you: (1) any unpaid base salary due for periods prior to theTermination Date, (2) all of your accrued and unused PTO through theTermination Date, (3) following your submission of proper expense reports, thetotal unreimbursed amount of all expenses incurred by you in your duties ofemployment with the Company that are reimbursable in accordance with theCompany’s then-existing policies, and (4) any other benefits due to youthrough the Termination Date under the Company’s formal employee benefit plans(for example, the Company’s “401(k)” plan). These payments will be made promptly upon your employment terminationand within the period of time mandated by law or as provided in the applicableplan document.

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# 4.             Definitionof Terms.  The following terms usedto in this Agreement shall have the following meanings:

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## (a)           Cause.  “Cause” means (1) an act of personaldishonesty taken by you in connection with your responsibilities as an employeeand intended to result in your substantial personal enrichment, (2) yourbeing convicted of a crime recognized as a felony in the United States,(3) a willful act by you which constitutes gross misconduct and which is(or may be) injurious to the Company (*e.g.,*a significant violation of Company policy or the Company Code of Conduct may bedeemed to meet this clause (3) definition since all employees are required tobe fully knowledgeable of such polices and code), (4) following deliveryto you of a written demand for performance from the Company which describes thebasis for the Company’s reasonable belief that the you have not substantiallyperformed your duties, continued violations by you of your obligations to theCompany which are demonstrably willful and deliberate on your part.

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## (b)           Disability.  “Disability” means your being unable toperform the principal functions of your duties due to a physical or mentalimpairment, but only if such inability has lasted or is reasonably expected tolast 

 

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## for atleast six months.  The Company willdetermine whether a Disability exists based on evidence provided by one or morephysicians selected by the Company and reasonably acceptable to you.

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(c)           Good Reason.  “Good Reason” means, without your writtenconsent (1) a material reduction of your duties, authority orresponsibilities, relative to your duties, authority or responsibilities as ineffect immediately prior to such reduction, or the assignment to you of suchreduced duties, authority or responsibilities; or (2) a material reductionby the Company of your base compensation as in effect immediately prior to suchreduction (unless similar reductions apply to substantially all of theCompany’s other senior executives or to the employees); provided however, that“Good Reason” shall not be triggered if the CEO reassigns you to another VPlevel position and no material reduction in your base compensation occurs ascontemplated in paragraph (2) above..

 

(d)           Release of Claims.  “Release of Claims” means a written waiverby you (in a form specified by the Company) of all employment-relatedobligations of the Company and all claims and causes of action against theCompany.

 

5.             Term of Agreement.  If you have a termination of employment thatentitles you to receive the payments and benefits descried in Section 2, thisAgreement will terminate when all of your and the Company’s obligations underthe Agreement have been satisfied.  Ifyou have a termination of employment that does not entitle you to receive thepayments and benefits described in Section 2, this Agreement will terminate onthe Termination Date.

 

6.             At-Will Employment.  The Company and you acknowledge that youremployment is and will continue to be at-will, as defined under applicable law.

 

7.             Non-Solicitation of Employees.  You agree that for a period of **two years** following the Termination Date,you will not either directly or indirectly solicit, induce, recruit orencourage any of the Company’s employees to leave their employment, or takeaway such employees, or attempt to solicit, induce, recruit, encourage or takeaway employees of the Company, either for yourself or any other person orentity.

 

# 8.             Non-Competition.  With respect to the businesses of theCompany or any of its subsidiaries on either the Effective Date or the date ofyour termination of employment from the Company and all of it subsidiaries(collectively, the “Businesses”), you agree that during period beginning on theEffective Date and ending **two years**after the Termination date, you, directly or indirectly, whether as employee,owner, sole proprietor, partner, director, member, consultant, agent, founder,co-venturer or otherwise, will: (i) not engage, participate or invest in anybusiness activity anywhere in the world that is directly competitive with theprincipal products or services of the Businesses (except that it will not be aviolation of this Section 11 for you to own as a passive investment not morethan one percent of any class of publicly traded securities of any entity); nor(ii) directly or indirectly solicit business from any of the Businesses’customers and users on behalf of any business that directly competes with theBusinesses.

