Employment Agreement - Cylink Corp. and Richard F. Walsh
EMPLOYMENT AGREEMENT
Agreement made as of the 13th day of March 2000 (the "Effective Date"),
by and between Cylink Corporation, a California corporation with its principal
place of business at 3131 Jay Street, Santa Clara, California 95054 (the
"Company"), and Richard F. Walsh residing at 40 Glen Eyrie Ave. #26, San Jose CA
95125 (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to employ Executive as Vice President,
Chief Information Officer, and Executive is willing to serve in such capacity;
and
WHEREAS, the Company and Executive desire to set forth the terms and
conditions of such employment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Company and Executive agree as follows:
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Richard F. Walsh
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1. Employment.
1.1. The Company hereby agrees to employ Executive, and Executive
agrees to be employed by the Company, on the terms and conditions herein
contained, as of the Effective Date, as its Vice President, Chief Information
Officer, and in such other executive capacities assigned by the Chief Executive
Officer which are not inconsistent with Executive's duties. Executive's duties,
authority and responsibilities shall be commensurate with those of a similar
position for another company similar in size and business. During the term of
Executive's employment, he shall be based at the Company's principal office;
provided, however, that Executive shall be required to travel as reasonably
necessary in connection with the official business of the Company. Executive
shall maintain his permanent residence within the surrounding community. If so
requested by the Chief Executive Officer, Executive shall also serve as an
officer of the Company's affiliated entities without additional compensation.
1.2. The Executive shall devote substantially all of his business time,
energy, skill and efforts to the performance of his duties and shall faithfully
serve the Company to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner. The foregoing shall not prevent Executive
from participating in not-for-profit activities or from managing his passive
personal investments provided that these activities do not materially interfere
with Executive's obligations hereunder.
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2. Term of Employment.
Executive's employment under this Agreement shall be for a term (the
"Employment Term") commencing on the "Effective Date" and terminating, unless
otherwise terminated earlier as provided in this Agreement, on March 13, 2005
(the "Original Employment Term"), provided that the Employment Term shall be
extended (subject to earlier termination as provided in this Agreement) for
additional one (1) year periods (the "Additional Terms"), unless, at least
thirty (30) days prior to the end of the Original Employment Term or any
Additional Term, the Company or the Executive has notified the other in writing
that the Employment Term shall terminate at the end of the then current term. If
and when this Agreement is so extended, the term "Employment Term" used in this
Agreement shall include all such extensions. The Executive's obligations
concerning the Company's Inventions, Confidential Information, not to compete or
solicit the Company's customers or employees, and the Company's obligations to
provide indemnification, as provided elsewhere in this Agreement, shall survive
and remain in effect notwithstanding the termination of the Employment Term or a
breach of this Agreement by either the Company or the Executive.
3. Compensation.
3.1. As compensation for his services under this Agreement, the Company
shall pay Executive an annual salary of $150,000 ("Base Salary"). Such Base
Salary shall
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Richard F. Walsh
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be payable in equal installments (not less frequently than monthly) and subject
to withholding in accordance with the Company's normal payroll practices.
3.2. Executive's Base Salary may be increased from time to time by the
Chief Executive Officer, but solely in his discretion and not as an implied
obligation of this Agreement. Executive's Base Salary may also be decreased from
time to time by the Chief Executive Officer in his sole discretion based on his
assessment of the Executive's performance or changes in the scope of Executive's
responsibilities, provided that Executive will be given written notice and a
minimum of ninety (90) days to cure any such assessment which, in the Chief
Executive Officer's discretion, warrants such a reduction.
3.3. In addition to the Base Salary, for each calendar year completed
during the Employment Term, the Company shall pay to Executive an annual bonus
of $40,000 based, in part, on achievement of performance goals which shall be
determined by the Chief Executive Officer in consultation with the Executive.
The actual bonus may vary in the sole discretion of the Chief Executive Officer
based on his assessment of the Executive's performance.
