EMPLOYMENT AGREEMENT
BETWEEN BLUEGATE COMMUNICATIONS, INC. AND
XXXXXXX X. XXXXXXX
This Employment agreement (the "Agreement") is made effective as of the 1st
day of September 2005, by and between Bluegate, Inc., a Nevada corporation
("Bluegate"), and Xxxxxxx X. Xxxxxxx (the "Executive").
WHEREAS, The Executive is willing to be employed by Bluegate from and after
the effective date on the basis and terms and conditions set forth in this
Agreement.
THEREFORE, upon the mutual promises and covenants of the parties, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, the parties agree as follows:
1. Employment.
Bluegate hereby employs the Executive, and the Executive hereby accepts
such employment, for the period stated in section (3) below and upon the
other terms and conditions herein provided.
2. Position and Duties.
During the Employment Period the Executive agrees to serve as President and
Chief Operating Officer ("President and COO") of Bluegate. In his capacity
of President and COO, the Executive will perform such duties and
responsibilities for Bluegate as may from time to time be assigned to him
by the Board of Directors of Bluegate. The Executive shall have no
responsibility for payroll nor for the filing of any payroll tax return,
nor for payment of any tax of any kind that may be due or payable by
Bluegate or any of its divisions.
3. Term.
By this Agreement, Bluegate employs the Executive, and the Executive
accepts employment with Bluegate, for a period consisting of two (2) years,
commencing on the date of this Agreement.
4. Compensation.
In consideration of such service, Bluegate agrees to pay the Executive as
compensation an annual salary of $150,000.00, in accordance with Bluegate's
regular payroll practices in effect from time to time.
Stock Options. In addition to the compensation set forth above, the
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Executive shall be entitled to receive options to purchase the following
number of Bluegate shares of common stock, par value $.001 per share,
("Option Shares") pursuant to a Stock Option Agreement on the date and at
the option price set out below:
DATE OF GRANT OPTION SHARES OPTION PRICE
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September 1, 2005 50,000 shares $1.08 per share
September 1, 2006 290,000 shares $1.08 per share
The Option Shares to be issued pursuant to this Agreement shall be
restricted securities with piggy back registration rights, and shall
terminate and become null and void after the expiration of five (5) years
from the date of grant.
Bonus. In addition to the compensation set forth above, Executive may be
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entitled to receive an annual bonus in an amount to be determined by the
Board of Directors of the Company in its sole discretion.
5. Change of Control.
In the event a "Change of Control" occurs then, in that event the Company
shall pay Executive the sum of $50,000, and all future compensation under
this Agreement will immediately become due and payable to Executive and all
options granted under this Agreement immediately will become fully vested.
For purposes of this Agreement a "Change of Control" is hereby defined as:
(a) A sale, transfer, or other disposition by the Company through a
single transaction or a series of transactions of securities of the Company
representing thirty-five (35%) percent or more of the combined voting power
of the Company's then outstanding securities to any "Unrelated Person" or
"Unrelated Persons" acting in concert with one another. For purposes of
this definition, the term "Person" shall mean and include any individual,
partnership, joint venture, association, trust corporation, or other entity
(including a "group" as referred to in Section 13(d)(3) of the 1934 Act).
For purposes of this definition, the term "Unrelated Person" shall mean and
include any Person other than the Company, a wholly-owned subsidiary of the
Company, or an employee benefit plan of the Company; provided however, a
sale to underwriters in connection with a public offering of the Company's
securities pursuant to a firm commitment shall not be a Change of Control;
or
(b) A sale, transfer, or other disposition through a single
transaction or a series of transactions of all or substantially all of the
assets of the Company to an Unrelated Person or Unrelated Persons acting in
concert with one another.
6. Confidentiality.
In the course of the performance of Executive's duties hereunder, Executive
recognizes and acknowledges that Executive may have access to certain
confidential and proprietary information of Company or any of its
affiliates. Without the prior written consent of Company, Executive shall
not disclose any such confidential or proprietary information to any person
or firm, corporation, association, or other entity for any reason or
purpose whatsoever, and shall not use such information, directly or
indirectly, for Executive's own behalf or on behalf of any other party.
Executive agrees and affirms that all such information is the sole property
of Company and that at the termination
and/or expiration of this Agreement, at Company's written request,
Executive shall promptly return to Company any and all such information so
requested by Company.
