Document:

Exhibit 10.34

    EXHIBIT
      10.34

     

    SEVERANCE
      AGREEMENT AND RELEASE

     

    RECITALS

     

     

    This
      Severance Agreement and Release (“Agreement”)
      is
      made by and between
      Christopher G. Kenber (“Employee”)
      and
      Hi/fn, Inc. (“Company”)
      (collectively referred to as the “Parties”):

     

    WHEREAS,
      Employee was employed by the Company;

     

    WHEREAS,
      the Company and Employee entered into the Severance and Change of Control
      Agreement, effective May 16, 2005 (the “Severance
      Agreement”);

     

    WHEREAS,
      the Company and Employee entered into a Proprietary Information and
      Inventions Agreement (the “Confidentiality
      Agreement”);
      

     

    WHEREAS,
      Employee’s employment with Company and status as a member of the Board of
      Directors terminated on November 10, 2006 (the “Termination
      Date”);

     

    WHEREAS,
      the Parties, and each of them, wish to resolve any and all disputes, claims,
      complaints, grievances, charges, actions, petitions and demands that the
      Employee may have against the Company as defined herein, including, but not
      limited to, any and all claims arising or in any way related to Employee’s
      employment with, or separation from, the Company;

     

    NOW
      THEREFORE, in consideration of the promises made herein, the Parties hereby
      agree as follows:

     

    COVENANTS

     

    1. Resignation.
      Employee hereby acknowledges and reaffirms his resignation as the Company’s
      President and Chief Executive Officer and a member of the Company’s Board of
      Directors effective as of the Termination Date
      and from
      all other officer, employee and director positions with the Company and its
      affiliates.

     

    2. Consideration.
      

     

    (a) Severance
      Pay.
      Subject
      to this Agreement becoming effective (as set forth in Section 24), the Company
      will pay Employee $185,000 on its first regularly scheduled payroll date
      following the date six (6) months and one day following the Termination Date
      and
      will pay Employee $15,416.66 on each regularly scheduled payroll date thereafter
      through the last payroll date on or before the date twelve (12) months following
      the Termination Date, in accordance with the Company’s normal payroll
      policies.

     

    (b) Benefits.
      Subject
      to this Agreement becoming effective (as set forth in Section 24), the Company
      will promptly reimburse Employee for the same level of medical, dental and/or
      vision coverage and benefits as in effect for Employee and his spouse on the
      day
      immediately
      preceding the Termination Date,
      provided (i) Employee constitutes a qualified beneficiary, as

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    defined
      in Section 4980(B)(g)(1) of the Internal Revenue Code of 1986, as amended;
      and
      (ii) Employee elects continuation coverage pursuant to the Consolidated Omnibus
      Budget Reconciliation Act of 1985, as amended (“COBRA”),
      within the time period prescribed pursuant to COBRA. The Company will continue
      to reimburse Employee for continuation coverage (at a level of coverage no
      less
      favorable than that provided as of the day immediately preceding the Termination
      Date) until the earlier of (A) the date Employee (or his spouse, as applicable)
      is no longer eligible to receive continuation coverage pursuant to COBRA, (B)
      the date upon which Employee and his eligible dependents become covered by
      similar plans, or (C) twelve (12) months from the Termination Date. Employee
      will be responsible for the payment of COBRA premiums (including, without
      limitation, all administrative expenses) for the remaining COBRA
      period.

     

    (c) Consulting.
      Commencing on the Termination Date and subject to this Agreement becoming
      effective (as set forth in Section 24), Employee will make himself available
      to
      serve as a consultant to the Company through the date twelve (12) months
      following the Termination Date, pursuant to the written consulting agreement
      (the “Consulting
      Agreement”)
      attached hereto as Exhibit
      A.

     

    3. Confidential
      Information.
      Employee will continue to maintain the confidentiality of all confidential
      and
      proprietary information of the Company and will continue to comply with the
      terms and conditions of the Confidentiality Agreement between Employee and
      the
      Company. Employee will return all of the Company’s property and confidential and
      proprietary information in his possession to the Company on the Effective Date
      of this Agreement.

     

    4. Payment
      of Salary.
      Employee acknowledges and represents that the Company has paid all salary,
      wages, bonuses, accrued vacation, commissions and any and all other benefits
      due
      to Employee once the above noted payments and benefits are
      received.

