EXHIBIT 10.20.2


 





 


MCDATA CORPORATION


 


FORM EXECUTIVE SEVERANCE AGREEMENT


 


This Agreement is made by
and between McDATA Corporation
(the “Company”), and you,
                          .  This Agreement is effective as of May 24,
2004 (the “Effective Date”).  For
purposes of this Agreement, the “Company” shall include any parent or
subsidiary of the Company, unless the context clearly requires otherwise.


 


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


 


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


 


2.             Severance
Benefits.  If you meet the
eligibility requirements described in Section 1, you will receive the
following.


 


(a)            Cash Payments. 
You will receive severance pay equal to [one year][nine months][six
months] of your  base salary and target
bonus 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.  The
severance pay with respect to your [one year][nine months][six months] base
salary will be paid in accordance with the Company’s standard payroll practices
and the severance pay with respect to your target bonus will be paid at the
same time as bonuses are scheduled to be paid to the Company’s other senior
executives. No lump sum payment will be made. The payments will commence within
three (3) days after the Release of Claims becomes effective and no longer is
subject to revocation. You are responsible for any applicable taxes on such
payments.


 


(b)           Option Exercisability.  You will have one year following the Termination Date to exercise
your Company Class B stock options and any Company stock options granted to you
on or after the Effective Date, but in each
case only to the extent that such option is vested and unexpired on the
Termination Date. Moreover, in no event may any such option be
exercised after the original maximum term of the option.  


 

















 


Any
options that are unvested on the Termination Date will be forfeited on that
date. With regard to your Executive Performance Incentive Bonus (“EPIB”)
restricted Class B stock shares, you would
be entitled to those shares that by their own terms become unrestricted within
one year following the Termination Date.


 


(c)           Other Benefits. 
The Company will provide you with health, dental and vision benefits
coverage for up to [one year][nine months][six months] following Termination
Date or until you become eligible for group insurance benefits from another
employer, whichever comes first, but only if you elect continuation coverage
under 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 coverage
period, the Company will pay the COBRA premiums otherwise payable by you (for
coverage 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 any
taxable 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. The
Company will pay you: (1) any unpaid base salary due for periods prior to
the Termination Date, (2) all of your accrued and unused paid-time off
(“PTO”) through the Termination Date, (3) following your submission of
proper expense reports, the total unreimbursed amount of all expenses incurred
by you in your duties of employment with the Company that are reimbursable in
accordance with the Company’s then-existing policies, and (4) any other
benefits due to you through 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 termination and within the period of time mandated by law or as
provided in the applicable plan document.


 


3.             Other
Terminations of Employment.  If your
employment with the Company is terminated by the Company for Cause, death or
Disability, or if you voluntarily terminate your employment other than for Good
Reason, you will not be entitled to receive any of the payments or benefits
described in Section 2 of this Agreement. 
However, you may be eligible for other benefits under other Company
plans or policies that may exist on the Termination Date. In addition, the Company
will pay you: (1) any unpaid base salary due for periods prior to the
Termination Date, (2) all of your accrued and unused PTO through the
Termination Date, (3) following your submission of proper expense reports, the
total unreimbursed amount of all expenses incurred by you in your duties of
employment with the Company that are reimbursable in accordance with the
Company’s then-existing policies, and (4) any other benefits due to you
through 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 termination
and within the period of time mandated by law or as provided in the applicable
plan document.


 


4.             Definition
of Terms.  The following terms used
to in this Agreement shall have the following meanings:


 


(a)           Cause.  “Cause” means (1) an act of personal
dishonesty taken by you in connection with your responsibilities as an employee
and intended to result in your substantial personal enrichment, (2) your
being 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 be
deemed to meet this clause (3) definition since all employees are required to
be fully knowledgeable of such polices and code), (4) following delivery
to you of a written demand for performance from the Company which describes the
basis for the Company’s reasonable belief that the you have not substantially
performed your duties, continued violations by you of your obligations to the
Company which are demonstrably willful and deliberate on your part.


 


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


 

















 


for at
least six months.  The Company will
determine whether a Disability exists based on evidence provided by one or more
physicians selected by the Company and reasonably acceptable to you.


 


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


 


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


 


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


 


6.             At-Will Employment.  The Company and you acknowledge that your
employment 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 or
encourage any of the Company’s employees to leave their employment, or take
away such employees, or attempt to solicit, induce, recruit, encourage or take
away employees of the Company, either for yourself or any other person or
entity.


 


8.             Non-Competition.  With respect to the businesses of the
Company or any of its subsidiaries on either the Effective Date or the date of
your termination of employment from the Company and all of it subsidiaries
(collectively, the “Businesses”), you agree that during period beginning on the
Effective 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 any
business activity anywhere in the world that is directly competitive with the
principal products or services of the Businesses (except that it will not be a
violation of this Section 11 for you to own as a passive investment not more
than 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 the
Businesses.


 


9.             Assignment.  This Agreement will be binding upon and
become of advantage to (a) your heirs, executors and legal representatives
upon your death and (b) any successor of the Company.  Any such successor of the Company will be
deemed substituted for the Company under the terms of this Agreement for all
purposes.  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 all
or substantially all of the assets or business of the Company.  None of your rights to receive any form of
compensation payable pursuant to this Agreement may be assigned or transferred
except 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 benefits
will be null and void.


 

















 


10.           Notices.


 


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


 


If to the
Company:


 


McDATA
Corporation


380
Interlocken Crescent


Broomfield,
Colorado 80012


 


Attn: General Counsel


 


If to you:


 


at your last
residential address known by the Company.


