EMPLOYMENT AGREEMENT
BETWEEN BLUEGATE CORPORATION AND
XXXX X. XXXXX
This Employment Agreement (the "Agreement") is made effective as of the
15th day of February, 2005, by and between Bluegate Corporation, a Nevada
corporation ("Bluegate"), and Xxxx X. Xxxxx (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 hereto provided.
2. POSITION AND DUTIES.
During the Employment Period the Executive agrees to serve as Chief
Financial Officer ("CFO") of Bluegate. In his capacity of CFO, the
Executive will perform such duties and responsibilities for Bluegate as the
Board of Directors of Bluegate may from time to time assign to him.
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 $120,000.00, 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
--------------
Executive shall be entitled to receive options to purchase 350,000 shares
of Bluegate shares of common stock, par value $.001 per share ("Option
Shares"), at the per-share option price of $.50, granted pursuant to a
Stock Option Agreement being entered into in connection herewith. This
option shall become vested and exercisable with respect to 14,584
1
Option Shares immediately upon the execution and delivery of the related
Stock Option Agreement, and this option shall become vested and exercisable
with respect to another 14,584 Option Shares every 30 days thereafter until
this option become fully vested; provided, however, that if a suitable
replacement for Executive's position is hired by Bluegate within the first
year of this Agreement not because of any fault in Executive's performance
hereunder, then (notwithstanding the above or anything else contained
herein) 100% of the then unvested shares shall immediately become vested.
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 and
-----
Bluegate agree to enter into good faith negotiations with a view to
reaching an agreement on the payment of one or more bonuses (the "Bonuses")
in such amounts as are mutually agreed upon by Executive and Bluegatc, if
major transactions (such as acquisitions and financings) agreed mutually
upon by them shall be achieved. The Bonuses shall be payable at such time
as is mutually agreed upon by Executive and Bluegate.
5. [INTENTIONALLY OMITTED]
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 Bluegate or any of its
affiliates. Without the prior written consent of Bluegate, 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 Bluegate and that at the termination and/or expiration of this
Agreement, at Bluegate's written request, Executive shall promptly return
to Bluegate any and all such information so requested by Bluegate.
The provisions of this Section shall not, however, prohibit
Executive from disclosing to others or using 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 famished 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;
2
(c) was in the possession of Executive prior to obtaining such
information from Bluegate in connection with the performance of this
Agreement; or
(d) is required to be disclosed by law.
7. INDEMNIFICATION.
Bluegate shall to the full extent permitted by law or as set forth in
the Articles of Incorporation and the Bylaws of Bluegate, 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 Section 8(c).
(a) Death. This Agreement will terminate on the Death of the
Executive.
(b) With Cause. Bluegate 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
Bluegate shall not terminate this Agreement pursuant to this Section unless
Bluegate 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 Bluegate 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, if any).
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.
3
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 Bluegate and Executive.
11. COVENANT NOT TO COMPETE.
So long as the Executive is employed by Bluegate 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
Bluegate 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
Bluegate (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 my county in which Bluegate is
doing business at the time of termination, directly or indirectly, own,
mange, 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 Bluegate at the time
of termination of the Executive's employment.
Executive's Acknowledgment and Agreement. The Executive acknowledges and
-------------------------------------------
agrees that:
(1) Due to the nature of Bluegate's business, the foregoing covenants
place no greater restraint upon the Executive than is reasonably necessary
to protect the business and goodwill of Bluegate;
(2) These covenants protect a legitimate interest of Bluegate and do
not serve solely to limit Bluegate'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 Bluegate;
(5) These covenants will not preclude the Executive from becoming
gainfully employed following termination of employment with Bluegate;
(6) These covenants are reasonable in scope and are reasonably
necessary to protect Bluegate's business and goodwill and valuable and
extensive trade which Bluegate has established through its own expense and
effort;
4
(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 Bluegate.
Remedies, Injunctions. In the event of the Executive's actual or
----------------------
threatened breach of any provisions of this Agreement, the Executive agrees
that Bluegate 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 Bluegate 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 Bluegate's legal remedies would be inadequate and that
Bluegate would suffer irreparable harm as a result of the Executive's
violation of the provisions of this Agreement. In any proceeding brought by
Bluegate 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 Bluegate 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.
(a) 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 Bluegate may provide to its other
executives, provided such coverage is reasonably available, or be
reimbursed if Executive is carrying his own similar insurance.
(b) Benefit Plan. The Executive will be entitled to participate in any
------------
benefit plan or program of Bluegate that may currently be in place or
implemented in the future.
(c) 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 Bluegate
currently provides or such additional benefits as Bluegate may provide for
its executive officers in the future.
13. Vacation and Sick Leave.
(a) Vacation Pay. The Executive shall be entitled to an annual
-------------
vacation leave of four (4) weeks at full pay. Executive is specifically
permitted to work from home or
5
other remote location in his discretion, which time shall not be considered
as vacation leave.
(b) Sick Pay. The Executive shall be entitled to sick leave as needed.
--------
14. REIMBURSEMENT OF EXPENSES.
Upon submission of a detailed statement and reasonable documentation,
Bluegate 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:
XXXX X. XXXXX
X.X. XXX 000000
XXXXXXX, XXXXX 00000
6
If to Bluegate:
Bluegate Corporation
Attn: Xxxxxxx Xxxxxxxxx, Chief Executive Officer
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.
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:
/s/ Xxxxxxx Xxxxxxxxx /s/ Xxxx Xxxxx
------------------------------ ------------------------------
XXXXXXX XXXXXXXXX, XXXX X. XXXXX
CHIEF EXECUTIVE OFFICER
7
