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Exhibit 10(s)
EMPLOYMENT AGREEMENT between Rainbow Technologies, Inc., a Delaware corporation
(the "Corporation"), and Xxxxxxx Xxxxxx (the "Executive"), dated this first day
of January 1998.
W I T N E S S E T H :
WHEREAS, the Corporation desires to engage Executive to perform services
for the Corporation, and the Executive desires to perform such services, on the
terms and conditions herein set forth.
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Corporation and the
Executive as follows:
1. Term. The Corporation agrees to employ Executive, and Executive
agrees to serve, on the terms and conditions stated herein for a period
commencing January 1, 1998 and terminating December 31, 1998 or such shorter
period as provided for herein. The term shall be automatically renewed for
successive one year periods thereafter, unless terminated pursuant to the
provisions of this Employment Agreement (the "Agreement"). The period during
which Executive is employed hereunder is hereinafter referred to as the "Term."
2. Position and Duties. The Executive shall be employed in the business
of the Corporation. As of the date of this Agreement, Executive's duties include
those duties Executive is currently performing as Vice President of the
Corporation. Notwithstanding the duties as described above, Executive agrees
that his/her duties may be, from time to time, revised or modified by the
President of the Corporation. The Executive agrees to devote his/her full
business time during normal business hours to the business and affairs of the
Corporation and to use his/her best efforts to perform faithfully and
efficiently the assigned responsibilities hereunder, to the extent necessary to
discharge such responsibilities, except for (i) service on corporate, civic or
charitable boards or committees not significantly interfering with the
performance of such responsibilities and (ii) periods of vacation and sick leave
to which he is entitled. It is expressly understood and agreed that the
Executive's continuing to serve on any boards and committees with which he is
currently connected, as a member or otherwise, shall be deemed not to interfere
with the performance of the Executive's services to the Corporation.
3. Compensation and Benefits.
3.1 Base Salary. The Corporation will pay Executive a base salary ("Base
Salary") of $2115 per week which will be paid in accordance with the payroll
practices of the Corporation. The Base Salary shall be reviewed at least once
each year starting in 1999 and shall be increased at any time and from time to
time by action of the President, Board of Directors (the "Board") or any
committee thereof.
3.2 Annual Bonus. In addition to Base Salary, the Executive shall have
an opportunity to earn or be awarded, for each fiscal year during the Term, an
annual bonus ("Annual Bonus"), in cash, as established from time to time by the
Board. Each such Annual Bonus shall be payable no later than 60 days subsequent
to the end of the Corporation's fiscal year. In the event of the termination of
this
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Agreement for any reason, the Executive shall receive the Annual Bonus prorated
to the date of such termination.
3.3 Incentive, Retirement and Savings Plan. In addition to the Base
Salary and Annual Bonus, the Executive shall be entitled to participate in all
incentive, retirement and savings plans and programs ("Incentives"), if any, and
as established from time to time by the Corporation provided Executive meets the
eligibility requirements.
3.4 Benefit Plans. The Executive and/or Executive's spouse and
dependents, as the case may be, shall be entitled to all benefits under all
medical, dental, vision, disability, executive life, group life, accidental
death and travel accident insurance plans and programs ("Benefit Plans"), if
any, and as established from time to time by the Corporation provided the
Executive meets the eligibility requirements.
3.5 Fringe Benefits. The Executive and/or Executive's spouse and
dependents, as the case may be, shall be entitled to fringe benefits ("Fringe
Benefits"), if any, and as established from time to time by the Corporation
provided the Executive meets the eligibility requirements.
3.6 Office. The Executive shall be entitled to an office and to
administrative assistance commensurate with Executive's responsibilities and
title and consistent with the Corporation's policies.
3.7 Vacation. The Executive shall be entitled to paid vacation in
accordance with the policies established from time to time by the Corporation.
4. Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred or expended by the Executive
in fulfillment of the duties hereunder. Executive shall provide documentation of
such expenses in accordance with the procedures established from time to time by
the Corporation.
5. Termination.
5.1 Death. The Executive's employment shall terminate automatically upon
the Executive's death ("Death").
5.2 Disability. The Corporation may terminate the Executive's
employment, after having established the Executive's "Disability" (as defined
below), by giving to the Executive notice of its intention to terminate
Executive's employment effective on the 90th day after such notice (the
"Disability Effective Date") if within such 90-day period the Executive fails to
return to full-time performance of his/her duties. For purposes of this
Agreement, "Disability" means a disability which, after the expiration of more
than 26 weeks after its commencement, is determined to be total and permanent by
a physician selected by the Corporation or the insurers providing disability
insurance to the Company and consented to by the Executive or Executive's legal
representative (such consent not to be withheld unreasonably).
