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Exhibit 10(o)
EMPLOYMENT AGREEMENT between Rainbow Technologies, Inc., a Delaware corporation
(the "Corporation"), and Xx. Xxxxxx Xxxxxxxxx (the "Executive"), dated this
seventh day of April 1997.
W I T N E S S E T H :
WHEREAS, the Corporation desires to engage Executive to perform services
for the Corporation, and the Executive desires to perform such services, on the
terms and conditions herein set forth.
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Corporation and the
Executive as follows:
1. Term. The Corporation agrees to employ Executive, and Executive
agrees to serve, on the terms and conditions stated herein for a period
commencing April 7, 1997 and terminating December 31, 1998 or such shorter
period as provided for herein. The term shall be automatically renewed for
successive one year periods thereafter, unless terminated pursuant to the
provisions of this Employment Agreement (the "Agreement"). The period during
which Executive is employed hereunder is hereinafter referred to as the "Term."
2. Position and Duties. The Executive shall be employed in the business
of the Corporation. As of the date of this Agreement, Executive's duties include
those duties Executive is currently performing as Senior Vice President of the
Corporation. Notwithstanding the duties as described above, Executive agrees
that his duties may be, from time to time, revised or modified by the President
of the Corporation. The Executive agrees to devote his full business time during
normal business hours to the business and affairs of the Corporation and to use
his best efforts to perform faithfully and efficiently the responsibilities
assigned to him hereunder, to the extent necessary to discharge such
responsibilities, except for (i) service on corporate, civic or charitable
boards or committees not significantly interfering with the performance of such
responsibilities and (ii) periods of vacation and sick leave to which he is
entitled. It is expressly understood and agreed that the Executive's continuing
to serve on any boards and committees with which he is currently connected, as a
member or otherwise, shall be deemed not to interfere with the performance of
the Executive's services to the Corporation.
3. Compensation and Benefits.
3.1 Base Salary. The Corporation will pay Executive a base salary ("Base
Salary") of $3655 per week which will be paid in accordance with the payroll
practices of the Corporation. The Base Salary shall be reviewed at least once
each year starting in 1999 and shall be increased at any time and from time to
time by action of the President, Board of Directors (the "Board") or any
committee thereof.
3.2 Annual Bonus. In addition to Base Salary, the Executive shall have
an opportunity to earn or be awarded, for each fiscal year during the Term, an
annual bonus ("Annual Bonus"), in cash, as established from time to time by the
Board. Each such Annual Bonus shall be payable no later than 60 days subsequent
to the end of the Corporation's fiscal year. In the event of the termination of
this
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Agreement for any reason, the Executive shall receive the Annual Bonus prorated
to the date of such termination.
3.3 Incentive, Retirement and Savings Plan. In addition to the Base
Salary and Annual Bonus, the Executive shall be entitled to participate in all
incentive, retirement and savings plans and programs ("Incentives"), if any, and
as established from time to time by the Corporation provided Executive meets the
eligibility requirements therefor.
3.4 Benefit Plans. The Executive and/or his spouse and dependents, as
the case may be, shall be entitled to all benefits under all medical, dental,
vision, disability, executive life, group life, accidental death and travel
accident insurance plans and programs ("Benefit Plans"), if any, and as
established from time to time by the Corporation provided the Executive meets
the eligibility requirements therefor.
3.5 Fringe Benefits. The Executive and/or his spouse and dependents, as
the case may be, shall be entitled to fringe benefits ("Fringe Benefits"),
including, but not limited to, golf club and luncheon club dues and expenses, an
automobile allowance, parking, personal income tax preparation services and
financial counseling services, if any, and as established from time to time by
the Corporation provided the Executive meets the eligibility requirements
therefor.
3.6 Office and Support Staff. The Executive shall be entitled to an
office and to administrative assistance commensurate with his responsibilities
and title and consistent with the Corporation's policies.
3.7 Vacation. The Executive shall be entitled to paid vacation in
accordance with the policies established from time to time by the Corporation.
4. Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred or expended by the Executive
in fulfillment of the duties hereunder. Executive shall provide documentation of
such expenses in accordance with the procedures established from time to time by
the Corporation.
5. Termination.
5.1 Death. The Executive's employment shall terminate automatically upon
the Executive's death ("Death").
5.2 Disability. The Corporation may terminate the Executive's
employment, after having established the Executive's "Disability" (as defined
below), by giving to the Executive notice of its intention to terminate his
employment effective on the 90th day after such notice (the "Disability
Effective Date") if within such 90-day period the Executive fails to return to
full-time performance of his duties. For purposes of this Agreement,
"Disability" means a disability which, after the expiration of more than 26
weeks after its commencement, is determined to be total and permanent by a
physician selected by the Corporation or the insurers providing disability
insurance to the Company and consented to by the Executive or his legal
representative (such consent not to be withheld unreasonably).
