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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of March 11, 1999 by and between CyberGuard Corporation, a Florida corporation
(the "Company"), and Xxxxx X. Xxxxxxx (the "Employee").
WHEREAS, the Company, through its Board of Directors, desires to retain
the services of Employee, and Employee desires to be retained by the Company, on
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT. During his employment hereunder, Employee will serve as
the Chief Executive Officer and Chairman of the Board of Directors of the
Company.
2. TERM. The term ("Term") of this Agreement shall commence on March
15, 1999, and shall continue until otherwise terminated in accordance with the
terms of this Agreement.
3. DUTIES. Employee shall have general and active charge of the
business and affairs of the Company 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. Throughout the
term of employment hereunder, the Employee shall devote his business time and
attention to the affairs of the Company as appropriate to his duties and
responsibilities hereunder; provided, however, that the Board of Directors
acknowledges that Employee is a resident of Austin TX, and it is not
contemplated or expected that Employee will change his principal residence from
Austin TX to South Florida. Furthermore, nothing in this Agreement shall
preclude the Employee from devoting reasonable periods required for serving as a
director or member of any advisory committee of other business organizations
involving no conflict of interest with the interests of the Company or from
engaging in charitable and community activities, or from managing his personal
investments.
4. COMPENSATION.
a. SALARY. During his employment hereunder, Employee shall be
paid a base salary of $182,00.00 per year, payable in equal installments not
less than monthly ("Base Salary"). The Employee's Base Salary
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shall be reviewed at least annually by the Board of Directors or any Committee
of the Board delegated the authority to review executive compensation, but may
not be reduced during the Term.
b. OPTION AND BONUS. In addition to salary, Employee is hereby
awarded an option to acquire 375,000 shares ("Option Shares") of Company common
stock under the Company's Employee Stock Option Plan (the "Stock Option Plan"),
at an exercise price of $1.25 per share. The Option Shares shall be exercisable
as follows: the first 1/2 of the Option Shares shall be exercisable on the date
hereof, and the remainder shall become exercisable one year from today. The
Option Shares shall become immediately exercisable upon the occurrence of
certain events described in sections 7 and 8 of this Agreement. An agreement
shall be prepared providing for other terms and conditions regarding the Option
Shares that are typical of other executives option agreements, and this option
agreement shall also provide for anti-dilution in the event that shares of
Company stock are issued in settlement of any lawsuit pending against the
Company. In addition, Employee shall participate in the management bonus program
established by the Company with an initial annual targeted bonus equal to 100%
of Employee's Base Salary (hereafter the "Management Bonus Program").
c. INSURANCE. During his employment hereunder, Employee shall
be entitled to participate in all such health, life, disability and other
insurance programs, if any, that the Company may offer to other key executive
employees of the Company from time to time.
d. OTHER BENEFITS. During his employment here under, Employee
shall be entitled to all such other benefits, if any, that the Company may offer
to other key executive employees of the Company from time to time.
e. VACATION. Employee shall be entitled to four weeks'
vacation leave (in addition to holidays) in each calendar year during the Term;
however, Employee may take only two weeks' vacation leave within any calendar
month. Except with respect to vacation time unused as the result of a request by
the Company to postpone a vacation, and except for any Company policy that is
more favorable to Employee, any unused vacation from one calendar year shall not
carry-over to any subsequent calendar year.
f. EXPENSE REIMBURSEMENT. As a condition to employees
agreement to enter into this Agreement, the Company has agreed to reimburse
Employee for all his expenses in connection with his travel from Austin, TX to
Fort Lauderdale FL, as well as his expenses in connection with his living away
from home in Fort Lauderdale, FL. If Employee believes that it is in the best
interests of the Company to work over a weekend, he shall have the option to
have his spouse
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fly to Fort Lauderdale at Company expense. In addition, Employee shall, upon
submission of appropriate supporting documentation, be entitled to reimbursement
of reasonable out-of-pocket expenses incurred in the performance of his duties
hereunder in accordance with policies established by the Company. Such expenses
shall include, without limitation, reasonable entertainment expenses, gasoline
and toll expenses and cellular phone use charges, if such charges are directly
related to the business of the Company.
