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EXHIBIT 10.3
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement")
is made as of the 1st day of April, 2000 (the "Agreement Date"), by and between
RSA Security Inc., a Delaware corporation ("Employer"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇. ("Employee").
WHEREAS, Employer and Employee are parties to an Amended and Restated
Employment Agreement, dated as of November 1, 1997, as amended by Amendment ▇▇.
▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇ ▇, ▇▇▇▇ (▇▇ amended, the "1997 Agreement");
WHEREAS, Employer and Employee are desirous of Employee assuming the
role of Chairman of the Employer's Board of Directors (the "Board of Directors")
and President of RSA Capital Inc., a wholly owned subsidiary of Employer ("RSA
Capital");
WHEREAS, Employer and Employee are desirous of amending and restating
the 1997 Agreement to reflect Employee's roles as Chairman of the Board of
Directors and President of RSA Capital for the period, and on the terms and
conditions, set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions herein contained, the parties hereby agree that the
1997 Agreement is amended and restated in its entirety to read as follows:
Section 1. EMPLOYMENT.
Employer hereby agrees to continue to employ Employee, and Employee
accepts such continued employment, according to the terms and conditions set
forth in this Agreement.
Section 2. TERM.
The initial term of this Agreement (the "Initial Term") shall be for a
period commencing on April 1, 2000 and continuing through March 31, 2001.
Thereafter, this Agreement shall be automatically renewed for additional 90 day
periods (each, a "Renewal Term") on the same terms and conditions (except as may
be otherwise mutually agreed to in writing by the parties) unless either party
gives the other written notice of non-renewal at least sixty (60) days prior to
the expiration of the then-current term. Notwithstanding the foregoing, the
Employment Period (as defined below) may be terminated at any time upon the
occurrence of any one of the following events: (i) Employee's decision to resign
pursuant to Section 9 of this Agreement, (ii) Employer's decision to terminate
Employee, either "for cause" or other than "for cause" pursuant to Section 9, or
(iii) the parties' agreement in writing to terminate the Agreement. The period
of time between the commencement and termination of Employee's employment shall
be referred to herein as the "Employment Period."
Section 3. POSITION AND SERVICES.
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(a) Employee will occupy the position of Chairman of the Board of
Directors of and be a member of the Board of Directors,
subject to the terms of the Employer's Third Restated
Certificate of Incorporation as amended from time to time. In
addition, Employee will occupy the position of President of
RSA Capital. Any subsequent substantial diminution in the
position, office or duties of Employee (other than any such
diminution resulting from either a Reduced Employment Status
(as such term is defined in Section 10 hereof) or a Change in
Control (as such term is defined in Section 13 hereof)) or
material breach by the Employer of its obligations under this
Agreement shall be deemed a termination of this Agreement
other than "for cause" as defined in Section 9 hereof.
Employee will report directly to the Board of Directors and
shall have such duties and responsibilities as are set forth
in the Employer's Amended and Restated By-Laws, as amended
from time to time, and, with respect to the Employee's
position as President of RSA Capital, RSA Capital's By-laws,
which duties and responsibilities shall include, but not be
limited to:
(i) performing such duties and possessing such powers as are
assigned to him by the Board of Directors in Employee's
position as Chairman of the Board of Directors;
(ii) having general charge and supervision of the business of
RSA Capital in Employee's position as President of RSA
Capital; and
(iii) such other duties and responsibilities as shall be
defined by the Board of Directors.
(b) Except as otherwise provided in Section 10, Employee will be
expected to be in the full-time employment of Employer, to
devote substantially all of his business time and attention,
and exert his best efforts, to the performance of his duties
hereunder, and to serve Employer diligently and to the best of
his ability. Except as otherwise provided in Section 10,
during the Employment Period, the Employee shall devote his
full business time to the business and interests of the
Employer; provided, that, except to the extent set forth in
the Prior Agreements (as such term is defined in Section 8
hereof), nothing set forth herein shall prohibit the Employee
from engaging in other activities to the extent that such
activities do not impair the ability of the Employee to
perform his duties and obligations under this Agreement.