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5.3 Cause. The Corporation may terminate the Executive's employment for
Cause ("Cause"). For purposes of this Agreement, "Cause" means (i) an act or
acts of dishonesty on the Executive's part which result in or are intended to
result in his substantial personal enrichment at the expense of the Corporation
or (ii) repeated violations by the Executive of his obligations under Article 2
of this Agreement, which violations are demonstrably willful and deliberate on
the Executive's part and which were intended to result in or have resulted in
material injury to the Corporation.
5.4 Without Cause. The President or the Board may terminate the
Executive's employment without cause ("Without Cause") upon 60 days notice.
5.5 Good Reason. The Executive may terminate his employment for Good
Reason ("Good Reason"). For purposes of this Agreement, "Good Reason" is defined
as set forth in Articles 5.5.1 through 5.5.4 below.
5.5.1 Adverse Change. Without the express written consent of the
Executive, (i) the assignment to the Executive of any duties inconsistent in any
substantial respect with the Executive's position, authority or responsibilities
as contemplated by Article 2 of this Agreement, or (ii) any other substantial
adverse change in such position including titles, authority or responsibilities.
5.5.2 Failure to Comply. Any failure by the Corporation to comply
with any of the provisions of Article 3 of this Agreement, other than an
insubstantial and inadvertent failure remedied by the Corporation promptly after
receipt of notice thereof given by the Executive.
5.5.3 Unpermitted Termination. Any purported termination by the
Corporation of the Executive's employment otherwise than as permitted by this
Agreement, it being understood that any such purported termination shall not be
effective for any purpose of this Agreement.
5.5.4 Failure to Assume. Any failure by the Corporation to obtain
the assumption and agreement to perform this Agreement by a successor as
contemplated by Article 11.
5.5.5 Determination of Good Reason. For the purposes of this
Agreement, any final determination of "Good Reason" shall be made solely by the
Corporation's independent auditors.
5.5.6 Good Faith. In the event that the Executive shall in good
faith give a "Notice of Termination," as hereinafter defined in paragraph 5.8
hereof, for Good Reason and it shall thereafter be determined that Good Reason
did not exist, the employment of the Executive shall, unless the Corporation and
the Executive shall otherwise mutually agree, be deemed to have terminated at
the date of the giving of such purported Notice of Termination. In such event,
the Executive shall be deemed to have elected Voluntary Retirement and shall be
entitled to receive only those payments and benefits which he would have been
entitled to receive at such date under Article 6.3 of this Agreement.
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5.6 Voluntary Retirement. At any time after the effective date of the
Agreement, the Executive may terminate his employment by electing voluntary
retirement ("Voluntary Retirement").
5.7 Failure to Relocate. The Executive's employment shall terminate if
executive and his family do not relocate to Southern California by September 30,
1998.
5.8 Change of Control. In the event of a Change of Control, this
Agreement shall automatically terminate, and a separate Change of Control
Agreement shall become effective. For purposes of this Agreement, "Change of
Control" shall be deemed to have occurred if (i) a third person, including a
"group" as defined in Article 13(d)(3) of the Securities Exchange Act of 1934,
becomes the beneficial owner of shares of the Corporation having (a) 30% or more
of the total number of votes that may be cast for the election of directors of
the Corporation in 1997; (b) 25% or more of the total number of votes that may
be cast for the election of directors of the Corporation in 1998 and thereafter;
or (ii) as the result of, or in connection with, any cash tender or exchange
offer, merger of other business combination, sale of assets or contested
election, or any combination of the foregoing transactions (a "Transaction"),
the persons who were members of the Board before the Transaction shall cease to
constitute a majority of the Board or of the members of the board of directors
of any successor to the Corporation.
5.9 Notice of Termination. Any termination by the Corporation for Cause,
Without Cause or Failure to Relocate, or by the Executive for Good Reason or
election of Voluntary Retirement shall be communicated by Notice of Termination
to the other party hereto given in accordance with Article 12. For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated and (iii) if the termination date is other than the date of receipt of
such notice, specifies the termination date of this Agreement which date shall
be in accordance with the specific termination provision in this Agreement
relied upon.
5.10 Date of Termination. For purposes of this Agreement, the "Date of
Termination" shall mean the date the President receives the Notice of
Termination or any later date specified therein, as the case may be.
Notwithstanding any contrary provision contained in this Agreement, (i) if the
Executive is terminating this Agreement in order to elect Voluntary Retirement,
the Date of Termination shall not be the date of receipt of such Notice of
Termination but shall be a date specified therein, which date shall be not less
than 120 days after giving such Notice of Termination; (ii) if the Executive's
employment is terminating due to Disability, the Date of Termination shall be
the Disability Effective Date; (iii) if the Executive's employment terminates
due to the Executive's death, the Date of Termination shall be the date of
death; and (iv) if the Executive's employment is terminated Without Cause or for
Failure to Relocate, the Date of Termination shall not be the date of receipt of
such Notice of Termination but shall be a date specified therein, which date
shall be not less than 60 days after giving such Notice of Termination.