5.3 Cause. The Corporation may terminate the Executive's employment for
Cause ("Cause"). For purposes of this Agreement, "Cause" means (i) an act or
acts of dishonesty on the Executive's part which result in or are intended to
result in Executive's substantial personal enrichment at the expense of the
Corporation or (ii) repeated violations
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by the Executive of Executive's obligations under Article 2 of this Agreement,
which violations are demonstrably willful and deliberate on the Executive's part
and which were intended to result in or have resulted in material injury to the
Corporation.
5.4 Without Cause. The President or the Board may terminate the
Executive's employment without cause ("Without Cause") upon 60 days notice.
5.5 Good Reason. The Executive may terminate his/her employment for Good
Reason ("Good Reason"). For purposes of this Agreement, "Good Reason" is defined
as set forth in Articles 5.5.1 through 5.5.4 below.
5.5.1 Adverse Change. Without the express written consent of the
Executive, (i) the assignment to the Executive of any duties inconsistent in any
substantial respect with the Executive's position, authority or responsibilities
as contemplated by Article 2 of this Agreement, or (ii) any other substantial
adverse change in such position including titles, authority or responsibilities.
5.5.2 Failure to Comply. Any failure by the Corporation to comply
with any of the provisions of Article 3 of this Agreement, other than an
insubstantial and inadvertent failure remedied by the Corporation promptly after
receipt of notice thereof given by the Executive.
5.5.3 Unpermitted Termination. Any purported termination by the
Corporation of the Executive's employment otherwise than as permitted by this
Agreement, it being understood that any such purported termination shall not be
effective for any purpose of this Agreement.
5.5.4 Failure to Assume. Any failure by the Corporation to obtain
the assumption and agreement to perform this Agreement by a successor as
contemplated by Article 11.
5.5.5 Determination of Good Reason. For the purposes of this
Agreement, any final determination of "Good Reason" shall be made solely by the
Corporation's independent auditors.
5.5.6 Good Faith. In the event that the Executive shall in good
faith give a "Notice of Termination," as hereinafter defined in paragraph 5.8
hereof, for Good Reason and it shall thereafter be determined that Good Reason
did not exist, the employment of the Executive shall, unless the Corporation and
the Executive shall otherwise mutually agree, be deemed to have terminated at
the date of the giving of such purported Notice of Termination. In such event,
the Executive shall be deemed to have elected Voluntary Retirement and shall be
entitled to receive only those payments and benefits which he would have been
entitled to receive at such date under Article 6.3 of this Agreement.
5.6 Voluntary Retirement. At any time after the effective date of the
Agreement, the Executive may terminate his/her employment by electing voluntary
retirement ("Voluntary Retirement").
5.7 Change of Control. In the event of a Change of Control, this
Agreement shall automatically terminate, and a separate Change of Control
Agreement shall become effective. For purposes of this Agreement, "Change of
Control" shall be deemed to have occurred if (i)
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a third person, including a "group" as defined in Article 13(d)(3) of the
Securities Exchange Act of 1934, becomes the beneficial owner of shares of the
Corporation having (a) 30% or more of the total number of votes that may be cast
for the election of directors of the Corporation in 1998; (b) 25% or more of the
total number of votes that may be cast for the election of directors of the
Corporation in 1999 and thereafter; or (ii) as the result of, or in connection
with, any cash tender or exchange offer, merger of other business combination,
sale of assets or contested election, or any combination of the foregoing
transactions (a "Transaction"), the persons who were members of the Board before
the Transaction shall cease to constitute a majority of the Board or of the
members of the board of directors of any successor to the Corporation.
5.8 Notice of Termination. Any termination by the Corporation for Cause,
Without Cause or by the Executive for Good Reason or election of Voluntary
Retirement shall be communicated by Notice of Termination to the other party
hereto given in accordance with Article 12. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated and
(iii) if the termination date is other than the date of receipt of such notice,
specifies the termination date of this Agreement which date shall be in
accordance with the specific termination provision in this Agreement relied
upon.
5.9 Date of Termination. For purposes of this Agreement, the "Date of
Termination" shall mean the date the President receives the Notice of
Termination or any later date specified therein, as the case may be.
Notwithstanding any contrary provision contained in this Agreement, (i) if the
Executive is terminating this Agreement in order to elect Voluntary Retirement,
the Date of Termination shall not be the date of receipt of such Notice of
Termination but shall be a date specified therein, which date shall be not less
than 120 days after giving such Notice of Termination; (ii) if the Executive's
employment is terminating due to Disability, the Date of Termination shall be
the Disability Effective Date; (iii) if the Executive's employment terminates
due to the Executive's death, the Date of Termination shall be the date of
death; and (iv) if the Executive's employment is terminated Without Cause or for
Failure to Relocate, the Date of Termination shall not be the date of receipt of
such Notice of Termination but shall be a date specified therein, which date
shall be not less than 60 days after giving such Notice of Termination.