5. GROUNDS FOR TERMINATION. The Board of Directors of the Company may
terminate this Agreement for Cause. As used herein, "Cause" shall mean any of
the following: (i) an act of willful misconduct or gross negligence by Employee
in the performance of his material duties or obligations to the Company; if such
act is capable of cure, Employee shall be given written notice and such act
shall not be deemed a basis for Cause if cured within 60 days after written
notice is received by Employee specifying the alleged failure in reasonable
detail (and during such 60 day period, Employee shall continue to be employed by
the Company at full pay), or (ii) conviction of Employee of a felony involving
moral turpitude or (iii) a material act of dishonesty or breach of trust on the
part of Employee resulting or intended to result directly or indirectly in
personal gain or enrichment at the expense of the Company.
6. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement with
Good Reason. In the event of termination by Employee for Good Reason, Employee
shall be entitled to the benefits of Paragraph 7b. of this Agreement. "Good
Reason" means:
a. The Company materially breaches the provisions of this
Agreement (except those set forth in Paragraph 4a.) and Employee provides at
least 15 days' prior written notice to the Company of the existence of such
breach and his intention to terminate this Agreement (no such termination shall
be effective if such breach is cured during such period); or
b. The Company fails to comply with the provisions of
Xxxxxxxxx 0x. or to pay any amounts due under the Management Bonus Program
provisions of Paragraph 4b. for an uninterrupted 10 day period; or
c. the Company demotes or otherwise elects or appoints the
Employee to lesser offices or responsibilities than set forth in Section 1
hereof, or fails to re-elect or appoint him to such positions, or the Company
causes a material change in the nature or scope of the authorities, powers,
functions, duties or responsibilities attached to the Employee's positions as
described in Section 3; or
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d. The Company decreases Employee's compensation (salary or
percentage of bonus opportunity); or
e. The Company materially reduces Employee's welfare benefits,
including without limitation: paid vacation; paid sick time; paid legal and
float holidays; medical, dental and cancer insurance, hospital indemnity,
Flexible Spending, Short- and Long-term Disability insurance, Basic Group Term
Life/Accidental Death & Dismemberment insurance, Supplemental Life/AD&D
insurance, Spouse Life/Spouse AD&D insurance, Dependent Life insurance, Vision
Plan, 401k plan, Employee Assistance Program; education reimbursement program
(collectively, the "Benefits"); provided, however, that any change in Benefits
that is made by the Company that applies to its employees generally, shall not
be considered as giving rise to "Good Reason"; or
f. The Employee is required, without his prior written
consent, to relocate his office more than seventy-five miles from the office
Employee currently reports to.
7. PAYMENT AND OTHER PROVISIONS UPON TERMINATION.
a. In the event Employee's employment with the Company
(including its subsidiaries) is terminated by the Company for Cause as provided
in Paragraph 5 then, on or before Employee's last day of employment with the
Company, the provisions of this Paragraph 7a. shall apply. These same provisions
shall apply if Employee terminates his employment without Good Reason as
described in Paragraph 6.
i. SALARY, PERFORMANCE AWARD, AND BONUS PAYMENTS. The
Company shall pay in a lump sum to Employee at the time of Employee's
termination such amount of compensation due Employee for services rendered to
the Company, as well as compensation for unused vacation time and earned bonus,
as has accrued but remains unpaid. Any and all other rights granted to Employee
under this Agreement shall terminate as of the date of termination.
ii. NON-COMPETITION/NON-SOLICITATION PERIOD. The
provisions of Paragraphs 14 and 15 shall, at the option of the Company in its
sole discretion, continue to apply with respect to Employee for a period of up
to six months following the date of termination, so long as the Company: (x)
provides a written notice to Employee within 5 business days after Employee's
termination that the Company wishes to exercise its right to require that
Employee not compete and not solicit in accordance with Paragraphs 14 and 15
hereof; and (y) Company thereafter pays to Employee in periodic installments,
without interest, in
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accordance with the regular salary payment practices of the Company an amount
equal to (.1) the amount of Employee's annual Base Salary as in effect
immediately prior to Employee's date of termination, multiplied by (.2) the
number of months that the Company is requiring the non-competition and
non-solicitation covenants to remain in place, divided by 12. The first such
installment of Base Salary and target bonus shall be paid on or before the
delivery of the notice described in the prior sentence of this Paragraph 7a(ii).
