EXHIBIT 10.17
MEMORANDUM OF UNDERSTANDING
AXENT Technologies, Inc. ("AXENT"), Xxxxxxx X. Xxxxxxxx and the
Compensation Committee of the AXENT Board of Directors, on behalf of the AXENT
Board, have entered into this Memorandum of Understanding as of July 22, 1997 to
evidence the agreements among them relating to the continued employment of Xxxx
Xxxxxxxx, his compensation and severance arrangements and his service as AXENT's
Chairman of the Board, to and including July 31, 2000.
1. Effective at the close of business on July 31, 1997, Xxxx Xxxxxxxx will
resign as XXXXX's Chief Executive Officer. Xxxx Xxxxxxxx will be entitled to
receive all compensation payable to him through that date of the nature and at
the rates currently payable to him. From August 1, 1997, Xxxx Xxxxxxxx will
continue as an employee of AXENT, will fulfill the duties of Chairman of the
Board described in paragraph 2, below, and will receive the compensation
described in paragraph 3, below. Xxxx Xxxxxxxx will execute an agreement before
August 1, 1997 by which he agrees not to engage through July 31, 2000 in any
business competitive with the business of AXENT or its subsidiaries, and he will
continue to be bound by all nondisclosure or confidentiality agreements with
AXENT to which he currently is a party.
2. From August 1, 1997 until July 31, 1999 (and until July 31, 2000, if so
elected by the Chief Executive Officer of AXENT on or before July 31, 1999),
Xxxx Xxxxxxxx, in his capacity as Chairman of the Board of AXENT, will perform
such executive, supervisory and management functions and duties as may be
assigned to him from time to time by the Board of Directors or any committee of
the Board. He shall, if present, preside at all meetings of the Board of
Directors and of the stockholders of AXENT or he shall appoint an appropriate
officer of AXENT to preside at meetings of the stockholders.
3. In consideration of his agreement to provide services as described above,
Xxxx Xxxxxxxx will be entitled to receive the following compensation:
(a) From August 1, 1997 through July 21, 1999:
(1) salary at the annual rate of Two Hundred Thousand Dollars
($200,000), paid bi-weekly or on such other frequency as AXENT pays its other
executive officers;
(2) bonus for calendar year 1997 in accordance with the bonus
plan in place on the date of this Memorandum (including an amendment effected by
a Bonus Adjustment Agreement made April 3, 1997); bonus for calendar year 1998
up to a maximum bonus of Eighty Thousand Dollars ($80,000) in accordance with a
bonus plan identical except for amount of maximum bonus (i.e., using the same
components, percentages and thresholds) with the bonus plan for calendar year
1998 for AXENT's Chief Executive Officer; and
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(3) car allowance at the rate paid in 1997 to date.
(b) From August 1, 1999 through July 21, 2000: salary at the annual
rate of One Hundred Sixty Thousand Dollars ($160,000), paid bi-weekly or on such
other frequency as AXENT pays its other executive officers; no bonus or car
allowance will be payable.
4. The parties intend that Xxxx Xxxxxxxx will be a full-time employee of AXENT
through July 31, 2000, and, as such, will be eligible for vacation, sick leave
and personal leave in accordance with AXENT's prevailing policies and will be
permitted to participate in AXENT's medical, dental, disability and vision
coverage, 401(k) and Section 125 plans, as well as any other benefit plans
available generally to full-time employees of AXENT, through July 31, 2000.
AXENT reserves the right to amend, modify or terminate any such employee benefit
provided to its employees or executives at any time; provided that it shall not
terminate any employee benefit provided to Xxxx Xxxxxxxx prior to July 31, 2000
that other executive officers of AXENT continue to receive. AXENT will reimburse
Xxxx Xxxxxxxx all travel and out-of-pocket expenses incurred by him in providing
services hereunder in accordance with XXXXX's then-existing travel and expense
reimbursement policies, upon submission of itemized accounts, receipts or other
documentation reasonably satisfactory to AXENT.
5. As additional consideration to him for agreeing to serve as AXENT's Chairman
of the Board as provided above, AXENT and its Board of Directors agree that all
stock options granted to Xxxx Xxxxxxxx, including any additional stock options
granted through July 31, 1999, will vest or continue to vest in accordance with
their terms through July 31, 1999. In the event that any portion of a stock
option granted to Xxxx Xxxxxxxx and vested on July 31, 1999 has not been
exercised by July 31, 1999, the AXENT Board of Directors shall amend such stock
option to provide that such vested and unexercised portion shall be exercisable
to and including the earlier of its specified expiration date or July 31, 2000.