Section 4. COMPENSATION.
The Employer shall pay to the Employee an initial base salary (the
"Base Salary") at an annual rate of not less than $318,000, subject to
deductions for social security, state payroll and unemployment and all other
legally required or authorized deductions and withholding. Employee's salary
shall be payable at the same time and basis as Employer pays its payroll in
general. The Board of Directors shall review Employee's Base Salary during the
Employment Period in January 2001 and thereafter on an annual basis in light of
competitive compensation practices for the
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Employee's then current role and responsibilities. The base salary for 2001
shall be at an annual rate of not less than $318,000, provided that Employee
continues to be in the full-time employment of Employer. The Employee shall have
the right, by written notice to the Employer within thirty (30) days following
any decrease in Employee's Base Salary at any time during the Employment Period,
except in the event of a Reduced Employment Status, to treat such reduction as a
termination of this Agreement other than "for cause" as defined in Section 9
hereof.
Section 5. INCENTIVE PAYMENTS.
In addition to the Base Salary payable pursuant to Section 4 hereof,
Employee shall be entitled to annual performance bonuses if Employee satisfies
agreed-upon discrete goals/objectives to be contained in an annual incentive
plan for the Employee to be established by the Board of Directors in
consultation with Employee on an annual basis. The component of the annual
performance bonus attributable to Employee's role as Chairman of the Board of
Directors shall be based on agreed-upon discrete goals/objectives of Employer,
which component shall represent 25% of Employee's annual performance bonus. The
component of the annual performance bonus attributable to Employee's role as
President of RSA Capital shall be based on agreed-upon discrete goals/objectives
of RSA Capital, which component shall represent 75% of Employee's annual
performance bonus. If agreed upon by both Employer and Employee, the form of
bonus compensation attributable to Employee's role as President of RSA Capital
may be modified to include interests in any fund(s) of RSA Capital. The
Employee's incentive plan for 2000 is attached as EXHIBIT A hereto.
Section 6. DEATH OR DISABILITY DURING EMPLOYMENT.
If Employee is prevented from performing his duties hereunder by reason
of illness or injury for a period of (i) four or more consecutive months or (ii)
six months during any 12-month period as determined by a recognized physician
chosen by Employer and acceptable to Employee (the applicable date when either
of such disabling events shall occur being hereinafter referred to as the
"Effective Date of Disability"), or if Employee dies during the Employment
Period, Employer shall pay to the Employee, if the Employee is disabled, or to
Employee's spouse, the Executors under Employee's Last Will and Testament duly
admitted to probate within one year of his death or the Employee's heir at law,
if the Employee dies, in addition to such amounts (if any) as may be payable
pursuant to any short- or long-term disability or life insurance policies then
in effect and maintained by the Employer with respect to the Employee
("Disability Policies"), the compensation which would otherwise be payable to
the Employee under this Agreement through the end of the month in which the
Employee's Effective Date of Disability or death occurs, or, in the case of
disability (and assuming any Disability Policies are currently in effect) such
later date as the Employee would, if eligible, be entitled to receive benefits
under such Disability Policies. In addition, the Employer shall pay, at the time
when such bonus would normally be paid, all bonus payments under Section 5
hereof which the Board of Directors, in good faith, believed that the Employee
was entitled to in respect of the year in which the Effective Date of Disability
or death occurred.
Section 7. BENEFITS; EXPENSES.
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(a) The Employee shall be entitled to receive the same standard
employment benefits as other executives of the Employer
receive. The Employee shall be entitled to fully participate
in all of the Employer's future employee benefit programs in
accordance with their then-existing terms. The Employee shall
be entitled to reimbursement for all approved reasonable
travel and other business expenses incurred by the Employee in
connection with his services to the Employer pursuant to the
terms of this Agreement. All business expenses for which the
Employee seeks reimbursement from the Employer shall be
adequately documented by the Employee in accordance with the
Employer's procedures covering expense reimbursement and in
compliance with the regulations of the U.S. Internal Revenue
Service.