6. Obligations of the Corporation upon Termination.
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6.1 Death. If the Executive's employment is terminated by reason of the
Executive's death, except as described in the next sentence, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement other than those obligations accrued
hereunder at the date of his death. Anything in this Agreement to the contrary
notwithstanding, the Executive's spouse and dependents shall be entitled to
continue to receive the benefits under Benefit Plans and Fringe Benefits for 12
months subsequent to the Date of Termination.
6.2 Cause. If the Executive's employment shall be terminated for Cause,
the Corporation shall pay the Executive his Base Salary and any other accrued
obligations through the Date of Termination. The Corporation shall have no
further obligations to the Executive under this Agreement.
6.3 Voluntary Retirement. The Corporation shall have no further
obligation to the Executive under this Agreement. If the Executive elects
Voluntary Retirement on or after the Early Retirement Date, the Corporation
shall pay the Executive his Base Salary and any other accrued obligations
through the Date of Termination.
6.4 Good Reason, Without Cause, and Disability. If the President shall
terminate the Executive's employment either Without Cause or for Disability, or
if the Executive shall terminate his employment for Good Reason:
6.4.1 Payments. The Corporation shall pay to the Executive the
aggregate of the amounts determined pursuant to Articles 6.4.1 (i) and
6.4.1(ii):
(i) if not already paid, the Executive's Base Salary and accrued
obligations through the Date of Termination, to be paid within 30 days after the
Date of Termination;
(ii) 100% of the Executive's "Base Amount". Base Amount is the
aggregate of the Executive's Base Salary and Annual Bonus paid or due to
Executive in the fiscal year prior to the year in which termination occurred.
Said 100% of the Base Amount shall be paid to the Executive in 12 equal monthly
installments commencing within 30 days after the Date of Termination.
6.4.2 Stock Options. All stock options and stock appreciation
rights, if any, granted to the Executive which are not exercisable at the Date
of Termination, shall become fully exercisable as of the Date of Termination.
6.4.3 Benefits. For 12 months subsequent to the Date of
Termination, the Corporation shall continue Benefit Plans and Fringe Benefits to
the Executive and/or his spouse and dependents.
6.5 Change of Control. Notwithstanding anything in this Agreement to the
contrary, if the Executive's employment shall be terminated due to a Change of
Control, the Corporation shall have no further obligation to the Executive under
this Agreement.
6.6 Failure to Relocate. If the Executive's employment is terminated due
to Failure to Relocate, the Corporation shall have no further obligation to the
Executive under this Agreement. The
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Corporation shall pay the Executive his Base Salary and accrued Annual Bonus and
any other accrued obligations through the Date of Termination.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Corporation or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
stock option or other Agreements with the Corporation or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan or program of the Corporation or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan or program.
8. Full Settlement. The Corporation's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Corporation may have against the Executive or others. The Corporation agrees
to pay, to the full extent permitted by law, all legal fees and expenses
including costs of litigation which the Executive may reasonably incur as a
result of any contest (regardless of the outcome thereof) by the Corporation or
others of the validity or enforceability of, or liability under, any provision
of this Agreement.
9. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Corporation all secret or confidential
information, knowledge or data relating to the Corporation or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during his employment by the Corporation or any of its
affiliated companies and which shall not be public knowledge. After termination
of the Executive's employment with the Corporation, he shall not, without the
prior written consent of the Corporation, communicate or divulge any such
information, knowledge or data to anyone other than the Corporation and those
designated by it. In no event shall an asserted violation of the provisions of
this Article 9 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
10. Covenant Not to Compete. In view of the fulfillment of Executive's
obligations hereunder and (i) the unique and valuable services it is expected
Executive will render to the Corporation, (ii) Executive's knowledge of the
clients, trade secrets, and other proprietary information relating to the
business of the Corporation and its customers and suppliers, and (iii) similar
knowledge Executive has regarding the Corporation, and in consideration of the
compensation to be received hereunder and as a condition to the performance by
Corporation of its obligations under this Agreement, Executive agrees that if
this Agreement is terminated due to Disability, Good Reason, a Change of Control
or for Without Cause that for the period of one (l) year after the Date of
Termination the Executive shall not directly or indirectly through any other
person, firm or Corporation:
(i) compete with or be engaged in the same business or "participate in"
any other business or organization which during such
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one year period competes with or is engaged in the same business as the
Corporation, which business, for the purposes of this Agreement, will be limited
to the area of "software execution control," "network license management
control," "information security" and "data access control" within the computer
industry, in any geographical area in which the Corporation conducts such
business except that in each case the provisions of this Article 10 will not be
deemed to be breached merely because Executive owns not more than 5% of the
outstanding common stock of a publicly owned corporation, or by membership upon
any board of directors of a publicly owned corporation where Executive attained
such position during the Term and such position was deemed not to interfere with
the terms of this Agreement. The term "participate in" shall mean: "directly or
indirectly, for his own benefit or for, with, or through any other person, firm,
or corporation, own, manage, operate, control, loan money to, or participate in
the ownership, management, operation, or control of, or be connected as a
director, officer, employee, partner, consultant, agent, independent contractor,
or otherwise with, or acquiesce in the use of his name." Executive will not
directly or indirectly reveal the name of, solicit or interfere with, or
endeavor to entice away from the Corporation any of its customers or employees.