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# 9.             Assignment.  This Agreement will be binding upon andbecome of advantage to (a) your heirs, executors and legal representativesupon your death and (b) any successor of the Company.  Any such successor of the Company will bedeemed substituted for the Company under the terms of this Agreement for allpurposes.  For this purpose, “successor”means any person, firm, corporation or other business entity which at any time,whether by purchase, merger or otherwise, directly or indirectly acquires allor substantially all of the assets or business of the Company.  None of your rights to receive any form ofcompensation payable pursuant to this Agreement may be assigned or transferredexcept by will or the laws of descent and distribution.  Any other attempted assignment, transfer,conveyance or other disposition of your right to compensation or other benefitswill be null and void.

 

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10.           Notices.

 

(a)           General.  All notices, requests, demands and othercommunications called for by this Agreement will be in writing and will bedeemed given (1) on the date of delivery if delivered personally,(2) one day after being sent by a well established commercial overnightservice, or (3) four days after being mailed by registered or certifiedmail, return receipt requested, prepaid and addressed to the parties or theirsuccessors at the following addresses, or at such other addresses as theparties may later designate in writing:

 

If to theCompany:

 

McDATACorporation

380Interlocken Crescent

Broomfield,Colorado 80012

 

Attn: General Counsel

 

If to you:

 

at your lastresidential address known by the Company.

 

(b)           Notice of Termination. Anytermination by the Company for Cause or by you for Good Reason must becommunicated by a notice of termination to the other party.  The notice will indicate the specifictermination provision in this Agreement relied upon, will set forth inreasonable detail the facts and circumstances claimed to provide a basis fortermination under the provision so indicated, and will specify the date of youremployment termination (which will not be more than 30 days after the giving ofsuch notice).  Any failure on your partto include in the notice any fact or circumstance that contributes to a showingof Good Reason will not waive any of your rights under this Agreement orprevent you from asserting that fact or circumstance in enforcing thisAgreement.

 

# 11.           Severability.  In the event that any provision hereofbecomes or is declared by a court of competent jurisdiction to be illegal,unenforceable or void, this Agreement will continue in full force and effectwithout said provision.

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# 12.           EntireAgreement.  This Agreement, yourChange of Control Severance Agreement and the agreements evidencing any Companystock options and other equity compensation awards (if any) granted to yourepresent the entire agreement and understanding between the Company and youconcerning your severance arrangements with the Company or any of itssubsidiaries, and supersedes and replaces any and all prior agreements andunderstandings concerning your severance arrangements with the Company.

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# 13.           Arbitration.

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## (a)           General.  In consideration of your service to theCompany, its promise to arbitrate all employment related disputes and yourreceipt of the compensation, pay raises and other benefits paid to you by theCompany, at present and in the future, you agree that any and allcontroversies, claims, or disputes with anyone (including the Company and anyemployee, officer, director, shareholder or benefit plan of the Company intheir capacity as such or otherwise) arising out of, relating to, or resultingfrom your service to the Company under this Agreement or otherwise or thetermination of your service with the Company, including any breach of thisAgreement, shall be subject to binding arbitration under the Arbitration Rulesset forth under the rules and regulations of the American ArbitrationAssociation (the “Rules”) and pursuant to Colorado law.  Disputes which you agree to arbitrate, andthereby agree to waive any right to a trial by jury, include any statutoryclaims under state or federal law, including, but not limited to, claims underTitle VII of the Civil Rights Act of 1964, the 

 

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## Americanswith Disabilities Act of 1990, the Age Discrimination in Employment Act of1967, the Older Workers Benefit Protection Act, the Colorado Fair Employmentand Housing Act, the Colorado Labor Code, claims of harassment, discriminationor wrongful termination and any statutory claims.  You further understand that this Agreement to arbitrate alsoapplies to any disputes that the Company may have with you.