(b) The Employee shall be entitled to five weeks of vacation
during each year of the Employment Period. The Employee may
accrue and carry forward vacation time to future years;
provided, however, that in no event may the Employee carry
forward into any year in excess of five weeks of accrued paid
vacation time.
Section 8. CONFIDENTIALITY; NON-COMPETITION.
The parties acknowledge that the Employee has previously entered into a
Non-Competition Agreement and a Nondisclosure and Developments Agreement, each
initially dated as of February 13, 1987 and amended and restated as of November
1, 1997 (together, as amended and restated, the "Prior Agreements"), in
connection with the Employee's employment by the Employer. The Prior Agreements
are each incorporated herein by this reference and made a part hereof as if set
forth herein in their entirety. The parties hereby agree that the Non-Disclosure
and Non-Competition Covenant, dated as of February 13, 1987, by and between the
Employer and the Employee was terminated and of no further force and effect as
of November 1, 1997.
Section 9. TERMINATION.
This Agreement does not grant the Employee any right or entitlement to
be retained by the Employer, and shall not affect or prejudice the Employer's
right to discharge the Employee in accordance herewith. The Employee may
terminate this Agreement at any time during the Initial Term upon sixty (60)
days' prior written notice to the Employer. The Employer may terminate this
Agreement "for cause" (as defined below) at any time upon thirty (30) days'
prior written notice to the Employee. Employee shall, during such 30-day period,
be given an opportunity to defend the basis or facts giving rise to the notice.
The Employer may terminate this Agreement other than "for cause" at any time
during the Initial Term upon sixty (60) days' prior written notice to the
Employee. Either party may terminate this Agreement at any time during the
Renewal Term upon ninety (90) days' prior written notice to the other party. If
Employee is terminated either "for cause" or for reasons other than "for cause,"
Employee shall be entitled to the following severance payments:
(i) If termination occurs by the Employer other than "for cause,"
then the following severance payments (less applicable
deductions for social security, payroll and other applicable
taxes) and related arrangements will be made:
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(a) cash payments at the Employee's current monthly Base
Salary at the time of termination (less applicable
deductions) for a period of 24 months commencing with
the month immediately succeeding the month during
which the 30-day period after the giving of notice
shall have ended (the "Effective Date of
Termination"); provided, however, that if termination
occurs by the Employer other than "for cause" after
March 31, 2001, then cash payments at the Employee's
current monthly Base Salary at the time of
termination (less applicable deductions) shall be for
a period of 12 months commencing with the month
immediately succeeding the Effective Date of
Termination;
(b) in addition to (a) above, normal employee medical and
insurance benefits will be continued on an insured
basis for the Employee and for the Employee's spouse
at the Effective Date of Termination ("Spouse") until
the later to occur of (i) Employee's death or (ii)
the Spouse's death, provided that medical benefits
provided to the Employee and the Spouse pursuant to
this subparagraph (b) may be reduced from time to
time to the extent that medical benefits are provided
through Medicare or through any other employer
following the Effective Date of Termination;
(c) to the extent that all or any stock options granted
to Employee shall not have vested as of the Effective
Date of Termination, then all such stock options
shall automatically vest;
(d) the Employer shall pay to the Employee, in a single
lump sum payment within 30 days following the
Effective Date of Termination, an amount equal to a
pro rata portion of the Employee's current monthly
Base Salary at the time of termination (less
applicable deductions) with respect to the month in
which the Effective Date of Termination occurs based
upon the number of days elapsed in such month prior
to the Effective Date of Termination;
(e) the Employer shall pay to the Employee, in a single
lump sum payment within 30 days following the
Effective Date of Termination, an amount equal to the
greater of (i) a pro rata portion of the bonus
payable to the Employee pursuant to Section 5 of this
Agreement with respect to the year in which such
termination shall have occurred, calculated at 100%
of the Employee's target bonus amount, and (ii) a pro
rata portion of the actual bonus payable to the
Employee pursuant to Section 5 of this Agreement with
respect to the year in which such termination shall
have occurred (assuming the Employee had been
employed by the Employer the entire year);
(f) the Employer shall reimburse the Employee for any
reasonable legal expenses incurred by the Employee in
connection with the termination of the Agreement
(excluding any expenses incurred in contesting any
such termination, but including without limitation
any reasonable legal expenses
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incurred by the Employee in connection with the
negotiation, execution and delivery of the Consulting
Agreement referred to in (g) below); and
(g) the Employer shall negotiate in good faith with the
Employee regarding the retention of the Employee by
the Employer as a consultant for the one-year period
following the Effective Date of Termination pursuant
to a Consulting Agreement to be entered into by the
Employer and the Employee.
