Severance Agreement  - Paul Engle



 
Exhibit 10.2

 
AVANEX CORPORATION 
 
SEVERANCE AGREEMENT AND RELEASE 
 
This Severance Agreement and Release (“Agreement”)
is made by and between Avanex Corporation (the “Company”), and Paul Engle (“Executive”). 
 
WHEREAS, Executive was employed by the Company as its President and Chief Executive Officer; 
 
WHEREAS, Executive has served as a member of the
Company’s Board of Directors; 
 
WHEREAS,
Executive has resigned from all such positions, and 
 
WHEREAS, the Executive agrees to release the Company from any claims arising from or related to Executive’s service relationship; 
 
NOW THEREFORE, in consideration of the mutual promises made herein, the Company and Executive (collectively referred to as “the
Parties”) hereby agree as follows: 
 
1.    Termination of Employment and Board Membership.    Executive hereby acknowledges resignation of his employment and his membership on the Company’s Board of Directors effective
upon the close of business on November 18, 2002 (the “Termination Date”). 
 
2.    Payment of Salary.    Executive acknowledges and represents that the Company has paid all salary, wages, accrued vacation and any and all other
benefits due to Executive as of the Termination Date. 
 
3.    Consideration.    As consideration for Executive entering into this Agreement, the Company agrees to provide Executive with the following benefits: 
 
(a)     Salary;
Lump-Sum Payment.    On the Effective Date, Executive shall be paid a lump-sum payment of $41,732.20, less applicable withholding, equal to Executive’s current base salary from November 19, 2002 through December 31,
2002. On January 10, 2003, Executive shall be paid a lump-sum payment of $350,000, less applicable withholding, representing payment in full for any and all amounts payable to Executive as cash compensation. 
 
(b)    Stock Option
Accelerated Vesting.    All of Executive’s outstanding options to purchase common stock of the Company (the “Options”) shall, on the Effective Date, have their vesting accelerated as to six (6) months of
additional vesting. To the extent not vested on the Effective Date, the Options shall terminate and be without further force and effect. Following the Termination Date, Executive shall have three months, as specified in his individual option
agreements, to exercise any vested options, after which such Options shall, to the extent unexercised, be without further force and effect. 
 
(c)    Restricted Stock.    Executive agrees that, as of the Effective
Date, he holds 540,683 shares (excluding the 221,816 shares suspended from the release from the Forfeiture Option) of common stock of the Company that are subject to forfeiture in the event that Executive’s continuous status as a service
provider to the Company terminates for any or no reason (the “Forfeiture Option”). As of the Effective Date, the 221,816 shares of Common Stock scheduled to be released from the Forfeiture Option from December 2001 through the Effective
Date, as to which the release of the Forfeiture Option has been suspended, shall immediately be released from the Forfeiture Option. In addition, as of the date the Parties sign the 









Agreement, the Company shall release from the Forfeiture Option 103,184 shares, the number of shares that would have otherwise vested and
been released from the Forfeiture Option during the six months following the Termination Date. The 437,499 shares which remain subject to the Forfeiture Option immediately following the Effective Date shall be forfeited by Executive and shall revert
to the Company in accordance with the applicable restricted stock award agreements. 
 
(d)    Lump-Sum COBRA Payment.    A lump-sum payment equal to twelve
months’ COBRA premiums at the rates in effect on the Termination Date, less applicable withholding. 
 
(e)    Outplacement Services.    Reasonable executive outplacement services
for a period of up to six months after the Effective Date. 
 
(f)    Withholding Taxes.    Executive agrees that he shall pay to the Company, within three business days of the Effective Date, an amount equal to the
Company’s required tax withholding obligations related to the release of shares from the Forfeiture Option pursuant to Section 3(c) hereof, such amount to be determined by the Company in its sole discretion. 
 
4.    Release of
Claims.    Executive agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Executive by the Company. Executive, on behalf of himself and his respective heirs, executors
and assigns, hereby fully and forever releases the Company and its officers, directors, employees, investors, shareholders, administrators, predecessor and successor corporations, and assigns, of and from any claim, duty, obligation or cause of
action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that any of them may possess arising from any omissions, acts or facts that have occurred up until and including the effective date of this
Agreement including, without limitation, 
 
(a)    any and all claims relating to or arising from Executive’s employment relationship with the Company and the termination of that relationship; 
 
(b)    any and all claims
relating to, or arising from, Executive’s right to purchase, or actual purchase of shares of stock of the Company; 
 
(c)    any and all claims for wrongful discharge of employment; breach of contract, both express and
implied; breach of a covenant of good faith and fair dealing, both express and implied; negligent or intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; and defamation; 
 
(d)    any and all claims for violation of any federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in
Employment Act of 1967, the Americans with Disabilities Act of 1990, and the California Fair Employment and Housing Act; 
 
(e)    any and all claims arising out of any other laws or regulations relating to employment or
employment discrimination; and 
 
(f)    any and all claims for attorneys’ fees and costs. 
 