Notwithstanding the foregoing provisions, in the event of a "Change of Control,"
as defined in AXENT's 1996 Stock Option Plan in effect on the date of this
Memorandum or as subsequently amended (if such amendment is more favorable to
Xxxx Xxxxxxxx), the AXENT Board or the appropriate committee of the AXENT Board
shall cause any unvested portion of any stock option granted to Xxxx Xxxxxxxx to
become fully vested and exercisable not less than ten (10) business days prior
to the earliest date on which such Change of Control of AXENT may be deemed to
occur, and shall provide that all exercisable portions of such stock options
shall be assumed by any acquiring or successor corporation and shall be
exercisable for at least ninety (90) days after the latest date on which such
Change of Control may be deemed to have occurred. Xxxx Xxxxxxxx understands that
amendments or modifications to, or acceleration of, his stock options may cause
those options to become non-qualified stock options, and he releases AXENT from
any loss of tax benefit in connection therewith.
6. In the event of a "Change of Control," within thirty (30) days of the
earliest date on which such Change of Control may be deemed to occur, AXENT or
any successor shall pay in a lump sum all amounts that would be paid to Rich
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Xxxxxxxx under Section 3 of this Agreement through July 31, 2000 (including the
maximum bonus to which he would be entitled for any calendar years not then
concluded and the cost of providing COBRA-covered benefits through July 31,
2000); provided that, if the Change of Control involves a merger or
consolidation in which AXENT is a party, the lump sum payment required in this
paragraph 6 shall not be due or payable until closing of such merger or
consolidation, and shall then be made within ten (10) business days following
the closing of such merger or consolidation.
7. In the event that Xxxx Xxxxxxxx dies or is determined by the AXENT Board to
be permanently disabled prior to July 31, 2000, all compensation payable under
paragraph 3 of this Memorandum shall be payable to his estate, heirs, legatees,
personal representative or conservator at the same times and in the amounts
provided in this Memorandum (including the cost of providing COBRA-covered
benefits through July 31, 2000); provided, that AXENT may make a lump sum
payment in lieu of continuing periodic payments (which shall include the maximum
bonus to which he would be entitled for any calendar years not then concluded)
at its sole election. In the event of Xxxx Xxxxxxxx'x death prior to July 31,
1999, the AXENT Board or the appropriate committee shall amend all outstanding
stock options issued to Xxxx Xxxxxxxx so that they remain outstanding and
exercisable as provided in paragraph 5.
8. In the event that Xxxx Xxxxxxxx (a) notifies the AXENT Board in writing of
his election to terminate all of his duties and responsibilities under this
Memorandum or (b) is determined by AXENT's Board to have committed an act
involving dishonesty, embezzlement or fraud against AXENT or its subsidiaries,
this Memorandum may be terminated at any time thereafter by AXENT, at the sole
discretion of its Board of Directors.
9. This Memorandum supersedes a letter agreement dated October 16, 1992 among
Xxxx Xxxxxxxx and the members of AXENT's Compensation Committee, which is
canceled and terminated in all respects. This Memorandum contains all of the
understandings and agreements among the parties with respect to its subject
matter, and there are no other representations, promises, agreements or
understandings with respect to its subject matter. No change or modification of
this Memorandum, and no waiver of any of its provisions, will be valid or
binding unless it is in writing and signed by the party intended to be bound.
All amounts of compensation stated herein are gross amounts, from which AXENT
may make all deductions and withholdings it reasonably determines to be
appropriate under applicable laws and regulations. This Memorandum shall be
interpreted and construed according to the substantive laws of the Maryland,
without regard to its rules concerning conflicts of law. Except for breaches of
confidentiality or non-compete obligations, any dispute arising under or
relating to this Memorandum that cannot promptly be resolved amicably shall be
submitted to mediation before professional mediators reasonably acceptable to
AXENT and Xxxx Xxxxxxxx in the Washington, D.C. metropolitan area. If for any
reason any of the provisions of this Memorandum are held or deemed to be
unenforceable or invalid as applied to any particular case or in all cases, such
circumstances shall not have the effect of rendering such provision invalid in
any other case or of rendering any of the other provisions of this Memorandum
inoperative, unenforceable or invalid. No rights, duties or obligations under
this Agreement of any party are assignable without the prior written consent of
the other parties.
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The parties have executed this Memorandum as of July 22, 1997 intending
legally to be bound.
AXENT Technologies, Inc.
By: Xxxxxxx X. Xxxxxxxx
Members of AXENT's Compensation Committee:
Xxxxxxxxxx X. Xxxxx Xxxxxxx X. Xxxxxx XX
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