AGREEMENT
Exhibit 10.1
This Agreement is entered into by and between SafeNet, Inc. (“SafeNet”) and Xxxxxxx Xxxxxx
(“Xx. Xxxxxx”), the Chairman and Chief Executive Officer of SafeNet.
In consideration of the covenants undertaken and contained herein, the adequacy of which is
herein acknowledged, the parties agree as follows:
1. In accordance with Section 8 of the Employment Agreement between Xx. Xxxxxx and SafeNet,
dated December 12, 2001, as amended by agreement dated as of September 1, 2004 (“Employment
Agreement”), Xx. Xxxxxx hereby gives notice of the resignation of his employment under the
Employment Agreement, with such resignation to become effective on December 31, 2006 (the
“Separation Date”). In addition, Xx. Xxxxxx hereby resigns effective October 17, 2006 from any and
all positions he holds with SafeNet, including his position as Chief Executive Officer and a member
of the Board of Directors of SafeNet and his positions as an officer, employee or Board member of
any SafeNet subsidiary.
2. Xx. Xxxxxx will remain as an employee of SafeNet for the purpose of working with SafeNet on
the management transition and other significant issues during the period referred to in Section 1.
In consideration for the services rendered under the Employment Agreement and this Agreement,
through the Separation Date SafeNet will pay to Xx. Xxxxxx his base salary (including the ten
percent increase in such salary due starting as of July 1, 2006), certain existing benefits
provided to executive officers of the Company (i.e., family medical, dental, disability and
life insurance, participation in pension and retirement plans, and use of his automobile, cell
phone, Blackberry, office space and secretarial support) and accrued vacation, and shall continue
to fund the variable life insurance policy provided for in Section 5 of the Employment Agreement
through the Separation Date. Except as otherwise provided herein or in the Employment Agreement,
as of the Separation Date Xx. Xxxxxx will be eligible to receive the benefits provided to former
employees of SafeNet under SafeNet’s employee benefit plans, in accordance with the terms and
conditions of each such plan.
3. Both Xx. Xxxxxx and SafeNet reserve all rights under the Employment Agreement. For the
avoidance of doubt, Xx. Xxxxxx retains the right to contest any position taken or determination
made by the Personnel Committee, the Special Committee, or the Board pursuant to the Employment
Agreement or this Agreement, including but not limited to Paragraph 5, 6, and 10 of this Agreement.
4. SafeNet will not consider Xx. Xxxxxx’x resignation to be a resignation within the meaning
of Section 9(b) of the Employment Agreement or, except as expressly provided herein, for any other
purpose relating to the Employment Agreement.
5. The Personnel Committee of the SafeNet Board of Directors will advise Xx. Xxxxxx by March
29, 2007 (“Decision Date”) whether it has determined that
Xx. Xxxxxx should be treated as having been terminated for Cause under the Employment
Agreement, or whether the Committee agrees with Xx. Xxxxxx’x position that he has resigned his
employment for a Good Reason. None of the periods of time set forth in the Employment Agreement
within which events must occur or actions must be taken shall begin to run until the Personnel
Committee determines whether Xx. Xxxxxx should be considered to have been terminated for Cause, or
whether Xx. Xxxxxx has resigned his employment for a Good Reason (provided that any required
six-month waiting period under Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), shall begin to run as of the Separation Date). SafeNet and Xx. Xxxxxx agree that no
statutes of limitations on any claims Xx. Xxxxxx or SafeNet may have under the Employment Agreement
shall begin to run until the Decision Date or such earlier date as the Personnel Committee
determines whether Xx. Xxxxxx should be considered to have been terminated for Cause or whether Xx.
Xxxxxx has resigned his employment for a Good Reason. Subject to the foregoing sentences of this
Section 5, if the Personnel Committee determines that Xx. Xxxxxx should be considered to have been
terminated for Cause or whether Xx. Xxxxxx has resigned his employment for a Good Reason, that
determination will have the same effect under the Employment Agreement as if the termination or
resignation was effective as of the date of this Agreement. If the Personnel Committee fails to
make a decision by the Decision Date, Xx. Xxxxxx will be deemed to have resigned his employment for
Good Reason as of the date of this Agreement with entitlement to all the rights the benefits
provided for in the Employment Agreement. Notwithstanding anything in this paragraph, none of the
payments or benefits conferred to Xx. Xxxxxx under Paragraphs 2, 7 or 9 of this Agreement may be
revoked by the Company as a result of the decision of the Personnel Committee described herein.
