Exhibit 10.3
EXECUTION COPY
EMPLOYMENT AGREEMENT
     AGREEMENT, dated the 17th day of October 2006 (“the Effective Date”)
between SafeNet, Inc., a Delaware corporation (the “Company”) and Walter W.
Straub (the “Executive”).
WITNESSETH:
     WHEREAS, the Company and the Executive wish to enter into an employment and
compensation arrangement on the following terms and conditions;
1. Employment. Subject to the terms and conditions of this Agreement, the
Company agrees to employ the Executive as its Chief Executive Officer during the
Employment Period (as defined below) and to perform such acts and duties and
furnish such services to the Company and its affiliates and related parties as
the Company’s Board of Directors shall from time to time direct. The Executive
hereby accepts such employment and agrees to devote his full time and best
efforts to the duties, provided that, subject to the approval of the Board of
Directors (which approval shall not be unreasonably withheld), the Executive may
engage in other business activities which (i) involve no conflict of interest
with the interest of the Company and (ii) do not interfere with the performance
by the Executive of his duties under this Agreement.
2. Compensation. For services rendered to the Company during the term of this
Agreement, the Company shall compensate the Executive with an initial salary,
payable in bi-weekly installments, of Four Hundred Fifty Thousand Dollars
($450,000) per annum. Notwithstanding the foregoing, in no event shall the
Executive’s salary be less than Four Hundred Fifty Thousand Dollars ($450,000)
per annum during the Employment Period or any extension thereof, if any.
3. Incentive Compensation; Stock Options.
     a. The Executive shall also be entitled to annual incentive cash
compensation of no less than fifty percent (50%) of the applicable base salary
actually earned by the Executive during the Employment Period if sales
objectives and any other annual objectives specified by the Compensation
Committee are achieved. The nature and extent of such incentive compensation
shall be determined by the Compensation Committee and shall be paid to the
Executive no later than ninety (90) days following the end of the calendar year.
     b. Additional awards of long term incentive compensation, which may include
cash, stock or stock options, or other equivalent long term incentive
compensation, may be awarded annually as approved by the Compensation Committee.
     c. As soon as administratively feasible after the Effective Date, the
Company shall grant to Executive an option, pursuant to the SafeNet, Inc. 2001
Omnibus Stock Plan or any successor thereto (the “Stock Plan”), to purchase
50,000 shares of the Company’s common stock. The option granted pursuant to this
Section 3.c. shall have a per-share strike price equal to the closing price of a
share of the Employer’s common stock as of the date of the grant and shall vest
immediately.

 

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     d. If the Executive’s employment is terminated (i) on account of his death
or Disability, (ii) by the Company for any reason other than for Cause or
(iii) by the Executive for Good Reason:
     (x) The stock options described in Section 3.c. above that are outstanding
and not yet vested shall become fully vested; and
     (y) Each such stock option granted to the Executive shall remain
exercisable until the earlier of (A) the third anniversary of the Termination
Date or (B) the date on which the option terminates pursuant to the terms of the
applicable Stock Plan.
     In the event any provision in this Section 3.c. and Section 3.d. is
inconsistent with a provision in a stock option award agreement entered into on
or after the Effective Date, the provision in this Section 3.c. and Section 3.d.
shall govern, unless expressly provided otherwise.
4. Benefits. During the term of the Executive’s employment with the Company, the
Executive shall be eligible to receive such employee benefits as are provided to
other similarly situated executive officers of the Company, including family
medical and dental, disability and life insurance, and participation in pension
and retirement plans, incentive compensation plans, stock option plans and other
benefit plans, in each case in accordance with the terms of the applicable
plans, as in effect from time to time. During the term of the Executive’s
employment with the Company, the Company may provide or cause to be provided to
the Executive such additional benefits as the Company may deem appropriate from
time to time. The Company shall also provide the Executive with the use of an
automobile at Company expense, in accordance with the Company’s automobile
policy or practice as in effect from time to time. The Company shall provide
mutually agreeable housing for the Executive in the BelCamp area, plus such
additional amounts as necessary to pay any federal, state, or local income,
employment and other taxes incurred with respect to the housing provided
pursuant to this Section 4 and to place the Executive in the same after-tax
position as he would be in if such housing were not subject to any tax.
5. Vacation. The Executive shall be entitled to annual vacations in accordance
with the Company’s vacation policies in effect from time to time for executive
officers of the Company.
6. Employment Period. The “Employment Period” shall commence on the Effective
Date of this Agreement and shall terminate six (6) months thereafter. If the
Executive shall remain in the full time employ of the Company beyond the
Employment Period without any written agreement between the parties, this
Agreement shall be deemed to continue on a month to month basis and either party
shall have the right to terminate this Agreement at the end of any ensuing
calendar month on written notice of at least 30 days.
7. Termination.
     a. Executive’s employment with the Company shall be “at will.” Either the
Company or the Executive may terminate this Agreement and Executive’s employment
at any time, with or without Cause or Good Reason (as such terms are defined
below), in its or his sole discretion, upon thirty (30) days’ prior written
notice of termination, subject to Section 8 of this Agreement.

