Employment Agreement - Secure Computing Corp. and Jeffrey H. Waxman
Secure Computing Corporation
2675 Long Lake Road
Roseville, MN 55113
November 4, 1996
Employment Agreement
Secure Computing Corporation, a Delaware corporation (the "Company"),
and Jeffrey H. Waxman agree as follows:
1. Positions and Responsibilities
1.1. You shall serve in the executive capacity as President and
Chief Executive Officer and perform the duties customarily
associated with such capacity from time to time and at such
place or places as the Company shall designate or as shall be
appropriate and necessary in connection with such employment.
1.2. You will, to the best of your ability, devote your full time
and best efforts to the performance of your duties hereunder
and the business and affairs of the Company.
1.3. You will duly, punctually and faithfully perform and observe
any and all rules and regulations which the Company may now or
shall hereafter establish governing the conduct of its
business.
1.4. You have been elected a director of the Company and will be
considered for election as Chairman of the Board when that
position becomes open.
2. Term of Employment
2.1. The term of your employment agreement shall commence on
November 4, 1996 and terminate in two years, subject to
automatic renewal for successive one-year terms unless either
party shall have notified the other in writing not less than
30 days prior to the then current expiration date of this
Agreement of such party's determination not to renew this
Agreement.
2.2. The Company shall have the right, on written notice to you,
(a) to terminate your employment immediately at any time
for cause, or
(b) to terminate your employment at any time after
November 4, 1996, or to not renew this Agreement at
any time, without cause provided the Company shall be
obligated in either case to pay to you as severance
pay an amount equal to one year's base salary (or, if
greater than one year, base salary for the remainder
of the period from the date of termination to November
4, 1998) less applicable taxes and other required
withholdings and any amount you may owe to the
Company, payable in full immediately upon such
termination.
2.3. For purposes of Section 2.2, you may be terminated for cause
if, in the reasonable determination of the Company's Board of
Directors, you are convicted of any felony or of any crime
involving moral turpitude, or participate in fraud against the
Company, or intentionally damage any property of the Company,
or wrongfully disclose any trade secrets or other confidential
information of the Company to any of its competitors, or
materially breach Section 4 of this Agreement or any
provisions of the Proprietary Information Agreement (as
defined in Section 6 hereof) between you and the Company.
3. Compensation; Stock Options; Relocation
3.1. The Company shall pay to you for the services to be rendered
hereunder a base salary at an annual rate of $325,000, subject
to increase in accordance with the policies of the Company, as
determined by its Board of Directors from time to time,
payable in installments in accordance with Company policy.
(a) The Compensation Committee of the Board of Directors
will review the base salary from time to time, no less
frequently than annually, and may in its sole
discretion adjust the base salary upward, but not
downward, to reflect performance, appropriate industry
guideline data and other factors.
(b) If certain performance goals established from time to
time by the Board of Directors of the Company are met,
you will be entitled to a cash performance bonus of
75% of base salary, with respect to each fiscal year,
prorated for the remainder of fiscal 1996. The amount
of such bonus percentage may be increased but not
decreased by the Board of Directors of the Company.
3.2. You shall also be entitled to all rights and benefits for
which you shall be eligible under deferred bonus, pension,
group insurance, profit-sharing or other Company benefits
which may be in force from time to time and provided for the
Company's executives generally. In addition, you shall be
entitled to a monthly car allowance of up to $1,000, paid
separately and not subject to withholding taxes to the extent
permitted by law.
3.3. You will be reimbursed for reasonable expenses incurred on
behalf of the Company upon presentation of appropriate
receipts.
3.4. Stock Options
(a) At the present time Secure's Omnibus Stock Plan, under
which options have been granted to you, provides that
the maximum number of shares of Secure Common Stock
subject to options that may be awarded to any one
employee in any fiscal year shall not exceed 250,000.
