Document:

EXHIBIT 10.57

                           LEASE SUPPLEMENT NUMBER TWO

                  THIS LEASE SUPPLEMENT NUMBER TWO (the "Lease Supplement"),
dated October 9, 2002, among WACHOVIA BANK, NATIONAL ASSOCIATION, as successor
to FIRST UNION NATIONAL BANK, not in its individual capacity but solely as
Trustee ("Lessor"), AIRLEASE LTD., a California limited partnership ("Owner
Participant") and CSI AVIATION SERVICES, INC., a New Mexico corporation
("Lessee"; and together with Lessor and Owner Participant, the "Parties").

                               W I T N E S S E T H

                  WHEREAS, the Parties have heretofore entered into those two
certain Aircraft Lease Agreements, each dated as of November 21, 2001 and
pertaining to two McDonnell Douglas DC-9 Series 82 aircraft with respective
registration numbers N806US and N807US and respective manufacturer's serial
numbers 48038 and 48039 (each, as amended, modified or supplemented prior to the
date hereof, herein called a "Lease" and collectively the "Leases" and the terms
defined therein being herein used with the same meanings unless otherwise
defined herein); and

                  WHEREAS, the Parties desire to amend the Leases as set forth
herein;

                  NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, the Parties hereby agree as follows:

                  1.  Clause (b) of Section 3.1 in each Lease shall be deleted
and replaced with the following text:

                           Lessee shall have the right to terminate the leasing
                           of the Aircraft under this Lease on any date on or
                           after March 1, 2003 and the date on which the USMS
                           Agreement is terminated by delivering to Lessor and
                           Owner Participant not later than 30 days before such
                           date a written notice specifying that the leasing of
                           the Aircraft is to terminate on such date pursuant to
                           this Section 3.1(b).

                  2.  Clause (c) of Section 3.1 in each Lease shall be deleted
and replaced with the following text:

                           Lessor and/or Owner Participant shall have the right
                           to terminate the leasing of the Aircraft under this
                           Lease on any date on or after March 1, 2003 by
                           delivering to Lessee not later than 30 days before
                           such date a written notice specifying that the
                           leasing of the Aircraft is to terminate on such date
                           pursuant to this Section 3.1(c).

                  3. The definition of "Basic Rent Amount" in Schedule 2 of each
Lease shall be amended to read as set forth on Schedule 1 hereto.

                  4.  Lessee hereby makes the following representations and
warranties:

<PAGE>

                  (a) Lessee is a corporation duly organized and validly
existing in good standing under the laws of the State of New Mexico and has the
corporate power and authority to carry on its business as presently conducted
and to perform its obligations under the Leases and this Lease Supplement and
the other Lessee Documents and is duly qualified to do business as a foreign
corporation in each jurisdiction in which the nature of its business makes such
qualification necessary;

                  (b) this Lease Supplement has been duly authorized by all
necessary corporate action on the part of Lessee, does not require any approval
of the stockholders of Lessee or any trustee or any holder of any indebtedness
of Lessee, and neither the execution and delivery hereof nor the consummation of
the transactions contemplated hereby nor compliance by Lessee with any of the
terms and provisions hereof will contravene its organizational documents or any
law or governmental rule or regulation applicable to Lessee or result in any
breach of, or constitute any default under, or result in the creation of any
Lien upon any property of Lessee under any indenture, mortgage, credit agreement
or other agreement or instrument to which Lessee is a party or by which Lessee
or its properties or assets may be bound;

                  (c) this Lease Supplement has been, and upon execution and
delivery of such Lease Supplement will be, duly executed and delivered by Lessee
and constitutes or will constitute the legal, valid, and binding obligations of
Lessee, enforceable in accordance with its terms; and

                  (d) no Lease Event of Default or Lease Default has occurred
and is continuing under either Lease.

                  5.  Lessor hereby makes the following representations and
warranties:

                  (a) Trust Company is a national banking association duly
organized and validly existing under the laws of the United States of America,
and this Lease Supplement has been executed by an officer of Trust Company who
is duly authorized to do so in accordance with the terms of the Trust Agreement.

                  (b) The Trust Agreement is in full force and effect and Lessor
is duly and properly authorized to execute and deliver this Lease under the
Trust Agreement.

