Exhibit 10.1
SEPARATION AND RELEASE
AGREEMENT
This Separation and Release
Agreement (“Agreement”) by and between David Gould
(“Mr. Gould”), a resident of Atlanta, Georgia, and
Witness Systems, Inc. (the “Company”), a Delaware
corporation, is effective this 3 rd day of January, 2007.
1.
Resignation
. The Board accepted Mr.
Gould’s resignation as Chairman of the Company’s Board
of Directors as of December 6, 2006. On December 6, 2006, the
Board also accepted Mr. Gould’s resignation as a Director and
Chief Executive Officer effective on January 3, 2007 (the
“Separation Date”). Mr. Gould shall, at the same
time he executes this Agreement, execute the resignation letter
attached to this Agreement as Exhibit A, by which he further
resigns, effective upon acceptance by the Board, his employment and
all other officer or director positions he holds with any of the
Company’s subsidiaries or affiliates. Until such
acceptance, Mr. Gould shall continue to receive his current salary
and benefits.
2.
Employment Agreement
. Except as otherwise provided
in this Agreement, this Agreement extinguishes the Employment
Agreement between Mr. Gould and the Company dated February 2, 1999,
as amended (the “Employment Agreement”), effective
January 3, 2007. Except as may otherwise be provided in this
Agreement, the cessation of the Employment Agreement on January 3,
2007, without more, does not and will not result in the vesting,
acceleration, or triggering of any employment benefit in Mr.
Gould’s favor, including, but not limited to, any
post-termination payment obligation or any separation payment or
benefit, vesting of stock options, or any other right which Mr.
Gould may have as an option holder, officer, or employee or under
any agreement or understanding between the Parties, including, but
not limited to, the Employment Agreement.
3.
Separation Payments
. The Company shall make
payments to Mr. Gould in twelve (12) equal monthly installments on
the last day of each month (the “Separation
Payments”). The Separation Payments shall commence on
the last day of the month that begins six (6) months following the
Separation Date. Each of the equal monthly installments shall
be for an amount equal to Twenty Nine Thousand Three Hundred Thirty
Three Dollars and Thirty Three Cents ($29,333.33). If the
last day of the month falls on a weekend or a legal holiday, the
respective Separation Payment will be paid on the business day
immediately preceding such day. Except as provided in the
previous sentence, under no circumstances will any Separation
Payment to be made under this paragraph be accelerated or
deferred. Mr. Gould shall be solely responsible for the
payment of all taxes incurred with respect to the payments set
forth in this paragraph, including, but not limited to, federal and
state income taxes, subject to the Company’s obligation to
withhold applicable state and federal taxes and social security, as
determined by the Company in its sole and absolute
discretion.
4.
Consulting Engagement
. The Company shall engage Mr.
Gould as a Consultant to the Company beginning on the Board’s
acceptance of Mr. Gould’s resignation from Company employment
and continuing until the earlier of (a) termination by Mr. Gould
and/or the Company, or (b) June 30, 2007 (the “Consulting
Term”). The Consulting Engagement may be terminated at
any time simply by written notification to the other party.
Upon termination of the Consulting Engagement for any reason, the
Company shall pay Mr. Gould the amount of any accrued, but unpaid
Consulting Compensation (as defined in Section 4(b) below) through
the date of such termination. Termination of the Consulting
Engagement shall have no effect on the Company’s obligation
to provide the Separation Payments in Section 3 pursuant to the
terms and conditions set forth therein. After the end of the
Consulting Term, Mr. Gould and the Company may mutually agree to
extend the Consulting Engagement thereafter from
1
month to month upon the same terms
and conditions as set forth in this Section 4 (or such other terms
as they may then agree).
(a)
Consulting Services
. During the Consulting Term,
Mr. Gould agrees to perform all consulting services as directed by
the Company from time to time, in such manner and with such
limitations as the Company may direct (the
“Services”). Mr. Gould agrees to perform the
Services faithfully, diligently, and industriously.
(b)
Consulting
Compensation . During the
Consulting Term, the Company shall pay Mr. Gould Thirty Thousand
Dollars ($30,000.00) per month (the “Consulting Fee”)
for Services rendered under this Section 4. The Company shall
pay the Consulting Fee within five (5) business days after the end
of each calendar month of the Consulting Term. If either
party terminates the consulting engagement prior to the end of a
calendar month, the Company shall pay Mr. Gould a pro-rata share of
the Consulting Fee for such month. Mr. Gould acknowledges and
agrees that he is solely responsible, and Company has no
responsibility, to pay any and all taxes applicable to the
compensation Mr. Gould receives from the Company for the
Services.
(c)
Relationship of the
Parties . Mr. Gould
acknowledges and agrees that during the Consulting Term, Mr. Gould
will be act as an independent contractor and will not be: (i)
eligible to participate in any employee benefit plan or program
offered by the Company to its employees or agents; or (ii) covered
under Company’s worker’s compensation insurance or
unemployment insurance coverages.
5.
Release . In exchange for the consideration stated
in this Agreement, Mr. Gould releases, waives and discharges the
Company,(1) and the Company releases, waives and discharges Mr.
Gould, from any claim, demand or liability, whether known or
unknown, fixed or contingent, which one party ever had, now has or
may have against the other party, arising out of or relating to any
claim (whether heretofore or hereafter brought) for any breach of
contract under or termination of the Employment Agreement occurring
on or before Mr. Gould’s execution of this Agreement.