3.4. The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's then current policies with respect to
travel, entertainment and other
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Richard F. Walsh
March 13, 2000
business expenses, subject to the Company's requirements concerning reporting
and documentation of such expenses.
4. Benefits.
4.1. During the Employment Term, Executive shall be entitled to (i) all
benefits, if any, which are generally provided from time to time by the Company
to its senior executive officers, including, without limitation, (i) any life,
medical and disability insurance plans, (ii) incentive, profit-sharing, deferred
compensation and similar such plans, subject to: (A) the Executive's
satisfaction of the eligibility requirements, if any, and (B) with due credit
for the minimum annual bonus already provided under this Agreement, and (iii)
all other benefits provided under this Agreement.
5. Stock Options.
5.1. The Compensation Committee of the Board (the "Compensation
Committee"), or its delegee, authorized granting to Executive on March 31, 2000,
options to purchase 125,000 shares of Company common stock at an exercise price
of $14.50 per share, pursuant and subject to the Company's 1994 Flexible Stock
Incentive Plan (the "Plan"). Such Options shall be non-qualified or incentive
stock options, or a combination thereof as determined by the Plan's
Administrator. The terms of the Options, as more fully set forth in the Option
agreement annexed hereto as Attachment A, and specifically modified by this
Section 5, shall provide that (i) they shall be for a
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Richard F. Walsh
March 13, 2000
maximum six (6) year term from the grant date, and (ii) shall vest and become
exercisable ratably over a four (4) year period on the last day of each month
during such period, provided: (A) the Executive is employed by the Company on
each vesting date, and provided further, that (B) the initial twenty five
percent (25%) of the Options shall not be exercisable unless and until the
Executive remains employed by the Company on the first anniversary of the
Effective Date.
5.2. Furthermore, in the event of a "Corporate Transaction" or "Change
In Control" during the Term of this Agreement, the Executive will be entitled to
vesting of a certain percentage of the Executive's then unvested options (the
"Accelerated Options"), subject to the provisions of this Section 5, with the
percentage being determined as follows:
5.2.1. If the Corporate Transaction or Change in Control occurs on or
after one year from the Effective Date, the Accelerated
Options shall equal 100% of the Executive's then unvested
Options.
5.2.2. If the Corporate Transaction or Change in Control occurs
within less than one year from the Effective Date, the
Accelerated Options shall equal 50% of the Executive's then
unvested Options.
5.3. In the event of a "Corporate Transaction" the Accelerated Options
shall fully vest immediately prior to closing unless the Company's successor in
interest, or its parent, offers to:
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Richard F. Walsh
March 13, 2000
5.3.1. either (i) assume the Executive's Accelerated Options in
accordance with Section 11 of the Plan, or (ii) replace them
with equivalent options, having the same vesting schedule as
the original grant by the Company, to purchase publicly traded
shares in the successor corporation or its Parent by
exchanging them at the same rate of conversion offered to the
Company's common shareholders in the Corporate Transaction,
and
5.3.2. provided further that the successor in interest agrees to
fully vest all such assumed or exchanged Accelerated Options
on the earlier of: (i) the first anniversary of such Corporate
Transaction, or (ii) upon termination of the Agreement by the
Company or its successor in interest if such termination
occurs either without good Cause or by the Executive for Good
Reason.
5.4. In the event of a Change In Control, the Accelerated Options shall
vest on the earlier of: (i) the first anniversary of such Change In Control, or
(ii) upon termination of the Agreement by the Company or its successor in
interest if such termination occurs either without good Cause or by the
Executive for Good Reason. For purposes of the Agreement and this Amendment, the
terms "Corporate Transaction" and "Change in Control" shall have the definitions
of the Plan, except that a "Corporate Transaction" shall also include the
acquisition of more than 80% of the Company's outstanding
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Richard F. Walsh
March 13, 2000
securities by any entity or related group of entities.
6. Vacation.
During the Employment Term, Executive shall be entitled to four (4)
weeks paid vacation in each full calendar year (prorated for any partial year)
to be taken at such times as mutually agreed by the Executive and the Chief
Executive Officer.