     

    5. Release
      of Claims.
      Employee agrees that the foregoing consideration represents settlement in full
      of all outstanding obligations owed to Employee by the Company and its officers,
      managers, supervisors, agents and employees. Employee, on his own behalf, and
      on
      behalf of his respective heirs, family members, executors, agents, and assigns,
      hereby fully and forever releases the Company and its officers, directors,
      employees, agents, investors, shareholders, administrators, affiliates,
      divisions, subsidiaries, predecessor and successor corporations, and assigns
      (the “Releasees”),
      from,
      and agrees not to sue concerning, any claim, duty, obligation or cause of action
      relating to any matters of any kind, whether presently known or unknown,
      suspected or unsuspected, that Employee may possess arising from any omissions,
      acts or facts that have occurred up until and including the Effective Date
      of
      this Agreement including, without limitation:

     

    (a) any
      and
      all claims relating to or arising from Employee’s employment relationship with
      the Company and the termination of that relationship; 

     

    (b) any
      and
      all claims relating to, or arising from, Employee’s right to purchase, or actual
      purchase of shares of stock of the Company, including, without limitation,
      any
      claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty
      under applicable state corporate law, and securities fraud under any state
      or
      federal law; 

    
      
        
        

      

      
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    (c) any
      and
      all claims under the law of any jurisdiction including, but not limited to,
      wrongful discharge of employment; constructive discharge from employment;
      termination in violation of public policy; discrimination; harassment;
      retaliation; breach of contract, both express and implied; breach of a covenant
      of good faith and fair dealing, both express and implied; promissory estoppel;
      negligent or intentional infliction of emotional distress; negligent or
      intentional misrepresentation; negligent or intentional interference with
      contract or prospective economic advantage; unfair business practices;
      defamation; libel; slander; negligence; personal injury; assault; battery;
      invasion of privacy; false imprisonment; and conversion;

     

    (d) any
      and
      all claims for violation of any federal, state or municipal statute, including,
      but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights
      Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans
      with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee
      Retirement Income Security Act of 1974, The Worker Adjustment and Retraining
      Notification Act, Older Workers Benefit Protection Act, the Family and Medical
      Leave Act, the California Family Rights Act, the California Fair Employment
      and
      Housing Act, and the California Labor Code, including, but not limited to
      California Labor Code Sections 1400-1408;

     

    (e) any
      and
      all claims for violation of the federal, or any state, constitution;

     

    (f) any
      and
      all claims arising out of any other laws and regulations relating to employment
      or employment discrimination;

     

    (g) any
      claim
      for any loss, cost, damage, or expense arising out of any dispute over the
      non-withholding or other tax treatment of any of the proceeds received by
      Employee as a result of this Agreement; and

     

    (h) any
      and
      all claims for attorneys’ fees and costs.

     

    The
      Company and Employee agree that the release set forth in this section will
      be
      and remain in effect in all respects as a complete general release as to the
      matters released. This release does not extend to any obligations incurred
      under
      this Agreement.

     

    6. Acknowledgement
      of Waiver of Claims Under ADEA.
      Employee acknowledges that he is waiving and releasing any rights he may have
      under the Age Discrimination in Employment Act of 1967 (“ADEA”)
      and
      that this waiver and release is knowing and voluntary. Employee and the Company
      agree that this waiver and release does not apply to any rights or claims that
      may arise under ADEA after the Effective Date of this Agreement. Employee
      acknowledges that the consideration given for this waiver and release Agreement
      is in addition to anything of value to which Employee was already entitled.
      Employee further acknowledges that he has been advised by this writing that
      

     

    (a) he
      should
      consult with an attorney prior
      to
      executing this Agreement;

     

    (b) he
      has up
      to twenty-one (21) days within which to consider this
      Agreement;

    
      
        
        

      

      
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    (c) he
      has
      seven (7) days following his execution of this Agreement to revoke this
      Agreement;

     

    (d) this
      ADEA
      waiver will not be effective until the seven (7) day revocation period has
      expired; and

     

    (e) nothing
      in this Agreement prevents or precludes Employee from challenging or seeking
      a
      determination in good faith of the validity of this waiver under the ADEA,
      nor
      does it impose any condition precedent, penalties or costs for doing so, unless
      specifically authorized by federal law.

     

    7. Civil
      Code Section 1542.
      The
      Parties represent that they are not aware of any claim by either of them other
      than the claims that are released by this Agreement. Employee acknowledges
      that
      he had the opportunity to seek the advice of legal counsel and is familiar
      with
      the provisions of California Civil Code Section 1542, which provides as
      follows:

     

    A
      GENERAL
      RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
      TO
      EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
      HIM
      MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

     

    Employee,
      being aware of said code section, agrees to expressly waive any rights he may
      have thereunder, as well as under any other statute or common law principles
      of
      similar effect.