(ii) If Employee is terminated by the Employer "for cause," the
Employer shall (a) provide the Employee with normal employee
medical and insurance benefits for a period of six months
following the Effective Date of Termination, and (b) pay to
the Employee an amount equal to a pro rata portion of any
bonus payable to the Employee pursuant to Section 5 of this
Agreement with respect to the year in which such termination
shall have occurred based on the number of days elapsed in
such year prior to the Effective Date of Termination. Except
as set forth in the prior sentence, in the event of a
termination for cause, the Employee shall not be entitled to
any salary, severance or other payments or any benefits of any
kind beyond the Effective Date of Termination. Termination
"for cause" as used herein, and as determined by the Board of
Directors, shall include only the following Employee behavior:
(1) any act committed by Employee which shall represent (x) a
breach in any material respect of any of the terms hereof or
(y) a material breach of fiduciary duty to the Employer and/or
all of its stockholders under the laws of the State of
Delaware; (2) willful failure to carry out reasonable assigned
duties; (3) gross negligence, consisting of wanton and
reckless acts or omissions in the performance of Employee's
duties to the material detriment of Employer; (4) addiction to
drugs or chronic alcoholism which impairs the Employee's
ability to carry out his obligations under this Agreement; or
(5) any conviction of the Employee of a felony which is
subject to a jail sentence of at least three months; provided,
that in the case of a termination for cause pursuant to clause
(1), (2) or (3) of this paragraph (ii), the Employee shall be
provided with not less than 30 days' written notice thereof
from the Board of Directors or the Compensation Committee of
the Board of Directors and an opportunity to cure such event
to the reasonable satisfaction of the Board of Directors.
(iii) If Employee voluntarily resigns, then the following severance
payments (less applicable deductions for social security,
payroll and other applicable taxes) and the related
arrangements will be made:
(a) normal employee medical and insurance benefits will
be continued on an insured basis for the Employee and
for the Spouse until the latter to occur of (i)
Employee's death or (ii) the Spouse's death, provided
that medical benefits provided to the Employee and
the Spouse pursuant to this subparagraph (a) may be
reduced from time to time to the extent that medical
benefits are provided through Medicare or through any
other employer following the Effective Date of
Termination;
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(b) the Employer shall pay to the Employee, in a single
lump sum payment within 30 days following the
Effective Date of Termination, an amount equal to a
pro rata portion of the Employee's current monthly
Base Salary at the time of termination (less
applicable deductions) with respect to the month in
which the Effective Date of Termination occurs based
upon the number of days elapsed in such month prior
to the Effective Date of Termination; and
(c) the Employer shall pay to the Employee, in a single
lump sum payment within 30 days following the
Effective Date of Termination, an amount equal to a
pro rata portion of the bonus payable to the Employee
pursuant to Section 5 of this Agreement with respect
to the year in which such termination shall have
occurred (assuming the Employee had been employed by
the Employer the entire year), calculated at 100% of
Employee's target bonus amount.
