EMPLOYMENT AGREEMENT
This employment Agreement is effective as of February 7, 2000 (the
"Effective Date") between Certicom Corp., a Delaware corporation ("Certicom"),
Certicom Corp., a Yukon Territory, Canada corporation ("Parent") and Richard D.
Brounstein ("Employee").
In consideration of the mutual promises and conditions in this
Employment Agreement, and all benefits associated with the employment of
Employee, it is agreed as follows:
ARTICLE 0NE -- EMPLOYMENT
1.1 Employment
Commencing February 7, 2000, Certicom shall employ Employee as its
Finance Director and commencing February 23, 2000, Certicom shall employ
Employee as its Senior Vice President Finance, Chief Financial Officer and
Secretary. Employee shall perform such duties and exercise such powers related
to such offices as set forth in the bylaws of Certicom and as prescribed or
specified by the Board of Directors of Certicom, subject always to the control
and direction of such board of Directors. From February 23, 2000, Employee shall
also serve as the Senior Vice President Finance, Chief Financial Officer and
Secretary of Parent and each direct or indirect wholly owned subsidiary of
Parent (such subsidiaries, Parent and Certicom collectively the "Certicom
Group").
ARTICLE TWO -- REMUNERATION
2.1 Salary
As compensation for the services by Employee hereunder, Certicom shall
pay Employee during the term of this Agreement a gross annual salary of
one-hundred seventy-five thousand dollars ($175,000.00), payable on the
fifteenth and the last day of each calendar month.
2.2 Certicom Bonus
Each quarter, Employee shall be eligible to receive a bonus payment
equivalent to up to 2.5% ($4,375.00) of his annual salary from Certicom based on
Parent achieving its quarterly financial targets, as determined by the CEO of
Parent.
2.3 Annual Bonus
In its sole and absolute discretion, Certicom may pay Employee an
additional cash bonus at the end of each fiscal year of Parent. Employee
acknowledges that the payment of any such bonus shall be in the sole and
absolute discretion of the Board of Directors of Parent.
-1-
2.4 Options
(a) Employee shall be entitled to participate in Parent's 1997
Stock Option Plan ("SOP"), and any additional stock option
plans or stock purchase plans as may be established by Parent.
As of the date of this Agreement, Employee shall be granted
options to purchase one-hundred fifteen thousand (115,000)
Parent common shares under the SOP at an exercise price
equivalent to the closing price of the shares on the trading
day prior to the Effective Date of this Agreement. The grant
of any future options or any benefits under such plans shall
be in the discretion of Certicom.
(b) In the event there is a Change of Control (as defined below)
of Parent and Employee is subsequently terminated by Certicom
or Parent without Cause (as defined below), or Employee
resigns his employment with Good Reason (as defined below),
then 50% of any unvested options or other rights to acquire
securities of Parent, whether granted prior to or subsequent
to the date hereof, including, without limitation, 50% of any
such unvested options or rights granted pursuant to the SOP,
shall immediately vest and become fully exercisable.
For the purposes of this Agreement, "Change of Control" shall be deemed
to have occurred if: (1) any person (including a "person" as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), other than persons controlling (as defined in Rule 405
under the Securities Act of 1933 ("Rule 405")), Parent as of the Effective Date
of this Agreement (except that no person shall be deemed to control Parent under
Rule 405 merely due to his or her position as an officer or director of Parent),
(A) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of more than 50% of the voting securities of
Parent, or (B) succeeds to the control of all or substantially all of the
business or assets of Parent through merger, transfer of assets, reorganization,
or other event; or (2) individuals who as of the Effective Date constitute the
Board of Directors cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election, by the Parent
stockholders, of each new Board member was approved by a majority of the Board
members then still in office who were Board members as of the Effective Date.
For the purposes of this Agreement, "Cause" shall mean written notice
to Employee that he has engaged in any one or more of the following;
(1) Gross dishonesty, fraud, misappropriation,
embezzlement, or other act of material misconduct
against any entity in the Certicom Group;
-2-
(2) Conviction of any criminal act involving a crime of
moral turpitude or a felony including, without
limitation, misappropriation of funds, property, or
trade secrets;
(3) Willful and knowing violation of any rules or
regulations of any governmental or regulatory body
which are material to the business of any entity in
the Certicom Group;
(4) Violation of policies, rules or regulations of any
entity in the Certicom Group which violation is
materially detrimental to such entity;
(5) A material breach, a material repudiation or other
material failure to comply with or perform any of the
material terms of this Agreement, including the
attached Confidentiality and Rights Agreement; or
(6) A good faith determination by the Board of Directors
of Parent based on objective evidence that persistent
use of drugs or alcohol is significantly interfering
with Employee's performance of his duties hereunder.