     

    8. No
      Pending or Future Lawsuits.
      Employee represents that he has no lawsuits, claims, or actions pending in
      his
      name, or on behalf of any other person or entity, against the Company or any
      other person or entity referred to herein. Employee also represents that he
      does
      not intend to bring any claims on his own behalf or on behalf of any other
      person or entity against the Company or any other person or entity referred
      to
      herein.

     

    9. No
      Cooperation.
      Employee agrees he will not act in any manner that might damage the business
      of
      the Company. Employee agrees that he will not counsel or assist any attorneys
      or
      their clients in the presentation or prosecution of any disputes, differences,
      grievances, claims, charges, or complaints by any third party against the
      Company and/or any officer, director, employee, agent, representative,
      shareholder or attorney of the Company, unless under a subpoena or other court
      order to do so. Employee further agrees both to immediately notify the Company
      upon receipt of any court order, subpoena, or any legal discovery device that
      seeks or might require the disclosure or production of the existence or terms
      of
      this Agreement, and to furnish, within three (3) business days of its receipt,
      a
      copy of such subpoena or legal discovery device to the Company.

     

    10. Non-Solicitation.
      Employee agrees that for a period of twelve (12) months immediately following
      the Termination Date, Employee will not, either directly or indirectly, whether
      as an employee, owner, sole proprietor, partner, director, member, consultant,
      agent, founder, co-venturer or otherwise, (i) solicit, induce, or influence
      any
      person to leave employment with the Company, or (ii) directly or indirectly
      solicit business from any of the Company’s 

    
      
        
        

      

      
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    customers
      and users on behalf of any business that directly competes with the principal
      business of the Company. 

     

    11. Non-Disparagement.
      Employee agrees to refrain from any defamation, libel or slander of the Company
      or its affiliates or tortious interference with the contracts and relationships
      of the Company or its affiliates. All inquiries by potential future employers
      of
      Employee will be directed to the Company’s General Counsel. Upon inquiry, the
      Company will only state the following: Employee’s last position and dates of
      employment.

     

    12. No
      Admission of Liability.
      The
      Parties understand and acknowledge that this Agreement constitutes a compromise
      and settlement of disputed claims. No action taken by the Parties hereto, or
      either of them, either previously or in connection with this Agreement, will
      be
      deemed or construed to be (a) an admission of the truth or falsity of any claims
      heretofore made or (b) an acknowledgment or admission by either party of any
      fault or liability whatsoever to the other party or to any third
      party.

     

    13. No
      Knowledge of Wrongdoing.
      Employee represents that he has no knowledge of any wrongdoing involving
      improper or false claims against a federal or state governmental agency, or
      any
      other wrongdoing that involves Employee or other present or former Company
      employees.

     

    14. Costs.
      The
      Parties will each bear their own costs, expert fees, attorneys’ fees and other
      fees incurred in connection with this Agreement.

     

    15. Arbitration.
      The
      Parties agree that any and all disputes arising out of, or relating to, the
      terms of this Agreement, their interpretation, and any of the matters herein
      released, will be subject to binding arbitration in Santa Clara County before
      the Judicial Arbitration & Mediation Services (“JAMS”)
      pursuant to its employment arbitration rules & procedures (“JAMS
      Rules”).
      The
      arbitrator shall administer and conduct any arbitration in accordance with
      California law, including the California Code of Civil Procedure, and the
      arbitrator shall apply substantive and procedural California law to any dispute
      or claim, without reference to any conflict-of-law provisions of any
      jurisdiction. To the extent that the JAMS Rules conflict with California law,
      California law shall take precedence. The Parties agree that the prevailing
      party in any arbitration will be entitled to injunctive relief in any court
      of
      competent jurisdiction to enforce the arbitration award. The Parties agree
      that
      the prevailing party in any arbitration will be awarded its reasonable
      attorneys’ fees and costs. The
      Parties hereby agree to waive their right to have any dispute between them
      resolved in a court of law by a judge or jury. This
      section will not prevent either party from seeking injunctive relief (or any
      other provisional remedy) from any court having jurisdiction over the Parties
      and the subject matter of their dispute relating to Employee’s obligations under
      this Agreement and the agreements incorporated herein by reference.