The non-competition and non-solicitation provisions of this Agreement shall no
longer apply to Employee if the Company fails to pay the amounts required under
this Section 7a(ii) for an uninterrupted 10-day period and such failure is not
cured with 5 days after written notice of such failure is delivered to the
Company.
b. In the event Employee's employment with the Company
(including its subsidiaries) is terminated by the Company for any reason other
than for Cause as provided in Paragraph 5 and other than as a consequence of
Employee's death, disability, or normal retirement under the Company's
retirement plans and practices, then the following provisions apply. These same
provisions shall apply if Employee terminates his employment with Good Reason as
described in Paragraph 6. In addition to the amounts stated below, Employee
shall be paid any other amounts by the Company to which he is entitled.
i. SALARY, PERFORMANCE AWARD, AND BONUS PAYMENTS. On
or before Employee's last day of employment with the Company, the Company shall
pay in a lump sum to Employee as compensation for services rendered to the
Company a cash amount equal to twice the amount of Employee's annual Base
Salary. At the election of the Company, the cash amount referred to in this
Paragraph 7b.i. may be paid to Employee in periodic installments, without
interest, in accordance with the regular salary payment practices of the
Company, with the first such installment to be paid on or before Employee's last
day of employment with the Company, and no interest shall be paid with respect
to any amount not paid on the Employee's date of termination.
ii. VESTING OF OPTIONS AND RIGHTS. Notwithstanding
the vesting period provided for in any Company stock option plan and any related
stock option agreements between the Company and Employee for stock options
("Options") and stock appreciation rights ("Rights") granted Employee by the
Company, all Options (including without limitation the Option Shares) and Rights
shall become immediately exercisable upon termination of employment. In
addition, Employee will have the right to exercise all such Options and Rights
for the shorter of (a) two years following his termination of employment or (b)
with respect to each Option and Right, the remainder of the period of
exercisability under the terms of the appropriate documents that grant such
options.
iii. BENEFIT PLAN COVERAGE. The Company shall
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maintain in full force and effect for Employee and his dependents for six months
after the date of termination, all life, health, accident, and disability
benefit plans and other similar employee benefit plans, programs and
arrangements in which Employee or his dependents were entitled to participate
immediately prior to the date of termination, in such amounts as were in effect
immediately prior to the date of termination, provided that such continued
participation is possible under the general terms and provisions of such benefit
plans, programs and arrangements.
In the event that participation in any benefit plan, program
or arrangement described above is barred, or any such benefit plan, program or
arrangement is discontinued or the benefits thereunder materially reduced, the
Company shall arrange to provide Employee and his dependents for six months
after the date of termination with benefits substantially similar to those that
they were entitled to receive under such benefit plans, programs and
arrangements immediately prior to the date of termination. Notwithstanding any
time period for continued benefits stated in this Paragraph 7b.iii., all
benefits in this Paragraph 7b.iii. will terminate on the date that Employee
becomes an employee of another employer and eligible to participate in the
employee benefit plans of such other employer. To the extent that Employee was
required to contribute amounts for the benefits described in this Paragraph
7b.iii. prior to his termination, he shall continue to contribute such amounts
for such time as these benefits continue in effect after termination.
iv. OTHER COMPENSATION. Any awards previously made to
Employee under any of the Company's compensation plans or programs and not
previously paid shall immediately vest on the date of his termination and shall
be paid on that date and included as compensation in the year paid.