For the purposes of this Agreement, "Good Reason" shall be deemed to
exist where following a Change of Control; (1) Parent materially alters or
reduces employee's duties, responsibilities, authority or base compensation from
those in effect immediately prior to the occurrence of a Change of Control
(including an alteration or reduction indirectly in the form of resource
allocation or other assignment); (2) parent materially breaches the terms of
this Agreement or any other agreement between Parent and Employee with respect
to the payment or vesting of compensation or benefits or in any other material
respect and such breach is not cured within thirty (30) days after Parent
receives written notice thereof; (3) Parent requires Employee, as a condition of
employee's continued employment, to be based in any location more than fifty
miles from the City of Hayward, California, or to spend more than twenty-five
percent of each calendar quarter traveling outside the San Francisco Bay Area;
or (4) Parent requires Employee, as a condition of Employee's continued
employment, to perform illegal or fraudulent acts or omissions.
-3-
2.5 Benefits
Employee will be entitled to participate in all of Certicom's benefit
plans generally available to its senior executive employees, as determined by
Certicom in its discretion, in accordance with the terms thereof.
2.6 Vacation
Employee shall be entitled to accrue fifteen (15) days of vacation per
year during the first through fifth years of employment which will be prorated
for the first year of this Agreement. After five years of employment, Employee
shall be entitled to accrue twenty (20) days of vacation per year.
2.7 Expenses
Employee shall be reimbursed at the Employee's cost for all authorized
travel and other out of pocket expenses actually and properly incurred by him in
connection with his duties hereunder. For all such expenses, Employee shall
furnish to Certicom statements and vouchers as and when required by Certicom.
Also, Certicom shall reimburse Employee reasonable and actual out-of-pocket
expenses for Employee's legal counsel to review this Agreement in an amount not
to exceed three thousand five hundred dollars ($3,500.00).
ARTICLE THREE -- EMPLOYEE'S COVENANTS
3.1 Service
During his employment, Employee shall devote such time, attention,
energies, interests, and abilities for the business of the Certicom Group as is
necessary to fulfill his responsibilities, shall well and faithfully serve the
Certicom Group, and shall use his best efforts to promote the interests of the
Certicom Group. Employee shall not engage in any business activity that would be
adverse to the Certicom Group or its business prospects, financial or otherwise.
3.2 Duties and Responsibilities
Employee shall duly and diligently perform all the duties assigned to
him while in the employ of Certicom, and shall truly and faithfully account for
and deliver to Certicom all money, securities and things of value belonging to
any entity in the Certicom Group which Employee may, from time to time, receive
for, from or on account of any entity in the Certicom Group.
3.3 Rules and Regulations
Employees shall be bound by and shall faithfully observe and abide by
all the rules, regulations, or policies that Certicom may institute at its
discretion from time to time which are
-4-
brought to Employee's notice or of which he should reasonably be aware.
3.4 Confidentiality and Rights Agreement
Employee will execute and deliver the Confidentiality and Rights
Agreement in the form attached hereto as Exhibit A. The terms of the
Confidentiality and Rights Agreement are incorporated herein as if fully set
forth. Employee's obligations under such Confidentiality and Rights Agreement
shall continue both before and after he has used any confidential information
for the purposes of such Confidentiality and Rights Agreement, and both before
and after the employment of Employee with Certicom ceases, and shall continue
until such time as Employee is expressly released therefrom by Certicom in
writing. The obligations of Employee under this Agreement shall be binding on
the assigns, executors, administrators or legal representatives of Employee. Any
breach by the employee of this Agreement or the Confidentiality and Rights
Agreement shall cause irreparable damage to Certicom, and any such breach shall
entitled Certicom to seek immediate injunctive relief from a court of competent
jurisdiction.
3.5 Agreement to Arbitrate
Employee will execute and deliver the Mutual Agreement to Arbitrate
Claims in the form attached hereto as Exhibit B. The terms of the Mutual
Agreement to Arbitrate Claims are incorporated herein as if fully set forth.
ARTICLE FOUR -- TERMINATION OF EMPLOYMENT
4.1 At-Will Employment
Employee's employment may be terminated by either mutual agreement of
the parties, Employee's election, or Certicom's election. Either party may
terminate Employee's employment for any reason, or for no reason, with or
without Cause, and at any time, in their sole and absolute discretion; provided
only that if Certicom terminates Employee's employment without Cause (as defined
in section 2.4) whether or not following a Change of Control or if Employee
resigns with Good Reason (as defined in section 2.4) following a Change of
Control (as defined in section 2.4), it shall pay Employee severance as follows:
(a) a lump sum payment equivalent to Employee's base
salary for a total period of nine (9) months; and
(b) continuation of Employee's health insurance benefits
for a total period of nine (9) months; and
-5-
(c) Nine (9) months acceleration of vesting of all
unvested stock options and other rights to acquire
securities held by Employee as of the termination
date; and
(d) Up to ten thousand dollars ($10,000.00) in
outplacement services.
