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EXHIBIT
10.03
CONSULTING AND
SEPARATION AGREEMENT
This Consulting and
Separation Agreement (the “ Agreement ”) is made
by and between Stratton Sclavos (the “ Executive
”) and VeriSign, Inc. (“VeriSign” or sometimes
the “ Company ”), effective as of the eighth (8
th
) day following the
Executive’s signature without revocation (the “
Effective Date ”).
WHEREAS, the Executive was
the Chairman, President & Chief Executive Officer of the
Company;
WHEREAS, the Company and the
Executive desire to document the terms of the Executive’s
employment resignation and, except as expressly provided herein, to
terminate all prior agreements between them;
WHEREAS, the Company wishes
to secure the Executive’s services as a consultant for a
period of one year following the Executive’s resignation of
his employment, and the Executive wishes to provide such
services;
WHEREAS, the Company and the
Executive acknowledge that the Executive has had, and will continue
to have, access to confidential and proprietary information and
trade secrets of the Company; that it would be difficult for the
Executive to accept employment competitive with the Company without
the risk of use or disclosure of confidential and proprietary
information and trade secrets of the Company, however inadvertent;
and that the restrictions imposed upon the Executive by this
Agreement are as narrow in scope as is consistent with the
protection of the Company’s legitimate interest in the
protection of its confidential and proprietary information and
trade secrets;
THEREFORE, in exchange for
the good and valuable consideration set forth herein, the adequacy
of which is specifically acknowledged, the Executive and the
Company hereby agree as follows:
1. Resignation Date .
The Executive resigned his employment (including his positions as
President and Chief Executive Officer), his position as Chairman of
the Company’s Board of Directors, his Board seat, and all
positions he held as an officer or employee of the Company, its
subsidiaries, any joint ventures to which the Company is a party,
and all other entities where the Executive served as a
representative of the Company effective May 27, 2007 (the
“ Resignation Date ”), except for the following
positions where the Executive will continue to serve at the
discretion and direction of the Company and from which he shall
resign at any time upon the request of the Company: member of the
board of directors of VeriSign Japan K.K. (“VSJ”) and a
member of the board of managers of US Mobile Holdings LLC and
Netherlands Mobile Holdings C.V. The Company will replace the
Executive on the Board of VSJ as soon as reasonably
practicable.
2. Payment of Accrued
Wages and Expenses . On May 31, 2007, the Company paid to
the Executive $1,147,001.54, which amount included all wages
accrued through the Resignation Date, including all accrued and
unused Paid Time Off. The Executive will be reimbursed for all
business expenses incurred by him on or before the Resignation Date
in accordance with the Company’s current Travel and
Expense
Reimbursement Policy. Such
expenses shall be submitted by July 13, 2007, and shall be
paid in accordance with Company’s normal policies for Travel
and Expense Reimbursement.
3. Consulting . From
May 28, 2007 through May 28, 2008 (the “
Consulting Period ”), the Executive shall make himself
available at mutually agreeable times for up to three
(3) business days per month to provide consulting services to
the Company. The Executive shall be paid at the rate of $5,000
(five thousand dollars) per month in arrears for such consulting
services and shall be entitled to reimbursement of any reasonable
out-of-pocket expenses incurred in connection therewith to the
extent any such reasonable out-of-pocket expenses are reimbursable
under the Company’s Corporate Expense Reimbursement Policy.
The Executive agrees that as a consultant he is neither an agent
nor an employee of the Company and that he has no authority to bind
the Company. The Executive further agrees that, in light of this
consulting arrangement, his continued access to confidential and
proprietary information and trade secrets of the Company that such
consulting arrangement will entail and the payments to be made to
the Executive under this Agreement, he will not, during the period
ending twelve (12) months from the Resignation
Date:
(a) Engage in Competition
against the Company or against any of its subsidiaries, affiliates
or joint ventures;
(b) Directly or indirectly,
for his benefit or for the benefit of any other person or entity,
do any of the following:
1. Interfere with any
existing or expected relationship between the Company, or any of
its subsidiaries, affiliates or joint ventures, on the one hand,
and any customer of the Company, or of any of its subsidiaries,
affiliates or joint ventures, on the other; provided that,
for purposes of this Section 3(b)(1), such expected customer
relationship shall be deemed to exist if there is (a) a
written or oral bid, offer or proposal by the Company, or by any of
its subsidiaries, affiliates or joint ventures, or
(b) substantial preparation with a view toward making such a
bid, offer or proposal within 12 (twelve) months prior to the
Resignation Date, which are in each instance known or reasonably
should be known to the Executive; or
2. Solicit, encourage or
induce any employee, consultant or contractor of the Company or of
any of its subsidiaries, affiliates or joint ventures to terminate
his or her relationship with the Company or subsidiary, affiliate
or joint venture.