v. SAVINGS AND OTHER PLANS. Except as otherwise more
specifically provided herein or under the terms of the respective plans relating
to termination of employment, Employee's active participation in any applicable
savings, retirement, profit sharing or supplemental employee retirement plans or
any deferred compensation or similar plan of the Company or any of its
subsidiaries shall continue only through the last day of his employment. All
other provisions, including any distribution and/or vested rights under such
plans, shall be governed by the terms of those respective plans.
vi. NON-COMPETITION/NON-SOLICITATION PERIOD. The
provisions of Paragraphs 14 and 15 shall continue, beyond the time periods set
forth in such paragraphs, to apply with respect to Employee for six (6) months
following the date of termination. The non-competition and non-solicitation
provisions of this Agreement shall no longer apply to Employee if the Company
fails to pay the amounts required under the provisions of Paragraph 7b.i. for an
uninterrupted 10-day period and such failure is not cured within 5 days after
written notice of such
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failure is delivered to the Company.
c. The provisions of this Paragraph 7 shall apply if
Employee's employment is terminated prior to or more than one year after the
occurrence of a Change of Control (as defined in Paragraph 8c.). From the
occurrence of any Change of Control until the first anniversary of such Change
of Control, the provisions of Paragraph 8 shall apply in place of this Paragraph
7, except that in the event that Employee's employment is terminated by Employee
after a Change of Control without Good Reason, then the provisions of Paragraph
8 shall not apply and the provisions of Paragraph 7a. shall apply. Termination
upon death, disability and retirement are covered by Paragraphs 9, 10, and 11,
respectively.
8. PAYMENT AND OTHER PROVISIONS AFTER CHANGE OF CONTROL.
a. SALARY, PERFORMANCE AWARD, AND BONUS PAYMENTS. In the event
Employee's employment with the Company is terminated within one year following
the occurrence of a Change of Control (other than as a consequence of his death
or disability, or of his normal retirement under the Company's retirement plans
and practices) either (i) by the Company for any reason whatsoever or (ii) by
Employee with Good Reason as provided in Paragraph 6, then Employee shall be
entitled to receive from the Company, the following:
i. BASE SALARY. An amount equal to twice the
Employee's annual Base Salary as in effect at the date of termination shall be
paid on the date of termination; and
ii. OTHER BENEFITS. All benefits under Paragraphs
7.b.ii., 7b.iii., 7b.iv. and 7b.v. shall be extended to Employee as described in
such paragraphs.
b. NON-COMPETITION/NON-SOLICITATION PERIOD. In the event of a
termination under the circumstances described in Paragraph 8a., the provisions
of Paragraphs 14 and 15 shall be without force and effect and shall not apply to
Employee.
c. For purposes 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 ss. 13(d)(3) or ss.
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act)
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(any of the foregoing described in this Paragraph hereafter a "Person") of 30%
or more of 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 of
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 30% 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 proportion 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 date hereof,
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 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 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 the 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 Business Combination; or
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iv. (a) a complete liquidation or dissolution of the
Company or (b) a sale or other disposition of all 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 shares of common stock and the combined voting power of 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 Capital Stock and Voting
Securities, as the case may be, immediately prior to such sale or disposition.
d. OPTIONS VEST UPON CHANGE OF CONTROL. In the event a Change
of Control occurs during the Term of this Agreement, notwithstanding the vesting
period provided for in any Company stock option plan and any related stock
option agreements between the Company and Employee for Options, all Options
(including without limitation the Option Shares) and Rights shall become
immediately exercisable upon the occurrence of a Change of Control. In addition,
Employee will have the right to exercise all Options and Rights for the
remainder of the period of their exercisability under the terms of the
appropriate documents that grant such Options.