The provisions of this Section shall not, however, prohibit
Executive from disclosing to others or using in any manner information
that:
(a) has been published or has become part of the public
domain other than by acts, omissions or fault of Executive;
(b) has been furnished or made known to Executive by third
parties (other than those acting directly or indirectly for or on behalf of
Executive) as a matter of legal right without restriction on its use or
disclosure;
(c) was in the possession of Executive prior to obtaining
such Not Applicable
(d) is required to be disclosed by law.
7. Indemnification.
The Company shall to the full extent permitted by law or as set forth in
the Articles of Incorporation and the Bylaws of the Company, indemnify,
defend and hold harmless Executive from and against any and all claims,
demands, liabilities, damages, loses and expenses (including reasonable
attorney's fees, court costs and disbursements) arising out of the
performance by him of his duties hereunder except in the case of his
willful misconduct.
8. Termination.
This Agreement and the employment relationship created hereby will
terminate (i) upon the death of Executive under section 8(a); (ii) with
cause under Section 8(b); or (iii) upon the voluntary termination of
employment by Executive under Section8(c).
(a) Death. This Agreement will terminate on the Death of the
Executive.
(b) With Cause. The Company may terminate this Agreement at any
time because of (i) the determination by the Board of Directors in the
exercise of its reasonable judgment that Executive has committed an act or
acts constituting a felony or other crime involving moral turpitude,
dishonesty or theft or fraud; or (ii) Executive's willful misconduct in the
performance of his duties hereunder, provided, in each case, however, that
the Company shall not terminate this Agreement pursuant to this Section
unless the Company shall first have delivered to the Executive, a notice
which specifically identifies such breach or misconduct and the executive
shall not have cured the same within fifteen (15) days after receipt of
such notice.
(c) Voluntary Termination. The Executive may terminate his
employment voluntarily.
Obligations of Company Upon Termination. In the event of the termination of
Executive's employment pursuant to Section 8 (a), (b) or (c), Executive
will be entitled only to the compensation earned by him hereunder as of the
date of such termination (plus any life insurance benefits).
9. Waiver of Breach.
The waiver by any party hereto of a breach of any provision of this
Agreement will not operate or be construed as a waiver of any subsequent
breach by any party.
10. Arbitration.
If a dispute should arise regarding this Agreement the parties agree that
all claims, disputes, controversies, differences or other matters in
question arising out of this relationship shall be settled finally,
completely and conclusively by arbitration in Houston, Texas in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association (the "Rules"). The governing law of this Agreement shall be the
substantive law of the State of Texas, without giving effect to conflict of
laws. A decision of the arbitrator shall be final, conclusive and binding
on the Company and Executive.
11. Covenant Not to Compete.
So long as the Executive is employed by the Company and for a period of
eighteen (18) months after either (i) the voluntary termination of
employment by Executive or (ii) the termination of the Executive by the
Company for cause, as set forth in Section 8(b) hereof, the Executive
specifically agrees that he will not, for himself, on behalf of, or in
conjunction with any person, firm, corporation or entity, other than the
Company (either as principal, employee, shareholder, member, director,
partner, consultant, owner or part-owner of any corporation, partnership or
any type of business entity) anywhere in any county in which the Company is
doing business at the time of termination, directly or indirectly, own,
manage, operate, control, be employed by, participate in, or be connected
in any manner with the ownership, management, operation, or control of any
business similar to the type of business conducted by the Company at the
time of termination of the Executive's employment.
Executive's Acknowledgments and Agreements. The Executive acknowledges and
agrees that:
(1) Due to the nature of the Company's business, the foregoing
covenants place no greater restraint upon the Executive than is reasonably
necessary to protect the business and goodwill of the Company;
(2) These covenants protect a legitimate interest of the Company
and do not serve solely to limit the Company's future competition;
(3) This Agreement is not an invalid or unreasonable restraint of
trade;
(4) A breach of these covenants by the Executive would cause
irreparable damage to the Company;
(5) These covenants will not preclude the Executive from becoming
gainfully employed following termination of employment with the Company;
(6) These covenants are reasonable in scope and are reasonably
necessary to protect the Company's business and goodwill and valuable and
extensive trade which the Company has established through its own expense
and effort;
(7) The signing of this Agreement is necessary for the Executive's
employment; and
(8) He has carefully read and considered all provisions of this
Agreement and that all of the restrictions set forth are fair and
reasonable and are reasonably required for the protection of the interests
of the Company.
