Document:

Employment Agreement between Blue Coat Systems, Inc. and Kevin Royal

 Exhibit 10.32 
  
 March 31, 2005 
  
 Kevin S. Royal 
  
 Dear Kevin: 
  
 I am pleased to extend to you an
offer to join Blue Coat Systems, Inc. as Chief Financial Officer (CFO), reporting to Brian NeSmith, President and Chief Executive Officer (CEO). 
  
 We have structured an offer package for you that consists of four (4) primary components. They are as follows: 
  

	•	 	An annual base salary of $300,000 paid according to standard company payroll policies. 

  

	•	 	Participation in the executive/management bonus plan available generally to other members of the executive/management team as may be authorized and approved by the Company’s
Board of Directors. 

  

	•	 	An option to purchase 75,000 shares of the Company’s Common Stock reserved under the Company’s option plan will be requested for approval by the Company’s Board of
Directors. The exercise price per share will be equal to the fair market value per share on the date the option is granted. You will vest in 25% of the option shares after 12 months of service, and the balance will vest in monthly installments over
the next 36 months of service, as described in the applicable stock option agreement. This grant is subject to approval by the Company’s Board of Directors and execution of the appropriate stock option agreement. 

  

	•	 	Eligibility for all standard benefits according to the Company’s U.S. benefits plan. Information on benefits will be supplied to you as soon as possible.

  
  

 March 31, 2005 
 Page 2

  
 Like all Company employees, you will be required, as a condition of your
employment with the Company, to sign the Company’s standard Proprietary Information and Inventions Agreement, a copy of which is enclosed. While you render services to the Company, you will not engage in any other gainful employment, business
or activity without the written consent of the Company. While you render services to the Company, you also will not assist any person or organization in competing with the Company, in preparing to compete with the Company or in hiring any employees
or consultants of the Company. 
  
 In accordance with the requirements of the
Immigration reform and Control Act of 1986, you will be required to provide verification of your identity and your legal right to work in the United States. This offer is contingent upon your ability to provide us with such documentation.

  
 You will be required to complete an application form and a reference and
background check authorization form. Your offer of employment is contingent upon your execution of the application form and satisfactory completion of the reference and background check. 
  
 Your employment with the Company will be “at will,” meaning that either you or the Company will be entitled to terminate your
employment at any time and for any reason, with or without cause. Any contrary representations, which may have been made to you, are superseded by this offer. This is the full and complete agreement between you and the Company on this term. Although
your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement
signed by you and the Company’s President and CEO. 
  
 This letter and the
enclosed Proprietary Information and Inventions Agreement supersede any prior understandings or agreements, whether oral or written, between you and the Company. These documents may not be amended or modified except by an express written agreement
signed by you and the Company’s President and CEO. The terms of this offer and the resolution of any disputes will be governed by California law. 
  
 This offer stands until the end of business on Friday, April 8, 2005 and your signature below acknowledges your acceptance of these terms. 
  
 Best Regards, 
  

					
	 /s/ Brian NeSmith

	  	 /s/ Kevin S. Royal

	 	 4/8/05

	Brian NeSmith	  	Kevin S. Royal	 	Date
	President & CEO	  	 	 	 
	Blue Coat Systems, Inc.	  	My start date will beSeparation Agreement between Blue Coat Systems, Inc. and Robert Verheecke

 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.

	 	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

	  	Number of
Shares

	  	Exercise
Price

	  	Vested
5/02/05

	  	Unvested
5/02/05

	 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

	  	Number of
Shares

	  	Exercise
Price

	  	Vested as of
Effective
Date

	  	 Unvested as
of
 Effective
Date

	 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,

	 	 
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. 

	 	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. 

	 	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

	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

	 	Dated:	 	 4/29/05

	 	 	Robert P. Verheecke	 	 	 	 

  
 Exhibit A – PIIA 

 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 

 
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 

 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

	 	 	 	 	Signature
			
	 	 	 	 	 Robert P. Verheecke

	 	 	 	 	Name (Printed)
			
	 	 	 	 	 May 1, 2001

	 	 	 	 	Date
		
	Accepted and Agreed to:	 	 
		
	BLUE COAT SYSTEMS, INC.	 	 
			
	By	 	 /s/ Susan H. Thornton

	 	 
	 	 	Susan H. Thornton	 	 

  

 3 

 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 

 APPENDIX B 
  

PRIOR MATTER

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