EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made and entered as of this 6TH day of
NOVEMBER, 1998 ("Effective Date"), by and between V-ONE Corporation, a Delaware
corporation with its principal executive offices at 00000 Xxxxxxx Xxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxxx 00000 ("Company"), and XXXXXXX X. XXXXXXX , an
individual residing at 00000 XXXXXXX XXXXX, XXXXXXX, XXXXXXXX 00000
("Employee");
WHEREAS, the Company wishes to assure itself of the services of
Employee, and Employee is willing to serve in the employ of the Company on a
full-time basis;
WHEREAS, the Company and Employee desire to set forth the amounts
payable and benefits to be provided by the Company to Employee in the event of a
termination of Employee's employment with the Company under the circumstances
set forth herein, including after the happening of a Change in Control (as
defined herein); and
WHEREAS, the parties intend that the provisions of this Agreement shall
be in lieu of Employee's right to make any claim or demand with respect to any
presently existing or prospectively adopted severance policy of the Company;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto hereby agree as follows:
1. EMPLOYMENT. The Company agrees to continue Employee in its employ,
and Employee agrees to remain in the employ of the Company, for the period
stated in Section 3 hereof and upon the other terms and conditions herein
provided.
2. POSITION AND RESPONSIBILITIES.
The Company employs Employee, and Employee agrees to serve, as SENIOR
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER of the Company on the conditions
hereinafter set forth. Employee agrees to perform such services consistent with
his position as SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER as shall from
time to time be assigned to him by the Company's Board of Directors ("Board") or
by an executive designated by the Board.
3. TERM AND DUTIES.
(a) TERM. The term of this employment agreement shall commence on
November 1, 1998 and terminate on October 31, 1999, subject to automatic renewal
for successive one-year terms unless either party shall have notified the other
in writing not less than 180 days prior to the then current expiration date of
this Agreement of such party's determination not to renew this Agreement.
(b) The Company shall have the right, on written notice to you,
(i) to terminate your employment immediately at any time for
Just Cause, as defined in Paragraph 6e.
(ii) to terminate your employment at any time on or after
November 1, 1999, or to not renew the Agreement at any time, without cause
provided the Company shall be obligated in either case to pay to you severance
pay as specified in Paragraph 7.
(c) DUTIES. During the period of his employment hereunder by the
Company and except for illness, reasonable vacation periods having an aggregate
duration of not less than that provided pursuant to the Company's practices in
effect on the Effective Date, and reasonable leaves of absence, Employee shall
devote all his business time, attention, skill, and efforts to the faithful
performance of his duties hereunder.
(d) HEADQUARTERS LOCATION. The Company agrees to maintain Employee's
offices within Xxxxxxxxxx County in the State of Maryland ("Base Employment
Area").
4. COMPENSATION, STOCK OPTIONS, REIMBURSEMENT OF EXPENSES, AND
RELOCATION.
(a) COMPENSATION. The Company shall pay to you for the services to be
rendered hereunder a base salary at an annual rate of $150,000, subject to
increase, in accordance with the policies of the Company from time to time,
payable in installments in accordance with Company policy, but in no event less
frequently than monthly.
(i) The Company will review the base salary from time to time,
no less frequently than annually, and may in its sole discretion adjust the base
salary upward but not downward, to reflect performance, appropriate industry
guideline data and other factors.
(ii) If certain performance goals reasonably established from
time to time by the Company are met, you will be entitled to a cash performance
bonus of 50% of base salary, with respect to each fiscal year. The amount of
such bonus percentage may be increased but not decreased by the Company.
Performance in excess of 100% of plan objectives will be rewarded at an
incrementally higher percentage. Metrics will also be reasonably established to
measure and compensate appropriately for performance below the plan goals.
(b) REIMBURSEMENT OF EXPENSES. The Company shall pay or reimburse
Employee, in accordance with such polices and procedures as the Board may
establish from time to time, for all reasonable travel and other expenses
incurred by Employee in the performance of his obligations under this Agreement.