9. TERMINATION BY REASON OF DEATH. If Employee shall die while employed
by the Company both prior to termination of employment and during the effective
Term of this Agreement, all Employee's rights under this Agreement shall
terminate with the payment of such amounts of annual Base Salary as have accrued
but remain unpaid and a prorated amount of targeted bonus under the Company's
Management Bonus Program through the month in which his death occurs, plus three
additional months of the fixed salary and targeted bonus. All benefits under
7b.ii., 7b.iv and 7b.v. shall be extended to Employee's estate as described in
such paragraphs. In addition, Employee's eligible dependents shall receive
continued benefit plan coverage under Paragraph 7b.iii. for three months from
the date of Employee's death.
10. TERMINATION BY DISABILITY. Employee's employment hereunder may be
terminated by the Company for disability. In such event, all Employee's rights
under this Agreement shall terminate with the payment of such amounts of annual
Base Salary as have accrued but remain unpaid as of thirtieth (30th) day after
such notice is given except that all benefits under Xxxxxxxxxx 0x.xx, 0x.xxx,
0x.xx. and 7b.v. shall be extended to Employee as described in such paragraphs.
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For purposes of this Agreement, "disability" is defined to mean that, as a
result of Employee's incapacity due to physical or mental illness:
a. Employee shall have been absent from his duties as an
officer of the Company on a substantially full-time basis for six (6)
consecutive months; and
b. Within thirty (30) days after the Company notifies Employee
in writing that it intends to replace him, Employee shall not have returned to
the performance of his duties as an officer of the Company on a full-time basis.
11. RETIREMENT. A voluntary termination by Employee for reasons of
retirement shall be treated as a voluntary termination without Good Reason and
the provisions of Paragraph 7a. shall apply. If during the Term or any extension
thereof, the Company adopts a retirement plan with respect to executive officers
of the Company, Employee shall have the right to participate in such plan.
12. INDEMNIFICATION. If litigation shall be brought, in the event of
breach or to enforce or interpret any provision contained herein, the
non-prevailing party shall indemnify the prevailing party for reasonable
attorney's fees (including those for negotiations, trial and appeals) and
disbursements incurred by the prevailing party in such litigation, and hereby
agrees to pay prejudgment interest on any money judgment obtained by the
prevailing party calculated at the generally prevailing NationsBank of Florida,
N.A. base rate of interest charged to its commercial customers in effect from
time to time from the date that payment(s) to him should have been made under
this Agreement.
13. (Omitted Intentionally)
14. NON-COMPETITION.
a. At all times during Employee's employ ment hereunder, and
for such additional periods as may otherwise be set forth in this Agreement in
reference to this Paragraph 14, Employee shall not, directly or indirectly,
engage in any business, enterprise or employment, whether as owner, operator,
shareholder, director, partner, creditor, consultant, agent or any capacity
whatsoever that manufactures products designed to compete directly with products
of the Company or markets such products anywhere in the world where the Company
(i) is engaged in business or (ii) has evidenced an intention of engaging in
business. Employee acknowledges that he has read the foregoing and agrees that
the nature of the geographical restrictions are reasonable given the
international nature of the Company's business.
In the event that these geographical or temporal restrictions are
judicially
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determined to be unreasonable, the parties agree that these restrictions shall
be judicially reformed to the maximum restrictions which are reasonable.
b. Notwithstanding the provisions of the preceding Paragraph
14a., Employee may accept employment with a company that would be deemed to be a
competitor of the Company as described in the previous sentence ("Competitor"),
so long as (i) the Competitor has had annual revenues of at least $1 billion in
each of the prior two fiscal years, (ii) the Competitor's revenues for products
and maintenance in direct competition with the Company does not exceed 50% of
its total revenues and (iii) Employee's responsibilities are solely for
divisions or subsidiaries of the Competitor that do not compete with the
Company.
15. NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS. At all times during
Employee's employment hereunder, or for such additional periods as may otherwise
be set forth in this Agreement in reference to this Paragraph 15, Employee shall
not, directly or indirectly, for himself or for any other person, firm,
corporation, partnership, association or other entity (a) attempt to employ,
employ or enter into any contractual arrangement with any employee or former
employee of the Company, its affiliates, subsidiaries or predecessors in
interest, unless such employee or former employee has not been employed by the
Company, its affiliates, subsidiaries or predecessors in interest during the
twelve months prior to Employee's attempt to employ him, or (b) call on or
solicit any of the actual or targeted prospective customers of the Company or
its affiliates, subsidiaries or predecessors in interest with respect to any
matters related to or competitive with the business of the Company.
