SEPARATION
AGREEMENT
This Separation
Agreement (or “ Agreement ”) is entered into by
and between Gary L. Lau (“ Employee ”)
and Network Equipment Technologies, Inc. (which, with its
subsidiaries and affiliates including NET Federal, Inc.,
collectively are called in the singular “ NET
”).
1. Last Day of
Work . Employee was employed by NET as a Sr. Vice
President in Dulles, Virginia, until April 15, 2009, when
Employee’s employment terminated (the “ Termination
Date ”).
2. Final
Regular Pay . Regardless of whether Employee accepts this
Agreement, Employee has been or will be:
a. paid all earned salary and
accrued and unused vacation owed through the Termination
Date;
b. paid all due as of the
Termination Date, in accordance with and at the commission rates in
the Sales Compensation Plan that was in effect immediately prior to
the Termination Date;
c. eligible to continue
Employee’s health insurance pursuant to COBRA; and
d. eligible to exercise
Employee’s stock options that have vested by the Termination
Date, subject to the agreement and plan concerning such options,
including the time limits for exercise (generally, three months
after the Termination Date, except as modified herein).
3.
Separation Payments and Benefits . In consideration of
Employee’s acceptance of this Agreement and compliance with
the promises made herein, including the covenants set forth in
section 4 below, NET will provide Employee with the following
monies and benefits (collectively, the “ Separation
Payments and Benefits ”) to which he otherwise would not
be entitled:
a. an amount equal to two (2) times
Employee’s ending base salary of $205,000 per annum, paid in
regular increments over two (2) years (the “ Separation
Payments Period ”) on the same dates as NET’s
regularly scheduled payroll dates, less applicable payroll tax
withholdings and deductions, provided that no such payments shall
be due before the first payroll date after this Agreement’s
Effective Date as defined in section 13 below;
b. payment of Employee’s
premiums for COBRA benefits through eighteen (18) months, provided
that Employee first signs and returns a COBRA enrollment form,
which will be sent to Employee’s home address within three
(3) weeks of the Termination Date; and
c. continued exercisability by
Employee until the last day of the Separation Payments Period, of
all of Employee’s NET stock options that (i) have vested as
of the Termination Date and (ii) have an exercise price of $7.00
per share or less.
4.
Employee’s Covenants During the Separation Payments
Period . During the Separation Payments Period, Employee
shall not:
a. be involved with, as a partner,
employee, consultant, director, owner or otherwise (except as a
passive investor of less than five percent (5%) of total debt
and equity, and other than in a capacity rendering services that
are outside the scope of the work that Employee performed for NET),
any entity whose core business includes the development or
marketing of networking products that are voice-over-IP (VoIP)
gateways or time division multiplexing (TDM) networking
equipment;
b. participate in any discussion
with any stockholder of NET regarding, in whole or in part, any
topic directly or indirectly involving NET;
c. solicit the services of any
person who is then in the employ of NET;
d. in any way disrupt or wrongfully
interfere with NET’s business or its relationship with its
employees, customers, resellers, distributors or other entities
with whom NET has a business relationship (collectively,
“Business Partners”); nor
e. take any action that might
deteriorate NET’s business position with regards to its
Business Partners or the reputation of NET, its management, or its
products.
In the event of a breach
of any of these covenants, all of which are material terms of this
Agreement, the resulting damage caused to NET would be too
difficult or impractical to calculate. Accordingly, in the
event of a breach, (i) all Separation Payments and Benefits
shall cease (including the continued exercisability of NET stock
options) and NET will be relieved of the obligation to make or
provide any future Separation Payment or Benefit to Employee and,
to the extent that any Separation Payment or Benefit already has
been made, Employee will return such payment or the value of such
benefit to NET as liquidated damages and not by way of penalty.
In addition, NET will be entitled to obtain any other legal
or equitable remedies from Employee’s breach.
5.
Responsibility for Taxes. Employee is solely
responsible for all tax obligations and payments that may arise
from this Agreement, and shall indemnify NET against any claim or
liability therefor.
6.
Release of Claims .
a. For and in consideration of
NET’S acceptance of this Agreement and performance of its
obligations under it, including the obligation to provide the
Separation Payments and Benefits, and on behalf of Employee and
Employee’s representatives, heirs, executors, successors,
administrators, and assignees, and each of them, Employee hereby
completely releases and forever discharges NET from all claims,
rights, demands, actions, obligations, liabilities, debts and
causes of action of any and every kind, nature and character
whatsoever, known or unknown, that Employee now may have or ever
has had against NET and its parents, affiliates, subsidiaries,
directors, officers, employees, agents, successors, assigns,
insurers, and attorneys (the “ Released Claims
”). The Released Claims include, and are not limited
to, all claims arising from or in any way connected with
Employee’s employment by NET or the termination of that
employment; all claims arising under (as amended) Title