6. Obligations of the Corporation upon Termination.
6.1 Death. If the Executive's employment is terminated by reason of the
Executive's death, except as described in the next sentence, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement other than those obligations accrued
hereunder at the date of Executive's death. Anything in this Agreement to the
contrary notwithstanding, the Executive's spouse and dependents shall be
entitled to continue to receive the benefits under Benefit Plans and Fringe
Benefits for 12 months subsequent to the Date of Termination.
6.2 Cause. If the Executive's employment shall be terminated for Cause,
the Corporation shall pay the Executive his/her Base Salary and
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any other accrued obligations through the Date of Termination. The Corporation
shall have no further obligations to the Executive under this Agreement.
6.3 Voluntary Retirement. The Corporation shall have no further
obligation to the Executive under this Agreement. If the Executive elects
Voluntary Retirement on or after the Early Retirement Date, the Corporation
shall pay the Executive his/her Base Salary and any other accrued obligations
through the Date of Termination.
6.4 Good Reason, Without Cause, and Disability. If the President shall
terminate the Executive's employment either Without Cause or for Disability, or
if the Executive shall terminate his/her employment for Good Reason:
6.4.1 Payments. The Corporation shall pay to the Executive the
aggregate of the amounts determined pursuant to Articles 6.4.1 (i) and
6.4.1(ii):
(i) if not already paid, the Executive's Base Salary and accrued
obligations through the Date of Termination, to be paid within 30 days after the
Date of Termination;
(ii) 100% of the Executive's "Base Amount." Base Amount is the
aggregate of the Executive's Base Salary and Annual Bonus paid or due to
Executive in the fiscal year prior to the year in which termination occurred.
Said 100% of the Base Amount shall be paid to the Executive in 12 equal monthly
installments commencing within 30 days after the Date of Termination.
6.4.2 Stock Options. All stock options and stock appreciation
rights, if any, granted to the Executive which are not exercisable at the Date
of Termination, shall become fully exercisable as of the Date of Termination.
6.4.3 Benefits. For 12 months subsequent to the Date of
Termination, the Corporation shall continue Benefit Plans and Fringe Benefits to
the Executive and/or Executive's spouse and dependents. For COBRA purposes, the
Date of Termination will be the qualifying event and the Corporation will pay 12
months of insurance premiums.
6.5 Change of Control. Notwithstanding anything in this Agreement to the
contrary, if the Executive's employment shall be terminated due to a Change of
Control, the Corporation shall have no further obligation to the Executive under
this Agreement.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Corporation or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
stock option or other Agreements with the Corporation or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan or program of the Corporation or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan or program.
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8. Full Settlement. The Corporation's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Corporation may have against the Executive or others. The Corporation agrees
to pay, to the full extent permitted by law, all legal fees and expenses
including costs of litigation which the Executive may reasonably incur as a
result of any contest (regardless of the outcome thereof) by the Corporation or
others of the validity or enforceability of, or liability under, any provision
of this Agreement.
9. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Corporation all secret or confidential
information, knowledge or data relating to the Corporation or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during his/her employment by the Corporation or any of
its affiliated companies and which shall not be public knowledge. After
termination of the Executive's employment with the Corporation, he/she shall
not, without the prior written consent of the Corporation, communicate or
divulge any such information, knowledge or data to anyone other than the
Corporation and those designated by it. In no event shall an asserted violation
of the provisions of this Article 9 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this Agreement.