7. Termination.
7.1. Executive's employment under this Agreement shall terminate prior
to expiration of the Employment Term (including any Additional Terms which may
be in effect) upon the occurrence of any of the following events:
7.1.1. Automatically on the date of Executive's death.
7.1.2. Upon written notice by the Chief Executive Officer to the
Executive for Cause. "Cause" shall mean (A) the Executive
being convicted of (or pleading nolo contendere to) a felony
(other than a traffic-related offense); (B) the barring of the
Executive by any regulatory authority from holding his
positions or any limitations imposed on the Company by any
regulatory agency if the Executive continued to hold his
positions; (C) willful refusal by the Executive to attempt to
properly perform his material obligations under this
Agreement, or attempt to follow any direction of the Chief
Executive Officer consistent with this Agreement, provided the
refusal to follow a
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Richard F. Walsh
March 13, 2000
direction shall not be Cause if the Executive in good faith
believes that such direction is not legal or is contrary to a
specific provision of published Professional Standards
applicable to Executive's duties, and promptly notifies the
Company's General Counsel in writing of such belief; (D) the
Executive's willful misconduct or material gross negligence
with regard to the business, assets or employees of the
Company or its affiliated entities (including as willful
misconduct, without limitation, the Executive's willful breach
of any fiduciary duty he may owe to the Company or its
affiliates under applicable law or this agreement but not de
minimis personal use of Company assets or reasonable good
faith expense account disputes), (E) the Executive's theft,
dishonesty or fraud with regard to the Company or its
affiliates which is intended to enrich the Executive or
another person or entity but not de minimis personal use of
Company assets or reasonable good faith expense account
disputes, (F) the Executive's inability to competently perform
his assigned duties, or (G) any other material breach by the
Executive of this Agreement that remains uncured for thirty
(30) days after written notice thereof is given to the
Executive. During any period in which the Executive is charged
with committing a crime covered by (A) above, the Company may
suspend Executive from his titles, duties and
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Richard F. Walsh
March 13, 2000
authority herein pending resolution of his status under
applicable law; such suspension shall be with pay for up to
six (6) months and thereafter shall be without pay. In the
event of any Corporate Transaction or Change in Control,
subsections (F) and (G) shall be deemed eliminated and without
force or effect.
7.1.3. Upon written notice by the Chief Executive Officer to the
Executive, if the Executive (as determined by the Chief
Executive Officer in good faith) fails to regularly perform
the material duties hereunder by reason of mental or physical
illness or incapacity for an aggregate period of more than 180
days during any 365 day period (a "Disability"), provided
that, during the Employment Term prior to such termination,
the Company's obligations hereunder shall be reduced by any
payments being received by Executive under any long-term
disability program.
7.1.4. Upon written notice by the Executive to the Chief Executive
Officer for Good Reason stating with specificity the details
of the Good Reason, if the stated Good Reason is not cured
within twenty (20) days of the giving of such notice. "Good
Reason" shall mean any material breach of any provision of
this Agreement by the Company, including but not limited to
(i) any reduction in Executive's duties or responsibilities as
Vice President,
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Richard F. Walsh
March 13, 2000
Chief Information Officer (other than those duties which may
no longer be required if the Company ceases to be a publicly
traded company) or (ii) any demand that he relocate his
principal residence beyond any of the counties immediately
adjacent to San Francisco Bay, without his consent. Any notice
for Good Reason shall be given within ninety (90) days of the
later of (i) the occurrence of the triggering event, or (ii)
the date upon which Executive could be reasonably expected to
know of such event.
7.1.5. Immediately upon written notice to the Executive by the Chief
Executive Officer without Cause.
7.1.6. Upon the voluntary termination by the Executive without Good
Reason upon thirty (30) days prior written notice to the
Company (which the Company may, in its sole discretion, make
effective earlier). A notice by Executive of non-renewal of
the Employment Term shall be deemed a voluntary termination by
Executive.