(c) For purposes of this
Agreement, “ Competition ” by the Executive
shall mean the Executive, directly or indirectly, provides
services, whether acting as a consultant, contractor, director,
officer, employee, principal, agent, owner, member or partner, or
by permitting his name to be used, in connection with activities
relating to the following lines of business of the Company, or of
any of its subsidiaries, affiliates or joint ventures: domain name
registry services, SSL security services, managed security
services, PKI services, network consumer authentication services,
communications services currently offered by the Company, content
delivery network services, and messaging services or activities
directly related thereto (the “ Primary Lines of
Business ”); provided that it shall not be a
violation of this
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Section 3(c) for the
Executive to become the registered or beneficial owner of less than
1% (one percent) of any class of the capital stock of any one or
more competing publicly traded corporations, so long as the
Executive does not participate in the business of such corporations
relating to the Primary Lines of Business until such time as this
Section 3(c) has expired.
For the purposes of this
Agreement, “Competition” is not intended to include
instances where the Executive, directly or indirectly, provides
services to any company or entity which competes with any of the
Company’s Primary Lines of Business so long as all of the
following conditions are met: (i) such company or entity
is also engaged in lines of business other than the Primary Lines
of Business; (ii) such company’s or entity’s
revenues (determined in accordance with GAAP) from such other lines
of business equal at least eighty percent (80%) of the total
revenues of such company or entity; (iii) the
Executive’s employment with or services to such company or
entity is strictly limited to lines of business other than the
Primary Lines of Business; (iv) the Executive will not be
providing any support, advice, instruction, direction or other
guidance to such company’s or entity’s lines of
business that compete with VeriSign in any of the Primary Lines of
Business then conducted or offered by VeriSign; and (v) before
the Executive begins working for or otherwise providing any
services or guidance to the company or entity,
Executive shall submit to the Company a written description of his
proposed employment duties and responsibilities and represent
to VeriSign in writing that the Executive’s
employment with or otherwise providing services to such
company or entity will not violate this Agreement. Company and the
Executive agree that any decision with respect to the applicability
of this provision shall be determined by the Chairman of the Board
of VeriSign, subject in all instances to the provisions of
Section 16 hereof.
4. Severance Payments
. The Company hereby agrees, subject to the Executive’s
execution of this Agreement without revocation, and his continuing
compliance with its terms, to provide the Executive severance in
the aggregate amount of $5,085,761.54 (five million eighty-five
thousand seven hundred sixty-one dollars and fifty-four cents) (the
“ Severance Payments ”), payable as
follows:
(a) $1,147,001.54 (one
million one hundred forty-seven thousand one dollars and fifty-four
cents), which was paid to the Executive on May 31,
2007.
(b) Within 21 (twenty-one)
days of the Effective Date, $1,969,380 (one million nine hundred
sixty-nine thousand three hundred eighty dollars).
(c) On June 15, 2008,
$1,969,380 (one million nine hundred sixty-nine thousand three
hundred eighty dollars).
(d) If it is determined
through binding arbitration pursuant to Section 16 of this
Agreement that the Executive has breached any term of this
Agreement in any significant respect, then the Company (i) may
require the Executive’s repayment to the Company of any
Severance Payments provided for in Sections 4(a) and 4(b) and
payment to the Company of all gains received by the Executive from
the exercise of stock options and
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restricted stock units the
vesting of which was accelerated pursuant to Section 7 of this
Agreement; (ii) may refuse to make either or both Severance
Payments provided for by Sections 4(b) and 4(c), and to permit the
Executive to exercise unexercised stock options and restricted
stock units the vesting of which was accelerated pursuant to
Section 7 of this Agreement; and (iii) may decline to
make all other payments or benefits due to the Executive pursuant
to the terms of this Agreement.
(e) The Executive agrees that
the Severance Payments are not required by contract, or under the
Company’s normal policies and procedures, and are provided as
a severance solely in connection with this Agreement, and that the
Executive is not entitled to any payments from the Company or the
other persons and entities released herein other than as set forth
in this Agreement.
(f) Upon a Change of Control
of the Company, all Severance Payments shall accelerate and become
immediately due and payable. “ Change of Control
” for purposes of this Agreement shall mean: (i) a sale
of all or substantially all the assets of the Company, or
(ii) a merger or consolidation in which the Company is not the
surviving corporation and in which beneficial ownership of
securities of the Company representing at least fifty percent
(50%) of the combined voting power entitled to vote in the
election of directors has changed. Notwithstanding the foregoing, a
Change of Control shall not include any transaction effected
primarily for the purpose of financing the Company with cash (as
determined by the Board of Directors acting in good faith and
without regard to whether such transaction is effectuated by a
merger, equity financing or otherwise).
5. Payment for Erroneously
Deleted Stock Options . Within 21 (twenty-one) days after the
Effective Date, the Company shall pay to the Executive $5,459,430
(five million four hundred fifty-nine thousand four hundred thirty
dollars) in connection with options to purchase 300,000 shares of
the Company’s Common stock (after adjustment for stock
splits) which were granted to the Executive in 1998, but were
erroneously deleted from the Company’s records.