16. CONFIDENTIALITY.
a. NONDISCLOSURE. Employee acknowledges and agrees that the
Confidential Information (as defined below) is a valuable, special and unique
asset of the Company's business. Accordingly, except in connection with the
performance of his duties hereunder, Employee shall not at any time during or
subsequent to the term of his employment hereunder disclose, directly or
indirectly, to any person, firm, corporation, partnership, association or other
entity any proprietary or confidential information relating to the Company or
any information concerning the Company's financial condition or prospects, the
Company's customers, the design, development, manufacture, marketing or sale of
the Company's products or the Company's methods of operating its business
(collectively "Confidential Information"). Confidential Information shall not
include information which, at the time of disclosure, is known or available to
the general public by publication or otherwise through no act or failure to act
on the part of Employee.
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b. RETURN OF CONFIDENTIAL INFORMATION. Upon termination of
Employee's employment, for whatever reason and whether voluntary or involuntary,
or at any time at the request of the Company, Employee shall promptly return all
Confidential Information in the possession or under the control of Employee to
the Company and shall not retain any copies or other reproductions or extracts
thereof. Employee shall at any time at the request of the Company destroy or
have destroyed all memoranda, notes, reports, and documents, whether in "hard
copy" form or as stored on magnetic or other media, and all copies and other
reproductions and extracts thereof, prepared by Employee and shall provide the
Company with a certificate that the foregoing materials have in fact been
returned or destroyed.
c. BOOKS AND RECORDS. All books, records and accounts whether
prepared by Employee or otherwise coming into Employee's possession, shall be
the exclusive property of the Company and shall be returned immediately to the
Company upon termination of Employee's employment hereunder or upon the
Company's request at any time.
17. INJUNCTION/SPECIFIC PERFORMANCE SETOFF. Employee acknowledges that
a breach of any of the provisions of Paragraphs 14, 15 or 16 hereof would result
in immediate and irreparable injury to the Company which cannot be adequately or
reasonably compensated at law. Therefore, Employee agrees that the Company shall
be entitled, if any such breach shall occur or be threatened or attempted, to a
decree of specific performance and to a temporary and permanent injunction,
without the posting of a bond, enjoining and restraining such breach by Employee
or his agents, either directly or indirectly, and that such right to injunction
shall be cumulative to whatever other remedies for actual damages to which the
Company is entitled. Employee further agrees that the Company may set off
against or recoup from any amounts due under this Agreement to the extent of any
losses incurred by the Company as a result of any breach by Employee of the
provisions of Paragraphs 14, 15 or 16 hereof.
18. SEVERABILITY. Any provision in this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
19. SUCCESSORS. This Agreement shall be binding upon Employee and inure
to his and his estate's benefit, and shall be binding upon and inure to the
benefit of the Company and any permitted successor of the Company. Neither this
Agreement nor any rights arising hereunder may be assigned or pledged by:
Employee or anyone claiming through Employee; or by the Company, except to any
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corporation which is the successor in interest to the Company by reason of a
merger, consolidation or sale of substantially all of the assets of the Company.
The foregoing sentence shall not be deemed to have any effect upon the rights of
Employee upon a Change of Control.
20. CONTROLLING LAW. This Agreement shall in all respects be governed
by, and construed in accordance with, the laws of the State of Florida.
21. NOTICES. Any notice required or permitted to be given hereunder
shall be written and sent by registered or certified mail, telecommunicated or
hand delivered at the address set forth herein or to any other address of which
notice is given:
To the Company: CyberGuard Corporation
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
To Employee: Xxxxx X. Xxxxxxx
[at such address as appears in the records of the Company
as being the last-known address of the Employee]
22. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto on the subject matter hereof and may not be modified
without the written agreement of both parties hereto.