7.2. Upon such earlier termination of the Employment Term, the
Executive shall be promptly paid (i) any unpaid salary and accrued vacation
through his date of termination, (ii) a prorated portion of his unpaid annual
bonus, as determined by the Chief Executive Officer in accordance with this
Agreement, for the calendar year of his termination, (iii) reimbursed for any
expenses incurred in connection with the business
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March 13, 2000
of the Company prior to his date of termination which he would be otherwise
entitled to in accordance with the Company's policies on the reimbursement of
business expenses, and (iv) receive any benefits or fringes due under any
benefit or fringe plan or arrangement in accordance with the terms of said plan
or arrangement due for the period prior to such termination.
7.3. In addition, if the termination is by the Company without Cause,
or by the Executive for Good Reason, as provided above, and prior to the
Executive's sixty-fifth birthday, the Executive shall receive in full settlement
of all amounts owed him, provided he signs a release running to the Company and
its related entities and their respective officers, directors and employees of
all claims relating to his employment and termination thereof (other than any
right to indemnification under the Company's Articles of Incorporation or
By-Laws or the Indemnification Agreement annexed as Attachment B hereto, which
shall survive) in such form as reasonably requested by the Company:
7.3.1. Six (6) monthly installments of severance pay each in an
amount equal to one-twelfth of the then sum of his Base Salary
and annual bonus, based on the amount paid for service during
the prior six month period (or, in the event of a corporate
austerity program applied to Executive together with other
officers of the Company, then the amount that otherwise would
have
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Richard F. Walsh
March 13, 2000
been paid in accordance with Section 3.3), pro rated if
necessary, and subject to the offset of any amounts due, and
7.3.2. payment by the Company of the premiums for Executive's and his
dependents' COBRA coverage for the Company's health insurance
plan that generally applies to executives for the period in
which Executive is receiving severance pursuant to this
Agreement or, if earlier, until Executive and his dependents
cease to be eligible for such COBRA coverage. The Company's
payment obligations under this Section (other than those in
the first sentence) shall immediately cease in the event
Executive materially breaches any of his obligations under
this Agreement concerning the Company's Inventions,
Confidential Information, and not to compete or solicit the
Company's customers or employees.
7.3.3. If the Employment Term ends early on account of Disability,
Executive shall be entitled to receive only such amounts as he
otherwise be entitled to under any disability policy sponsored
by the Company in accordance with this Agreement.
7.4. If the Employment Term ends early pursuant to this Section 7 for
any other reason, Executive shall cease to have any rights to salary, bonus or
benefits other than: (i) salary or bonus which has accrued but is unpaid as of
the end of the Employment
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Richard F. Walsh
March 13, 2000
Term, and (ii) to the limited extent provided in any benefit or equity plan or
arrangement in which Executive has participated as an employee of the Company,
any benefits or rights which by their specific terms extend beyond termination
of Executive's employment.
7.4.1. All aforesaid amounts in this Section shall be subject to
required withholding. The Company and its affiliated entities
shall have no other obligations to the Executive upon a
termination except as specifically provided in this Agreement.
8. No Duty to Mitigate/Set-Off.
Except as specifically stated in this Agreement, the Company's
obligation to make any payments to the Executive shall not be affected by any
set-off, counterclaim, recoupment, defense, or other claim, right or action
which the Company may have against the Executive or others. The Company agrees
that if Executive's employment with the Company is terminated during the
Employment Term, Executive shall not be required to seek other employment or to
attempt in any way to reduce any amounts payable to Executive by the Company
pursuant to this Agreement. Further, the amount of any payment or benefit
provided for in this Agreement shall not be reduced by any compensation earned
by Executive or benefit provided to Executive as the result of employment by
another employer or otherwise. Any amounts due under Section 7 are
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Richard F. Walsh
March 13, 2000
inclusive, and in lieu of, any amounts payable under any other salary
continuation or cash severance arrangement of the Company. To the extent any
such payments are made to Executive under any other salary continuation or cash
severance arrangement, such payments shall be offset from the amount due
Executive under Section 7.