4.2 Termination by Certicom for Cause
Certicom may terminate this Agreement at any time for Cause (as defined
in paragraph 2.4(b)) without payment of any compensation of any kind or nature,
including but not limited to severance, anticipated earnings, or stock options
or other securities of any kind.
4.3 Return of Property
Upon any termination of this Agreement, Employee shall at once deliver
or cause to be delivered to Certicom, all books, documents, effects, money,
securities or other property belonging to any entity in the Certicom Group, or
for which Certicom is liable to others, which are in the possession, charge,
control or custody of Employee.
4.4 Provisions Which Will Operate Following Termination
Notwithstanding any termination of this Agreement for any reason
whatsoever, the provisions of sections 3.4 and 4.3 of this Agreement and any
other provisions of this Agreement necessary to give effect thereto, shall
continue in full force and effect following such termination.
4.5 Indemnity
Certicom shall indemnify Employee to the fullest extent permitted by
applicable law at California Labor Code section 2802.
ARTICLE FIVE -- GENERAL
5.1 Sections and Headings
The division of this Agreement into Articles and Sections and the
insertion of headings are for the convenience of reference only and shall not
effect the construction or interpretation of this Agreement. The term "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular article, section or other portion of this
Agreement.
-6-
5.5 Benefit of Agreement
This Agreement shall bind the Employee's heirs, personal
representatives, legal representatives, successors, spouses and assigns, and
shall bind Certicom and Parent, and their successors, purchasers, assignees or
any entities who acquire the assets of Certicom and/or Parent.
5.3 Entire Agreement
This Agreement, including the Confidentiality and Rights Agreement at
Exhibit A, the Mutual Agreement to Arbitrate Claims at Exhibit B, and any stock
option agreement entered into between the parties in relation to the grant of
stock options referred to in Section 2.4(a), constitutes the entire Agreement
between the parties with respect to the subject matter hereof, and replaces and
supercedes any prior understanding and agreements between the parties.
5.4 Amendments and Waivers
No amendment to this Agreement shall be valid or binding unless set
forth in writing and duly executed by Employee and the Chief Executive Officer
of Certicom. No waiver of any breach of any provision of this Agreement shall be
effective or binding unless made in writing and signed by the party purporting
to give the same and, unless otherwise provided in the written waiver, shall be
limited to the specific breach waived.
5.5 Severability
If any provision of this Agreement is determined to be invalid or
unenforceable in whole or in part, such invalidity or unenforceability shall
attach only to such provision or part thereof, and the remaining part of such
provision and all other provisions hereof shall continue in full force and
effect.
5.6 Notices
Any demand, notice or other communication to be given in connection
with this Agreement shall be given in writing and may be given by personal
delivery, by fax or by registered mail addressed to the recipient as follows:
To the Employee: Richard D. Brounstein
606 Bella Vista Court
Fremont, CA 94539
-7-
To the Employer: Certicom Corp.
Attention: Mr. Richard P. Dalmazzi
25801 Industrial Boulevard
Hayward, CA 94545
or such other address or individual as may be designated by notice by either
party to the other.
Any communication given by personal delivery shall be conclusively
deemed to have been given on the day of actual delivery thereof; or if made or
given by facsimile, on the business day following receipt thereof; or if made or
given by registered mail, on the 7th day, other than a Saturday, Sunday or
statutory holiday in California, following the deposit thereof in the mail.
If the party giving any communication knows or ought reasonably to know
of any difficulties with the postal system which might affect the delivery of
mail, any such communication shall not be mailed but shall be given by facsimile
or personal delivery.
5.7 Governing Law
This Agreement shall be deemed to have been entered into and shall be
construed and enforced in accordance with the laws of the State of California as
applied to contracts made and to be performed within California.
5.8 Reasonableness
Employee declares that he has read the foregoing and agrees to the
conditions and obligations set forth. Employee also acknowledges that he has
been given a reasonable amount of time in which to consult with, and has
consulted with, an attorney with respect to this Agreement.
5.9 Copy of Agreement
Employee acknowledges receipt of a copy of this Agreement duly signed
by Employee and Certicom.
Dated: February 7, 2000 /s/ Richard D. Brounstein
------------------------ ---------------------------------
Richard D. Brounstein (Employee)
Dated: February 7, 2000 /s/ Richard M. Depew
------------------------ ---------------------------------
Witness to Employee Signature
Richard M. Depew
---------------------------------
Printed Witness' Name and Address
-8-
Certicom Corp.
Dated: February 7, 2000 by: /s/ Richard P. Dalmazzi
------------------------ -----------------------------
Richard P. Dalmazzi
Chief Executive Officer
-9-