Employment Agreement - CyberGuard Corp. and Scott J. Hammack
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is made and entered into as
of January 24, 2001, but effective as of January 2, 2001 (the "EFFECTIVE DATE"),
by and between CyberGuard Corporation, a Florida corporation (the "COMPANY"),
and Scott J. Hammack (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 of the Company.
2. TERM. The term ("TERM") of this Agreement shall commence on
the Effective Date 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 (as defined herein), 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 Illinois, though it is required that Employee will
change his principal residence from Lake Bluff, Illinois to a location in
Florida. Notwithstanding any other provision of this Agreement to the contrary,
the Company acknowledges and agrees that nothing in this Agreement shall
preclude Employee from (a) 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, (b)
engaging in charitable and community activities or (c) managing his personal
investments.
4. COMPENSATION.
(a) SALARY. During the Term, Employee shall be paid a
base salary of two hundred thousand dollars ($200,000.00) per year, payable in
equal installments not less than monthly ("BASE SALARY"). Employee's Base Salary
shall be reviewed at least annually by the Company's Board of Directors or any
committee of the Company's Board of Directors delegated the authority to review
executive compensation, but in no event may the Base Salary be reduced during
the Term.
(b) OPTION. Employee is hereby awarded an option to
acquire 500,000 shares ("OPTION Shares") of Company common stock under the
Company's Employee Stock Option Plan (the "STOCK OPTION PLAN"), at an exercise
price of $1.51 per share. The Option Shares shall be exercisable as follows:
100,000 of the Option Shares shall be exercisable on such date that Employee
establishes his principal residence in Florida and, except as otherwise provided
in this Agreement, the remaining Option Shares shall be exercisable as follows:
133,333 of the Option Shares shall be exercisable on the first (1st) anniversary
of the Effective Date, 133,333 of the Option Shares shall be exercisable on the
second (2nd) anniversary of this Effective Date and the remaining 133,334 of the
Option Shares shall be exercisable on the third (3rd) anniversary of the
Effective Date. The Option Shares shall become immediately exercisable upon the
occurrence of certain events described in Paragraphs 7 and 8 of this Agreement.
An agreement shall be
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prepared providing for other terms and conditions regarding the Option Shares
that are typical of other executives' option agreements (a representative sample
of which is attached hereto as Exhibit A).
(c) BONUS. Employee shall participate in the management
bonus program established by the Company (a copy of the terms of which is
attached hereto as Exhibit B) with an initial annual targeted bonus equal to
100% of Employee's Base Salary (hereafter the "MANAGEMENT BONUS PROGRAM").
(d) INSURANCE. During the Term, 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.
(e) OTHER BENEFITS. During the Term, 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.
(f) PAID TIME OFF. Employee shall be entitled to six (6)
weeks' paid-time-off leave (in addition to holidays) in each calendar year
during the Term; however, Employee may take only two (2) weeks' paid-time-off
leave within any calendar month. Except with respect to paid-time-off time
unused as the result of a request by the Company to postpone the paid-time-off,
and except for any Company policy that is more favorable to Employee, any unused
paid-time-off from one calendar year shall not carry-over to any subsequent
calendar year.
(g) EXPENSE REIMBURSEMENT. The Company shall reimburse
Employee for all of his expenses incurred in connection with his travel from
Lake Bluff, Illinois to Fort Lauderdale, Florida until such date as Employee
establishes his principal residence in Florida. If Employee believes that it is
in the best interests of the Company to work over a weekend, the Company shall
reimburse Employee for the expense of flying his spouse and children, if any, to
Fort Lauderdale until such date as Employee establishes his principal residence
in Florida. In addition, the Company shall reimburse Employee for all of his
expenses incurred in connection with the relocation of his primary residence to
a location in Florida including, but not limited to, moving expenses and all
commissions or other fees charged by any real estate agent in connection with
the sale of Employee's Lake Bluff, Illinois residence and the purchase of a
residence in Florida. Amounts payable by Employee pursuant to the immediately
preceding sentence shall be grossed up to include all taxes payable on amounts
payable pursuant to the preceding sentence and this sentence. 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.
All expenses required to be reimbursed pursuant to this Paragraph shall be paid
to Employee no later than in the month immediately following the month in which
Employee submits the expense reimbursement
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request to 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: (a) an act of willful misconduct or gross negligence by
Employee in the performance of his material duties or obligations to the
Company; provided, however, 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 (b) conviction of
Employee of a felony involving moral turpitude or (c) 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 7(b) of this Agreement.
"GOOD REASON" means:
(a) The Company materially breaches the provisions of
this Agreement (except those set forth in Paragraph 4(a)) 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
Paragraph 4(a) or to pay any amounts due under the Management Bonus Program
provisions of Paragraph 4(b) for a period of ten (10) consecutive days; or
(c) the Company demotes or otherwise elects or appoints
the Employee to any office other than the office set forth in Paragraph 1,
unless the Employee agrees in writing therewith, 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 Employee's positions as described in Paragraph 3; or
(d) The Company decreases Employee's Base Salary or
percentage of bonus opportunity under the Management Bonus Program: or
(e) The Company materially reduces or eliminates any of
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 (which change also applies to the Company's key executive employees),
shall not be considered as giving rise to Good Reason; or
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(f) Employee is required, without his prior written
consent, to relocate his office more than seventy-five (75) miles from the
office to which Employee currently reports, which, as of the date hereof, is
located at 2000 West Commercial Blvd., Fort Lauderdale, FL 33309.