6. Any payments or benefits to which Xx. Xxxxxx may be due under Sections 5 and 9 (other than
the health benefits described in paragraph 7 of this Agreement) of the Employment Agreement shall
not become due until ten days after the Personnel Committee determines whether Xx. Xxxxxx should be
considered to have been terminated for Cause or whether Xx. Xxxxxx resigned his employment for a
Good Reason, and shall be made at that time in accordance with the terms of the Employment
Agreement; provided, however, that the foregoing shall not cause Xx. Xxxxxx to forfeit or waive any
claim for benefits he may have under a plan, policy or arrangement that is an “employee benefit
plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended. If the Personnel Committee fails to make a decision by the Decision Date, Xx. Xxxxxx will
receive the payments and benefits he is entitled to by April 8, 2007. The Company agrees to
provide Xx. Xxxxxx with written notice within three business days of the release of its restated
financial statements for fiscal years 2000 through 2005 and first quarter 2006 specifying which
options, if any, he received where the Company has changed the measurement date such that there is
an accounting charge. With regard to any such options for which the Company has changed the
measurement date such that there is an accounting charge, Xx. Xxxxxx agrees that he will not
exercise such options for SafeNet stock until the Decision Date or such earlier date on which the
Personnel Committee reaches its decision under Paragraph 5 of this Agreement. With regard to any
options for which the Company has not changed the measurement date such that there is an accounting
charge, Xx. Xxxxxx may exercise his
rights under those options and may participate in a Change of Control or other sale of
business transaction in the same manner as other option holders. SafeNet further agrees that the
foregoing restrictions on exercise of Xx. Xxxxxx’x stock options shall not apply to those options
granted on January 1, 2000 and shall not restrict in any way Xx. Xxxxxx’x ability to purchase,
sell, tender or exchange his SafeNet stock. In addition to any amount that may become payable to
Xx. Xxxxxx under Sections 5 and 9 of his Employment Agreement, as soon as practicable following the
Separation Date (subject to any required six-month waiting period under Section 409A of the Code),
the Company shall make a lump sum payment to Xx. Xxxxxx equal to $27,000.00.
7. Xx. Xxxxxx and his family shall continue to receive the medical benefits SafeNet currently
provides him until December 31, 2006 at no cost to them (other than normal co-payment amounts).
Thereafter, following Xx. Xxxxxx’x termination of employment on December 31, 2006, Xx. Xxxxxx and
his family shall be entitled to receive COBRA benefits for the maximum continuation period (as
applicable to Xx. Xxxxxx (for a period of eighteen months) and each covered member of his family
(for a period of thirty-three months)) permitted under COBRA under the medical plans maintained by
the Company. With regard to the Company’s fully-insured plans (Execucare and dental), all premiums
for such COBRA coverage shall be paid by the Company. With regard to the Company’s self-insured
plan (Blue Cross/Blue Shield), all premiums for such COBRA coverage shall be paid by Xx. Xxxxxx.
8. Xx. Xxxxxx and SafeNet waive their right to notice of any termination for Cause under
Section 8(a) of the Employment Agreement.
9. Xx. Xxxxxx’x resignation under this Agreement will not affect any advancement of fees or
indemnification to which he otherwise would be entitled under applicable state law, under the
Articles of Incorporation and Bylaws of SafeNet, or under the Employment Agreement. SafeNet also
agrees that all such rights to indemnification shall apply to any claims relating to or arising
from his employment from the date of this Agreement through the Separation Date.
10. Xx. Xxxxxx and the Special Committee of the SafeNet Board of Directors and the Personnel
Committee will attempt to reach agreement on any amount to be paid or repaid to SafeNet by Xx.
Xxxxxx, and any amount to be paid by SafeNet to Xx. Xxxxxx, in connection with the Employment
Agreement and with respect to any actual or potential claims arising out of the process of granting
stock options at SafeNet (and the accounting for and disclosure of such stock option grants) or any
other claims asserted against Xx. Xxxxxx in stockholder derivative actions, and any actual or
potential claims Xx. Xxxxxx may assert against SafeNet. Nothing in this Agreement shall preclude
Xx. Xxxxxx from asserting any claim for benefits or compensation under his Employment Agreement,
including any claim for incentive compensation or stock options under Section 5 of his Employment
Agreement. To the extent that any agreement between the parties under this paragraph contains a
release of claims asserted against Xx. Xxxxxx in pending stockholder derivative actions, the
parties agree that such a release shall be subject to approval by the appropriate courts in which
any stockholder derivative actions are then pending.