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     b. Without limiting the foregoing Section 7.a., (i) the Executive may
terminate his employment with the Company at any time for Good Reason, or
(ii) the Company may terminate his employment at any time for Cause. “Good
Reason” shall mean death, Disability (as defined below), a substantial
diminution in the Executive’s duties and/or responsibilities (including but not
limited to a diminution in title, or an adverse change in reporting structure),
relocation of either Executive’s office or the Company’s Headquarters greater
than fifty (50) miles from their current locations, or the Company’s failure or
refusal to perform its obligations hereunder (including but not limited to
payment of all compensation due hereunder in full when due) following ten
(10) days written notice to such effect. “Cause” shall mean (i) the Executive’s
willful, repeated or grossly negligent failure to perform his duties hereunder
or to comply with any reasonable or proper direction given by or on behalf of
the Company’s CEO which failure remains uncured for greater than ten (10) days
after Executive’s receipt of formal written notice of such failure; (ii) the
Executive’s conviction of, or plea of guilty or no contest to, a felony or other
crime involving moral turpitude; (iv) the Executive’s being found guilty of, or
pleading no contest to, any act of fraud, theft or dishonesty, or any
intentional tort against the Company; (v) the Executive’s violation of any of
the material terms, covenants, representations or warranties contained in this
Agreement, which violation remains uncured for greater than ten (10) days after
Executive’s receipt of formal written notice of such violation; or (vi) the
Executive engaging in illegal conduct or gross misconduct which causes financial
or reputational harm to the Company.
     c. “Disability” shall mean that the Executive, in the good faith
determination of the Chief Executive Officer of the Company, is unable to render
services of the character contemplated hereby and that such inability (i) may be
expected to be permanent, or (ii) may be expected to continue for a period of at
least three (3) consecutive months (or for shorter periods totaling more than
six (6) months during any period of twelve (12) consecutive months). Termination
resulting from Disability may only be effected after at least thirty (30) days
written notice by the Company of its intention to terminate the Executive’s
employment.
     d. “Termination Date” shall mean (i) if this Agreement is terminated on
account of death, the date of death; (ii) if this Agreement is terminated for
Disability, the date established by the Company pursuant to Section 7.c. hereof;
(iii) if this Agreement is terminated by the Executive, the date the Executive
thereafter ceases work; or (v) if this Agreement expires by its terms, the last
day of the term of this Agreement.
8. Severance.
     a. If the Company terminates the employment of the Executive against his
will and without Cause, or the Executive terminates his employment for a Good
Reason, the Executive shall be entitled to receive, subject to receipt by the
Company of an executed release and waiver of claims (that has not be revoked
during any applicable revocation period) in a form acceptable to the Company:
(i) salary and target incentive compensation accrued through the Termination
Date, plus (ii) the balance of the Executive’s compensation hereunder to the end
of the Employment Period computed using the latest applicable salary rate. The
Company shall make severance payments pursuant to this section, in full, within
30 days of the Termination Date. Notwithstanding the foregoing, the Company
shall not be required to pay any severance pay for any period following the
Termination Date if the Executive violates the provisions of Section 14,
Section 15 or Section 16 of this Agreement. In such event, the Company shall
provide written notice to the Executive detailing such violation.