Mr. Gould further releases, waives and discharges the Company from
any claim, demand or liability, whether known or unknown, fixed or
contingent, which Mr. Gould ever had, now has or may have against
the Company for compensation arising out of or relating
to his service (or resignation) as chairman of the Board or a
director of the Company. Mr. Gould further agrees that he has
suffered no harassment, retaliation, employment discrimination, or
work-related injury or illness. The foregoing releases
do not waive Mr. Gould’s right to (a) receive benefits under
the Company’s 401(k) plan that either (i) have accrued or
vested prior to the date of this Agreement, or (ii) are intended,
under the terms of such plan, to survive Mr. Gould’s
separation from the Company; or (b) enforce the terms of this
Agreement, including any agreements incorporated by reference; or
(c) exercise stock options that by their terms or by the terms of
their governing plans or agreements or by the terms of this
Agreement he may be entitled to exercise; or (d) receive
advancement of or indemnification for attorney’s fees and
related costs, litigation costs, settlements, and expenses as set
forth in (i) Section 8 of this Agreement, (ii) the Request,
Affirmation And Undertaking With Respect To Advancement Of Expenses
In Advance Of Final Disposition Of A Proceeding, signed by Mr.
Gould on September 7, 2006, (iii) Mr. Gould’s Indemnification
Agreement
(1) For purposes of the Release
(Section 5) and ADEA/OWBPA Waiver (Section 6), the term
“Company” means the Company, the Company’s
parents, subsidiaries, affiliates, and all related companies, as
well as their respective officers, directors, shareholders,
employees, agents, and any other representatives, any employee
benefits plan of the Company, and any fiduciary of those
plans.
2
with the Company dated January 19,
2000, and (iv) the Fifth Amended and Restated Certificate of
Incorporation and Bylaws of the Company.
6.
ADEA/OWBPA Waiver
. Mr. Gould also specifically
releases and waives any right or claim against the Company, as
defined in footnote 1, arising out of his employment or his
resignation of employment with the Company under the Age
Discrimination in Employment Act, as amended, 29 U.S.C. § 621
et seq. (“ADEA”), the Older Workers Benefit Protection
Act, 29 U.S.C. § 621 et seq. (“OWBPA”), or the
Georgia Prohibition of Age Discrimination in Employment, O.C.G.A.
§ 34-1-2 (such release and waiver referred to as the
“Waiver”). Mr. Gould understands and agrees that
(i) this Agreement is written in a manner that he understands; (ii)
he does not release or waive rights or claims that may arise after
he signs this Agreement; (iii) he waives rights and claims he may
have had under the OWBPA and the ADEA, but only in exchange for
payments and/or benefits in addition to anything of value to which
he is already entitled; (iv) Mr. Gould has been advised to consult
with an attorney before signing this Agreement; (v) he has twenty
one (21) calendar days (the “Offer Period”) from
receipt of this Agreement to consider whether to sign it. If
Mr. Gould signs before the end of the Offer Period, Mr. Gould
acknowledges that his decision to do so was knowing, voluntary, and
not induced by fraud, misrepresentation, or a threat to withdraw,
alter, or provide different terms prior to the expiration of the
Offer Period. Mr. Gould agrees that changes or revisions to
this Agreement, whether material or immaterial, do not restart the
running of the Offer Period; (vi) Mr. Gould has seven (7) calendar
days after signing this Agreement to revoke this Agreement (the
“Revocation Period”). If Mr. Gould revokes, the
Agreement shall not be effective or enforceable and Mr. Gould shall
not be entitled to the payments or benefits provided for in
Sections 3, 4(b), or 7 of this Agreement. To be effective,
the revocation must be in writing and received by Pete Sinisgalli,
member of the Board of Directors, at Witness Systems, Inc., 300
Colonial Center Parkway, Roswell, Georgia, 30076, prior to
expiration of the Revocation Period; and (vii) this Waiver shall
not become effective or enforceable until the Revocation Period has
expired.
7.
Stock Options
. Notwithstanding anything to
the contrary set forth in any prior agreement, option grant, or
other compensatory arrangement, the following will govern the
options to purchase Company stock previously granted to Mr. Gould,
and which vest or have vested as of the last day of Mr.
Gould’s employment in accordance with the terms and
conditions of the respective stock option plans (“Option
Plans”) and/or stock option agreements (“Option
Agreements”) pursuant to which they were granted (the
“Vested Options”): Mr. Gould shall not exercise
any of the Vested Options until after the conclusion of the option
inquiry currently being undertaken by the Company and any
prohibition on exercising options has been lifted, and the Company
may instruct its Transfer Agent that Mr. Gould has so agreed and
that the Transfer Agent shall not permit any shares to be issued
pursuant to a purported exercise of a Vested Option not in
accordance with this Agreement. Mr. Gould agrees that the
Company has the right to (1) increase the exercise price of Vested
Options that were granted to Mr. Gould on or after February 10,
2000 to a price equal to the closing price of the Company’s
common stock, as reported by the NASDAQ Stock Market, Inc., on the
date that the Company determines in its sole and absolute
discretion to be the correct measurement date for such Vested
Options, or (2) make such other adjustments, as determined in the
Company’s sole and absolute discretion, as may be required to
offset the economic benefit that Mr. Gould would otherwise derive
from such lower exercise price. Subject to the adjustments
contemplated by the preceding sentence, the Vested Options shall be
exercisable until the later of