Section 10. REDUCED EMPLOYMENT STATUS.
At any time during the Initial Term upon sixty (60) days' prior written
notice to Employer, or at any time during the Renewal Term upon forty-five (45)
days' prior written notice to Employer, Employee, in his sole discretion, may
elect to continue his employment with the Employer, except in a reduced
employment status with, among other factors, reduced time commitment and
compensation (the "Reduced Employment Status"), to continue until the later of
(a) October 13, 2004 and (b) the first anniversary of the effective date of the
Employee's notice pursuant to this Section 10. Under Reduced Employment Status,
Employee shall be employed by the Employer in the positions of (i) Chairman
Emeritus and, in that capacity, shall serve as a member of the Board of
Directors and (ii) Executive Advisor and, in that capacity, shall be available
at the Employer's request to advise management and perform such similar services
as may be reasonably requested by the Employer, for a minimum of five hours per
month, at the Employer's premises and under the Employer's supervision and
control; provided, however, that if Employee is not reelected to serve as a
member of the Board of Directors at any time during Employee's Reduced
Employment Status, then Employee shall retain such title and provide such
services as mutually agreed upon by Employer and Employee; it being further
understood that Employee's employment during any period of Reduced Employment
Status shall not, (i) without the Employee's consent, require more than 20 hours
per month and (ii) without the Employer's consent, be less than five hours per
month. For any required hours beyond this stated range, Employee's compensation
shall be at a rate to be agreed upon by the Employee and Employer. While under
Reduced Employment Status, Employee shall be paid a base salary of $75,000 per
annum and shall continue to receive the medical and insurance benefits
contemplated by Section 9(iii)(a). Upon electing Reduced Employment Status,
Employee shall forfeit any right to continued vesting of any then unvested
options granted to him on and after the Agreement Date; provided, however, that
any then vested options shall continue to be exercisable as provided under their
original terms.
Section 11. BREACH OR VIOLATION OF AGREEMENT.
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Any controversy or claim arising out of, or relating to, this
Agreement, or the breach thereof, shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association,
and judgment upon the award rendered may be entered in any court having
jurisdiction thereof. Notwithstanding the foregoing, the parties agree that a
breach or violation of this Agreement will result in immediate and irreparable
injury and harm to the other party, who shall have the right of an injunction,
specific performance or other equitable relief to prevent the violation of the
obligations hereunder. In addition, the prevailing party in any arbitration or
litigation relating to the interpretation or enforcement of this Agreement shall
be entitled to reimbursement of all reasonable costs and expenses (including
without limitation fees and expenses of counsel) incurred in connection
therewith.
Section 12. NOTICES.
Any notice required to be given pursuant to the provisions of this
Agreement shall be in writing and, if mailed, sent by registered or certified
mail, postage prepaid, with a copy delivered by an overnight courier service of
recognized standing, to the party named at the address set forth below, or at
such other address as each party may hereafter designate in writing to the other
party:
Employer: RSA Security Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Secretary
cc: ▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Employee: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any such notices shall be deemed to have been delivered when served
personally, or 28 hours after being mailed in the manner specified above.
Section 13. CHANGE IN CONTROL EVENT.
(a) If a Change in Control (as such term is defined below) shall
have occurred, Employee shall be entitled, at his election, to
receive, if he chooses to leave Employer's management at any
time during the first 18 months after the effective date of
the Change in Control, (a) a lump sum payment in an amount
equal to two times his then-current monthly Base Salary (less
applicable deductions) provided for in Section 4 hereof for a
12-month period, and (b) a pro rata portion of any bonus
otherwise payable to the Employee pursuant to Section 5 of
this Agreement with respect to the year in which such Change
in Control shall have occurred, calculated
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at 100% of the Employee's target bonus amount, based on the
number of days elapsed in such year prior to the Employee's
last day of full-time employment with Employer.