9. Inventions and Other Intellectual Property.
The Company and Executive agree to promptly execute the Proprietary
Information and Invention Agreement, annexed hereto as Attachment C, and any
revised versions which are subsequently issued by the Company as part of its
standard terms of employment.
10. Confidential Information.
Executive acknowledges that the trade secrets, know how, and
proprietary information and observations concerning the business or affairs of
the Company, or any of its subsidiaries or affiliates or any predecessor thereof
(collectively "Confidential Information"), obtained by him while employed by the
Company pursuant to this Agreement are the property of the Company or such
subsidiary or affiliate. Executive agrees that he shall not disclose to any
unauthorized person or use for his own account any Confidential Information
without the prior written consent of the Chief Executive Officer unless and
except to the extent that the aforementioned matters become generally known to
and available for use by the public other than as a result of
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Richard F. Walsh
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Executive's acts or omissions to act. If Executive receives legal process, he
may comply with it provided he promptly notifies the Company and diligently
cooperates with the Company in obtaining a protective order. Executive shall
deliver to the Company at the termination of the Employment Term, or at any
other time the Company may request, all memoranda, notes, plans, records,
reports, computer tapes and software and other documents and data (and copies
thereof) relating to the Confidential Information or business of the Company or
any of its subsidiaries or affiliates which he may then possess or have under
his control.
11. Non-Compete, Non-Solicitation.
11.1. Executive acknowledges that in the course of his employment with
the Company pursuant to this Agreement he will become familiar with the
Company's Confidential Information and that his services will be of special,
unique and extraordinary value to the Company.
11.2. During the Employment Term and for one (1) year thereafter,
Executive shall not enter into Competition with the Company or its affiliates to
the extent such Competition requires Executive to divulge, disclose or
communicate to any third party, or make use of, any Company Confidential
Information. For purposes of this Agreement, "Competition" shall mean
participating, directly or indirectly, as an individual proprietor, partner,
officer, employee, director, joint venturer, lender, consultant or in
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Richard F. Walsh
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any capacity whatsoever (within the United States or in any foreign country
where the Company or its affiliates do business) in a business which develops or
markets goods, services or intangible property which is similar to any of those
marketed or developed by the Company or its affiliates; provided, however, that
such participation shall not include (i) the mere ownership of not more than two
percent (2%) of the total outstanding stock of a publicly held company, (ii) the
performance of services for any enterprise to the extent such services are not
performed, directly or indirectly, for a business in the aforesaid competition,
(iii) any activity engaged in with the prior written approval of the Chief
Executive Officer, or (iv) Executive's employment by a non Competitive division
(or other business unit) of a company which is in Competition with the Company
so long as Executive is not involved with the competitive division (or other
business unit). Notwithstanding anything else in this Section to the contrary,
subsequent to the termination of Executive's employment hereunder, Executive
may, in his sole discretion, passively invest in any entity, provided Executive
does not divulge, disclose or communicate any Company Confidential Information
to such company or its affiliates, employees, officers, consultants, directors,
lenders, or investors and further provided Executive does not render services to
such company or otherwise violates this Section (other than by making such
passive investments).
11.3. During the Employment Term and for two (2) years thereafter,
Executive shall
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not directly or indirectly solicit for Competitive products or induce any
customer of the Company or its affiliates to terminate, or otherwise to cease,
reduce, or diminish in any way its business relationship with the Company or its
affiliates.
11.4. During the Employment Term and one (1) year thereafter, Executive
shall not recruit, solicit or induce any nonclerical employees of the Company or
its affiliates to terminate their employment or otherwise cease their business
relationship with the Company or its affiliates, or hire or assist another
person or entity to hire any nonclerical employee of the Company or its
affiliates. Executive agrees not to circumvent this prohibition by hiring any
such employee within six (6) months after the employee terminates his employment
with the Company or its affiliates. Notwithstanding the foregoing, if requested
by any entity with which Executive is not affiliated, Executive may serve as a
reference for any person who at the time of the request is not an employee of
the Company or any of its affiliates.