     

    16. Authority.
      The
      Company represents and warrants that the undersigned has the authority to act
      on
      behalf of the Company and to bind the Company and all who may claim through
      it
      to the terms and conditions of this Agreement. Employee represents and warrants
      that he has the capacity to act on his own behalf and on behalf of all who
      might
      claim through him to bind them to the terms and conditions of this Agreement.
      Each party warrants and represents that there are no liens
      or
      claims of lien or assignments in law or equity or otherwise of or against any
      of
      the claims or causes of action released herein.

    
      
        
        

      

      
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    17. No
      Representations.
      Each
      party represents that it has had the opportunity to consult with an attorney,
      and has carefully read and understands the scope and effect of the provisions
      of
      this Agreement. Neither party has relied upon any representations or statements
      made by the other party hereto which are not specifically set forth in this
      Agreement.

     

    18. Severability.
      In the
      event that any provision hereof becomes or is declared by a court of competent
      jurisdiction to be illegal, unenforceable or void, this Agreement will continue
      in full force and effect without said provision so long as the remaining
      provisions remain intelligible and continue to reflect the original intent
      of
      the Parties.

     

    19. Entire
      Agreement.
      This
      Agreement represents the entire agreement and understanding between the Company
      and Employee concerning the subject matter of this Agreement and Employee’s
      relationship with the Company, and supersedes and replaces any and all prior
      agreements and understandings between the Parties concerning the subject matter
      of this Agreement and Employee’s relationship with the Company, with the
      exception of the Confidentiality Agreement and any agreements relating to
      Employee’s outstanding equity awards with the Company.

     

    20. No
      Waiver.
      The
      failure of any party to insist upon the performance of any of the terms and
      conditions in this Agreement, or the failure to prosecute any breach of any
      of
      the terms and conditions of this Agreement, will not be construed thereafter
      as
      a waiver of any such terms or conditions. This entire Agreement will remain
      in
      full force and effect as if no such forbearance or failure of performance had
      occurred.

     

    21. No
      Oral Modification.
      Any
      modification or amendment of this Agreement, or additional obligation assumed
      by
      either party in connection with this Agreement, will be effective only if placed
      in writing and signed by both Parties or by authorized representatives of each
      party.

     

    22. Governing
      Law.
      This
      Agreement will be deemed to have been executed and delivered within the State
      of
      California, and it will be construed, interpreted, governed, and enforced in
      accordance with the laws of the State of California, without regard to conflict
      of law principles. To the extent that either party seeks injunctive relief
      in
      any court having jurisdiction for any claim relating to the alleged misuse
      or
      misappropriation of trade secrets or confidential or proprietary information,
      each party hereby consents to personal and exclusive jurisdiction and venue
      in
      the state and federal courts of the State of California.

     

    23. Attorneys’
      Fees.
      In the
      event that either Party brings an action to enforce or effect its rights under
      this Agreement, the prevailing party will be entitled to recover its costs
      and
      expenses, including the costs of mediation, arbitration, litigation, court
      fees,
      plus reasonable attorneys’ fees, incurred in connection with such an
      action.

     

    24. Effective
      Date.
      This
      Agreement is effective after it has been signed by both parties and after seven
      (7) days have passed since Employee has signed the Agreement (the “Effective
      Date”),
      unless revoked by Employee within seven (7) days after the date the Agreement
      was signed by Employee.

    
      
        
        

      

      
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    25. Counterparts.
      This
      Agreement may be executed in counterparts, and each counterpart will have the
      same force and effect as an original and will constitute an effective, binding
      agreement on the part of each of the undersigned.

     

    26. Voluntary
      Execution of Agreement.
      This
      Agreement is executed voluntarily and without any duress or undue influence
      on
      the part or behalf of the Parties hereto, with the full intent of releasing
      all
      claims. The Parties acknowledge that:

     

    (a) They
      have
      read this Agreement;

     

    (b) They
      have
      been represented in the preparation, negotiation, and execution of this
      Agreement by legal counsel of their own choice or that they have voluntarily
      declined to seek such counsel;

     

    (c) They
      understand the terms and consequences of this Agreement and of the releases
      it
      contains; and

     

    (d) They
      are
      fully aware of the legal and binding effect of this Agreement.

     

    IN
      WITNESS WHEREOF, the Parties have executed this Agreement on the respective
      dates set forth below.