(b) In addition, all of the stock options granted to Employee
which shall not have vested or which shall still remain
exercisable as of the effective date of the Change in Control
shall immediately thereupon automatically vest and be free
from repurchase. However, notwithstanding any other provision
of this Agreement, in the event that within two years after
the Agreement Date, (i) a plan for a Change in Control is
initiated, (ii) the Board of Directors desires that the
transaction giving rise to such Change in Control be accounted
for as a pooling of interests and (iii) this Section 13(b) is
determined to prevent such transaction from being accounted
for as a pooling of interests, then (x) this Section 13(b)
shall be inapplicable to such transaction and (y) the
provision set forth in the last sentence of the first
paragraph of Section 12 of the 1997 Agreement shall instead
apply.
(c) For purposes of this Agreement, a "Change in Control" shall be
deemed to have taken place if:
(i) there shall be consummated any consolidation or
merger of Employer in which Employer is not the
continuing or surviving corporation or pursuant to
which shares of the Employer's capital stock are
converted into cash, securities or other property,
other than a consolidation or merger of Employer in
which each holder of the Employer's capital stock
immediately prior to the consolidation or merger has
upon consummation of the consolidation or merger the
same proportionate ownership of each class or series
of capital stock of the surviving corporation as such
holder had of each class or series of the Employer's
capital stock immediately prior to the consolidation
or merger, or any sale, lease, exchange or other
transfer (in one transaction or a series of
transactions contemplated or arranged by any party as
a single plan) of all or substantially all of the
assets of Employer; or
(ii) any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), shall after the
Agreement Date become the beneficial owner (as
defined in Rules 13(d)(3) and 13(d)(5) under the
Exchange Act), directly or indirectly, of securities
of Employer representing more than 50% of the voting
power of all then outstanding securities of Employer
having the right under ordinary circumstances to vote
in an election of the Board of Directors (for
purposes of this clause (ii), any securities of
Employer that any such person has the right to
acquire pursuant to any agreement, or upon exercise
of conversion rights, warrants or options, or
otherwise, shall be deemed beneficially owned by such
person).
Section 14. EXERCISE OF STOCK OPTIONS.
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(a) Subject to the provisions of Section 13 hereof, upon the
termination of the Employment Period, Employee shall have the
following periods during which to exercise all then vested
stock options having a grant date on or before November 1,
1997:
(i) if Employee voluntarily resigns, Employee shall have
60 days from the date of resignation during which to
exercise such vested options; and
(ii) if there is a termination other than "for cause" and
other than due to the occurrence of any of the events
referred to in Section 6 hereof, then Employee shall
have six months from such date during which to
exercise such vested options.
(b) Subject to the provisions of Section 13 hereof, upon the
termination of the Employment Period, Employee shall have the
following periods during which to exercise all then vested
stock options having a grant date after November 1, 1997:
(i) if Employee voluntarily resigns, Employee shall have
12 months from the date of resignation during which
to exercise such vested options; and
(ii) if there is a termination other than "for cause" and
other than due to the occurrence of any of the events
referred to in Section 6 hereof, then Employee shall
have twelve months from the date of such termination
during which to exercise such vested options.
(c) Upon a termination of the Employment Period "for cause," all
stock options held by the Employee shall terminate
automatically upon the Effective Date of Termination.
(d) Upon a termination of the Employment Period as a result of any
of the events referred to in Section 6 hereof, the period of
exercise of all or any portion of the Employee's then vested
stock options shall be 12 months from the Effective Date of
Disability or death.
Section 15. LIMITATIONS ON PARACHUTE PAYMENTS.