                  (c) This Lease Supplement has been, and upon execution and
delivery of such Lease Supplement will be, duly executed and delivered by Lessor
and constitutes or will constitute the legal, valid, and binding obligations of
Lessor, enforceable in accordance with its terms.

                  6. Sections 16 and 20 of each Lease are hereby incorporated by
reference in this Lease Supplement mutatis mutandis, on and as of the date of
this Lease Supplement, to the same extent as if fully set forth herein.

                  7. Save as expressly amended herein, the Leases as amended
hereby shall continue to be, and shall remain, in full force and effect in
accordance with their terms.

                                      * * *

<PAGE>

                  IN WITNESS WHEREOF, the Parties have caused this Lease
Supplement to be duly executed and delivered as of the date and year first above
written.

                            WACHOVIA BANK, NATIONAL ASSOCIATION,
                            as successor to First Union
                            National Bank, not in its
                            individual capacity, but solely
                            as Trustee, as Lessor

                            By: /s/ ANITA M. ROSELI
                                    ____________________________
                                    Name: Anita M. Roseli
                                    Title: Trust Officer

                            AIRLEASE, LTD.
                            as Owner Participant

                            By: /s/ DAVID B. GEBLER
                                    ____________________________
                                    Name: David B. Gebler
                                    Title: President

                            CSI AVIATION SERVICES, INC.
                            as Lessee

                            By: /s/ ALLEN E. WEH
                                    ____________________________
                                    Name: Allen E. Weh
                                    Title: President

                               - Signature Page -
                            [Lease Supplement No. 2]

<PAGE>

SCHEDULE 1

"Basic Rent Amount" means $125,000 on each Rent Payment Date before September
10, 2002, $108,500 on September 10, 2002 and $70,000 on each Rent Payment Date
after September 10, 2002.

                                      * * *

                                   SCHEDULE 1Exhibit 10A

 

EMPLOYMENT AGREEMENT

 

AGREEMENT,

dated this 12th day of December, 2001 between SafeNet, Inc.  a Delaware corporation (the “Company”) with

offices at 8029 Corporate Drive, Baltimore, MD and Anthony A. Caputo (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 in Section 7) 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

shall have general and active charge of the business and affairs of the Company

as its Chief Executive Officer and, in such capacity, shall have responsibility

for the day-to-day operations of the Company, subject to the authority and

control of the Board of Directors of the Company.  During the Employment Period, the Company shall continue to take

such actions as necessary to cause the Executive’s nomination as a member of

the Board of Directors of the Company. 

The Executive hereby accepts such employment and agrees to devote his

full time and best efforts to the duties provided, that the Executive may

engage in other business activities which (i) involve no conflict of interest

with the interest of the Company (subject to approval by the Board of

Directors, which approval shall not be unreasonably withheld) and (ii) do not

materially 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

$329,422.50 per annum. Such base salary shall be reviewed on an annual basis by

the Compensation Committee of the Company’s Board of Directors (the

“Compensation Committee”) and shall be increased by at least ten (10%) percent

per annum.

 

3.     Incentive Compensation.  The Executive shall also be entitled to

annual incentive compensation targeted at fifty (50)% of the applicable base

salary if the Company’s business objectives as set for the in the Company’s

annual business plan are achieved.  The

nature and extent of such incentive compensation shall be determined by the

Compensation Committee and paid to the Executive no later than ninety (90) days

following the end of the Company’s fiscal year.

 

4.     Stock Options. As further

compensation, Executive was issued 150,000 incentive stock options (subject to

allowable limitations set for the in the Internal Revenue Code of 1986, as

amended, hereinafter “stock options”).  

The stock options were issued at the fair market value of the Employer’s

common stock as of the date of the grant 50,000 vest on the one year

anniversary of the grant date, and the remaining 100,000 vest 25% over four

years.  All of the foregoing to be in

accordance with the provisions of Employer’s Stock Option Plan, as may be

amended from time to time, which is incorporated by reference herein.

 

Additional

awards of stock options are to be granted annually in order to provide the

Executive with TOTAL DIRECT COMPENSATION which is competitive with CEO

compensation levels at peer companies.