11. SafeNet and Xx. Xxxxxx agree that Xx. Xxxxxx shall be provided a reasonable opportunity to
review and comment on SafeNet’s proposed public statement relating to this Agreement and his
separation from SafeNet, and that SafeNet will consider, in good faith, any comments made by Xx.
Xxxxxx; provided that SafeNet shall not be obligated to make any changes to such public statement
based on any comments received from Xx. Xxxxxx.
12. Nothing contained in this Agreement shall be deemed as an admission by any party.
13. This Agreement shall not be deemed to constitute a waiver of any rights, claims or
defenses of any of the parties to this Agreement or the Employment Agreement, all of which are
expressly preserved. Preserved rights and claims include, but are not limited to, SafeNet’s
ability to assert termination for Cause and Xx. Xxxxxx’x ability to assert termination without
Cause or resignation for Good Reason; provided, however, that Xx. Xxxxxx agrees that any assertion
of termination without Cause or resignation for Good Reason shall be effective as of the date of
this Agreement, and that such assertion shall not be made before the Decision Date. This Agreement
does not constitute a release of any claims that either party may have against the other.
14. This Agreement can be modified only in writing signed by the parties. The Agreement shall
constitute the entire understanding between the parties concerning the subject matter of this
Agreement and supersedes and replaces all prior negotiations, proposed agreements, and agreements,
written or oral, relating to this subject.
15. Both parties agree to cooperate with the other in taking the actions required under the
terms of this Agreement, including without limitation those described in paragraphs 1 and 10
hereof.
16. Xx. Xxxxxx and SafeNet shall cooperate in good faith to amend this Agreement and the
Employment Agreement, in each case, in the least restrictive manner necessary in order for the
payments and benefits to which Xx. Xxxxxx is entitled to comply with Section 409A the Code. Any
such amendments shall be designed so as to preserve the economic benefits intended to be provided
to Xx. Xxxxxx.
17. Both parties have cooperated in the drafting and preparation of this Agreement. Hence, in
any construction to be made of this Agreement, the same shall not be construed against any party on
the basis that the party was the drafter.
18. This Agreement may be executed in one or more counterparts, each of which shall constitute
an original, and all of which shall constitute one instrument.
19. In entering this Agreement, the parties represent that they have relied upon the advice of
their attorneys, who are attorneys of their own choice, and that the terms of this Agreement have
been completely read and explained to them by their attorneys, and that those terms are fully
understood and voluntarily accepted by them.
20. To the fullest extent allowed by law, any controversy or claim arising out of or relating
to this Agreement shall be settled by binding and non-appealable arbitration conducted in
Wilmington, Delaware, or such other place as the parties hereto agree, by a three-member
arbitration tribunal acting in accordance with the Commercial Arbitration rules of the American
Arbitration Association. To the extent anything in this Agreement conflicts with any arbitration
procedures required by applicable law, the arbitration procedures required by applicable law shall
govern. The proceedings before the tribunal shall be maintained in the strictest confidence by the
parties and the tribunal, subject only to legal requirements of disclosure. The arbitration
tribunal shall issue a written award that sets forth the essential findings and conclusions on
which the award is based. The tribunal shall have the authority to award any relief authorized by
law in connection with the asserted claims or disputes. The arbitration award shall be enforceable
before any court of competent jurisdiction, and shall be subject to correction, confirmation or
vacatur only on the grounds provided by applicable law, including the Federal Arbitration Act.
Nothing in this paragraph shall be construed to apply to or affect pending stockholder derivative
actions brought on behalf of the Company.
21. SafeNet and Xx. Xxxxxx will share equally the arbitrator’s fees and any other expense of
conducting the arbitration, except that if the arbitrators determine that Xx. Xxxxxx had a “good
faith basis to bring the arbitration,” then SafeNet will pay the first $25,000 of tribunal’s fees
and any other expense of conducting the arbitration. Each party will pay its own attorney’s fees
and costs. Any final decision of the arbitrator so chosen may be enforced by a court of competent
jurisdiction.
Each of the undersigned have read the foregoing Agreement, and accepts and agrees to the
provisions it contains and hereby executes it voluntarily with full understanding of its
consequences.
SafeNet, Inc.
By: |
/s/ Xxxxxx Xxxxxx | |||
Title:
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Dated: |
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By: |
/s/ Xxxxxx X. Xxxxx | |||
Title:
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Dated: |
October 17, 2006 | |||
| Xxxxxxx Xxxxxx | ||||
By: |
/s/ Xxxxxxx Xxxxxx | |||
Dated: |
October 17, 2006 | |||