(a) In the event that the Employer undergoes a "Change in
Ownership or Control" (as defined below), a portion of any
"Contingent Compensation Payments" (as defined below) that the
Employee would otherwise be entitled to receive shall be
eliminated to the extent necessary to eliminate any "excess
parachute payments" (as defined in Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code")) for
the Employee. For purposes of this Section 15, the Contingent
Compensation Payments so eliminated shall be referred to as
the "Eliminated Payments" and the aggregate amount (determined
in accordance with Proposed Treasury Regulation Section
1.280G-1, Q/A-30 or successor provision) of the Contingent
Compensation
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Payments so eliminated shall be referred to as the "Eliminated
Amount." Notwithstanding the foregoing, no such reduction in
payments shall occur if the excess of (A) 110% of the
Eliminated Amount (computed without regard to this sentence)
over (B) the aggregate present value (determined in accordance
with Proposed Treasury Regulation Section 1.280G-1, Q/A-31,
and Q/A-32 or successor provisions) of the amount of any
additional taxes that would be incurred by the Employee if the
Eliminated Payments (determined without regard to this
sentence) were paid to him (including, state and federal
income taxes on the Eliminated Payments, the excise tax
imposed by Section 4999 of the Code payable with respect to
all of the Contingent Compensation Payments, and any
withholding taxes) is greater than zero. For purpose of the
preceding sentence, any federal or state income tax that would
be attributable to the receipt of the Eliminated Payments
shall be computed by multiplying the amount of the Eliminated
Payment by the maximum combined federal and state income tax
rate provided by law; provided, however, that if the Employee
so notifies the Employer within 90 days following the timely
filing of all relevant tax returns for the Employee for the
year or other taxable period in which the Eliminated Payments
would have been made, the Eliminated Payments shall be
recomputed based upon all of the Employee's actual tax
circumstances. If, as a result of such recomputation, there
are no Eliminated Payments, the Employee shall become entitled
to receive Contingent Compensation Payments previously treated
as Eliminated Payments within ten days of the delivery of the
aforementioned notice together with interest thereon computed
at the prime rate announced from time to time by the Wall
Street Journal compounded monthly from the date that such
payments originally would have been made.
(b) For purposes of this Section 15, the following terms shall
have the meaning given them in this subsection (b):
(i) "Change in Ownership or Control" shall mean a change
in the ownership or effective control of the Employer
or in the ownership of a substantial portion of the
assets of the Employer determined in accordance with
Section 280G(b)(2) of the Code.
(ii) "Contingent Compensation Payment" shall mean any
payment (or benefit) in the nature of compensation
that is made or supplied to a "disqualified
individual" (as defined in Section 280G(c) of the
Code) and that is contingent (within the meaning of
Section 280G(b)(2)(A)(i) of the Code) on a Change in
Ownership or Control of the Employer.
(c) The amount of any payments or other benefits otherwise due to
the Employee following a Change in Ownership or Control that
could reasonably be characterized as Contingent Compensation
Payments (as determined by the Employer) shall not be made
until 30 days after the date on which they would otherwise
have been due (the "Extended Due Date"). Within 15 days of the
date on which such payments or benefits would have originally
been due, the Employer shall determine and notify the
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Employee (with reasonable detail regarding the basis for its
conclusions) (i) whether some or all of such payments and
benefits constitute Contingent Compensation Payments and (ii)
the amount of any Eliminated Amount. On or prior to the
Extended Due Date, the Employee shall notify the Employer
either (A) that he agrees with the Employer's determination
pursuant to the preceding sentence, in which case he shall
indicate, if applicable, the Contingent Compensation Payments
that will be treated as Eliminated Payments or (B) that he
disagrees with such determination, in which case he shall
indicate those payments that should be characterized as
Contingent Compensation Payments, the amount of any Eliminated
Amount and, if applicable, the Contingent Compensation
Payments that will be treated as Eliminated Payments. The
amount and characterization of any item in the notice from the
Employee shall be final; provided, however, that in the event
that the Employee fails to notify the Employer pursuant to the
preceding sentence on or before the Extended Due Date, the
Employer's initial determination shall be final and the
Contingent Compensation Payments that will be treated as
Eliminated Payments shall be determined by the Employer in its
absolute discretion. In no event shall the Employer be liable
to the Employee as a result of any factual or legal
determination made by it pursuant to this subsection (c) or
for any information supplied by it to the Employee or his
advisors.