The Board of Directors of Secure has approved an
amendment to the Omnibus Stock Plan that would
increase such number from 250,000 to 750,000,
conditional upon stockholder approval at the next
annual or special meeting of stockholders. The Board
of Directors of Secure agrees that it will recommend
approval of such amendment and will solicit proxies
for stockholder approval of such amendment.
Accordingly, as provided more specifically below,
options in excess of 250,000 shares have been approved
conditional upon the obtaining of stockholder approval
of the amendment to the Omnibus Stock Plan.
(b) You have been granted a non-statutory option to
purchase 450,000 shares of Secure Common Stock, which
is conditional with regard to 200,000 shares upon
stockholder approval of the amendment to the Omnibus
Stock Plan referred to above. The purchase price per
share is $9.75. The option vests over three years at a
rate of one-third per year on each of November 4,
1997, 1998 and 1999, i.e. 150,000 per year (of which
66,666, 66,667 and 66,667 shares vesting on November
4, 1997, 1998 and 1988, respectively, are conditional
upon stockholder approval of the amendment to the
Omnibus Stock Plan referred to above). Such option
will also immediately vest in full upon the
declaration of an "Event" as set forth in Secure's
Omnibus Stock Plan; provided, however, that such
option shall continue to be conditioned upon
stockholder approval as noted above with regard to
200,000 shares if such approval shall not have been
obtained prior to the occurrence of such Event.
(c) You have also been granted a non-statutory option to
purchase up to an additional 300,000 shares of Secure
Common Stock at a purchase price per share equal to
$9.75. Such option is conditional upon stockholder
approval of the amendment to the Omnibus Stock Plan
referred to above. The vesting of such option is
conditioned upon the occurrence of the following
events:
(i) If, on or before November 4, 1997, the
closing price of a share of Secure Common
Stock is $19.75 or more and maintains or
exceeds such price for a period of 20
consecutive business days, then the option
shall vest as to 100,000 shares of Secure
Common Stock.
(ii) If, on or before November 4, 1998, the
closing price of a share of Secure Common
Stock is $29.75 or more and maintains or
exceeds such price for a period of 20
consecutive business days, then the option
shall vest as to 100,000 shares of Secure
Common Stock.
(iii) If, on or before November 4, 1999, the
closing price of a share of Secure Common
Stock is $39.75 or more and maintains or
exceeds such price for a period of 20
consecutive business days, then the option
shall vest as to 100,000 shares of Secure
Common Stock.
To the extent that any such event shall not have occurred
within the applicable time periods set forth above, then such
option shall immediately terminate with respect to the
applicable number of shares which have not vested. The per
share price targets are subject to appropriate adjustments for
stock splits and other changes in the capitalization of
Secure, as set forth in the Omnibus Stock Plan.
The Company will pay for your direct relocation expenses,
including the cost of moving your household goods and closing
costs for the sale of your present home and the purchase of a
new home, such as real estate brokers' commissions, together
with an additional amount of cash sufficient to pay any
personal income taxes payable as a result of the Company's
payment of your direct relocation expenses. You agree that,
within 18 months of the date of this Agreement, you will
relocate your residence to the general vicinity of the
Company's corporate headquarters. In the interim, the Company
will also provide you a furnished apartment, or suitable
living quarters, in the general vicinity of the Company's
corporate headquarters.
4. Other Activities During Employment
4.1. Except as stated herein or with the prior written consent of
the Company's Board of Directors, you will not during the term
of this Agreement undertake or engage in any other employment,
occupation or business enterprise other than ones in which you
are a passive investor.
4.2. Except as permitted by Section 4.3, you will not acquire,
assume or participate in, directly or indirectly, any
position, investment or interest adverse or antagonistic to
the Company, its business or prospects, financial or
otherwise, or take any action toward or looking toward any of
the foregoing.