6. COBRA . The
Executive may, if eligible, elect to receive continued healthcare,
dental and vision coverage pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“ COBRA ”). If the Executive elects COBRA
coverage, the Company shall make the Executive’s COBRA
premium payments through the earliest of (i) November 30,
2009, (ii) such time as the Executive is eligible for
healthcare, dental and vision coverage provided by another employer
or (iii) such time as the Executive is no longer eligible for
COBRA.
7. Stock Options and
Restricted Stock Units . The Executive and the Company
acknowledge and agree that the Executive currently holds
outstanding options (the “ Options ”) to
purchase shares of Common Stock of the Company and outstanding
restricted stock units (the “ RSUs ”) each in
the amounts, received on the grant dates and with the exercise
prices or in the unreleased amounts as reflected in Exhibit
A hereto. The Executive acknowledges and agrees that, except as
reflected in Exhibit A hereto, the Executive has no rights
to Company stock options or restricted stock units or other rights
to purchase Company stock. Except as expressly modified herein, all
Options and RSUs may be exercised only in
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accordance with the terms of
the applicable VeriSign Stock Options Plans, Notices of Grant and
Option or RSU Agreements.
(a) On the Effective Date,
all outstanding Options and RSUs that are scheduled to vest within
24 (twenty-four) months after the Resignation Date shall fully
vest, and may be exercised only in accordance with the terms of the
applicable Stock Options Plans, Notices of Grant and Option or RSU
Agreements; provided , however , that the Executive
shall receive the benefit of the extension of exercisability of
Options and RSUs previously granted by the Company to former
employees as attached hereto as Exhibit B , pending
restatement of the Company’s financial results and, with
respect to the Option grant to the Executive made on August 1,
2001 and any option grants made to the Executive under the
VeriSign, Inc. 2006 Equity Plan only, subject to the effectiveness
of the Company’s Registration Statements on Form S-8, which
Form S-8 shall be filed prior to December 31, 2007, provided
further, however, that in all events Executive shall have not less
than forty-five (45) days within which to exercise any such
Options or RSUs.
(b) Options for 600,000 (six
hundred thousand) shares granted to the Executive on
February 21, 2002, at an exercise price of $22.71 (twenty-two
dollars and seventy-one cents) per share have been or shall be
adjusted to an exercise price of $26.31 (twenty-six dollars and
thirty-one cents) per share, as reflected in Exhibit A
hereto.
(c) Options for 600,000 (six
hundred thousand) shares granted to the Executive on May 24,
2002, which are fully vested, shall remain at an exercise price of
$10.08 (ten dollars and eight cents) per share; provided, however,
that if the Board of Directors of the Company, or the ad hoc group
of Directors that performed the options review, determines in good
faith within 90 days from the Resignation Date, based on
information not available to it on the Resignation Date, that the
exercise price of such Options should be increased based on conduct
of the Executive relating to option granting practices, then the
exercise price of any unexercised Options shall be increased to the
price so determined and, with respect to any exercised Options, the
Executive shall promptly repay to the Company in cash the
difference between such increased price and the exercise price paid
by him, subject to the Executive’s right to challenge any
such determination in an appropriate administrative, judicial or
arbitration proceeding. As of the date of execution of this
Agreement, the Company represents to Executive that no
determination has been made to increase the exercise price of such
Options based on information relating to the conduct of Executive
relating to option granting practices which was not available to
the Company on the Resignation Date.
(d) In addition to the
foregoing, the Executive agrees that, in the event that the Company
records compensation expense in its restatement of financial
results that relates to any Option to purchase shares of Company
Common Stock previously granted to him, then (i) to the extent
not exercised, such Options shall be amended so that their exercise
price is increased to equal the fair market value of the
Company’s Common Stock as of the measurement date (or initial
measure date, in the case of re-priced Options) determined in such
restatement and (ii) to the extent exercised, the Executive
shall pay to the Company promptly in cash an amount per share
exercised equal to the amount, if any, by which the fair
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market value of the
Company’s Common Stock on the measurement date exceeds the
per share exercise price for each Option granted with an exercise
price below fair market value.
(e) The Executive
acknowledges and agrees that his Options Election Form dated
December 22, 2006 (the “ Options Election Form
”) governing the Executive’s Options and RSUs shall
remain in full force and effect in accordance with its
terms.
8. General Release
.
(a) As a material inducement
for the Company to enter into this Agreement, and in exchange for
the Company’s promises under this Agreement, the Executive
knowingly and voluntarily waives and releases all rights and
claims, known and unknown, which the Executive may have against the
Company and/or any of the Company’s subsidiaries and/or
related or affiliated entities or successors, or any of their
current or former officers, directors, managers, executives,
agents, insurance carriers, auditors, accountants, attorneys or
representatives, and joint venture partners solely in connection
with matters relating to the Company on or prior to the Effective
Date, including without limitation any and all charges, complaints,
claims, liabilities, obligations, promises, agreement
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