 

If the

Executive’s employment is terminated (i) because of his death or disability

pursuant to Section 8 of this Agreement, (ii) by the Company for any reason

other than for Cause or (iii) by the Executive for Good Reason:

 

(x) the portion of the stock option which was exercisable at

termination shall remain exercisable for a period of 3 years after such date;

and

(y) with respect to that portion, if any, of the stock option which was

not yet exercisable at termination, such portion shall immediately become

exercisable an shall remain exercisable until the end of such 3-year

period.  The stock option shall be

memorialized in a separate written stock option agreement reasonably

satisfactory to the Company and Executive.

 

In the event

that the Common Stock to be issued upon the exercise of said options has not

been registered under the Securities Act of 1933 (the “Act”), it must be held

by the Executive indefinitely, and may not be sold or disposed of unless (i) a

registration statement covering those shares becomes effective under the Act,

or (ii) if an exemption from registration becomes available. The Company agrees

to register the shares under the act as an addendum to any other registration

filing

 

 

made by the Company.  The Company shall use its best efforts to

timely file all reports, statements and other documents as may be required

under the Securities and Exchange Act of 1934 to keep available the exemption

under Rule 144 of the Act or other comparable rules or regulations of the

Securities and Exchange Commission.

 

5.     Benefits. During the Employment

Period, the Company shall provide or cause to be provided to the Executive such

employee benefits as are provided to other 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.

 

The Company

agrees to provide and fully fund during the term of this agreement, the

Executive with a two million dollar ($2,000,000) VARIABLE LIFE INSURANCE  POLICY (ATTACHMENT A) hereto.

 

During the

Employment Period, 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 the use of an automobile of at least equal value to that

which is presently utilized by the Executive as the date of this Agreement.

 

6.     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.

 

7.     Term; Employment Period.  The “Employment Period” shall commence on

the date of this Agreement and shall terminate 5 years thereafter, unless

extended by written agreement between parties or unless earlier terminated

pursuant of Section 8.  If the Executive

shall remain in the fulltime 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.

 

8.     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.

 

b.     Without limiting the foregoing Section

8(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) or a termination of employment as a

result of a substantial diminution in the Executive’s responsibilities, or base

salary below $329,422.50 or a demotion in title or status including, but not

limited to, a status whereby Executive is no longer Chief Executive Officer of

a publicly traded company.  “Cause”

shall mean (i) the Executive’s willful, repeated or neglectful failure to

perform his duties hereunder or to comply with any reasonable or proper

direction given by or on behalf of the Company’s Board of Directors following

ten (10) days written notice to such effect; 

(ii) the Executive being guilty of serious misconduct on the Company’s

premises or elsewhere, whether during the performance of his duties or not,

which may cause damage to the reputation of the Company or to prejudice its

interests if the Executive were to continue to be employed by the Company; (iv)

the Executive’s commission of any act of fraud, theft or dishonesty, or any

intentional tort against the Company; or (v) the Executive’s violation of any

of the material terms, covenants, representations or warranties contained in

this Agreement.

 

c.     “Disability” shall mean that the Executive,

in the good faith determination of the Board of Directors 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 8 (c) hereof; (iii) if this Agreement is terminated by the

Executive, the date the Executive ceases work; or (v) if this Agreement expires

by its terms, the last day of the term of this Agreement.

 

2

 

9.     Severance.

 

a.     If (i) the Company terminates the

employment of the Executive against his will and without Cause, or (ii) the

Executive terminates his employment for a Good Reason, the Executive shall be

entitled to receive salary, target incentive compensation and vacation accrued

through the Termination Date plus the lesser of (i) $600,000 or (ii) the

balance of the Executives compensation hereunder to the end of the term of this

Agreement computed using the latest applicable salary rate.  The Company shall make such termination

payment within 30 days of such termination. 

In addition, the Company shall also accelerate the payment of all annual

premiums required to fully fund the Executive’s $2,000,000 Variable Life

Insurance Policy. 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 15, Section 16 or Section

17 of this Agreement.  In such event,

the Company shall provide written notice to the Executive detailing such

violation.

 

b.     If the Executive voluntarily terminates his

employment other than for Good Reason, then the Executive shall be entitled to

receive salary, accrued vacation and six months’ severance pay.

 

c.     If the Executive is terminated by the

Company for Cause, then the Executive shall be entitled to receive salary and

accrued vacation through the Termination Date only.