4.3. During the term of your employment by the Company except on
behalf of the Company or its subsidiaries, you will not
directly or indirectly, whether as an officer, director,
stockholder, partner, proprietor, associate, representative,
consultant, or otherwise, become or be interested in any
other person, corporation, firm, partnership or other entity
whatsoever which manufactures, markets, sells, distributes
or provides consulting services concerning products or
services which compete with those of the Company or any of
its subsidiaries. However, nothing in this Section 4.3 shall
preclude you from holding less than one percent of the
outstanding capital stock of any corporation required to
file periodic reports with the Securities and Exchange
Commission under Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the securities of which
are listed on any securities exchange, quoted on the
National Association of Securities Dealers Automated
Quotation System or traded in the over-the-counter market.
During the term of your employment with the Company you will
also not directly or indirectly intentionally solicit,
endeavor to entice away from the Company, or any of its
subsidiaries, or otherwise interfere with the relationship
of the Company, or any of its subsidiaries with, any person
who is employed by or otherwise engaged to perform services
for the Company, or any of its subsidiaries (including, but
not limited to, any independent sales representatives or
organizations), or any person or entity who is, or was
within the then most recent 12-month period, a customer or
client of the Company, or any of its subsidiaries, whether
for your own account or for the account of any other person,
corporation, firm, partnership or other entity whatsoever.
5. Former Employment
5.1. You represent and warrant that your employment by the Company
will not conflict with and will not be constrained by any
prior employment or consulting agreement or relationship. You
represent and warrant that you do not possess confidential
information arising out of prior employment which, in your
best judgment, would be utilized in connection with your
employment by the Company in the absence of Section 5.2.
5.2. If, in spite of the second sentence of Section 5.1, you should
find that confidential information belonging to any former
employer might be usable in connection with the Company's
business, you will not intentionally disclose to the Company
or use on behalf of the Company any confidential information
belonging to any of your former employers; but during your
employment by the Company you will use in the performance of
your duties all information which is generally known and used
by persons with training and experience comparable to your own
and all information which is common knowledge in the industry
or otherwise legally in the public domain.
6. Proprietary Information and Inventions You agree to be bound by the
provisions of the Proprietary Information Agreement dated the date of
this Agreement between you and the Company (the "Proprietary
Information Agreement").
7. Post-Employment Consultation
7.1. Upon the termination or expiration of your employment with the
Company pursuant to Section 2.1 or 2.2 above or otherwise, the
Company shall have the option to retain you as a consultant by
notifying you of its desire to so retain you within seven days
of such termination or expiration in writing mailed to you at
your last address as it appears in the Company's records. If
you are so retained, you shall, during the period for
retention notify the Company of any change in address and each
subsequent employment (stating the name of and address of the
employer and the nature of your position) or business activity
in which you engage during such 30 days.
7.2. If the Company retains you as a consultant, you shall during
the period of such retention hold your self available to
render consulting services in your area of expertise or
special competence for up to 60 days for not more than 80
hours per month, for which the Company shall pay you an
amount equal to 50% of your monthly base salary (in addition
to any severance payment to which you would be entitled
under Section 2.2(b)) obtained under Section 3 at the time
of termination of your employment, whether or not you shall
be called upon to render any services in any such month.
Additionally, if you are retained as a consultant, during
the consulting period, the Company will continue to provide
you with the Company's basic medical, dental, vision and
life insurance coverage in place at that time. Any
out-of-pocket expenses including travel, food, lodging and
associated costs which your consulting activities for the
Company may require will be reimbursed against receipts and
vouchers therefor in accordance with the Company's policies
in force from time to time.
7.3. During any period in which you are retained by the Company as
a consultant, the Company may terminate your status as a
consultant by giving you seven days' written notice, during
which seven-day period you shall continue to receive your
monthly consulting fee but shall not be obligated to render or
hold yourself available to render any consulting services
during such period. Thereafter the Company shall have no
further liability for consulting fees. All other prohibitions
of the Proprietary Information Agreement shall survive
termination of your status as a consultant to the extent
provided in such Proprietary Information Agreement.