    
      	 	 	 	
               

              Hi/fn

            
	
               

              Dated:
                November 16, 2006

            	 	
               

              By

            	
               

              /s/
                William R. Walker   

            
	 	 	 	
              William
                R. Walker 

              Vice
                President of Finance, Chief Financial Officer

              and
                Secretary

            

    

    

    
      	 	 	 	
               

              CHRISTOPHER
                G. KENBER, an individual

            
	
               

              Dated:
                November 16, 2006

            	 	
               

              By

            	
               

              /s/
                Christopher G. Kenber   

            
	 	 	 	
              Christopher
                G. Kenber

            

    

        

    -7-Exhibit 10.35

     

    EXHIBIT
      10.35

     

    HI/FN,
      INC.

     

    CONSULTING
      AGREEMENT

     

    This
      Consulting Agreement (“Agreement”)
      is
      entered into as of November 16, 2006 by and between Hi/fn, Inc. (the
“Company”)
      and
      Christopher G. Kenber (“Consultant”).
      The
      Company desires to retain Consultant as an independent contractor to perform
      consulting services for the Company, and Consultant is willing to perform such
      services, on the terms described below. In consideration of the mutual promises
      contained herein, the parties agree as follows:

     

    1. Services
      and Compensation.
      Consultant agrees to perform for the Company the services described in
Exhibit A
      (the
“Services”),
      and
      the Company agrees to pay Consultant the compensation described in Exhibit A
      for
      Consultant’s performance of the Services.

     

    2. Confidentiality.

     

    A. Definition.
      “Confidential
      Information”
means
      any non-public information that relates to the actual or anticipated business
      or
      research and development of the Company, technical data, trade secrets or
      know-how, including, but not limited to, research, product plans or other
      information regarding Company’s products or services and markets therefor,
      customer lists and customers (including, but not limited to, customers of the
      Company on whom Consultant called or with whom Consultant became acquainted
      during the term of this Agreement), software, developments, inventions,
      processes, formulas, technology, designs, drawing, engineering, hardware
      configuration information, marketing, finances or other business information.
      Confidential Information does not include information that (i) is known to
      Consultant at the time of disclosure to Consultant by the Company as evidenced
      by written records of Consultant, (ii) has become publicly known and made
      generally available through no wrongful act of Consultant or (iii) has been
      rightfully received by Consultant from a third party who is authorized to make
      such disclosure.

     

    B. Nonuse
      and Nondisclosure.
      Consultant will not, during or subsequent to the term of this Agreement,
      (i) use the Confidential Information for any purpose whatsoever other than
      the performance of the Services on behalf of the Company or (ii) disclose
      the Confidential Information to any third party. Consultant agrees that all
      Confidential Information will remain the sole property of the Company.
      Consultant also agrees to take all reasonable precautions to prevent any
      unauthorized disclosure of such Confidential Information. Without the Company’s
      prior written approval, Consultant will not directly or indirectly disclose
      to
      anyone the existence of this Agreement or the fact that Consultant has this
      arrangement with the Company.

     

    C. Former
      Client Confidential Information.
      Consultant agrees that Consultant will not, during the term of this Agreement,
      improperly use or disclose any proprietary information or trade secrets of
      any
      former or current employer of Consultant or other person or entity with which
      Consultant has an agreement or duty to keep in confidence information acquired
      by Consultant, if any. Consultant also agrees that Consultant will not bring
      onto the Company’s premises any unpublished document or proprietary information
      belonging to any such employer, person or entity unless consented to in writing
      by such employer, person or entity. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    D. Third
      Party Confidential Information.
      Consultant recognizes that the Company has received and in the future will
      receive from third parties their confidential or proprietary information subject
      to a duty on the Company’s part to maintain the confidentiality of such
      information and to use it only for certain limited purposes. Consultant agrees
      that, during the term of this Agreement and thereafter, Consultant owes the
      Company and such third parties a duty to hold all such confidential or
      proprietary information in the strictest confidence and not to disclose it
      to
      any person, firm or corporation or to use it except as necessary in carrying
      out
      the Services for the Company consistent with the Company’s agreement with such
      third party.

     

    E. Return
      of Materials.
      Upon
      the termination of this Agreement, or upon Company’s earlier request, Consultant
      will deliver to the Company all of the Company’s property, including but not
      limited to all electronically stored information and passwords to access such
      property, or Confidential Information that Consultant may have in Consultant’s
      possession or control.

     

    3. Conflicting
      Obligations.

     

    A. Conflicts.
      Consultant certifies that Consultant has no outstanding agreement or obligation
      that is in conflict with any of the provisions of this Agreement or that would
      preclude Consultant from complying with the provisions of this Agreement.
      Consultant will not enter into any such conflicting agreement during the term
      of
      this Agreement. Consultant’s violation of this Section 3.A
      will be
      considered a material breach under Section 5.B.