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## (b)           Procedure.  You agree that any arbitration will beadministered by the American Arbitration Association (“AAA”) and that a neutralarbitrator will be selected in a manner consistent with its National Rules forthe Resolution of Employment Disputes. The arbitration proceedings will allow for discovery according to therules set forth in the *National Rules forthe Resolution of Employment Disputes or Colorado Code of Civil Procedure*.  You agree that the arbitrator shall have thepower to decide any motions brought by any party to the arbitration, includingmotions for summary judgment and/or adjudication and motions to dismiss anddemurrers, prior to any arbitration hearing. You agree that the arbitrator shall issue a written decision on themerits.  You also agree that thearbitrator shall have the power to award any remedies, including attorneys’fees and costs, available under applicable law.  You understand the Company will pay for any administrative orhearing fees charged by the arbitrator or AAA except that you shall pay thefirst $200.00 of any filing fees associated with any arbitration youinitiate.  You agree that the arbitratorshall administer and conduct any arbitration in a manner consistent with theRules and that to the extent that the AAA’s National Rules for the Resolutionof Employment Disputes conflict with the Rules, the Rules shall take precedence.

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## (c)           Remedy.  Except as provided by the Rules, arbitrationshall be the sole, exclusive and final remedy for any dispute between you andthe Company.  Accordingly, except asprovided for by the Rules, neither you nor the Company will be permitted to pursuecourt action regarding claims that are subject to arbitration.  Notwithstanding, the arbitrator will nothave the authority to disregard or refuse to enforce any lawful Company policy,and the arbitrator shall not order or require the Company to adopt a policy nototherwise required by law which the Company has not adopted.

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## (d)           Availability of Injunctive Relief.  In addition to the right under the Rules topetition the court for provisional relief, you agree that any party may alsopetition the court for injunctive relief where either party alleges or claims aviolation of this Agreement or any other agreement regarding trade secrets,confidential information, or nonsolicitation. In the event either party seeks injunctive relief, the prevailing party shallbe entitled to recover reasonable costs and attorneys’ fees.

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## (e)           Administrative Relief.  You understand that this Agreement does notprohibit you from pursuing an administrative claim with a local, state orfederal administrative body such as the Department of Fair Employment andHousing, the Equal Employment Opportunity Commission or the workers’compensation board.  This Agreementdoes, however, preclude you from pursuing court action regarding any such claim.

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## (f)            Voluntary Nature of Agreement.  You acknowledge and agree that you areexecuting this Agreement voluntarily and without any duress or undue influenceby the Company or anyone else.  Youfurther acknowledge and agree that you have carefully read this Agreement andthat you have asked any questions needed for you to understand the terms,consequences and binding effect of this Agreement and fully understand it,including that you are waiving your right to a jury trial.  Finally, you agree that you have beenprovided an opportunity to seek the advice of an attorney of your choice beforesigning this Agreement.

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# 14.           NoOral Modification, Cancellation or Discharge.  This Agreement may be changed or terminated only in writing(signed by you and an authorized officer of the Company).

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# 15.           Withholding.  The Company is authorized to withhold, orcause to be withheld, from any payment or benefit under this Agreement the fullamount of any applicable withholding taxes.

 

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# 16.           GoverningLaw.  This Agreement will begoverned by the laws of the State of Colorado (with the exception of itsconflict of laws provisions).

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# 17.           Acknowledgment.  You acknowledge that you have had theopportunity to discuss this matter with and obtain advice from your privateattorney, have had sufficient time to, and have carefully read and fullyunderstand all the provisions of this Agreement, and are knowingly andvoluntarily entering into this Agreement.

 

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IN WITNESS WHEREOF, the undersigned have executed thisAgreement on the respective dates set forth below:

 

 
|                   |   | Date:  |   | , 2004 |   |
|------------------------|--------|--------|--------|--------|--------|
|                   |   |
|                   |   |
| **MCDATA CORPORATION** |   |
|                   |   |
|                   |   |
|                   |   | Date:  |   | , 2004 |
| Name:                  |   |   |   |   |
| Title:                 |   |   |   |   |
|                        |        |        |        |        |        |  |  |  |  |  |

 

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