5. PARTICIPATION IN BENEFIT PLANS. The payments provided for in this
Agreement, except where specifically provided otherwise, are in addition to any
other benefits to which Employee may be, or may become, entitled under any of
the Company's group hospitalization, health, dental, care, and/or sick-leave
plans; life, other insurance and/or death benefit plans; travel and/or accident
insurance plans; deferred compensation plans; capital accumulation programs;
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restricted income and/or stock purchase plans; stock option plans; retirement
income and/or pension plans; supplemental pension plans; excess benefit plans;
short- and long-term disability programs; and other present and future group
employee benefit plans and programs for which Company executives are or shall
become eligible. Employee shall be eligible to receive, during the period of his
employment under this Agreement and during any subsequent period for which he
shall be entitled to receive payments from the Company under Section 6, all of
the foregoing benefits and emoluments for which employees are eligible under
every such plan and program to the extent permissible under the general terms
and provisions of such plans and programs and in accordance with the provisions
thereof. Nothing contained in this Agreement shall prevent the Board from
amending or otherwise altering any such plan, program, or arrangement as long as
such amendment or alteration equitably affects all the Company's employees of
the level of vice president or above.
6. TERMINATION OF EMPLOYMENT. Employee's employment under this
Agreement may be terminated by the Company or Employee as follows:
(a) DISABILITY.
(i) If Employee fails to perform his duties under this
Agreement on account of Disability (as hereinafter defined), the Company may
give notice to Employee to terminate this Agreement on a date not less than
thirty (30) days thereafter ("Notice Period") and, if Employee has not resumed
full performance of his duties under this Agreement within such Notice Period,
then Employee's employment under this Agreement will terminate on the date
provided in the notice ("Disability Termination Date").
(ii) During any period of Disability, the Company shall
maintain and pay for health insurance benefits for Employee at least equal to
those he had at the commencement of such Disability.
(iii) As used in this Agreement, the term "Disability" shall
mean the complete inability of Employee to perform his duties under this
Agreement by reason of his total and permanent disability, as determined by an
independent physician selected with the approval of the Board and Employee. The
determination of total and permanent disability will not be made until after all
leave of absence time specified in the Federal Family and Medical Leave Act
("FMLA") has been exhausted.
(b) DEATH. If Employee dies while employed under this Agreement, his
employment under this Agreement will terminate as of the date of his death
("Date of Death"). Within thirty (30) days after the Date of Death, the Company
shall pay to the Employee's legal representative Employee's Base Salary as then
in effect that has accrued to the last day of the month in which the Date of
Death occurs.
(c) TERMINATION BY EMPLOYEE OR COMPANY. In the event that
(i) the Company terminates Employee's employment for any
reason (other than because of death, Disability, or "just cause" (as hereinafter
defined)),
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(ii) Employee terminates his employment with the Company
because of the Company's material breach of this Agreement,
(iii) Employee's Base Salary, as in effect on the Effective
Date or as the same may be increased from time to time, is reduced, or
(iv) The Company's principal executive offices are relocated
to a location outside the Base Employment Area or the Company requires Employee
to be based anywhere other than the Company's principal executive offices
(except for required travel on the Company's business) then:
The Company will pay severance compensation as defined in Paragraph 7.
No termination of employment pursuant to this Section 6(c) shall operate to
prohibit Employee from negotiating and entering into a new employment contract
with the Company or such entity as survives the Change in Control.
(d) RETIREMENT. Employee shall be entitled to terminate his employment
with the Company on, or at any date after, a date on which he is at least
sixty-five (65) years old. Any date on which Employee elects to retire shall be
referred to as the "Retirement Termination Date." The Company shall pay to
Employee his Base Salary and Bonus Salary as then in effect that has accrued to
the last day of the month in which the Retirement Termination Date occurs. All
vested stock options will be exercisable for their originally defined time
period, typically 10 years from date of issue, after retirement.
(e) TERMINATION BY THE COMPANY FOR JUST CAUSE.
(i) The Company may terminate Employee's employment for "just
cause" at any time by giving written notice thereof to Employee. (Except as
provided below, the date of such notice is the "Just Cause Termination Date"
unless otherwise provided in the notice). Within thirty (30) days after the Just
Cause Termination Date, the Company shall pay to Employee his Base Salary as
then in effect that has accrued to the Just Cause Termination Date. For the
purposes of this subparagraph, "just cause" shall mean termination because of a
material breach involving Employee's personal dishonesty, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, or material breach of any provision of this Agreement.
Unless otherwise determined by the Board, Employee shall have no right to
receive compensation or other benefits under this Agreement after a termination
for just cause.
(ii) Notwithstanding the foregoing, Employee shall not be
deemed to have been terminated for just cause pursuant to this Section 6(e)
unless and until he shall have received a copy of a resolution duly adopted by
the affirmative vote of a majority of the Board, at a meeting held for that
purpose, declaring that in the good faith opinion of the Board one or more of
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the conditions set forth in clause (i) of this Section 6 (e) has occurred and
specifying the particulars thereof.