8. Post Employment Activities
8.1. In the event and for so long as you are retained as a
consultant by the Company pursuant to Section 7 following
the termination or expiration of your employment with the
Company hereunder, absent the Company's prior written
approval upon instructions of its Board of Directors, you
will not directly or indirectly engage in activities
(similar or reasonably related to those in which you shall
have engaged hereunder during the two years immediately
preceding the termination or expiration of your employment
with the Company) for, nor render services (similar or
reasonably related to those which you shall have rendered
hereunder during such two years) to, any firm or business
organization whether now existing or hereafter established,
which manufactures, markets, sells, distributes or provides
products or services which compete with those of the Company
or any of its subsidiaries on the date of termination of
your employment, nor shall you engage in such activities nor
render such services to any other person or entity engaged
or about to become engaged in such activities to, for or on
behalf of any such firm or business organization, or employ
any person to engage in any activity which, were it done by
you, would violate any provision of the Proprietary
Information Agreement or Section 8 hereof.
8.2. The Company upon instruction of its Board of Directors may
give you written approval to engage personally in any activity
or render services referred to in Section 8.1 if it secures
written assurances (satisfactory to the Company in its sole
discretion) from you and from the prospective employer that
the integrity of the Proprietary Information Agreement will
not in any way be jeopardized by such activities, provided the
burden of so establishing the foregoing to the satisfaction of
the Company shall be upon you and your prospective
employer(s).
8.3. In the event and for so long as you are retained as a
consultant by the Company pursuant to Section 7 following the
termination or expiration of your employment with the Company,
the provisions of Section 4.3 shall be applicable to you and
you shall comply therewith.
9. Survival Your duties under the Proprietary Information Agreement and
Section 8 shall survive termination of your employment with the Company
to the extent provided under such Proprietary Information Agreement or
Section 8 hereof.
10. Assignment This Agreement and the rights and obligations of the
parties hereto shall bind and inure to the benefit of any successor or
successors of the Company by way of reorganization, or merger and any
assignee of all or substantially all or its business and properties,
but, except as to any such successor or assignee of the Company,
neither this Agreement nor any rights or benefits hereunder may be
assigned by the Company or by you.
11. Interpretation In case any one or more of the provisions
contained in the agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect the other provision of
this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained
herein. If, moreover, any one or more of the provisions contained in
this Agreement shall for any reason be held to be excessively broad as
to duration, geographical scope, activity or subject, it shall be
construed by limiting and reducing it so as to be enforceable to the
extent compatible with the applicable law as it shall then appear.
12. Notices Any notice which the Company is required or may desire to
give to you shall be given by personal delivery or registered or
certified mail, return receipt requested, addressed to you at the
address of record with the Company, or at such other place as you may
from time to time designate in writing. Any notice which you are
required or may desire to give to the Company hereunder shall be given
by personal delivery or by registered or certified mail, return receipt
requested, addressed to the Company at its principal office, or at such
other office as the Company may from time to time designate in writing,
to the attention of the Chairman of the Compensation Committee. The
date of personal delivery or the date of mailing such notice shall be
deemed to be the date of delivery thereof.
13. Waiver If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provisions of
this Agreement.
14. Complete Agreement; Amendments The foregoing, together with a
Proprietary Information Agreement between you and the Company, is the
entire agreement of the parties with respect to the subject matter
hereof and supersedes all prior understandings, including without
limitation that certain draft of offer letter dated October 22, 1996
between the parties which you have executed. This Agreement may not be
amended, supplemented, canceled or discharged except by written
instrument executed by both parties hereto.
15. Applicable Law This agreement has been negotiated in, and shall
be governed by the laws of, the State of Minnesota, without giving
effect to conflict of law principles.
16. Heading The heading of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof
nor to affect the meaning thereof.
SECURE COMPUTING CORPORATION
By: /s/ Stephen M. Puricelli
--------------------------------
Stephen M. Puricelli
Chairman, Compensation Committee
Accepted and agreed as of the
4th day of November, 1996
/s/ Jeffrey H. Waxman
---------------------
Jeffrey H. Waxman