     

    4. Reports.
      Consultant also agrees that Consultant will, from time to time during the term
      of this Agreement or any extension thereof, keep the Company advised as to
      Consultant’s progress in performing the Services under this Agreement.
      Consultant further agrees that Consultant will, as requested by the Company,
      prepare written reports with respect to such progress. The Company and
      Consultant agree that the time required to prepare such written reports will
      be
      considered time devoted to the performance of the Services.

     

    5. Term
      and Termination.

     

    A. Term.
      The
      term of this Agreement will begin on the date of this Agreement and will
      continue until the earlier of (i) November 10, 2007 or
      (ii) termination as provided in Section 5.B.

     

    B. Termination.
      Consultant
      may terminate this Agreement upon giving the Company 14 days’ prior written
      notice of such termination pursuant to Section 9.E
      of this
      Agreement.
      The
      Company may terminate this Agreement immediately and without prior notice for
      Cause. For purposes of this Agreement, “Cause”
shall
      mean Consultant’s refusal or inability to perform the Services or Consultant’s
      breach of any material provision of this Agreement, the
      Proprietary Information and Inventions Agreement or the Severance Agreement
      and Release by and between Consultant and the Company dated November 16,
      2006.

     

    C. Survival.
      Upon
      such termination, all rights and duties of the Company and Consultant toward
      each other shall cease except:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

                    (1) The
      Company will pay, within 30 days after the effective date of termination, all
      amounts owing to Consultant for Services completed and accepted by the Company
      prior to the termination date and related expenses, if any, submitted in
      accordance with the Company’s policies and in accordance with the provisions of
Section 1
      of this
      Agreement; and

                    

                    (2) Section 2
      (Confidentiality), Section 3
      (Conflicting Obligations), Section 6
      (Independent Contractor; Benefits), Section 7 (Indemnification),
      and Section 8
      (Arbitration and Equitable Relief) will survive termination of this
      Agreement.

     

    6. Independent
      Contractor; Benefits.

     

    A. Independent
      Contractor. It
      is the
      express intention of the Company and Consultant that Consultant perform the
      Services as an independent contractor to the Company. Nothing in this Agreement
      shall in any way be construed to constitute Consultant as an agent, employee
      or
      representative of the Company. Without limiting the generality of the foregoing,
      Consultant is not authorized to bind the Company to any liability or obligation
      or to represent that Consultant has any such authority. Consultant agrees to
      furnish (or reimburse the Company for) all tools and materials necessary to
      accomplish this Agreement and shall incur all expenses associated with
      performance, except as expressly provided in Exhibit A.
      Consultant acknowledges and agrees that Consultant is obligated to report as
      income all compensation received by Consultant pursuant to this Agreement.
      Consultant agrees to and acknowledges the obligation to pay all self-employment
      and other taxes on such income.

     

    B. Benefits.
      The
      Company and Consultant agree that Consultant will receive no Company-sponsored
      benefits from the Company. If Consultant is reclassified by a state or federal
      agency or court as Company’s employee, Consultant will become a reclassified
      employee and will receive no benefits from the Company, except those mandated
      by
      state or federal law, even if by the terms of the Company’s benefit plans or
      programs of the Company in effect at the time of such reclassification,
      Consultant would otherwise be eligible for such benefits.

     

    7. Indemnification.
      Consultant agrees to indemnify and hold harmless the Company and its directors,
      officers and employees from and against all taxes, losses, damages, liabilities,
      costs and expenses, including attorneys’ fees and other legal expenses, arising
      directly or indirectly from or in connection with (i) any negligent,
      reckless or intentionally wrongful act of Consultant or Consultant’s assistants,
      employees or agents, (ii) a determination by a court or agency that the
      Consultant is not an independent contractor, (iii) any breach by the
      Consultant or Consultant’s assistants, employees or agents of any of the
      covenants contained in this Agreement, (iv) any failure of Consultant to perform
      the Services in accordance with all applicable laws, rules and regulations,
      or
      (v) any violation or claimed violation of a third party’s rights resulting
      in whole or in part from the Company’s use of the work product of Consultant
      under this Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    8. Arbitration
      and Equitable Relief.