Remedies, Injunction. In the event of the Executive's actual or threatened
breach of any provisions of this Agreement, the Executive agrees that the
Company shall be entitled to a temporary restraining order, preliminary
injunction and/or permanent injunction restraining and enjoining the
Executive from violating the provisions herein. Nothing in this Agreement
shall be construed to prohibit the Company from pursuing any other
available remedies for such breach or threatened breach, including the
recovery of damages from the Executive. The Executive further agrees that
for the purpose of any such injunction proceeding, it shall be presumed
that the Company's legal remedies would be inadequate and that the Company
would suffer irreparable harm as a result of the Executive's violation of
the provisions of this Agreement. In any proceeding brought by the Company
to enforce the provisions of this Agreement, no other matter relating to
the terms of any claim or cause of action of the Executive against the
Company will be defense thereto. The foregoing remedy provisions are
subject to the provisions of Sec.15.15 of the Texas Business and Commerce
Code, as amended (the "Code"), which Code provisions shall control in the
event of any conflict between the provisions hereof and the Code or any
other law in effect relevant and applicable hereto.
12. Benefits Insurance.
(i)Medical, Dental and Vision Benefits. During this Agreement,
Executive and his dependents will be entitled to receive such group
medical, dental and vision benefits as Company may provide to its
other executives, provided such coverage is reasonably available, or
be reimbursed if Executive is carrying his own similar insurance.
(ii)Benefit Plans. The Executive will be entitled to participate in
any benefit plan or program of the Company which may currently be in
place or implemented in the future.
(iii)Other Benefits. During the Term, Executive will be entitled to
receive, in addition to and not in lieu of base salary, bonus or other
compensation, such other benefits and normal perquisites as Company
currently provides or such additional benefits as Company may provide
for its executive officers in the future.
13. Vacation and Sick Leave.
Vacation Pay. The Executive shall be entitled to an annual vacation leave
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of four (4) weeks at full pay.
Sick Pay. The Executive shall be entitled to sick leave as needed.
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14. Reimbursement of Expenses.
Upon submission of a detailed statement and reasonable documentation,
Company will reimburse Executive in the same manner as other executive
officers for all reasonable and necessary or appropriate out-of-pocket
travel and other expenses incurred by Executive in rendering services
required under this Agreement.
15. Withholding of Taxes.
Bluegate may withhold from any payments under this Agreement all applicable
taxes, as shall be required pursuant to any law or governmental regulation
or ruling.
16. Entire Understanding.
This Agreement sets forth the entire understanding between the parties with
respect to the subject matter hereof and cancels and supersedes all prior
oral and written agreements between the parties with respect to the subject
matter hereof.
17. Severability.
If for any reason any provision of this Agreement shall be held invalid,
such invalidity shall not affect any other provision of this Agreement not
held so invalid.
18. Governing Law.
This Agreement has been executed and delivered in the State of Texas and
its validity, interpretation, performance and enforcement shall be governed
by and construed in accordance with the laws thereof applicable to
contracts executed and to be wholly performed in Texas.
19. Notices.
All notices shall be in writing and shall have been duly given if delivered
by hand or mailed, certified or registered mail, return receipt requested
to the following address or to such other address as either party may
designate by like notice:
If to Executive:
Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxx Xx.
Xxxxxxx, Xxxxx 00000
If to Bluegate:
Bluegate, Inc.
Attn: Xxxxxxx Xxxxxxxxx, Chairman of the Board of Directors
000 X. Xxxx Xxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Bluegate has caused this Agreement to be executed by its officer and the
Executive has signed this Agreement.
20. Successors, Binding Agreement.
This Agreement is binding upon Bluegate's successors. Bluegate will require
any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business
and/or assets of Bluegate to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that Bluegate would be
required to perform it as if no such succession had taken place. Failure of
Bluegate to obtain such assumption and agreement prior to the effectiveness
of any such succession shall constitute a breach of this Agreement and the
provisions of Section 5 shall apply as if there was a Change of Control.
This Agreement shall inure to the benefit of both Bluegate and its
successors and assigns and the Executive and his personal or legal
representatives, executors, administrators, heirs, distributes, successors
and assigns.
Bluegate: Executive:
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Xxxxxxx Xxxxxxxxx, XXXXXXX X. XXXXXXX
CHAIRMAN OF THE BOARD