 

d.     In addition to the provisions of Section 9

(a), 9 (b) and 9 (c) hereof, to the extent COBRA shall be applicable to the

Company or as provided by lay, the Executive shall be entitled to continuation

of group health plan benefits for a period of one (1) year following the

Termination Date if the Executive makes the appropriate conversion and

payments.

 

e.     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.

 

10.   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, and the rule and regulations adopted pursuant

thereto now or hereafter in effect.

 

11.   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.

 

12.   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.

 

13.   Place of Performance.  The Executive shall perform his duties

primarily in Baltimore, Maryland or locations within a reasonable proximity

thereof, except for reasonable travel as the performance of Executive’s duties

may require.

 

14.   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 no less than $1,000,000.  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.  This

indemnity shall survive termination of this agreement.

 

3

 

15.   Noncompetition.

 

A.            The Executive agrees that, except in

accordance with his duties under this Agreement on behalf of the Company, he

will not during this Agreement:

 

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 business of distributing, selling or

otherwise trading in products or services which are competitive to any products

or services distributed, sold or otherwise traded in by the Company or any of

its subsidiaries during the term of the Executive’s employment with the

Company, or which are competitive to any products or services being actively

developed, with the bona fide intent to market same, by the Company or any of

its subsidiaries during the term of the Executive’s employment with the

Company;  In addition, the Executive

agrees that for a period of two years after the end of the term of this

Agreement (unless this Agreement is terminated due to a breach of terms hereof

by the Company in failing to pay to the Executive all sums due him under the

terms hereof, in which event the following shall be inapplicable), the

Executive shall observe the covenants set forth in this Section 15 and 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 distributes,

sells, or otherwise trades in computer network security products or other

products which are competitive to any products or services being developed,

distributed, sold, or otherwise traded in by the Company or any of its

subsidiaries, during the term of this Agreement,  or being actively developed by the Company or any of its

subsidiaries during the term of this Agreement with the Company with a bona

fide intent to market same.  Executive

further agrees, for such two year period following termination to refrain from

directly or indirectly soliciting Company’s vendors, customers 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 15 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 15 by injunction or specific performance, an may obtain any other

appropriate remedy available in equity.

 

16.   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 months after his employment shall terminate, which

are in whole or in part 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.  Sail cooperation shall also include all

actions reasonably necessary to aid the Company in the defense of its rights in

the event of litigation.

 

17.   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) which are in the possession or under the

control of the Executive. The Executive shall not be deemed to have breached

the Section 17 if the Executive

 

4

 

shall be specifically compelled

by lawful order of any judicial, legislative, or administrative authority or

body to disclose any confidential material or else face civil or criminal

penalty or sanction.

 

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 17 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 17

by injunction or specific performance, and my obtain any other appropriate

remedy available in equity.

 

18.   Payment and Other Provisions After Change

of Control.

 

(a)           In the event the Executive’s

employment with the Company is terminated within one year following the

occurrence of a Change of Control (other than as a consequence of death or

disability) either (x) by the Company for any reason other than for Cause, or

(y) by Executive for Good Reason, then the Executive shall be entitled to

receive from the Company, in lieu of the severance payment otherwise payable

pursuant to Section 9 (a), the following:

 

(i)                  Base

Salary:  Executive’s annual base salary

as in effect at the date of termination, multiplied by three, shall be paid on

the date of termination;

(ii)               Target

Incentive Compensation:  The amount of

the Executive’s target incentive compensation under the applicable Executive

Bonus Plan for the fiscal year in which the date of termination occurs,

multiplied by three, shall be paid on the date of termination; and

(iii)            Variable

Life Insurance: All unpaid premiums, which are required to fully fund the

Executive’s $2,000,000 Variable Life Insurance Policy are to be paid by the

Company on the date of termination.

(iv)           Other

Benefits: Notwithstanding the vesting period provided for in the Company’s

Stock Option Plan and any related stock option agreements between the Company

and the Executive for stock option (“options”) granted Executive by the

Company, all of the options shall be fully vested and exercisable upon a Change

of Control and termination of employment.