(f) RESIGNATION BY EMPLOYEE. Employee can resign at any time, giving
customary two (2) weeks notice, terminating his employment under this Agreement
("Effective Resignation Date"). All Base Salary and Bonus Salary earned through
the Effective Resignation Date will be paid to Employee. All vested stock
options will be exercisable for a period of 90 days following the effective
resignation date.
7. SEVERANCE. If Severance Compensation is triggered under conditions
specified in Paragraph 6, the compensation will include the following.
(a) the Company shall pay Employee within ten (10) days following the
date his employment with the company is so terminated ("Employee Termination
Date") as severance pay a lump sum payment equal to the sum of (A) the aggregate
amount of the future Base Salary payments Employee would have received if he
continued in the employ of the Company until twelve (12) months following the
Employee Termination Date and (B) Employee's projected bonus for the twelve
months in which the Employee Termination Date occurs, which shall be computed
assuming that Employee had remained in the Company's employ for the next twelve
months and that all performance goals or other performance measures have been
met at the then current level for the time period. The payment required by
clause (A) shall be calculated at the highest rate of Base Salary paid to
Employee at any time under this Agreement with such payments discounted to
present value at a discount rate equal to one percent (1%) above the per annum
one-year Treasury Xxxx rate, as published in the Eastern Edition of the Wall
Street Journal, on the Employee Termination Date (or the next preceding date on
which such rate is published), applied to each such future payment from the time
it would have become payable to the date Employee receives payment.
(b) All vested stock options as specified in Paragraph 4c, including
the options that would vest as part of the termination, would be exercisable
within 90 days of such termination.
8. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall mean the occurrence, after the Effective Date, of any of the
following events, directly or indirectly or in one or more series of
transactions:
(i) A consolidation or merger of the Company with any third
party (which includes a single person or entity or a group of persons or
entities acting in concert) not wholly owned directly or indirectly by the
Company (a "Third Party"), unless the Company is the entity surviving such
merger or consolidation;
(ii) A transfer of all or substantially all of the assets of
the Company to a Third Party or a complete liquidation or dissolution of the
Company;
(iii) A Third Party, directly or indirectly, through one or
more subsidiaries or transactions or acting in concert with one or more persons
or entities:
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(A) acquires beneficial ownership of more than 50% of
the classes of stock of the Company entitled to vote generally in the election
of directors of the Company ("Voting Stock");
(B) acquires irrevocable proxies representing more than
50% of the Voting Stock;
(C) acquires any combination of beneficial ownership of
Voting Stock and irrevocable proxies representing more than 50% of the Voting
Stock;
(D) acquires the ability to directly or indirectly
exercise a controlling influence over the management or policies of the Company;
(iv) A determination is made by the Securities and Exchange
Commission ("SEC") or any similar agency having regulatory control over the
Company that a change in control, as defined in the securities laws or
regulations then applicable to the Company, has occurred.
Notwithstanding any provision contained herein, a Change in Control shall not
include any of the above described events if they are the result of a Third
Party's inadvertently acquiring beneficial ownership or irrevocable proxies or a
combination of both for 50% or more the Voting Stock, and the Third Party as
promptly as practicable thereafter divests itself of beneficial ownership or
irrevocable proxies for a sufficient number of shares so that the Third Party no
longer has beneficial ownership or irrevocable proxies or a combination of both
for 50% or more of the Voting Stock.
9. EXCISE TAX.
(a) EXCESS PARACHUTE PAYMENT. Notwithstanding anything to the contrary
in this Agreement, if tax counsel selected by the Company and acceptable to
Employee determines that any portion of any payment by the Company to Employee
under this Agreement or otherwise would constitute an "excess parachute
payment," then the payments to be made to Employee by the Company shall be
reduced such that the value of the aggregate payments that Employee is entitled
to receive under this Agreement and any other agreement, plan or program of the
Company shall be one dollar ($1.00) less than the maximum amount of payments
that Employee may receive without becoming subject to the tax imposed by Section
4999 of the Code; PROVIDED, HOWEVER, that the foregoing limitation shall not
apply in the event that such tax counsel determines that the benefits to
Employee on an after-tax basis (i.e., after federal, state, and local income and
excise taxes) if such limitation is not applied would exceed the after-tax
benefits to Employee if such limitation is applied.
(b) THE COMPANY NOT RESPONSIBLE FOR EXCISE TAX. If the Internal Revenue
Service assesses an excise tax against Employee pursuant to Sections 280G and
4999 of the Code, the Company shall be under no obligation to Employee with
respect to the amount of (i) the excise tax or (ii) any additional federal
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income tax due from and payable by Employee as the result of his receipt of any
payment hereunder or otherwise.