Executive will not directly or indirectly employ any person who, at any time up
to such cessation, was an employee of the Corporation, within a period of one
year after such person leaves the employ of such Corporation. Executive agrees
that the provisions of this Article 10 are necessary and reasonable to protect
the Corporation in the conduct of its business. If any restriction contained in
this Article 10 shall be deemed to be invalid, illegal, or unenforceable by
reason of the extent, duration, or geographical scope thereof, or otherwise,
then the court making such determination shall have the right to reduce such
extent, duration, geographical scope, or other provisions hereof, and in its
reduced form such restriction shall then be enforceable in the manner
contemplated hereby.
10.1 Breach. If Executive commits a breach of any of the provisions of
this Article 10, Corporation shall have the right and remedy to have such
provisions specifically enforced by any court having equity jurisdiction. The
foregoing right and remedy shall be in addition to any other remedy (including
without limitation damages) to which Corporation may be entitled.
11. Successors.
11.1 Assignment by Executive. This Agreement is personal to the
Executive and without the prior written consent of the Corporation shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
11.2 Assignment by Corporation. Notwithstanding anything in this
Agreement, Executive agrees that this Agreement may be assigned by the
Corporation.
11.3 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the Corporation and its successors. The Corporation shall require
any successor to all or substantially all of the business and/or assets of the
Corporation, whether directly or indirectly, by purchase, merger, consolidation,
acquisition of stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in
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same manner and to the same extent as the Corporation would be required to
perform if no such succession had taken place.
12. Miscellaneous.
12.1 Modifications. This Agreement sets forth the entire understanding
of the parties with respect to the subject matter hereof, and is supplemented by
the offer letter dated February 28, 1997. This agreement may be modified only by
a written instrument duly executed by each party.
12.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without reference to
principles of conflict of laws. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
12.3 Notice. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xx. Xxxxxx Xxxxxxxxx
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If to the Corporation:
Xxxxxx Xxxxxx, President
Rainbow Technologies, Inc.
00 Xxxxxxxxxx
Xxxxxx, XX 00000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressees.
12.4 Equitable Relief. Since a breach of the provisions of this
Agreement, particularly with respect to Article 10, could not adequately be
compensated by money damages, the Corporation shall be entitled, in addition to
any other right and remedy available to it, to an injunction restraining such
breach or a threatened breach, and in either case no bond or other security
shall be required in connection therewith, and Executive hereby consents to the
issuance of such injunction.
12.5 Relationship of Parties. Except for authority granted to Executive
by the President in order to enable Executive to fulfill the obligations set
forth in this Agreement, nothing contained in this Agreement shall authorize,
empower, or constitute Executive the agent of the Corporation in any manner;
authorize or empower Executive to assume or create any obligation or
responsibility whatsoever, express or implied, on behalf of or in the name of
the Corporation.
12.6 Waiver. Any waiver by any party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or any breach of any other provision of this Agreement.
The failure of a party to insist upon
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strict adherence to any term of this Agreement on one or more occasions shall
not be a waiver or deprive the party of the right hereunder to insist upon
strict adherence to that term or any other term of this Agreement. Any waiver
must be in writing and signed by the waiving party.
12.7 Separability. If any provision of this Agreement is invalid,
illegal, or unenforceable, the balance of this Agreement shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
12.8 Headings. The headings in this Agreement are solely for convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement.
12.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 Withholdings. The Executive agrees that the Corporation shall
withhold from any and all payments required to be made to Executive pursuant to
this Agreement all federal, state, local and/or other taxes or contributions
which the Corporation determines are required to be withheld in accordance with
applicable statutes and/or regulations from time to time in effect provided,
however, that such withholding shall be consistent with the calculations made by
the Corporation.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Corporation has
caused these presents to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its Secretary all as of
the day and year first above written.
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Xx. Xxxxxx Xxxxxxxxx
ATTEST:
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Xxxxxx X. Xxxxxx
President
Rainbow Technologies, Inc.