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The Company and Executive
agree that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Agreement. 
 
The parties acknowledge that they have been advised by legal
counsel and are familiar with the provisions of California Civil Code Section 1542, 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. 
 
The parties, being aware of said Code Section, agree to expressly waive any rights they may have thereunder, as well as under any other
statute or common law principles of similar effect. 
 
5.    Acknowledgment of Waiver of Claims under ADEA.    Executive acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of
1967 (“ADEA”) and that this waiver and release is knowing and voluntary. Executive agrees that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement.
Executive acknowledges that the consideration given for this waiver and release is in addition to anything of value to which Executive was already entitled. Executive further acknowledges that he has been advised by this writing that: (a) he should
consult with an attorney prior to executing this Agreement; (b) he has twenty-one (21) days within which to consider this Agreement; (c) he has seven (7) days following the execution of this Agreement by the Parties to revoke the Agreement;
(d) this Agreement shall not be effective until after the revocation period has expired; and (e) nothing in this Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under
the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law. 
 
6.    Return of Company Property.    Executive agrees to return all Company property,
including all computing equipment, to the Company upon the effectiveness of this Agreement. 
 
7.    Indemnification.    Executive shall be entitled to indemnification, in accordance with the applicable provisions of the Company’s certificate
of incorporation and bylaws, against expense, liability and loss that Executive may incur by reason of any action, suit or proceeding arising from or relating to the performance of Executive’s duties as an officer or director of the Company or
any of its subsidiaries. 
 
8.    Mutual Non-Disparagement.    The Company agrees that its executive officers will refrain from any disparagement, criticism, defamation or slander of Executive, or tortious
interference with the contracts and relationships of Executive. Executive agrees to refrain from any disparagement, criticism, defamation or slander of the Company or its employees, or tortious interference with the contracts and relationships of
the Company. 
 
9.    No
Cooperation.    Executive agrees that he will not knowingly counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any
third party against the Company, unless under a subpoena or other court order to do so. Executive agrees to immediately notify the Company upon receipt of any such subpoena or court order, and to furnish, within three (3) business days of its
receipt, a copy of such subpoena or court order to the Company. If approached by anyone for counsel or assistance in the presentation or prosecution of any 

 

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disputes, differences, grievances, claims, charges, or complaints against the Company, Executive shall state no more than that he cannot
provide counsel or assistance. 
 
10.    Non-Solicitation.    In consideration for the severance benefits Executive is to receive hereunder, Executive agrees that he will not, at any time during the twelve months
following the Termination Date, directly or indirectly solicit any individuals to leave the Company’s employ for any reason or interfere in any other manner with the employment relationships at the time existing between the Company and its
current or prospective employees. 
 
11.    Non-Compete.    In consideration for the benefits Executive is to receive hereunder, Executive agrees that he will not, at any time during the twelve (12) months following the
Termination Date, directly engage in (whether as an employee, consultant, proprietor, partner, or otherwise), or have any ownership interest in, or participate in the financing, operation, management or control of, any person, firm, corporation or
business that engages or participates anywhere in the United States in providing goods and services similar to those provided by the Company upon the date of Executive’s termination of employment. Ownership of less than 3% of the outstanding
voting stock of a public corporation will not constitute a violation of this provision. 
 
12.    Tax Consequences.    The Company makes no representations or warranties with respect to the tax consequences of the payment of any sums or
provision of any benefits or accelerated vesting to Executive under the terms of this Agreement. The Company will withhold sums from Executive’s compensation hereunder sufficient to satisfy the Company’s withholding obligations. Executive
agrees and understands that he is responsible for payment, if any, of his portion of the local, state and/or federal taxes on the sums paid hereunder by the Company and any penalties or assessments thereon. 
 
13.    No Admission of
Liability.    No action taken by the Parties hereto, or either of them, either previously or in connection with this Agreement shall be deemed or construed to be (a) an admission of the truth or falsity of any claims
heretofore made or (b) an acknowledgment or admission by either party of any fault or liability whatsoever to the other party or to any third party. 
 