23. WAIVER. A waiver by any party of any of the terms and conditions
hereof shall not be construed as a general waiver by such party.
24. COUNTERPARTS. This Agreement may be executed in counter parts, each
of which shall be deemed an original and both of which together shall constitute
a single agreement.
25. INTERPRETATION. In the event of a conflict between the provisions
of this Agreement and any other agreement or document defining rights and duties
of Employee or the Company upon Employee's termination, the rights and duties
set forth in this Agreement shall control.
26. CERTAIN LIMITATIONS ON REMEDIES. Paragraph 7b. provides that
certain payments and other benefits shall be received by Employee upon the
termination of Employee by the Company other than for Cause and states that
these same provisions shall apply if Employee terminates his employment for Good
Reason. It is the intention of this Agreement that if the Company terminates
Employee other than for Cause (and other than as a consequence of Employee's
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death or disability) or if Employee terminates his employment with Good Reason,
then the payments and other benefits set forth in Paragraph 7b. shall constitute
the sole and exclusive remedies of Employee.
27. SURVIVAL. Notwithstanding the provisions of Paragraph 2, the
provisions of Paragraphs 14, 15, and 16 shall survive the expiration or early
termination of this Agreement.
IN WITNESS WHEREOF, this Employment Agreement has been executed by the
parties as of the date first above written.
COMPANY:
CYBERGUARD CORPORATION
By:_________________________
Its:
EMPLOYEE:
----------------------------
XXXXX X. XXXXXXX
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15
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT ("Amendment"), dated as of May 4, 1999, amends the
EMPLOYMENT AGREEMENT (the "Agreement") that was made and entered into as of
March 11, 1999 by and between CyberGuard Corporation, a Florida corporation (the
"Company"), and Xxxxx X. Xxxxxxx (the "Employee").
WHEREAS, the Company, through its Board of Directors, desires to amend
the Agreement and Employee also desires to amend the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
A. Section 1 of the Agreement shall be amended by deleting Section 1 in
its entirety and substituting the following in its place:
"1. EMPLOYMENT. During his employment hereunder, Employee will
serve as the Chief Executive Officer, President and Chairman
of the Board of Directors of the Company."
B. Section 4a of the Agreement shall be amended by deleting the words "a
base salary of $182,000 per year" and substituting in its place: "a
base salary of $5,000 per week".
C. Section 4 of the Agreement shall be amended by adding the following
subsection 4g:
g. ADDITIONAL OPTION. In addition to salary, bonus and options
described in the Agreement, Employee is hereby awarded an option to
acquire 100,000 shares ("Additional Option Shares") of Company common
stock under the Stock Option Plan, at an exercise price of $0.75 per
share. The Additional Option Shares shall become exercisable in 1/3
increments on the first, second and third anniversaries of the date on
which Employee becomes President of the Company (by way of example, if
Employee became President of the Company on May 12, 1999, 33,333
Additional Option Shares would become exercisable on May 11, 2000,
33,334 Additional Option Shares would become exercisable on May 11,
2001, and the remaining 33,333 Additional Option Shares would become
exercisable on May 11, 2002). The Additional Option Shares shall become
immediately exercisable upon the occurrence of certain events described
in sections 7 and 8 of this Agreement. An agreement shall be prepared
providing for other terms and conditions regarding the Option Shares
that are typical of other executives option agreements, and this option
agreement shall also provide for anti-dilution in the event that shares
of Company stock are issued in settlement of any lawsuit pending
against the Company.
D. This amendment shall become effective as soon as Employee becomes
President of the Company.
E. Other than as stated in this Amendment, the Agreement shall remain in
full force and effect.
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IN WITNESS WHEREOF, this Amendment to Employment Agreement has been executed by
the parties as of the date first above written.
COMPANY:
CYBERGUARD CORPORATION
By:_________________________
Its:
EMPLOYEE:
----------------------------
XXXXX X. XXXXXXX
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