Employment Agreement - RSA Security Inc. and Arthur W. Coviello Jr.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 1st day
of April, 2000 (the "Agreement Date"), by and between RSA Security Inc., a
Delaware corporation ("Employer"), and Arthur W. Coviello, Jr. ("Employee").
WHEREAS, Employer and Employee are parties to a letter agreement, dated
as of August 21, 1995 (the "1995 Agreement"); and
WHEREAS, Employer and Employee are desirous of continuing Employee's
employment with Employer for the period, and on the terms and conditions, set
forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions herein contained, the parties hereby agree as follows:
Section 1. EMPLOYMENT.
Employer hereby agrees to continue to employ Employee, and Employee
accepts such continued employment, according to the terms and conditions set
forth in this Agreement.
Section 2. TERM.
The initial term of this Agreement (the "Initial Term") shall be for a
period commencing on April [1], 2000 and continuing through March 31, 2002.
Thereafter, this Agreement shall be automatically renewed for additional
one-year periods (each, the "Renewal Term") on the same terms and conditions
(except as may be otherwise mutually agreed to in writing by the parties) unless
either party gives the other written notice of non-renewal at least ninety (90)
days prior to the expiration of the then-current term. Notwithstanding the
foregoing, the Employment Period (as defined below) may be terminated at any
time upon the occurrence of any one of the following events: (i) Employee's
decision to resign pursuant to Section 9 of this Agreement, (ii) Employer's
decision to terminate Employee, either "for cause" or other than "for cause"
pursuant to Section 9, or (iii) the parties' agreement in writing to terminate
the Agreement. The period of time between the commencement and termination of
Employee's employment shall be referred to herein as the "Employment Period."
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Section 3. POSITION AND SERVICES.
(a) Employee will occupy the position of President and Chief
Executive Officer of Employer. Employee will also be a member
of the Employer's Board of Directors (the "Board of
Directors"), subject to the terms of the Employer's Third
Restated Certificate of Incorporation as amended from time to
time. Any subsequent substantial diminution in the position,
office or duties of Employee (other than any such diminution
resulting from a Change in Control (as such term is defined in
Section 12 hereof)) or material breach by the Employer of its
obligations under this Agreement shall be deemed a termination
of this Agreement other than "for cause" as defined in Section
9 hereof. Employee will report directly to the Board of
Directors and shall have such duties and responsibilities as
are set forth in the Employer's Amended and Restated By-Laws,
as amended from time to time, which duties and
responsibilities shall include, but not be limited to, overall
management responsibility for the operations and
administration of Employer as well as such other duties and
responsibilities, consistent with Employee's position as
President and Chief Executive Officer, as shall be defined by
the Board of Directors.
(b) Employee will be expected to be in the full-time employment of
Employer, to devote substantially all of his business time and
attention, and exert his best efforts, to the performance of
his duties hereunder, and to serve Employer diligently and to
the best of his ability. During the Employment Period, the
Employee shall devote his full business time to the business
and interests of the Employer; provided, that, except to the
extent set forth in the Prior Agreements (as such term is
defined in Section 8 hereof), nothing set forth herein shall
prohibit the Employee from engaging in other activities to the
extent that such activities do not impair the ability of the
Employee to perform his duties and obligations under this
Agreement.
Section 4. COMPENSATION.
The Employer shall pay to the Employee an initial base salary (the
"Base Salary") at an annual rate of not less than $318,000, subject to
deductions for social security, state payroll and unemployment and all other
legally required or authorized deductions and withholding. Employee's salary
shall be payable at the same time and basis as Employer pays its payroll in
general. The Board of Directors shall review Employee's Base Salary during the
Employment Period at least on an annual basis. The Employee shall have the
right, by written notice to the Employer within thirty (30) days following any
decrease in
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Employee's Base Salary at any time during the Employment Period, to treat
such reduction as a termination of this Agreement other than "for cause"
as defined in Section 9 hereof.
Section 5. INCENTIVE PAYMENTS.
In addition to the Base Salary payable pursuant to Section 4 hereof,
Employee shall be entitled to annual bonuses if Employee satisfies agreed-upon
discrete goals/objectives to be contained in an annual incentive plan for the
Employee to be established by the Board of Directors in consultation with
Employee on an annual basis. The incentive plan for 2000 is attached as EXHIBIT
A hereto.
Section 6. DEATH OR DISABILITY DURING EMPLOYMENT.
If Employee is prevented from performing his duties hereunder by reason
of illness or injury for a period of (i) four or more consecutive months or (ii)
six months during any 12-month period as determined by a recognized physician
chosen by Employer and acceptable to Employee (the applicable date when either
of such disabling events shall occur being hereinafter referred to as the
"Effective Date of Disability"), or if Employee dies during the Employment
Period, Employer shall pay to the Employee, if the Employee is disabled, or to
Employee's spouse, the Executors under Employee's Last Will and Testament duly
admitted to probate within one year of his death or the Employee's heir at law,
if the Employee dies, in addition to such amounts (if any) as may be payable
pursuant to any short- or long-term disability or life insurance policies then
in effect and maintained by the Employer with respect to the Employee
("Disability Policies"), the compensation which would otherwise be payable to
the Employee under this Agreement through the end of the month in which the
Employee's Effective Date of Disability or death occurs, or, in the case of
disability (and assuming any Disability Policies are currently in effect) such
later date as the Employee would, if eligible, be entitled to receive benefits
under such Disability Policies. In addition, the Employer shall pay, at the time
when such bonus would normally be paid, all bonus payments under Section 5
hereof which the Board of Directors, in good faith, believed that the Employee
was entitled to in respect of the year in which the Effective Date of Disability
or death occurred.
Section 7. BENEFITS; EXPENSES.
(a) The Employee shall be entitled to receive the same standard
employment benefits as other executives of the Employer
receive. The Employee shall be entitled to fully participate
in all of the Employer's future employee benefit programs in
accordance with their then-existing terms. The Employee shall
be entitled to reimbursement for all approved reasonable
travel and other business expenses incurred by the Employee in
connection with his services
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to the Employer pursuant to the terms of this Agreement. All
business expenses for which the Employee seeks reimbursement
from the Employer shall be adequately documented by the
Employee in accordance with the Employer's procedures covering
expense reimbursement and in compliance with the regulations
of the U.S. Internal Revenue Service.
(b) The Employee shall be entitled to five weeks of vacation
during each year of the Employment Period. The Employee may
accrue and carry forward vacation time to future years;
provided, however, that in no event may the Employee carry
forward into any year in excess of five weeks of accrued paid
vacation time.
Section 8. CONFIDENTIALITY; NON-COMPETITION.
The parties acknowledge that the Employee has previously entered into a
Non-Competition Agreement and a Nondisclosure and Developments Agreement, each
dated as of August 28, 1995 (together, the "Prior Agreements"), in connection
with the Employee's employment by the Employer. The Prior Agreements are each
incorporated herein by this reference and made a part hereof as if set forth
herein in their entirety.
Section 9. TERMINATION.
This Agreement does not grant the Employee any right or entitlement to
be retained by the Employer, and shall not affect or prejudice the Employer's
right to discharge the Employee in accordance herewith. The Employee may
terminate this Agreement at any time during the Initial Term upon sixty (60)
days' prior written notice to the Employer. The Employer may terminate this
Agreement "for cause" (as defined below) at any time upon thirty (30) days'
prior written notice to the Employee. Employee shall, during such 30-day period,
be given an opportunity to defend the basis or facts giving rise to the notice.
The Employer may terminate this Agreement other than "for cause" at any time
during the Initial Term upon sixty (60) days' prior written notice to the
Employee. Either party may terminate this Agreement at any time during the
Renewal Term upon ninety (90) days' prior written notice to the other party. If
Employee is terminated either "for cause" or for reasons other than "for cause,"
Employee shall be entitled to the following severance payments:
(i) If termination occurs by the Employer other than "for cause,"
then the following severance payments (less applicable
deductions for social security, payroll and other applicable
taxes) and related arrangements will be made:
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(a) cash payments at the Employee's current monthly Base
Salary at the time of termination (less applicable
deductions) for a period of 24 months commencing with
the month immediately succeeding the month during
which the 30-day period after the giving of notice
shall have ended (the "Effective Date of
Termination");
(b) in addition to (a) above, normal employee medical and
insurance benefits will be continued on an insured
basis for the Employee and for each of the Employee's
children who are under the age of 18 and the
Employee's spouse at the Effective Date of
Termination (the "Family") for a period of 24 months
following the Effective Date of Termination, provided
that medical benefits provided to the Employee and
the Family pursuant to this subparagraph (b) may be
reduced from time to time to the extent that medical
benefits are provided through Medicare or through any
other employer following the Effective Date of
Termination;
(c) to the extent that all or any stock options granted
to Employee shall not have vested as of the Effective
Date of Termination, then all such stock options
shall automatically vest;
(d) the Employer shall pay to the Employee, in a single
lump sum payment within 30 days following the
Effective Date of Termination, an amount equal to a
pro rata portion of the Employee's current monthly
Base Salary at the time of termination (less
applicable deductions) with respect to the month in
which the Effective Date of Termination occurs based
upon the number of days elapsed in such month prior
to the Effective Date of Termination;
(e) the Employer shall pay to the Employee, in a single
lump sum payment within 30 days following the
Effective Date of Termination, an amount equal to the
greater of (i) a pro rata portion of the bonus
payable to the Employee pursuant to Section 5 of this
Agreement with respect to the year in which such
termination shall have occurred, calculated at 100%
of the Employee's target bonus amount, and (ii) a pro
rata portion of the actual bonus payable to the
Employee pursuant to Section 5 of this Agreement with
respect to the year in which such termination shall
have occurred (assuming the Employee had been
employed by the Employer the entire year); and
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(f) the Employer shall reimburse the Employee for any
reasonable legal expenses incurred by the Employee in
connection with the termination of the Agreement
(excluding any expenses incurred in contesting any
such termination).
(ii) If Employee is terminated by the Employer "for cause," the
Employer shall (a) provide the Employee with normal employee
medical and insurance benefits for a period of six months
following the Effective Date of Termination, and (b) pay to
the Employee an amount equal to a pro rata portion of any
bonus payable to the Employee pursuant to Section 5 of this
Agreement with respect to the year in which such termination
shall have occurred based on the number of days elapsed in
such year prior to the Effective Date of Termination. Except
as set forth in the prior sentence, in the event of a
termination for cause, the Employee shall not be entitled to
any salary, severance or other payments or any benefits of any
kind beyond the Effective Date of Termination. Termination
"for cause" as used herein, and as determined by the Board of
Directors, shall include only the following Employee behavior:
(1) any act committed by Employee which shall represent (x) a
breach in any material respect of any of the terms hereof or
(y) a material breach of fiduciary duty to the Employer and/or
all of its stockholders under the laws of the State of
Delaware; (2) willful failure to carry out reasonable assigned
duties; (3) gross negligence, consisting of wanton and
reckless acts or omissions in the performance of Employee's
duties to the material detriment of Employer; (4) addiction to
drugs or chronic alcoholism which impairs the Employee's
ability to carry out his obligations under this Agreement; or
(5) any conviction of the Employee of a felony which is
subject to a jail sentence of at least three months; provided,
that in the case of a termination for cause pursuant to clause
(1), (2) or (3) of this paragraph (ii), the Employee shall be
provided with not less than 30 days' written notice thereof
from the Board of Directors or the Compensation Committee of
the Board of Directors and an opportunity to cure such event
to the reasonable satisfaction of the Board of Directors.
(iii) If Employee voluntarily resigns then the following severance
payments (less applicable deductions for social security,
payroll and other applicable taxes) and related arrangements
will be made:
(a) normal employee medical and insurance benefits will
be continued on an insured basis for the Employee and
for the Family for a period of 12 months following
the Effective Date of Termination, provided that
medical benefits provided to the Employee and the
Family pursuant
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to this subparagraph (a) may be reduced from time to
time to the extent that medical benefits are provided
through Medicare or through any other employer
following the Effective Date of Termination;
(b) the Employer shall pay to the Employee, in a single
lump sum payment within 30 days following the
Effective Date of Termination, an amount equal to a
pro rata portion of the Employee's current monthly
Base Salary at the time of termination (less
applicable deductions) with respect to the month in
which the Effective Date of Termination occurs based
upon the number of days elapsed in such month prior
to the Effective Date of Termination; and
(c) the Employer shall pay to the Employee, in a single
lump sum payment within 30 days following the
Effective Date of Termination, an amount equal to a
pro rata portion of the actual bonus payable to the
Employee pursuant to Section 5 of this Agreement with
respect to the year in which such termination shall
have occurred (assuming the Employee had been
employed by the Employer the entire year).
Section 10. BREACH OR VIOLATION OF AGREEMENT.
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 Commercial Arbitration Rules of the American Arbitration Association,
and judgment upon the award rendered may be entered in any court having
jurisdiction thereof. Notwithstanding the foregoing, the parties agree that a
breach or violation of this Agreement will result in immediate and irreparable
injury and harm to the other party, who shall have the right of an injunction,
specific performance or other equitable relief to prevent the violation of the
obligations hereunder. In addition, the prevailing party in any arbitration or
litigation relating to the interpretation or enforcement of this Agreement shall
be entitled to reimbursement of all reasonable costs and expenses (including
without limitation fees and expenses of counsel) incurred in connection
therewith.
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Section 11. NOTICES.
Any notice required to be given pursuant to the provisions of this
Agreement shall be in writing and, if mailed, sent by registered or certified
mail, postage prepaid, with a copy delivered by an overnight courier service of
recognized standing, to the party named at the address set forth below, or at
such other address as each party may hereafter designate in writing to the other
party:
Employer: RSA Security Inc.
36 Crosby Drive
Bedford, MA 01730
Attn: Secretary
cc: Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn: Hal J. Leibowitz, Esq.
Employee: Arthur W. Coviello, Jr.
16 South Merrimack Road
Hollis, NH 03049
Any such notices shall be deemed to have been delivered when served
personally, or 28 hours after being mailed in the manner specified above.
Section 12. CHANGE IN CONTROL EVENT.
(a) If a Change in Control (as such term is defined below) shall
have occurred, Employee shall be entitled, at his election, to
receive, if he chooses to leave Employer's management at any
time during the first 18 months after the effective date of
the Change in Control, (a) a lump sum payment in an amount
equal to two times his then-current monthly Base Salary (less
applicable deductions) provided for in Section 4 hereof for a
12-month period, and (b) a pro rata portion of any bonus
otherwise payable to the Employee pursuant to Section 5 of
this Agreement with respect to the year in which such Change
in Control shall have occurred, calculated at 100% of the
Employee's target bonus amount, based on the number of days
elapsed in such year prior to the Employee's last day of full
time employment with the Employer.
(b) In addition, all of the stock options granted to Employee
which shall not have vested or which shall still remain
exercisable as of the effective date of the
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Change in Control shall immediately thereupon automatically
vest and be free from repurchase. However, notwithstanding any
other provision of this Agreement, in the event that within
two years after the Agreement Date, (i) a plan for a Change in
Control is initiated, (ii) the Board of Directors desires that
the transaction giving rise to such Change in Control be
accounted for as a pooling of interests and (iii) this Section
12(b) is determined to prevent such transaction from being
accounted for as a pooling of interests, then (x) this Section
12(b) shall be inapplicable to such transaction and (y) the
provision set forth in the last sentence of Section 3 of the
1995 Agreement shall instead apply.
(c) For purposes of this Agreement, a "Change in Control" shall be
deemed to have taken place if:
(i) there shall be consummated any consolidation or
merger of Employer in which Employer is not the
continuing or surviving corporation or pursuant to
which shares of the Employer's capital stock are
converted into cash, securities or other property,
other than a consolidation or merger of Employer in
which each holder of the Employer's capital stock
immediately prior to the consolidation or merger has
upon consummation of the consolidation or merger the
same proportionate ownership of each class or series
of capital stock of the surviving corporation as such
holder had of each class or series of the Employer's
capital stock immediately prior to the consolidation
or merger, or any sale, lease, exchange or other
transfer (in one transaction or a series of
transactions contemplated or arranged by any party as
a single plan) of all or substantially all of the
assets of Employer; or
(ii) any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), shall after the
Agreement Date become the beneficial owner (as
defined in Rules 13(d)(3) and 13(d)(5) under the
Exchange Act), directly or indirectly, of securities
of Employer representing more than 50% of the voting
power of all then outstanding securities of Employer
having the right under ordinary circumstances to vote
in an election of the Board of Directors (for
purposes of this clause (ii), any securities of
Employer that any such person has the right to
acquire pursuant to any agreement, or upon exercise
of conversion rights, warrants or options, or
otherwise, shall be deemed beneficially owned by such
person).
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Section 13. EXERCISE OF STOCK OPTIONS.
Upon a termination of the Employment Period "for cause," all stock
options held by the Employee shall terminate automatically upon the Effective
Date of Termination. Upon a termination of the Employment Period (i) other than
"for cause," (ii) by reason of Employee's voluntary resignation or (iii) by
death or disability, all stock options held by the Employee shall be exercisable
in accordance with their terms.
Section 14. LIMITATIONS ON PARACHUTE PAYMENTS.
(a) In the event that the Employer undergoes a "Change in
Ownership or Control" (as defined below), a portion of any
"Contingent Compensation Payments" (as defined below) that the
Employee would otherwise be entitled to receive shall be
eliminated to the extent necessary to eliminate any "excess
parachute payments" (as defined in Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code")) for
the Employee. For purposes of this Section 14, the Contingent
Compensation Payments so eliminated shall be referred to as
the "Eliminated Payments" and the aggregate amount (determined
in accordance with Proposed Treasury Regulation Section
1.280G-1, Q/A-30 or successor provision) of the Contingent
Compensation Payments so eliminated shall be referred to as
the "Eliminated Amount." Notwithstanding the foregoing, no
such reduction in payments shall occur if the excess of (A)
110% of the Eliminated Amount (computed without regard to this
sentence) over (B) the aggregate present value (determined in
accordance with Proposed Treasury Regulation Section 1.280G-1,
Q/A-31, and Q/A-32 or successor provisions) of the amount of
any additional taxes that would be incurred by the Employee if
the Eliminated Payments (determined without regard to this
sentence) were paid to him (including, state and federal
income taxes on the Eliminated Payments, the excise tax
imposed by Section 4999 of the Code payable with respect to
all of the Contingent Compensation Payments, and any
withholding taxes) is greater than zero. For purpose of the
preceding sentence, any federal or state income tax that would
be attributable to the receipt of the Eliminated Payments
shall be computed by multiplying the amount of the Eliminated
Payment by the maximum combined federal and state income tax
rate provided by law; provided, however, that if the Employee
so notifies the Employer within 90 days following the timely
filing of all relevant tax returns for the Employee for the
year or other taxable period in which the Eliminated Payments
would have been made, the Eliminated Payments shall be
recomputed based upon all of the Employee's actual tax
circumstances. If, as a result of such recomputation, there
are no Eliminated Payments, the Employee shall become entitled
to receive Contingent Compensation
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Payments previously treated as Eliminated Payments within 10
days of the delivery of the aforementioned notice together
with interest thereon computed at the prime rate announced
from time to time by the Wall Street Journal compounded
monthly from the date that such payments originally would have
been made.
(b) For purposes of this Section 14, the following terms shall
have the meaning given them in this subsection (b):
(i) "Change in Ownership or Control" shall mean a change
in the ownership or effective control of the Employer
or in the ownership of a substantial portion of the
assets of the Employer determined in accordance with
Section 280G(b)(2) of the Code.
(ii) "Contingent Compensation Payment" shall mean any
payment (or benefit) in the nature of compensation
that is made or supplied to a "disqualified
individual" (as defined in Section 280G(c) of the
Code) and that is contingent (within the meaning of
Section 280G(b)(2)(A)(i) of the Code) on a Change in
Ownership or Control of the Employer.
(c) The amount of any payments or other benefits otherwise due to
the Employee following a Change in Ownership or Control that
could reasonably be characterized as Contingent Compensation
Payments (as determined by the Employer) shall not be made
until 30 days after the date on which they would otherwise
have been due (the "Extended Due Date"). Within 15 days of the
date on which such payments or benefits would have originally
been due, the Employer shall determine and notify the Employee
(with reasonable detail regarding the basis for its
conclusions) (i) whether some or all of such payments and
benefits constitute Contingent Compensation Payments and (ii)
the amount of any Eliminated Amount. On or prior to the
Extended Due Date, the Employee shall notify the Employer
either (A) that he agrees with the Employer's determination
pursuant to the preceding sentence, in which case he shall
indicate, if applicable, the Contingent Compensation Payments
that will be treated as Eliminated Payments or (B) that he
disagrees with such determination, in which case he shall
indicate those payments that should be characterized as
Contingent Compensation Payments, the amount of any Eliminated
Amount and, if applicable, the Contingent Compensation
Payments that will be treated as Eliminated Payments. The
amount and characterization of any item in the notice from the
Employee shall be final; provided, however, that in the event
that the Employee fails to notify the Employer pursuant to the
preceding sentence on or before the Extended Due Date, the
Employer's initial
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determination shall be final and the Contingent Compensation
Payments that will be treated as Eliminated Payments shall be
determined by the Employer in its absolute discretion. In no
event shall the Employer be liable to the Employee as a result
of any factual or legal determination made by it pursuant to
this subsection (c) or for any information supplied by it to
the Employee or his advisors.
(d) The provisions of this Section 14 are intended to apply to any
and all payments or benefits available to the Employee under
this Agreement.
Section 15. LEGAL EXPENSES.
The Employer shall reimburse the Employee for any reasonable legal
expenses incurred by the Employee in connection with the preparation and
negotiation of this Agreement and any amendments hereto.
Section 16. ENTIRE AGREEMENT.
(a) CHANGE, MODIFICATION, WAIVER. No change or modification of
this Agreement shall be valid unless it is in writing and
signed by each of the parties hereto. No waiver of any
provision of this Agreement shall be valid unless it is in
writing and signed by the party against whom the waiver is
sought to be enforced. The failure of a party to insist upon
strict performance of any provision of this Agreement in any
one or more instances shall not be construed as a waiver or
relinquishment of the right to insist upon strict compliance
with such provision in the future.
(b) INTEGRATION OF ALL AGREEMENTS. This Agreement, together with
the Prior Agreements, constitutes the entire Agreement between
the parties and is intended to be an integration of all
agreements between the parties with respect to Employee's
service with Employer. Subject to Section 12(b) hereof, any
and all prior agreements, including without limitation the
1995 Agreement, between Employee and Employer with respect to
the subject matter hereof (other than the Prior Agreements)
are hereby revoked.
(c) SEVERABILITY OF PROVISIONS. If for any reason any provision of
this Agreement should be declared void or invalid, such
declaration shall not affect the validity of the rest of this
Agreement, which shall remain in force as if executed with the
void or invalid provision eliminated. Each of the Prior
Agreements shall survive any termination of this Agreement in
accordance with its terms.
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Section 17. BINDING EFFECT.
This Agreement shall be binding upon all parties hereto and their
heirs, successors and assigns. This Agreement shall be binding upon any
successor entity to Employer, including without limitation any successor by
merger, consolidation or sale of assets, and shall be assignable by the Employer
to any entity controlled by or under common control with the Employer.
Section 18. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the internal laws of The Commonwealth of Massachusetts, without regard to
conflicts of laws principles.
Section 19. MISCELLANEOUS.
(a) FORM. As employed in this Agreement, the singular form shall
include, if appropriate, the plural.
(b) HEADINGS. The headings employed in this Agreement are solely
for the convenience and reference of the parties and are not
intended to be descriptive of the entire contents of any
paragraph and shall not limit or otherwise affect any of
terms, provisions or construction thereof.
(c) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
EMPLOYER:
RSA SECURITY INC.
/s/ JOSEPH B. LASSITER, III
-----------------------------------
Joseph B. Lassiter, III
Director and Chairman of the
Compensation Committee of the
Board of Directors
EMPLOYEE:
/s/ ARTHUR W. COVIELLO, JR.
----------------------------------
Arthur W. Coviello, Jr.
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Attachment "A"
RSAS CONFIDENTIAL
2000 COMPENSATION PLAN
A. COVIELLO
I. SALARY $318,000
II. BONUS** THRESHOLD PLAN STRETCH
--------- ---- -------
TARGET REVENUE (in 000's) $261M $268M $280M
----- -----
A) REVENUE 60% $114,480 $143,100 $171,720
-------- -------- --------
TARGET EPS*** 0.85 0.89 >.90
---- ---- ----
B) EARNINGS PER SHARE*** 40% $76,320 $95,400 $114,480
------- ------- --------
TOTAL BONUS $190,800 $238,500 $286,200
% OF BASE SALARY 60.00% 75.00% 90.00%
* All bonus paid after year end audit
** Bonus paid linearly to the Plan - no bonus payment if threshold is not
reached
*** On an operating basis only - including interest income - excluding one time
gains and losses and operations of RSA Capital.
Payout as a % of
Target Bonus
THRESHOLD 80%
PLAN 100%
STRETCH GOAL 120%
Stretch Goal is $280M in revenue and >90 cents EPS (including additional bonus)
No additional bonus between Plan and Stretch
Bonus will be prorated after 120%
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