14.    Costs.    The Parties shall each bear their own costs, expert fees, attorneys’
fees and other fees incurred in connection with this Agreement. 
 
15.    Arbitration and Equitable Relief. 
 
(a)    The Parties agree that, to the extent permitted by law, any dispute or controversy arising out
of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof shall be settled by arbitration to be held in Alameda County, California, in accordance with the
National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the “Rules”). The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the
arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction. 
 
(b)    The arbitrator shall apply California law to the merits of any
dispute or claim, without reference to rules of conflict of law. The arbitration proceedings shall be governed by federal arbitration law and by the Rules, without reference to state arbitration law. The parties hereto hereby expressly consent to
the personal jurisdiction of the state and federal courts located in California for any action or proceeding 

 

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arising from or relating to this Agreement and/or relating to any arbitration in which the parties are participants. 
 
(c)    The Company and
Executive shall each pay one-half of the costs and expenses of such arbitration, and each party shall pay its own attorneys’ fees and expenses incurred in connection with such arbitration. 
 
(d)    THE PARTIES HERETO
HAVE READ AND UNDERSTAND SECTION 15, WHICH DISCUSSES ARBITRATION. THE PARTIES HERETO UNDERSTAND THAT BY SIGNING THIS AGREEMENT, THEY AGREE, TO THE EXTENT PERMITTED BY LAW, TO SUBMIT ANY FUTURE CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION
WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH, OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF THEIR RIGHT TO A JURY TRIAL AND RELATES TO THE
RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS: 
 
(i)  ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED;
BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR
PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION. 
 
(ii)  ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et seq; 
 
(iii)  ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO
EMPLOYMENT OR EMPLOYMENT DISCRIMINATION. 
 
16.    Authority.    The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it
to the terms and conditions of this Agreement. Executive represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement.

 
17.    No
Representations.    Each party represents that it has had the opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. Neither party has relied
upon any representations or statements made by the other party hereto which are not specifically set forth in this Agreement. 
 

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18.    Severability.    In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall
continue in full force and effect without said provision. 
 
19.    Entire Agreement.    This Agreement, along with the previously executed Employment, Confidential Information, Invention Assignment and Arbitration Agreement and any applicable
stock option agreements and restricted stock award agreements (as modified in Section 3 above), represent the entire agreement and understanding between the Company and Executive concerning Executive’s employment transition and eventual
separation from the Company, and supersedes, replaces and fully discharges all obligations under any and all prior agreements and understandings concerning Executive’s relationship with the Company and his compensation by the Company.

 
20.    No Oral
Modification.    This Agreement may only be amended in writing signed by Executive and the Company’s Chief Executive Officer. 
 
21.    Effective Date.    This Agreement will become effective after it has been signed by
both Parties and after seven days have passed since Executive signed the Agreement. 
 
22.    Cooperation with the Company.    Executive agrees to cooperate fully with the Company, including but not limited to, responding to reasonable
requests from the Company’s Chief Executive Officer, Chief Financial Officer or the Company’s legal counsel in connection with any and all existing or future litigation related to the Company. Executive also agrees to furnish upon
reasonable request, information necessary in order to assist the Company in meeting the Company’s reporting requirements and Executive’s continuing Section 16 reporting obligations on a timely manner and as prescribed by the then current
SEC and/or Nasdaq rules. Executive understands that he remains subject to the SEC and Nasdaq prohibitions on insider trading even after the Effective Date of this Agreement. 
 
23.    Counterparts.    This Agreement may be executed in
counterparts, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned. 
 
24.    Voluntary Execution of Agreement.    This Agreement is
executed voluntarily and without any duress or undue influence on the part or behalf of the Parties hereto, with the full intent of releasing all claims. The Parties acknowledge that: 
 
(a)    They have read this Agreement; 
 
(b)    They have been
represented in the negotiation and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel; 
 
(c)    They understand the terms and consequences of this Agreement and
of the releases it contains; 
 
(d)    They are fully aware of the legal and binding effect of this Agreement. 
 

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IN WITNESS
WHEREOF, the Parties have executed this Agreement. 
 

	  Avanex Corporation
	  	  	  	  Executive

	
	  By:
	  	  /S/    WALTER
ALESSANDRINI        
	  	  	  	  /S/    PAUL ENGLE
        

	  	  	
	  	  	  	

	  	  	  Walter Alessandrini, Chairman
	  	  	  	  Paul Engle

	
	  Date:  November 18, 2002
	  	  	  	  Date:  November 18, 2002


 

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