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, other than pursuant to Paragraph 5(b), then, on or before
Employee's last day of employment with the Company, the provisions of this
Paragraph 7(a) shall apply. In addition, this Paragraph 7(a) 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, on or before
Employee's last day of employment with the Company, as compensation for services
rendered to the Company, a cash amount equal to Employee's annual Base Salary as
well as compensation for unused vacation time and the amount of bonus which has
been earned under the Management Bonus Program 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 15 and 16 shall continue to apply with respect to
Employee for a period of 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
Paragraph 7(a)(i) hereof and such failure is not cured within five (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, as a result of a felony pursuant to Paragraph 5(b),
disability, or normal retirement under the Company's retirement plans and
practices), then the provisions of this Paragraph 7(b) apply. In addition, this
Paragraph 7(b) 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 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
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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 this Agreement, any Company
stock option plan and any related stock option agreements between the Company
and Employee for stock options including, but not limited to, the Option Shares
("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 shall have the right to exercise all such Options (including,
without limitation, the Option Shares) and Rights for the shorter of (a) two (2)
years following his termination of employment or (b) with respect to each Option
(including, without limitation, the Option Shares) 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
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 permissible 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 which
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 7(b)(iii), all
benefits in this Paragraph 7(b)(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
7(b)(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
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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 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 8(c)). From the
occurrence of any Change of Control until the first (1st) 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 7(a) shall apply.
Paragraphs 9, 10 and 11 shall apply in the event of termination upon death,
felony conviction pursuant to Paragraph 5(b), disability and retirement,
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 (1) 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 the following from the Company:
(i) BASE SALARY. An amount equal to 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), 7(b)(iii), 7(b)(iv) and 7(b)(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 8(a), 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:
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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) (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 this Agreement, any Company stock option plan and
any related stock option agreements between the Company and Employee for the
Options, all Options Shares and Rights shall become immediately exercisable upon
the occurrence of the 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 OR FELONY CONVICTION. If
Employee shall die while employed by the Company prior to termination of
employment for any reason, or if Employee is terminated for Cause pursuant to
Paragraph 5(b) hereof, all of 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 or termination of
employment occurs, plus three additional months of the fixed salary and targeted
bonus. In the event of termination as a result of the death of Employee, all
benefits under 7(b)(ii), 7(b)(iv) and 7(b)(v) shall be extended to Employee's
estate as described in such paragraphs and Employee's eligible dependents shall
receive continued benefit plan coverage under Paragraph 7(b)(iii) for three (3)
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 Paragraphs 7b.ii,
7b.iii, 7b.iv. and 7b.v. shall be extended to Employee as described in such
paragraphs. In addition, the non-competition and non-solicitation provisions of
Paragraphs 14 and 15 shall continue to apply to Employee for a period of one
year from the date of termination.
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
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(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. Retirement of Employee, whether occurring as a
result of a voluntary termination by Employee or an involuntary termination as
the result of reach the retirement age as may be set forth in the Company's
retirement plan, shall be treated as a voluntary termination without Good Reason
and the provisions of Paragraph 7(a) 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.
(a) 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 attorneys' 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.
(b) Notwithstanding the foregoing, the Corporation shall indemnify
the Employee in his capacity as an officer, director and employee of the Company
to the maximum extent permissible under applicable law and in accordance with
the Company's Bylaws and Articles of Incorporation.
13. MEMBERSHIP IN BOARD OF DIRECTORS. The Company, through its
Board of Directors and officers, shall take action within its authority to
nominate Employee for election by the shareholders of the Company as a member of
the Board of Directors (unless Employee elects not to serve thereon) and to
include his nomination in the Company's proxy materials.
14. NON-COMPETITION.
(a) At all times during Employee's employment
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.
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In the event that these geographical or temporal restrictions are judicially
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 for a period of two (2) years 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"); provided, however that the Employee shall not at any time during
or subsequent to his employment hereunder disclose the Company's customers to
any third party. 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.
(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
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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.
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
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
2000 West Commercial Boulevard
Fort Lauderdale, Florida 33309
Attention: President
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To Employee: Scott Hammack
[at such address as appears in the records
of the Company as being the last-known
address of the Employee]
With a copy to: Patzik, Frank & Samotny Ltd.
150 South Wacker Drive
Suite 900
Chicago, Illinois 60606
Attention: Gary I. Walt, Esq.
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 counterparts,
each of which shall be deemed an original and both of which together shall
constitute a single agreement.
25. INTERPRETATION. In the event of an irreconcilable 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 7(b) 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
death or disability) or if Employee terminates his employment with Good Reason,
then the payments and other benefits set forth in Paragraph 7(b) 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:
------------------------------------------
Scott J. Hammack
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EXHIBIT A
OPTION AGREEMENT
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EXHIBIT B
MANAGEMENT BONUS PROGRAM
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