Resignation Agreement
RESIGNATION AGREEMENT dated as of July 23, 2002, between Richard Belluzzo
("Belluzzo") residing at [redacted] Seattle, Washington and
Microsoft Corporation ("Microsoft") ("Agreement").
1. Resignation. Belluzzo hereby acknowledges his voluntary and irrevocable
resignation from the offices of President and Chief Operating Officer effective
May 1, 2002. In addition, Belluzzo voluntarily and irrevocably resigns his
employment with Microsoft effective August 23, 2002 ("Resignation Date"). Except
as expressly modified by paragraphs 2, 3 and 4 of this Agreement, Belluzzo's
existing compensation and benefits shall remain in place until the Resignation
Date. In the event that Belluzzo elects to resign his employment prior to the
Resignation Date, any and all compensation and stock option vesting will cease
on the last day of his employment with Microsoft except as set forth below in
paragraph 2. In consideration of Belluzzo signing this Agreement and his
executing a general release of claims in a form acceptable to Microsoft
("Release"), Microsoft has agreed to undertake the commitments described in
Paragraphs 2 and 3 below, some or all to which Belluzzo would not otherwise be
entitled.
2. Bonus and Other Consideration. In consideration of Belluzzo irrevocably
resigning his employment and office as set forth in Section 1, signing this
Agreement, delivering an effective and timely Release and honoring the
commitments undertaken herein, and conditioned upon each of the foregoing events
having occurred, Microsoft agrees to: (1) take the actions described in
Paragraph 3 below; and (2) award Belluzzo a bonus under the Partner Bonus Plan
for the fiscal year ending June 30, 2002 in the amount of $350,000, which
amount exceeds the amount to which Belluzzo would be entitled as of right under
the Partner Bonus Plan. This bonus shall be payable on August 15, 2002 in
accordance with Microsoft's regular payroll procedures for payment of such
bonuses (including tax withholding). Belluzzo acknowledges and agrees that he is
not eligible for and waives any and all rights to a bonus under the Partner
Bonus Plan for the fiscal year beginning July 1, 2002 and ending June 30, 2003.
Nothing in this Agreement represents a waiver by Belluzzo of any rights he might
otherwise have, including to be paid accrued vacation, receive health or other
insurance, or exercise his stock options in accordance with Microsoft's stock
option plans except as set forth in Paragraph 3.
3. Cancellation of Options. In connection with option grants made September 1,
1999 for 1,000,000 shares, March 6, 2000 for 1,000,000 shares, May 30, 2000 for
500,000 shares and May 30, 2000 for 1,000,000 shares (the "99/00 Options"), on
December 12, 2000 Microsoft and Belluzzo entered into an arrangement whereby
Belluzzo was advanced the sum of $15,000,000 which represented a minimum benefit
to be received from the potential exercise of the 99/00 Options unless Microsoft
terminated his employment with cause or Belluzzo terminated without good reason.
The advance was acknowledged by a promissory note a copy of which is attached as
Exhibit A (the "Note"). In lieu of the provisions in the Note, the parties have
parties have agreed that the 99/00 Options shall be cancelled as of the
Resignation Date and Belluzzo shall retain all funds previously advanced.
Microsoft shall forgive the remaining unpaid balance of interest and principal
owing under the Note. Microsoft will thereafter promptly cancel the Note and
return it to Belluzzo. Belluzzo will execute such instruments as are reasonably
requested by Microsoft to evidence surrender and cancellation of the 99/00
Options. The forgoing arrangements shall supercede any conflicting terms of the
Note or any other oral or written agreement between the parties. Belluzzo
understands that forgiveness of the Note and cancellation of the 99/00 Options
will constitute ordinary income taxable to him, and which will be reported by
Microsoft as income to him. Accordingly, Belluzzo agrees to pay to Microsoft not
later than October 1, 2002, and Microsoft shall timely pay to the United States
Treasury the amount of federal tax and employment withholding Microsoft is
required to withhold with respect to the debt forgiven. The parties will execute
such instruments and documentation as is reasonably necessary to evidence
withholding and payment of the withheld sum.
1.
4. Miscellaneous. This Agreement and the Release contain the entire
agreements and all the promises and covenants exchanged by the parties and merge
any and all prior written and oral communications concerning the financial terms
relating to Belluzzo's resignation. In executing this Agreement, each party
warrants that he or it is relying solely upon his or its own judgment and
knowledge, and that he or it is signing in the absence of any caercion or duress
whatsoever. The parties agree that the provisions of this Agreement are
severable. In the event that any provision is found to be unlawful or
unenforceable, the remaining provisions shall remain in full force and effect.
The parties further agree that all questions with respect to the construction of
this Agreement and the rights and liabilities under it shall be governed by the
laws of the State of Washington, and any dispute arising in connection with the
execution and/or operation of this Agreement shall be determined in a Washington
court of competent jurisdiction, to whose personal jurisdiction Belfuzzo
consents to submit. In the event suit is commenced to enforce this Agreement,
the substantially prevailing party shall be entitled to an award of his or its
reasonable attorneys' fees and costs. This Agreement shall bind the heirs,
successors, representatives, and assigns of each party.
Microsoft Corporation
/s/ Richard Belluzzo By /s/ Steven A. Ballmer
-------------------- ----------------------------------
Richard Belluzzo Steven A. Ballmer, Chief Executive
Officer
Richard Belluzzo Resignation Agreement
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