11.5. If, at the time of enforcement of this Section, a court holds
that the restrictions stated herein are unreasonable under circumstances then
existing, the parties agree that the maximum period, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area and that the court shall be allowed to revise the restrictions
contained herein to cover the maximum period, scope and area permitted by law.
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12. Refund Of Benefits.
In the event Executive is in breach of Section 11 ("Non-Compete,
Non-Solicitation"), or such modified version as may be required by law,
Executive will relinquish to the Company:
12.1. all stock options and other benefits under any stock incentive
plan, including the Options granted under this Agreement and Attachment "A",
which vested in the Executive's interest during the six months preceding the
last day of Executive's employment by the Company. In the event Executive sells
or otherwise transfers any such Options, Executive will refund to the Company
the amount of the gross economic value realized by Executive.
12.2. all bonus payments, or any pro rata portions thereof, which were
paid or otherwise owed to Executive for his services rendered during the six
months preceding the last day of Executive's employment by the Company.
12.3. all severance payments calculated on the basis of salary, bonus
or both.
12.4. The relinquishment of the foregoing benefits in accordance with
this Section shall not limit or otherwise preclude all other rights and remedies
of the Company due to the Executive's breach of this Agreement.
13. Enforcement.
Because Executive's services are unique and because Executive has
access to
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Richard F. Walsh
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Confidential Information of the Company and its affiliates, the parties hereto
agree that money damages, while not waived, would be an inadequate remedy for
any breach of this Agreement. Therefore, in the event a breach or threatened
breach of this Agreement, the Company or its successors or assigns may, in
addition to other rights and remedies existing in their favor, including the
award of money damages, apply to any court of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce, or
prevent any violations of, the provisions hereof (without posting a bond or
other security).
14. Indemnification.
Executive shall be entitled to be indemnified for his activities as an
officer to the full extent provided in the Articles of Incorporation and By-Laws
of the Company and in accordance with the Indemnification Agreement annexed as
Attachment B hereto, which the Company and Executive agree to promptly execute.
In addition, the Company shall cover Executive under Directors and Officers
Liability Insurance during the Employment Term in the same amount and to the
same extent as the Company covers its other officers.
15. Executive Representations.
Executive represents and warrants to the Company that (i) the
execution,
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delivery and performance of this Agreement by Executive does not and will not
conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Executive is a party or by which
he is bound, (ii) except with respect to agreements which have been furnished to
the Company and relate primarily to confidentiality, intellectual properties
and/or ethical conduct entered into between Executive and his former
employer(s), Executive is not a party to or bound by any employment agreement,
change in control agreement, non-compete agreement or confidentiality agreement
with any other person or entity, (iii) upon the execution and delivery of this
Agreement by the Company, this Agreement shall be the valid and binding
obligation of Executive, enforceable in accordance with its terms, (iv)
Executive is a United States citizen or a lawfully resident alien entitled to
work within the United States, and (v) Executive will in performing his duties
not utilize any confidential information of any other person or entity.
16. Entire Agreement; Modification.
This Agreement, and all documents incorporated herein, constitute the
full and complete understanding of the parties hereto and will supersede all
prior agreements and understandings, oral or written, with respect to the
subject matter hereof. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, oral or otherwise, have
been made by either party, or anyone acting on
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behalf of either party, which are not embodied in this Agreement, and that no
other agreement, statement or promise not contained in this Agreement shall be
valid or binding. This Agreement may not be modified or amended except by an
instrument in writing signed by the party against whom or which enforcement may
be sought.
17. Survival.
The provisions of this agreement which by their terms imply
continuation beyond the end of the Employment Term shall survive notwithstanding
any termination of the Employment Term.
18. Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms of provisions of
this Agreement in any other jurisdiction.
19. Waiver of Breach.
The waiver by any party of a breach of any provisions of this
Agreement, which waiver must be in writing to be effective, shall not operate or
be construed as a waiver of any subsequent breach.
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20. Notices.