     

    A. Arbitration.
      Consultant agrees that any and all controversies, claims or disputes with anyone
      (including the Company and any employee, officer, director, shareholder or
      benefit plan of the Company, in its capacity as such or otherwise) arising
      out
      of, relating to or resulting from Consultant’s performance of the Services under
      this Agreement or the termination of this Agreement, including any breach of
      this Agreement, shall be subject to binding arbitration under the Arbitration
      Rules set forth in California Code of Civil Procedure Section 1280 through
      1294.2, including Section 1283.05 (the “Rules”)
      and
      pursuant to California law. CONSULTANT AGREES TO ARBITRATE, AND THEREBY AGREES
      TO WAIVE ANY RIGHT TO A TRIAL BY JURY WITH RESPECT TO, ALL DISPUTES ARISING
      FROM
      OR RELATED TO THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO: ANY STATUTORY CLAIMS
      UNDER STATE OR FEDERAL LAW, CLAIMS UNDER TITLE VII OF THE CIVIL RIGHTS ACT
      OF
      1964, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE AGE DISCRIMINATION IN
      EMPLOYMENT ACT OF 1967, THE OLDER WORKERS BENEFIT PROTECTION ACT, THE FAMILY
      AND
      MEDICAL LEAVE ACT, THE CALIFORNIA FAMILY RIGHTS ACT, THE CALIFORNIA FAIR
      EMPLOYMENT AND HOUSING ACT, THE CALIFORNIA LABOR CODE, CLAIMS OF HARASSMENT,
      DISCRIMINATION OR WRONGFUL TERMINATION AND ANY STATUTORY CLAIMS. Consultant
      understands that this Agreement to arbitrate also applies to any disputes that
      the Company may have with Consultant. 

     

    B. Procedure.
      Consultant agrees that any arbitration will be administered by the Judicial
      Arbitration & Mediation Services (“JAMS”), and that a neutral arbitrator
      will be selected in a manner consistent with its employment arbitration rules
      & procedures (“JAMS Rules”). Consultant agrees that the arbitrator will have
      the power to decide any motions brought by any party to the arbitration,
      including discovery motions, motions for summary judgment and/or adjudication
      and motions to dismiss and demurrers, prior to any arbitration hearing.
      Consultant agrees that the arbitrator will issue a written decision on the
      merits. Consultant also agrees that the arbitrator will have the power to award
      any remedies, including attorneys’ fees and costs, available under applicable
      law. Consultant understands that the Company will pay for any administrative
      or
      hearing fees charged by the arbitrator or JAMS, except that Consultant shall
      pay
      the amount of any filing fees associated with any arbitration Consultant
      initiates that Consultant would have otherwise had to pay had he filed any
      such
      claim in court. Consultant agrees that the arbitrator will administer and
      conduct any arbitration in a manner consistent with the Rules and that, to
      the
      extent that JAMS Rules conflict with the Rules, the Rules will take
      precedence.

     

    C. Remedy.
      Except
      as provided by the Rules, arbitration will be the sole, exclusive and final
      remedy for any dispute between the Company and Consultant. Accordingly, except
      as provided for by the Rules, neither the Company nor Consultant will be
      permitted to pursue court action regarding claims that are subject to
      arbitration. Notwithstanding the foregoing, the arbitrator will not have the
      authority to disregard or refuse to enforce any lawful Company policy, and
      the
      arbitrator shall not order or require the Company to adopt a policy not
      otherwise required by law which the Company has not adopted. 

     

                                    
D. Availability
      of Injunctive Relief.
      In
      addition to the right under the Rules to petition the court for provisional
      relief, Consultant agrees that any party may also petition the court

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    for
      injunctive relief where either party alleges or claims a violation of
Sections 2
      (Confidentiality) or 3
      (Conflicting Obligations) of this Agreement or any other agreement regarding
      trade secrets, confidential information, nonsolicitation or Labor Code §2870. In
      the event either the Company or Consultant seeks injunctive relief, the
      prevailing party will be entitled to recover reasonable costs and attorneys’
fees.

     

    E. Administrative
      Relief.
      Consultant understands that this Agreement does not prohibit Consultant from
      pursuing an administrative claim with a local, state or federal administrative
      body such as the Department of Fair Employment and Housing, the Equal Employment
      Opportunity Commission or the workers’ compensation board. This Agreement does,
      however, preclude Consultant from pursuing court action regarding any such
      claim.