10. Covenant Not to Compete. In view of the fulfillment of Executive's
obligations hereunder and (i) the unique and valuable services it is expected
Executive will render to the Corporation, (ii) Executive's knowledge of the
clients, trade secrets, and other proprietary information relating to the
business of the Corporation and its customers and suppliers, and (iii) similar
knowledge Executive has regarding the Corporation, and in consideration of the
compensation to be received hereunder and as a condition to the performance by
Corporation of its obligations under this Agreement, Executive agrees that if
this Agreement is terminated due to Disability, Good Reason, a Change of Control
or for Without Cause that for the period of one (l) year after the Date of
Termination the Executive shall not directly or indirectly through any other
person, firm or Corporation:
(i) compete with or be engaged in the same business or "participate in"
any other business or organization which during such one year period competes
with or is engaged in the same business as the Corporation, which business, for
the purposes of this Agreement, will be limited to the area of "software
execution control," "digital rights and license management control,"
"information security" and "data access control" within the computer industry,
in any geographical area in which the Corporation conducts such business except
that in each case the provisions of this Article 10 will not be deemed to be
breached merely because Executive owns not more than 5% of the outstanding
common stock of a publicly owned corporation, or by membership upon any board of
directors of a publicly owned corporation where Executive attained such position
during the Term and such position was deemed not to interfere with the terms of
this Agreement. The term "participate in" shall mean: "directly or indirectly,
for Executive's own benefit or for, with, or through any other person, firm, or
corporation, own, manage, operate, control, loan money to, or participate in the
ownership, management, operation, or control of, or be connected as a director,
officer,
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employee, partner, consultant, agent, independent contractor, or otherwise with,
or acquiesce in the use of Executive's name." Executive will not directly or
indirectly reveal the name of, solicit or interfere with, or endeavor to entice
away from the Corporation any of its customers or employees. Executive will not
directly or indirectly employ any person who, at any time up to such cessation,
was an employee of the Corporation, within a period of one year after such
person leaves the employ of such Corporation. Executive agrees that the
provisions of this Article 10 are necessary and reasonable to protect the
Corporation in the conduct of its business. If any restriction contained in this
Article 10 shall be deemed to be invalid, illegal, or unenforceable by reason of
the extent, duration, or geographical scope thereof, or otherwise, then the
court making such determination shall have the right to reduce such extent,
duration, geographical scope, or other provisions hereof, and in its reduced
form such restriction shall then be enforceable in the manner contemplated
hereby.
10.1 Breach. If Executive commits a breach of any of the provisions of
this Article 10, Corporation shall have the right and remedy to have such
provisions specifically enforced by any court having equity jurisdiction. The
foregoing right and remedy shall be in addition to any other remedy (including
without limitation damages) to which Corporation may be entitled.
11. Successors.
11.1 Assignment by Executive. This Agreement is personal to the
Executive and without the prior written consent of the Corporation shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
11.2 Assignment by Corporation. Notwithstanding anything in this
Agreement, Executive agrees that this Agreement may be assigned by the
Corporation.
11.3 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the Corporation and its successors. The Corporation shall require
any successor to all or substantially all of the business and/or assets of the
Corporation, whether directly or indirectly, by purchase, merger, consolidation,
acquisition of stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in same manner and to the same extent as the Corporation would be
required to perform if no such succession had taken place.
12. Miscellaneous.
12.1 Modifications. This Agreement sets forth the entire understanding
of the parties with respect to the subject matter hereof. This agreement may be
modified only by a written instrument duly executed by each party.
12.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without reference to
principles of conflict of laws. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
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12.3 Notice. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xxxxxxx Xxxxxx
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If to the Corporation:
Xxxxxx Xxxxxx, President
Rainbow Technologies, Inc.
00 Xxxxxxxxxx
Xxxxxx, XX 00000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressees.
12.4 Equitable Relief. Since a breach of the provisions of this
Agreement, particularly with respect to Article 10, could not adequately be
compensated by money damages, the Corporation shall be entitled, in addition to
any other right and remedy available to it, to an injunction restraining such
breach or a threatened breach, and in either case no bond or other security
shall be required in connection therewith, and Executive hereby consents to the
issuance of such injunction.
12.5 Relationship of Parties. Except for authority granted to Executive
by the President in order to enable Executive to fulfill the obligations set
forth in this Agreement, nothing contained in this Agreement shall authorize,
empower, or constitute Executive the agent of the Corporation in any manner;
authorize or empower Executive to assume or create any obligation or
responsibility whatsoever, express or implied, on behalf of or in the name of
the Corporation.
12.6 Waiver. Any waiver by any party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or any breach of any other provision of this Agreement.
The failure of a party to insist upon strict adherence to any term of this
Agreement on one or more occasions shall not be a waiver or deprive the party of
the right hereunder to insist upon strict adherence to that term or any other
term of this Agreement. Any waiver must be in writing and signed by the waiving
party.
12.7 Separability. If any provision of this Agreement is invalid,
illegal, or unenforceable, the balance of this Agreement shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
12.8 Headings. The headings in this Agreement are solely for convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement.
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12.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 Withholdings. The Executive agrees that the Corporation shall
withhold from any and all payments required to be made to Executive pursuant to
this Agreement all federal, state, local and/or other taxes or contributions
which the Corporation determines are required to be withheld in accordance with
applicable statutes and/or regulations from time to time in effect provided,
however, that such withholding shall be consistent with the calculations made by
the Corporation.
IN WITNESS WHEREOF, the Executive has hereunto set his/her hand and,
pursuant to the authorization from its Board of Directors, the Corporation has
caused these presents to be executed in its name on its behalf all as of the day
and year first above written.
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Xxxxxxx Xxxxxx
ATTEST:
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Xxxxxx X. Xxxxxx
President
Rainbow Technologies, Inc.
