Employment Agreement - CyberGuard Corp. and Thomas W. Patterson
Employment Agreement
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
as of July 24, 1997 by and between CyberGuard Corporation, a Florida
corporation (the "Company"), and Thomas W. Patterson ("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. The Company hereby employs Employee, and Employee
hereby accepts employment, as Senior Vice President of TradeWave, and Corporate
Vice President for Business Development of the Company upon the terms of and
subject to this Agreement.
2. Term. The term (the "Term") of this Agreement shall commence on
July 24, 1997, and shall continue for a period of one year in accordance with
the terms hereof.
3. Duties. During his employment hereunder, Employee will serve in
such capacity and with such duties as shall be assigned from time to time by
the Chief Executive Officer of the Company. Employee shall diligently perform
such duties and shall devote his entire business skill, time and effort to his
employment and his duties hereunder and shall not during the Term, directly or
indirectly, alone or as a member of a partnership, or as an officer, director,
employee or agent of any other person, firm or business organization engage in
any other business activities or pursuits requiring his personal service that
materially conflict with his duties hereunder or the diligent performance of
such duties. It is understood and agreed to that the Employee does and will
continue to serve on Board of Directors on other companies which the Company
shall agree are non-competitive. It is additionally understood that the
Employee shall be able to author books, papers, articles and other publications
which do not detract from the performance of duties as described above.
<PAGE> 2
4. Compensation.
a) Salary. During his employment hereunder, Employee shall be paid a
salary of $125,000 year, payable in equal installments not less than monthly
("Base Salary"). The Employee's Base Salary shall be reviewed at least annually
by the Board of Directors or any Committee of the Board delegated the authority
to review executive compensation.
b) Option and Bonus. In addition to salary, the Employee shall be
entitled to participate in the Company's Stock Incentive Plan as adopted by the
Board of Directors of the Company on September 14, 1994, effective on October
8, 1994, and amended from time to time (the "Stock Incentive Plan" to be
provided under separate cover). An option to purchase 100,000 shares of
CyberGuard Common Stock at a date of grant price as of June 27, 1997. The
option will vest 33% of the shares on July 24, 1998; 66% on July 24, 1999 and
100% of the shares on July 24, 2000. In addition, Employee shall participate in
a Management Bonus Program anticipated to be established by the Company with an
initial annual targeted bonus equal to 40% of Employee's Base Salary (hereafter
the "Management Bonus Program"). Bonuses are payable on an annual basis and, at
the company's discretion, may be paid as stock grants or cash. The Employee
prorata share of the calendar 1997 portion of the Bonus program shall be
guaranteed.
c) Special Incentive Awards. In addition to eligibility for the
Companies Stock Incentive Plan, and the Management Bonus Program, the Employee
shall be eligible for four Special Incentive Awards during the Agreement
period. Each of the four incentives shall be based upon achievement of (an
expected present value) of $1.5M of TradeWave new business revenue in each of
the second through the fourth quarters. The first quarter achievement level
will be based upon current "new business work in process at TradeWave and the
achievement level would be $750,000. Each of the awards will be in the form of
stock grants equal in market value of $50,000. In lieu of anyone of these
awards and at the soul discretion of the Chief Executive Officer of the Company
may elect to offer one incentive award or any part thereof for contributions to
the Company. All special incentive awards are subject to the approval of the
Compensation Committee of the Board of Directors.
d) One Time Grant. An initial grant of 2,000 shares of CyberGuard
restricted stock with a date of grant price equal to the close of market on
June 27, 1997 will be granted with a restriction that the shares cannot be sold
until January 1, 1998.
e) 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.
f. Other Benefits. During his employment hereunder, Employee shall be
entitled to all such other benefits, if any, that the
2
<PAGE> 3
Company may offer to other key executive employees of the Company from time to
time.
g. Vacation. Employee shall be entitled to four weeks' vacation leave (in
addition to holidays) in each calendar year during the Term in accordance with
the Company's vacation policy for executives as it may be in effect from time
to time. Except with respect to vacation time unused as the result of a request
by the Company to postpone a vacation, any unused vacation from one calendar
year shall not carry-over to any subsequent calendar year.
h. Expense Reimbursement. 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.
i. Relocation Expense Reimbursement. Employee shall, upon submission of
appropriate supporting documentation, be entitled to reimbursement of
relocation expense consistent with the CyberGuard relocation policy (sent under
separate cover).