All notices hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, or one (1) day after sending by express
mail or other "overnight mail service," or three (3) days after sending by
certified or registered mail, postage prepaid, return receipt requested. Notice
shall be sent as follows: if to Executive, to the last known address provided by
the Executive in the Company's records and, if to the Company, at the address
set forth on the first page of this Agreement, attention of the General Counsel.
Either party may change the notice address by notice in accordance with this
Section.
21. Assignability; Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
Executive and Executive's legal representatives, heirs and distributees, and
shall be binding upon and inure to the benefit of the Company, its successors
and assigns. This Agreement may not be assigned by the Executive. This Agreement
may not be assigned by the Company, except in connection with a merger or a sale
by the Company of all or substantially all of its assets and, in such event,
only on the condition that the assignee specifically assumes in writing all of
the Company's obligations under this Agreement.
22. Governing Law.
All issues pertaining to the validity, construction, execution and
performance of this Agreement shall be construed and governed in accordance with
the laws of the
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State of California, without giving effect to the conflict or choice of law
provisions thereof.
23. Arbitration.
23.1. In the event of any dispute of any kind whatsoever between the
parties, arising out of or related in any way to this Agreement, the parties
agree to submit all such disputes to binding arbitration. Each party shall be
entitled to appoint one arbitrator, who shall not be an affiliate, officer,
director, employee, agent, vendor or contractor of that party. The appointed
arbitrators shall then appoint a neutral arbitrator who shall serve as Chairman,
and the arbitration shall be conducted by the arbitrators so chosen. The
parties' arbitrators shall be experienced executives in the technology industry,
and the Chairman shall be an attorney practicing litigation in the field of
employment law. The arbitration shall be conducted in Santa Clara County,
California. Demand for arbitration shall be made in writing and shall be served
upon the party or parties to whom the demand is addressed in the manner provided
for the tender of notices in this Agreement. If the party receiving the demand
for arbitration does not appoint its arbitrator within 30 days after receiving
such notice, the arbitrator appointed by the party serving the demand for
arbitration shall be further empowered to serve as the sole arbitrator,
notwithstanding that he fails to meet the qualifications for the Chairman set
forth in this Section.
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March 13, 2000
23.2. The arbitrators are authorized to award any remedy, legal or
equitable, as well as any interim relief as they deem appropriate in their
discretion. However, notwithstanding the foregoing, the arbitrators shall have
no power to add to, subtract from, or modify any of the terms or conditions of
this Agreement.
23.3. Subject to the arbitration agreement stated in this Article, the
federal and state courts located in Santa Clara County, California shall have
exclusive jurisdiction over all other legal proceedings between the parties.
Executive agrees to the personal jurisdiction of said courts and to the receipt
of service of process in the same form as other notices under this Agreement.
Application may be made to any such court to assist the arbitrators in
performing their arbitral duties, to confirm their award and to enforce any such
award as a judgement of said court.
24. Headings.
The headings in this Agreement are intended solely for convenience or
reference and shall be given no effect in the construction or interpretation of
this Agreement.
25. Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together shall constitute one
and the same instrument.
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Employment Agreement
Richard F. Walsh
March 13, 2000
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and Executive has hereunto set his hand as of the date first set forth
above.
CYLINK CORPORATION
By: /s/ William P. Crowell
--------------------------
Name: William P. Crowell
Title: CEO and President
EXECUTIVE
/s/ Richard F. Walsh
--------------------------
Richard F. Walsh
26
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FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
This First Amendment is made as of the 1st day of January, 2002 (the
"Effective Date"), by and between Cylink Corporation, a California corporation
with its principal place of business at 3131 Jay Street, Santa Clara, California
95054 (the "Company"), and Richard F. Walsh, residing at 40 Glen Eyrie Ave. #26,
San Jose CA 95125 (the "Executive").
WHEREFORE, the Company and Executive executed an Employment Agreement
(the "Agreement") having an Effective Date of March 13, 2000;
WHEREFORE, the Company has revised some of the standard terms of its
executive Employment Agreements;
NOW THERFORE, the parties agree as follows:
1. Article 5 of the Agreement is revised to state:
Stock Options.