 

(b)           For purpose of this Agreement, the

term “Change of Control” shall mean:

 

(i)                  The

acquisition, other than from the Company, by any individual, entity or group

(within the meaning of Rule 13d-3 promulgated under the Exchange Act or any

successor provision) (any of the foregoing described in this Paragraph 18.b.i

hereafter a “Person”) of 50% or more either (a) the then outstanding shares of

Capital Stock of the Company (the “Outstanding Capital Stock”) or (b) the

combined voting power of the then outstanding voting securities of the Company

entitled to vote generally in the election of directors (the “Voting

Securities”), provided, however, that any acquisition by (x) the Company or any

of its subsidiaries, or any employee benefit plan (or related trust) sponsored

or maintained by the Company or any or its subsidiaries or (y) any Person that

is eligible, pursuant to Rule 13d-1(b) under the Exchange Act, to file a

statement on Schedule 13G with respect to its beneficial ownership of Voting

Securities, whether or not such Person shall have filed a statement on Schedule

13G, unless such Person shall have filed a statement on Schedule 13D with

respect to beneficial ownership of 50% or more of the Voting Securities or (z)

any corporation with respect to which, following such acquisition, more than

60% of, respectively, the then outstanding shares of common stock of such

corporation and the combined voting power of the then outstanding voting

securities of such corporation entitled to vote generally in the election of

directors is then beneficially owned, directly or indirectly, by all or

substantially all of the individuals and entities who were the beneficial

owners, respectively, of the Outstanding Capital Stock and Voting Securities

immediately prior to such acquisition in substantially the same portion as

their ownership, immediately prior to such acquisition, of the Outstanding

Capital Stock and Voting Securities, as the case may be, shall not constitute a

Change of Control; or

(ii)               Individuals

who, as of the Effective Date, constitute the Board (the Incumbent Board”)

cease for any reason to constitute at least a majority of the Board, provided

that any individual becoming a director subsequent to the date of hereof whose

election or nomination for election by the Company’s shareholders, was approved

by a vote of at least a majority of the directors

 

5

 

then comprising the Incumbent Board shall be considered as though such

individual were a member of the Incumbent Board, but excluding, for this

purpose, any such individual whose initial assumption of office is in

connection with an actual or threatened election contest relating to the

election of the Directors of the Company (as such terms are used in Rule 14a-11

of Regulation 14A, or any successor section, promulgated under the Exchange

Act); or

(iii)            Approval

by shareholders of the Company of a reorganization, merger or consolidation (a

“Business Combination”), in each case, with respect to which all or

substantially all holders of the Outstanding Capital Stock and Voting

Securities immediately prior to such Business Combination do not, following

such Business Combination, beneficially own, directly or indirectly, more than

60% of, respectively, the then outstanding shares of common stock and the

combined voting power of the then outstanding voting securities entitled to

vote generally in the election of directors, as the case may be, of the

corporation resulting from the Business Combination; or

(iv)           (a)

a complete liquidation or dissolution of the Company or (b) a sale or other

disposition of al or substantially all of the assets of the Company other than

to a corporation with respect to which, following such sale or disposition,

more than 60% of respectively, the then outstanding voting securities entitled

to vote generally in the election of directors is then owned beneficially,

directly or indirectly, by all or substantially all of the individuals and entities

who were the beneficial owners, respectively, of the Outstanding Capital Stock

and Voting Securities immediately prior to such sale or disposition in

substantially the same proportion as their ownership of the Outstanding Stock

and Voting Securities, as the case may be, immediately prior to such sale or

disposition.

 

19.   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.

 

20.   Entire Agreement; Waiver.  This Agreement contains the entire

understanding of the parties 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.

 

21.   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.

 

22.   Headings.  The headings contained in this Agreement are for reference

purposes only and shall not affect the meaning or interpretation of this

Agreement.

 

23.   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.

 

24.   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.

 

25.   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.

 

6

 

26.   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.

 

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.

 

 

	

   /s/

  Thomas A. Brooks

  	

   

  	

  /s/ Anthony

  A. Caputo

  	

   

  
	

  Thomas A.

  Brooks

  	

   

  	

  Anthony A. Caputo

  	

   

  
	

  Compensation

  Committee

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   /s/

  Ira A. Hunt

  	

   

  	

   

  
	

  Gen. Ira A.

  Hunt

  	

   

  	

   

  
	

  Compensation

  Committee

  	

   

  	

   

  

 

7

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