 


(b)           Notice of Termination. Any
termination by the Company for Cause or by you for Good Reason must be
communicated by a notice of termination to the other party.  The notice will indicate the specific
termination provision in this Agreement relied upon, will set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and will specify the date of your
employment termination (which will not be more than 30 days after the giving of
such notice).  Any failure on your part
to include in the notice any fact or circumstance that contributes to a showing
of Good Reason will not waive any of your rights under this Agreement or
prevent you from asserting that fact or circumstance in enforcing this
Agreement.


 


11.           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 will continue in full force and effect
without said provision.


 


12.           Entire
Agreement.  This Agreement, your
Change of Control Severance Agreement and the agreements evidencing any Company
stock options and other equity compensation awards (if any) granted to you
represent the entire agreement and understanding between the Company and you
concerning your severance arrangements with the Company or any of its
subsidiaries, and supersedes and replaces any and all prior agreements and
understandings concerning your severance arrangements with the Company.


 


13.           Arbitration.


 


(a)           General.  In consideration of your service to the
Company, its promise to arbitrate all employment related disputes and your
receipt of the compensation, pay raises and other benefits paid to you by the
Company, at present and in the future, you agree that any and all
controversies, claims, or disputes with anyone (including the Company and any
employee, officer, director, shareholder or benefit plan of the Company in
their capacity as such or otherwise) arising out of, relating to, or resulting
from your service to the Company under this Agreement or otherwise or the
termination of your service with the Company, including any breach of this
Agreement, shall be subject to binding arbitration under the Arbitration Rules
set forth under the rules and regulations of the American Arbitration
Association (the “Rules”) and pursuant to Colorado law.  Disputes which you agree to arbitrate, and
thereby agree to waive any right to a trial by jury, include any statutory
claims under state or federal law, including, but not limited to, claims under
Title VII of the Civil Rights Act of 1964, the 


 

















 


Americans
with Disabilities Act of 1990, the Age Discrimination in Employment Act of
1967, the Older Workers Benefit Protection Act, the Colorado Fair Employment
and Housing Act, the Colorado Labor Code, claims of harassment, discrimination
or wrongful termination and any statutory claims.  You further understand that this Agreement to arbitrate also
applies to any disputes that the Company may have with you.


 


(b)           Procedure.  You agree that any arbitration will be
administered by the American Arbitration Association (“AAA”) and that a neutral
arbitrator will be selected in a manner consistent with its National Rules for
the Resolution of Employment Disputes. 
The arbitration proceedings will allow for discovery according to the
rules set forth in the National Rules for
the Resolution of Employment Disputes or Colorado Code of Civil Procedure.  You agree that the arbitrator shall have the
power to decide any motions brought by any party to the arbitration, including
motions for summary judgment and/or adjudication and motions to dismiss and
demurrers, prior to any arbitration hearing. 
You agree that the arbitrator shall issue a written decision on the
merits.  You also agree that the
arbitrator 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 or
hearing fees charged by the arbitrator or AAA except that you shall pay the
first $200.00 of any filing fees associated with any arbitration you
initiate.  You agree that the arbitrator
shall administer and conduct any arbitration in a manner consistent with the
Rules and that to the extent that the AAA’s National Rules for the Resolution
of Employment Disputes conflict with the Rules, the Rules shall take precedence.


 


(c)           Remedy.  Except as provided by the Rules, arbitration
shall be the sole, exclusive and final remedy for any dispute between you and
the Company.  Accordingly, except as
provided for by the Rules, neither you nor the Company will be permitted to pursue
court action regarding claims that are subject to arbitration.  Notwithstanding, the arbitrator will not
have 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 not
otherwise required by law which the Company has not adopted.


 


(d)           Availability of Injunctive Relief.  In addition to the right under the Rules to
petition the court for provisional relief, you agree that any party may also
petition the court for injunctive relief where either party alleges or claims a
violation 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 shall
be entitled to recover reasonable costs and attorneys’ fees.


 


(e)           Administrative Relief.  You understand that this Agreement does not
prohibit you from pursuing an administrative claim with a local, state or
federal administrative body such as the Department of Fair Employment and
Housing, the Equal Employment Opportunity Commission or the workers’
compensation board.  This Agreement
does, however, preclude you from pursuing court action regarding any such claim.


 


(f)            Voluntary Nature of Agreement.  You acknowledge and agree that you are
executing this Agreement voluntarily and without any duress or undue influence
by the Company or anyone else.  You
further acknowledge and agree that you have carefully read this Agreement and
that 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 been
provided an opportunity to seek the advice of an attorney of your choice before
signing this Agreement.


 


14.           No
Oral Modification, Cancellation or Discharge.  This Agreement may be changed or terminated only in writing
(signed by you and an authorized officer of the Company).


 


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


 

















 


16.           Governing
Law.  This Agreement will be
governed by the laws of the State of Colorado (with the exception of its
conflict of laws provisions).


 


17.           Acknowledgment.  You acknowledge that you have had the
opportunity to discuss this matter with and obtain advice from your private
attorney, have had sufficient time to, and have carefully read and fully
understand all the provisions of this Agreement, and are knowingly and
voluntarily entering into this Agreement.


 

















 


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


 


 


	
   

  	
   

  	
  Date:

  	
   

  	
  , 2004

  	 

	
   

  	
   

  
	
   

  	
   

  
	
  MCDATA CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
  , 2004

  
	
  Name:

  	
   

  	
   

  	
   

  	 

	
  Title: