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Employment Agreement - RSA Security Inc. and Arthur W. Coviello Jr.

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                              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."



<PAGE>   2

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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<PAGE>   3

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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<PAGE>   4

                  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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<PAGE>   5

                  (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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<PAGE>   6

                  (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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<PAGE>   7

                           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.

                                      -7-

<PAGE>   8

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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<PAGE>   9

                  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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<PAGE>   10

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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<PAGE>   11

                  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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<PAGE>   12

                  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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<PAGE>   13

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.


                                      -13-
<PAGE>   14


         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.



                                      -14-

<PAGE>   15


                                 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%


                                      -15-