(d) The provisions of this Section 15 are intended to apply to any
and all payments or benefits available to the Employee under
this Agreement.
Section 16. LEGAL EXPENSES.
The Employer shall reimburse the Employee for any reasonable legal
expenses incurred by the Employee in connection with the preparation and
negotiation of this Agreement and any amendments hereto.
Section 17. ENTIRE AGREEMENT.
(a) CHANGE, MODIFICATION, WAIVER. No change or modification of
this Agreement shall be valid unless it is in writing and
signed by each of the parties hereto. No waiver of any
provision of this Agreement shall be valid unless it is in
writing and signed by the party against whom the waiver is
sought to be enforced. The failure of a party to insist upon
strict performance of any provision of this Agreement in any
one or more instances shall not be construed as a waiver or
relinquishment of the right to insist upon strict compliance
with such provision in the future.
(b) INTEGRATION OF ALL AGREEMENTS. This Agreement, together with
the Prior Agreements, constitutes the entire Agreement between
the parties and is intended to be an integration of all
agreements between the parties with respect to Employee's
service with Employer. Subject to Section 13(b) hereof, any
and all prior agreements between Employee and Employer with
respect to the subject matter hereof (other than the Prior
Agreements) are hereby revoked.
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(c) SEVERABILITY OF PROVISIONS. If for any reason any provision of
this Agreement should be declared void or invalid, such
declaration shall not affect the validity of the rest of this
Agreement, which shall remain in force as if executed with the
void or invalid provision eliminated. Each of the Prior
Agreements shall survive any termination of this Agreement in
accordance with its terms.
Section 18. BINDING EFFECT.
This Agreement shall be binding upon all parties hereto and their
heirs, successors and assigns. This Agreement shall be binding upon any
successor entity to Employer, including without limitation any successor by
merger, consolidation or sale of assets, and shall be assignable by the Employer
to any entity controlled by or under common control with the Employer.
Section 19. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the internal laws of The Commonwealth of Massachusetts, without regard to
conflicts of laws principles.
Section 20. MISCELLANEOUS.
(a) FORM. As employed in this Agreement, the singular form shall
include, if appropriate, the plural.
(b) HEADINGS. The headings employed in this Agreement are solely
for the convenience and reference of the parties and are not
intended to be descriptive of the entire contents of any
paragraph and shall not limit or otherwise affect any of
terms, provisions or construction thereof.
(c) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
EMPLOYER:
RSA SECURITY INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
Director and Chairman of the
Compensation Committee of the
Board of Directors
EMPLOYEE:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-▇▇-
▇▇
▇▇▇▇▇▇▇▇▇▇ "A"
RSAS CONFIDENTIAL
2000 COMPENSATION PLAN
▇. ▇▇▇▇▇▇▇
I. SALARY $318,000
II. BONUS** THRESHOLD PLAN STRETCH
--------- ---- -------
TARGET REVENUE (in 000's) $261M $268M $280M
----- -----
A) REVENUE 60% $114,480 $143,100 $171,720
-------- -------- --------
TARGET EPS*** 0.85 0.89 >.90
---- ---- ----
B) EARNINGS PER SHARE*** 40% $76,320 $95,400 $114,480
------- ------- --------
TOTAL BONUS $190,800 $238,500 $286,200
% OF BASE SALARY 60.00% 75.00% 90.00%
* All bonus paid after year end audit
** Bonus paid linearly to the Plan - no bonus payment if threshold is not
reached
*** On an operating basis only - including interest income - excluding one time
gains and losses and operations of RSA Capital.
Payout as a % of
Target Bonus
THRESHOLD 80%
PLAN 100%
STRETCH GOAL 120%
Stretch Goal is $280M in revenue and >90 cents EPS (including additional bonus)
No additional bonus between Plan and Stretch
Bonus will be prorated after 120%