5.1. The Compensation Committee of the Board (the "Compensation
Committee") authorized granting to Executive on March 31, 2000, options to
purchase 125,000 shares of Company common stock at an exercise price of $14.50
per share, pursuant and subject to the Company's 1994 Flexible Stock Incentive
Plan (the "Plan"). Such options shall be non-qualified or incentive stock
options, or a combination thereof as determined by the Plan's Administrator. The
terms of the options, as more fully set forth in the option agreement annexed
hereto as Attachment A, and specifically modified by this
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First Amendment
Employment Agreement
Richard F. Walsh
Section 5, shall provide that (i) they shall be for a maximum six (6) year term,
and (ii) shall vest and become exercisable ratably over a four (4) year period
on the last day of each month during such period, provided: (A) the Executive is
employed by the Company on each vesting date, and provided further, that (B) the
initial twenty five percent (25%) of the options shall not be exercisable unless
and until the Executive remains employed by the Company on the first anniversary
of the Effective Date.
5.2. Furthermore, in the event of a "Corporate Transaction" or "Change In
Control" during the Term of this Agreement, the Executive will be entitled to
vesting of all of the Executive's then unvested options (the "Accelerated
Options") under all option agreements granted during the period of his
employment, subject to the provisions of this Section 5:
5.2.1. In the event of a "Corporate Transaction" the Accelerated
Options shall fully vest immediately prior to closing unless
the Company's successor in interest, or its parent, offers to:
5.2.2. either (i) assume the Executive's Accelerated Options in
accordance with Section 11 of the Plan and allow them to
continue vesting in accordance with their terms, or (ii)
replace them with equivalent options, having the same vesting
schedule as the original grant by the Company, to purchase
publicly traded shares in the successor corporation or its
Parent by exchanging them at the same rate of conversion
offered to the
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First Amendment
Employment Agreement
Richard F. Walsh
Company's common shareholders in the Corporate Transaction,
and
5.2.3. provided further that the successor in interest agrees to
fully vest all such assumed or exchanged Accelerated Options
on the earlier of: (i) the first anniversary of his continued
employment following such Corporate Transaction, or (ii) upon
termination of the Agreement by the Company or its successor
in interest if such termination occurs either without good
Cause or by the Executive for Good Reason.
5.3. In the event of a Change In Control, the Accelerated Options shall
vest on the earlier of: (i) the first anniversary of such Change In Control, or
(ii) upon termination of the Agreement by the Company or its successor in
interest if such termination occurs either without good Cause or by the
Executive for Good Reason. For purposes of the Agreement and this Amendment, the
terms "Corporate Transaction" and "Change in Control" shall have the definitions
of the Plan, except that a "Corporate Transaction" shall also include the
acquisition of more than 50% of the Company's outstanding securities by any
person or related group of persons as defined in Section 13(d)(3) of the
Securities Act of 1934, other than the entities and transactions identified on
the Attachment to this Amendment.
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First Amendment
Employment Agreement
Richard F. Walsh
2. Article 6 is revised to state:
Paid Time Off ("PTO").
During the Employment Term, Executive shall be entitled to PTO,
including vacation, equal to the greater of: (i) fifteen days plus one
additional day for each year of employment by the Company, or (ii) twenty days
plus one additional day for each year of employment under this Agreement; but in
no event more than 25 days, in each full calendar year (prorated for any partial
year) to be taken at such times as mutually agreed by the Executive and the
Chief Executive Officer.
3. All other terms and conditions of the Agreement shall remain in full force
and effect as if restated in their entirety herein.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and Executive has hereunto set his hand as of the date first set forth
above.
CYLINK CORPORATION
By: /s/ R. Fougner
---------------------
Name: R. Fougner
Title: VP, Corporate Secretary
30
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First Amendment
Employment Agreement
Richard F. Walsh
EXECUTIVE
By /s/ Richard F. Walsh
---------------------
Richard F. Walsh
31