10. COVENANT NOT TO COMPETE. Employee covenants and agrees that, in
consideration of the amounts to be paid Employee hereunder and other good and
valuable consideration, for a period of six (6) months beyond the Effective
Resignation Date, Retirement Termination Date or the Just Cause Termination Date
(each a "Termination Date"), Employee shall not be employed as an executive
officer of, control, manage, or otherwise participate in the management of the
business of a "significant competitor" of the Company. The term "significant
competitor" shall mean any company or division of a company that, on the date of
its employment of Employee, derives more than 50% of its gross revenues from
network security products and/or services, or a company that owns or controls a
majority of the voting securities of any such company. The Company and Employee
agree that the terms and conditions of this Section 9 shall survive the
termination of this Agreement following the Termination Date.
11. CONFIDENTIAL INFORMATION.
(a) Employee shall not, directly or indirectly, during the term of his
employment hereunder and at any time after a termination of his employment for
any reason, to the detriment of the Company, knowingly divulge, disclose,
disseminate, publish, reveal or otherwise communicate to any unauthorized person
any Confidential Information relating to the Company, the Company's subsidiaries
or affiliates, or to any of the businesses operated by any of them.
(b) Employee confirms that Confidential Information constitutes the
exclusive property of the Company and the Company's subsidiaries and affiliates.
Upon a termination of his employment hereunder, Employee will promptly return to
the Company all Materials (whether prepared by Employee or others) containing,
constituting, embodying or illustrating Confidential Information, and all other
property of the Company or of the Company's subsidiaries and affiliates then in
his possession or custody.
(c) As used in this Section 10 the following terms shall have the
following meanings:
(i) the term "Confidential Information" means information
disclosed to Employee or known to Employee as a consequence of or through his
employment by the Company and not generally known in the Company's industry.
Such information includes, but is not limited to, information relating to the
Company's products, research, development, accounting, finances, marketing,
merchandising and selling, and specifically includes future business plans,
client lists, lists of current and prospective employees and consultants,
potential acquisition candidates, and training and operating methods and
techniques. The term "Confidential Information" does not include information
that (A) at the time it was received by Employee was generally available to the
public; (B) prior to its use by Employee, becomes generally available to the
public through no act or failure of Employee; or (C) is received by Employee
from a person who is not a party to this Agreement and who is not under an
obligation of confidence with respect to such information.
(ii) "Materials" includes, but is not limited to, books,
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notebooks, documents, records, photographs, films, video tapes, audio tape
recordings, computer disks, diskettes or other electronic or optical storage
media, software and support materials, and similar or other materials.
(d) Employee shall not otherwise knowingly act or conduct himself (i)
to the material detriment of the Company or the Company's subsidiaries or
affiliates, or (ii) in a manner that is inimical or contrary to the interests
thereof.
(e) The Company and Employee agree that the provisions of this Section
10 shall survive the termination of this Agreement for any reason whatsoever.
12. GENERAL PROVISIONS.
(a) ENTIRE AGREEMENT. This Amendment, together with the employment
agreement existing between the parties immediately prior to the Effective Date
(as amended herein), contains the entire understanding between the parties
hereto with respect to the employment of Employee.
(b) CONSOLIDATION, MERGER, OR SALE OF ASSETS. Nothing in this Agreement
shall preclude the Company from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another corporation or
corporations; PROVIDED, HOWEVER, that such consolidation, merger or transfer
shall not affect Employee's rights under Section 6(c) hereof. Upon such a
consolidation, merger, or transfer of assets and assumption, the term "the
Company", as used herein, shall mean such other corporation or corporations, and
this Agreement shall continue in full force and effect and such other
corporation or corporations shall be liable for all payments to Employee under
the Agreement.
(c) NO DUTY TO MITIGATE. Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor shall any amounts received from other employment or otherwise
by Employee offset in any manner the obligations of the Company hereunder.
(d) NONASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof is assignable by
Employee, his beneficiaries, or legal representatives without the Company's
prior written consent; PROVIDED, HOWEVER, that nothing in this Section 12 (d)
shall preclude (i) Employee from designating a beneficiary to receive any
benefit payable hereunder upon his death, or (ii) the executors, administrators,
or other legal representatives of Employee or his estate from assigning any
rights hereunder to the person or persons entitled thereto.
(e) NO ATTACHMENT. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
the execution, attachment, levy, or similar process or assignment by operation
of law. Any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
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(f) GENERAL CREDITOR. All payments required hereunder shall be made
from the Company's general assets and Employee shall have no rights greater than
the rights of a general creditor of the Company.