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. A material breach of the provisions of this Agreement by
the Company (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
3
<PAGE> 4
b. The failure of the Company to comply with the provisions
of Paragraph 4a. or to pay any amounts due under the Management Bonus
Program provisions of Paragraph 4b. for an uninterrupted 10 day
period.
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 one year 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 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
4
<PAGE> 5
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 the first of six equal monthly payments to Employee as
compensation for services rendered to the Company an amount equal to
one-half the amount of Employee's annual Base Salary and the greater
of (x) one-half the target bonus under the Management Bonus Program as
in effect immediately prior to his date of termination or (y) the
amount of the bonus under the Management Bonus Program to which he is
entitled but which remains unpaid. At the election of the Company, the
cash amount referred to in this Paragraph 7b.i. will 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 the Stock Incentive 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 and stock appreciation
rights that were exercisable at the date of termination or within 6
months thereafter shall be 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) three months following
his termination of employment or (b) with respect to each option, 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 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
5
<PAGE> 6
provide Employee and his dependents for three 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, and at the end of such
six (6) month period, the Company shall have the right to extend the
time period of non-competition and non-solicitation for an additional
six (6) months by giving written notice to Employee of such extension
and paying to Employee an amount equal to one-half the amount of
Employee's annual Base Salary and one-half the target bonus under the
Management Bonus Program as in effect immediately prior to his date of
termination. At the election of the Company, the cash amount referred
to in the prior sentence of this Paragraph 7b.vi. may be paid to
Employee in periodic installments in accordance with the regular
salary payment practices of the Company, with the first such
installment to be paid on or before the delivery of the notice
described in the first sentence of this Paragraph 7b.vi., and no
interest shall be paid with respect to any amount paid in
installments. 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
6
<PAGE> 7
Paragraph 7b.i. or the first two sentences of this
Paragraph 7b.vi. 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
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 one-half the
Employee's annual Base Salary as in effect at the date of
termination shall be paid on the date of termination;
ii. Target Bonus. An amount equal to one-half the
Employee's target bonus under the Management Bonus Program
for the fiscal year in which the date of termination occurs
shall be paid on the date of termination; and
iii. Other Benefits. All benefits under Paragraphs
7b.i, 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
7
<PAGE> 8
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
8
<PAGE> 9
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
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.
v. Notwithstanding the foregoing, if any event or series of
events occur or commence within 180 days after the date of this
Agreement that otherwise would be considered a Change in Control, then
such event or series of events shall not be considered to constitute a
Change in Control. Under the circumstances described in this Section
8.c.v., the relative rights and duties of the Employee and the Company
shall be governed by the provisions of this Agreement as though such
Change in Control had not occurred.
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 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
9
<PAGE> 10
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
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 by Employee, whether occurring as a result of a
voluntary termination by Employee or an involuntary termination as the result
of reaching the age retirement as set forth in the Company's retirement
policies, 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 policy and the provisions of such policy shall supersede the provisions
of the preceding sentence.
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 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
10
<PAGE> 11
reasonable given the international nature of the Company's business.
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.
11
<PAGE> 12
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.
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
12
<PAGE> 13
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
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
2101 West Cypress Creek Road
Fort Lauderdale, Florida 33309
Attention: President
To Employee: Thomas W. Patterson
(Employee Address)____________________________
_____________________
_____________________
2. 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.
13
<PAGE> 14
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. Not withstanding anything contained in
this Agreement, any Change In Control that occurs on or before 180 days from the
date of this Agreement shall not be considered a Change In Control for any
purpose under this Agreement.
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 death, disability
or normal retirement) 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.
14
<PAGE> 15
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:
-------------------------------------
Thomas W. Patterson
15
<