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     b. If the Executive is terminated by the Company for Cause or the Executive
terminates employment other than for Good Reason, then the Executive shall be
entitled to receive compensation and incentive compensation earned through the
Termination Date only.
     c. The Executive acknowledges that, upon termination of his employment, he
is entitled to no other compensation, severance or other benefits other than
those specifically set forth in this Agreement or any applicable stock option
agreement.
     d. Notwithstanding anything herein to the contrary, to the extent COBRA
shall be applicable to the Company or as provided by law, the Executive shall be
entitled to continuation of group health plan benefits following the Termination
Date if the Executive makes the appropriate conversion and payments.
9. Expenses. The Company shall pay or reimburse the Executive for all expenses
normally reimbursed by the Company, reasonably incurred by him in furtherance of
his duties hereunder an authorized and approved by the Company in compliance
with such rules relating there to as the Company may, from time to time, adopt
and as may be required in order to permit such payments as proper deductions to
the Company under the Internal Revenue Code of 1986, as amended (the “Code”),
and the rule and regulations adopted pursuant thereto now or hereafter in
effect. In addition to the foregoing, the Company shall reimburse the Executive
for reasonable attorneys’ fees incurred by the Executive for the negotiation and
preparation of this Agreement, subject to the expense documentation requirements
of the Company’s expense reimbursement policy.
10. Facilities and Services. The Company shall furnish the Executive with office
space, secretarial, support staff and such other facilities and services as
shall be reasonably necessary for the performance of his duties under this
Agreement.
11. Mitigation Not Required. In the event this Agreement is terminated, the
Executive shall not be required to mitigate amounts payable pursuant hereto by
seeking other employment or otherwise. The Executive’s acceptance of any such
other employment shall not diminish or impair the amounts payable to the
Executive pursuant hereto, except as provided in 8.c. above.
12. Place of Performance. The Executive shall perform his duties primarily in
Belcamp, Maryland or locations within a reasonable proximity thereof, except for
reasonable travel as the performance of Executive’s duties may require.
Notwithstanding the foregoing, the Executive may perform his duties from the
Company’s Torrance, California office for up to ten percent (10%) of the
business days in the Employment Period, provided so doing does not adversely
impact his ability to effectively perform his duties under this Agreement as
determined by the Board of Directors in its discretion.

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13. Insurance and Indemnity. During the Employment Period, if available at
reasonable costs, the Company shall maintain, at its expense, officers and
directors fiduciary liability insurance covering the Executive and all other
executive officers and directors in an amount of not less than $1,000,000 per
officer and/or director. The Company shall also indemnify the Executive, to the
fullest extent permitted by law, from any liability asserted against or incurred
by the Executive by reason of the fact that the Executive is or was an officer
or director of the Company or any affiliate or related party or is or was
serving in any capacity at the request of the Company for any other corporation,
partnership, joint venture, trust, employment benefit plan or other enterprise,
including reasonable attorneys fees incurred by Executive. This indemnity shall
survive termination of this agreement. Executive shall be entitled to retain
counsel of his choosing to defend against any third-party claims covered by this
paragraph and Company hereby agrees to reimburse Executive for all reasonable
attorneys fees incurred on behalf of Executive therefor. The Company shall
advance all reasonable attorneys’ fees, including expenses, costs and
obligations incurred by or on behalf of Executive in connection with this
paragraph, within twenty days after the receipt by the Company of a statement or
statements from Executive requesting such advance or advances from time to time.
Such statement or statements shall reasonably evidence the expenses incurred by
Executive.
14. Noncompetition.
     a. The Executive agrees that, except in accordance with his duties under
this Agreement on behalf of the Company, he will not, during his employment, or
for a period of six (6) months from the Termination Date, participate in, be
employed in any capacity by, serve as director, consultant, agent or
representative for, or have any interest, directly or indirectly, in any
enterprise which is engaged in the digital encryption business. In addition, the
Executive agrees that for a period of six (6) months after the Termination Date,
the Executive shall not own, either directly or indirectly or through or in
conjunction with one or more members of his or his spouse’s family or through
any trust or other contractual arrangement, a greater than five percent (5%)
interest in, or otherwise control either directly or indirectly, any
partnership, corporation, or other entity which is engaged in the digital
encryption business. Executive further agrees, for such six (6) month period
following the Termination Date to refrain from directly or indirectly soliciting
Company’s vendors, customers (or potential customers whose identity became known
to the Executive in connection with his relationship with or employment by the
Company) or employees.
     b. The Executive hereby agrees that damages and any other remedy available
at law would be inadequate to redress or remedy any loss or damage suffered by
the Company upon any breach of the terms of this Section by the Executive, and
the Executive therefore agrees that the Company, in addition to recovering on
any claim for damages or obtaining any other remedy available at law, also may
enforce the terms of the this Section by injunction or specific performance, and
may obtain any other appropriate remedy available in equity.