(g) NOTICES. All notices and other communications required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by certified mail, return
receipt requested, first-class postage prepaid, to the parties to this Agreement
at the following addresses:
(i) if to the Company at:
V-ONE CORPORATION
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
and
(ii) if to Employee at the address set forth
at the end of this Agreement
or to such other address as either party to this Agreement shall have last
designated by notice to the other party. All such notices and communications
shall be deemed to have been received on the earlier of the date of receipt or
the third business day after the date of mailing thereof.
(h) BINDING EFFECT; BENEFITS. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended or shall be construed to give any person, other than the parties to
this Agreement or their respective successors or permitted assigns, any legal or
equitable right, remedy, or claim under or in respect of any agreement or any
provision contained herein.
(i) DISPUTE RESOLUTION. Subject to (iv) below, 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 then existing Commercial
Arbitration Rules of the American Arbitration Association ("AAA"). A request for
arbitration shall be filed in the AAA office closest to the Company and the
arbitration shall be conducted in Xxxxxxxxxx County, Maryland.
(ii) The parties irrevocably consent to the jurisdiction of
the Federal and state courts located in the State of Maryland for any purpose
relating to this agreement.
(iii) The arbitrator(s) may, in the course of the proceedings,
order any provisional remedy or conservatory measure (including, without
limitation, attachment, preliminary injunction, or the deposit of specified
security) that the arbitrator(s) consider to be necessary, just, and equitable.
The failure of a party to comply with such an interim order may, after due
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notice and opportunity to cure such noncompliance, be treated by the
arbitrator(s) as a default, and some or all of the claims or defenses of the
defaulting party may be stricken and partial or final award entered against such
party, or the arbitrator(s) may impose such lesser sanctions as may be deemed
appropriate. A request for interim or provisional relief by a party to a court
shall not be deemed incompatible with the agreement to arbitrate or a waiver of
that agreement.
(iv) The parties acknowledge that any remedy at law for breach
of this Agreement may be inadequate, and that, in the event of a breach of
Sections 9 and 10 by Employee, any remedy at law would be inadequate in that any
such breach would cause irreparable competitive harm to the Company.
Consequently, in addition to any other relief that may be available, either
party may seek temporary and permanent injunctive relief, including, without
limitation, specific performance, without the necessity of the prevailing party
proving actual damages and without regard to the adequacy of any remedy at law.
(v) In the event Employee is the prevailing party in any
arbitration or court proceeding, then Employee shall be entitled to
reimbursement by the Company for all reasonable legal and other professional
fees and expenses incurred by Employee in such proceeding or in enforcing any
award, including reasonable attorneys' fees.
(j) WAIVER. Either party hereto may by written notice to the other (i)
extend the time for the performance of any of the obligations or other actions
of the other under this Agreement; (ii) waive compliance with any of the
conditions or covenants of the other contained in this Agreement; and (iii)
waive or modify performance of any of the obligations of the other under this
Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representation, warranty, covenant, or
agreement contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach, and no failure by either party to exercise any
right or privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise that right or privilege at any subsequent time or times hereunder.
(k) AMENDMENT. This Agreement may be terminated, amended, modified, or
supplemented only by a written instrument executed by Employee and the Company.
(l) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the law of the State of Maryland, regardless of the law that
might be applied under principles of conflict of laws; PROVIDED, HOWEVER, that
any arbitration under Section 11(i) hereof shall be conducted in accordance with
the United States Arbitration Act as then in force.
(m) SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
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(n) WITHHOLDING OF TAXES. The Company may withhold from amounts
required to be paid to Employee hereunder any applicable federal, state, local,
and other taxes with respect thereto; PROVIDED, HOWEVER, that the Company shall
promptly pay over the amounts so withheld to the appropriate taxing bodies and
provide to executive appropriate statements on forms proscribed for such
purposes on the amounts so withheld.
(o) SEVERABILITY. If, for any reason, any provision of this Agreement
is held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each such other provision shall, to the full
extent consistent with law, continue in full force and effect. If any provision
of this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provisions not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with law continue in full force and effect.
(p) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and Employee has signed this Agreement, all as of the Effective
Date.
ATTEST: V-ONE CORPORATION
/s/ Xxxxx Xxxxxx By: /s/ Xxxxx Xxxxxx
----------------------------- ---------------------------------
(Corporate Seal)
WITNESS: Employee: Xxxxxxx X. Xxxxxxx
/s/ Xxxx Xxxxxxxx /s/ Xxxxxxx X. Xxxxxxx
----------------------------- ---------------------------------
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