     

    F. Voluntary
      Nature of Agreement.
      Consultant acknowledges and agrees that Consultant is executing this Agreement
      voluntarily and without any duress or undue influence by the Company or anyone
      else. Consultant further acknowledges and agrees that Consultant has carefully
      read this Agreement and has asked any questions needed to understand the terms,
      consequences and binding effect of this Agreement and fully understand it,
      including that Consultant is waiving its right to a jury trial. Finally,
      Consultant agrees that Consultant has been provided an opportunity to seek
      the
      advice of an attorney of its choice before signing this Agreement. 

     

    9. Miscellaneous.

     

    A. Governing
      Law.
      This
      Agreement shall be governed by the laws of California without regard to
      California’s conflicts of law rules.

     

    B. Assignability.
      Except
      as otherwise provided in this Agreement, Consultant may not sell, assign or
      delegate any rights or obligations under this Agreement.

     

    C. Entire
      Agreement.
      This
      Agreement constitutes the entire agreement between the parties with respect
      to
      the subject matter of this Agreement and supersedes all prior written and oral
      agreements between the parties regarding the subject matter of this Agreement,
      with the exception of the Proprietary Information and Inventions Agreement,
      the Severance Agreement and Release by and between Consultant and the Company
      dated November 16, 2006 and any agreements relating to Employee’s outstanding
      equity awards with the Company.

     

    D. Headings.
      Headings are used in this Agreement for reference only and shall not be
      considered when interpreting this Agreement.

     

    E. Notices.
      Any
      notice or other communication required or permitted by this Agreement to be
      given to a party shall be in writing and shall be deemed given if delivered
      personally or by commercial messenger or courier service, or mailed by U.S.
      registered or certified mail (return receipt requested), to the party at the
      party’s address written below or at such other address as the party may have
      previously specified by like notice. If by mail, delivery shall be deemed
      effective three business days after mailing in accordance with this Section 9.E.

     

    
                (1) If
        to the
        Company, to:

      Hi/fn,
        Inc.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Attention:
      General Counsel

    750
      University Ave.

    Los
      Gatos, CA 95032

    (408)
      399-3500

    (408)
      399-3501

     

            
      (2) If
      to
      Consultant, to the address for notice on the signature page to
      this
      Agreement or, if no such address is provided, to the last address of Consultant
      provided by Consultant to the Company.

     

    F. Attorneys’
      Fees.
      In any
      court action at law or equity that is brought by one of the parties to this
      Agreement to enforce or interpret the provisions of this Agreement, the
      prevailing party will be entitled to reasonable attorneys’ fees, in addition to
      any other relief to which that party may be entitled.

     

    G. Severability.
      If any
      provision of this Agreement is found to be illegal or unenforceable, the other
      provisions shall remain effective and enforceable to the greatest extent
      permitted by law.

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement
      as
      of the date first written above.

    
      	
               

              CONSULTANT

            	 	
               

              HI/FN,
                INC.

            
	
               

              By: 

            	 /s/
              Christopher G. Kenber	 	
               

              By:

            	 /s/
              William R. Walker
	
              Name:

            	
              Christopher
                G. Kenber

            	 	
              Name:

            	
              William
                R. Walker

            
	 	 	 	
              Title:

            	
              Vice
                President of Finance, Chief Financial Officer and
                Secretary

            

    

     

    

     

    Address
      for Notice:

    
      	 	 
	 	 
	 	 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    Services
      and Compensation

     

    1. Contact.
      Consultant’s principal Company contact:

     

    Name:
      Albert E. Sisto

     

    Title:
      Interim Chief Executive Officer and Chairman of the Board of
      Directors

     

    2. Services.
      The
      Services shall include, but shall not be limited to, the following:

     

    Consultant
      will provide consulting and advisory services relating to matters and projects
      or work in process that had been within the Consultant’s areas of responsibility
      while he served as Chief Executive Officer of the Company, including, without
      limitation, such appropriate tasks as the Company’s Board of Directors (the
“Board”)
      may
      request as necessary and appropriate to assist his successor to transition
      into
      the position of the Company’s Chief Executive Officer and traveling to key
      customers of the Company. Consultant will be required to provide up to twenty
      (20) hours per month (as requested by the Company) in Services under this
      Agreement.

     

    3. Compensation.

     

    A. The
      Company will pay Consultant $2,000.00 per month.

     

    B. The
      Company will reimburse Consultant for all reasonable expenses incurred by
      Consultant in performing the Services pursuant to this Agreement, if Consultant
      receives written consent from an authorized agent of the Company prior to
      incurring such expenses and submits receipts for such expenses to the Company
      in
      accordance with Company policy.

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