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15. Assignment of Patents. Executive shall disclose fully to the Company any and
all discoveries he shall make and any and all ideas, concepts or inventions
which he shall conceive or make during his period of employment, or during the
period of six (6) months after his employment shall terminate if, in whole or in
part, are the result of his work with the Company. Such disclosure is to be made
promptly after each discovery or conception, and the discovery, idea concept or
invention will become and remain the property of the Company, whether or not
patent applications are filed thereon. Upon request and at the expense of the
Company, the Executive shall make application through the patent solicitors of
the Company for letters patent of the United States and any and all other
countries at the discretion of the company on such discoveries, ideas and
inventions, and to assign all such applications to the Company, or at its order,
forthwith, without additional payment by the Company during his period of
employment and for reasonable compensation for time actually spent by the
Executive at such work at the request of the Company after the termination of
the employment. He is to give the Company, its attorneys and solicitors, all
reasonable assistance in preparing and prosecuting such applications and, on
request of the Company, to execute all papers and do all things that may be
reasonably necessary to protect the right of the Company and vest in it or its
assigns the discoveries, ideas or inventions, applications and letters patent
herein contemplated. Such cooperation shall also include all actions reasonably
necessary to aid the Company in the defense of its rights in the event of
litigation.
16. Trade Secrets.
     a. In the course of the term of this Agreement, it is anticipated that the
Executive shall have access to secret or confidential technical and commercial
information, records, data specifications, systems, methods, plans, policies,
inventions, material and other knowledge (“Confidential Material”) owned by the
Company and its subsidiaries. The Executive recognizes and acknowledges that
included within the Confidential Material are the Company’s confidential
commercial information, technology, methods of manufacture, designs, and any
computer programs, source codes, object codes, executable codes and related
materials, all as they may exist from time to time, and that they are valuable
special and unique aspects of the Company’s business. All such Confidential
Material shall be and remain the property of the Company. Except as required by
his duties to the Company, the Executive shall not, directly or indirectly,
either during the term of his employment or at any time thereafter, disclose or
disseminate to anyone or make use of, for any purpose whatsoever, any
Confidential Material. Upon termination of his employment, the Executive shall
promptly deliver to the Company all Confidential Material (including all copies
thereof, whether prepared by the Executive or others) that is in the possession
or under the control of the Executive. The Executive shall not be deemed to have
breached this Section if the Executive shall be specifically compelled by lawful
order of any judicial, legislative, or administrative authority or body to
disclose any confidential material.
     b. The Executive hereby agrees that damages and any other remedy available
at law would be inadequate to redress or remedy any loss or damage suffered by
the Company upon any breach of the terms of this Section by the Executive, and
the Executive therefore agrees that the Company, in addition to recovering on
any claim for damages or obtaining any other remedy available at law, also may
enforce the terms of this Section by injunction or specific performance, and my
obtain any other appropriate remedy available in equity.

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17. Notices. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by registered or certified mail,
return receipt requested to his residence in the case of the Executive, or to
its principal office in the case of the Company, or to such other addresses as
they may respectively designate in writing.
18. Entire Agreement; Waiver. This Agreement contains the entire understanding
of the parties with respect to the employment relationship between Company and
the Executive, and supercedes any prior agreements relating to such
relationship, including any Change of Control Agreement, and may not be changed
orally but only by an agreement in writing, signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought. Waiver
of or failure to exercise any rights provided by this Agreement in any respect
shall not be deemed a waiver of any further or future rights.
19. Binding Effect; Assignment. The rights and obligations of this Agreement
shall bind and inure to benefit of any successor of the Company by
reorganization, merger or consolidation, or any assignee of all or substantially
all of the Company’s business or properties. The Executive’s rights hereunder
are personal to and shall not be transferable nor assignable by the Executive.
20. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
21. Governing Law; Arbitration. This Agreement shall be construed in accordance
with and governed for all purposes by the laws and public policy of the State of
Delaware applicable to contracts executed and to wholly performed within such
state. Any dispute or controversy arising out of or relating to this Agreement
shall be settled by arbitration in accordance with the rules of the American
Arbitration Association and judgment upon the award may be entered in any court
having jurisdiction thereover. The arbitration shall be held in Wilimington,
Delaware or in such other place as the parties hereto may agree. The Company
acknowledges and agrees that it shall be solely responsible for payment of all
filing fees and hearing fees in connection with any arbitration brought pursuant
to this section. The prevailing party (if any, as determined by the arbitrator)
in arbitration shall be entitled to reimbursement by the non-prevailing party of
its reasonable attorneys fees incurred in connection with the arbitration.
22. Further Assurances. Each of the parties agrees to execute, acknowledge,
deliver and perform, and cause to be executed, acknowledged, delivered and
performed, at any time and from time to time, all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and/or assurances as may
be necessary or proper to carry out the provisions or intent of this Agreement.
23. Severability. The parties agree that if any one or more of the terms,
provisions, covenants or restrictions of this Agreement shall be determined by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restriction of this Agreement
shall be in full force and effect and shall in no way be affected, impaired or
invalidated.
24. Counterparts. This Agreements maybe executed in several counterparts, each
of which shall be deemed to be and original, but all of which together will
constitute on and the same Agreement.

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     IN WITNESS WHEREOF, SAFENET, INC. has caused this instrument to be signed
by a duly authorized officer and the Executive has hereunto set his hand the day
and year first above written.
SAFENET, INC.

             
By
  /s/  Bruce Thaw        
 
       
Name:  Bruce Thaw
 
       
Title:  Director
         
/s/ Walter W. Straub 
                  Walter W. Straub        

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