Sample Business Contracts

Severance Agreement - CyberGuard Corp. and David Proctor

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February 28, 2001

Mr. David Proctor
8119 Chalk Knoll Drive
Austin, TX 78735

Dear David:

This letter sets forth the agreement ("Agreement") between you and CyberGuard
Corporation ("CyberGuard" or "Company") regarding the termination of your
Employment Agreement entered into between you and the Company on March 11, 1999,
as amended on May 4, 1999, March 10, 2000 and April 26, 2000 ("Employment
Agreement"). We agree as follows:

1. TERMINATION DATE. The Employment Agreement and your employment with
CyberGuard shall be terminated effective as of February 28, 2001 ("Termination

2. SALARY, SEVERANCE AND BONUS PAYMENTS. Prior to the Termination Date, you will
continue to be paid your regular salary, and this Agreement shall have no effect
upon those payments. No severance and no bonus will be paid, and you acknowledge
that none is owed.

3. ACCRUED "PAID-TIME-OFF". The total amount of accrued paid-time-off pay to
which you are entitled as of your Termination Date is $50,970.22 (less tax

4. NET AMOUNT PAYMENT. The total amount payable to you after the Termination
Date is $50,970.22 (less tax withholding) (representing the aggregate of the
amounts described in paragraphs 2 and 3 above) and will be paid to you in
accordance with CyberGuard's regular payroll schedules and practices.

5. STOCK OPTIONS. We agree that, from time to time, you have been granted
options to acquire, in the aggregate, 566,875 shares of CyberGuard's Common
Stock ("Options"). The Options have been evidenced by various agreements that
have been entered into between you and CyberGuard, and by CyberGuard's Stock
Option Plans. We agree as follows:

     (a)  OFFICER OPTIONS. Your "Officer Options" listed below ("Officer
          Options" are defined as options to purchase shares of the Company's
          Common Stock granted to you while serving as an officer and/or
          consultant of the Company, with the exception of the "Special Option"
          (as defined below)) shall (i) become fully vested as of the
          Termination Date, to the extent such Officer Options have not yet
          fully vested (see "Amended Vesting" in the table below), and (ii)
          remain exercisable for the shorter of two (2) years from the
          Termination Date or the remainder of the period of exercisability
          under the terms of the respective stock option agreement (see Amended
          Expiration Date in the table below).


                                                                          Original       Amended
         Amount of    Grant             Original          Amended        Expiration    Expiration       Share
          Shares      Date              Vesting           Vesting           Date           Date         Price
         ---------   -------      ------------------     -----------     ----------    ----------       ------

          15,000     3/18/97       1 year       50%      100% vested        3/17/02       3/17/02        $1.125

          14,875     3/18/97       1 year       50%      100% vested        3/17/02       3/17/02        $1.125

         100,000      5/4/99       3 years      33%      100% vested         5/3/04       2/28/03        $0.750

         375,000     3/11/99       1 year       50%      100% vested        3/10/04       2/28/03        $1.250

<PAGE>   2

     (b) DIRECTOR OPTIONS. Your "Director Options" listed below ("Director
         Options" are defined as options to purchase shares of the Company's
         Common Stock granted to you while serving as the Company's non-employee
         director, with the exception of the Special Option) shall continue in
         full force and effect in accordance with the terms and conditions of
         their respective Stock Options Agreements and shall remain unaffected
         by this Agreement.


          of           Grant                                          Expiration          Share
        Shares         Date                   Vesting                    Date             Price
         -----        -------         ----------------------          ----------          ------
         6,000        3/27/97         Immediate          100%           3/25/07           $1.125

         3,000        1/29/98         Immediate          100%           1/27/08           $1.125

         3,000       12/31/98         Immediate          100%          12/30/08           $2.090

     (c) SPECIAL OPTION. Your option to purchase 50,000 shares of the Company's
         Common Stock granted to you on April 26, 2000 at an exercise price of
         $6.50 per share ("Special Option") shall continue to vest as long as
         you remain a member of the Board and shall expire in accordance with
         the terms and conditions of the Stock Option Agreement governing the
         Special Option. The Special Option shall remain unaffected by this


           of           Grant                                  Expiration         Share
         Shares          Date             Vesting                 Date            Price
         ------        -------       -----------------         -----------        ------
         50,000        4/26/00       3 years        33%          4/25/05          $6.500

     You acknowledge that other than (i) the above-described Options, (ii) the
     below-defined Warrant, and (iii) the previously issued 166,612 restricted
     shares of Common Stock upon your conversion of the Promissory Note dated
     August 26, 1999, CyberGuard has granted you no other options, warrants,
     restricted stock or rights of any kind to acquire capital stock of

6. WARRANT. Your rights under the Common Stock Purchase Warrant issued to you by
CyberGuard on August 26, 1999 ("Warrant") will remain in full force and effect,
and will be unaffected by this Agreement.

7. INSURANCE. Any coverage for insurance that you may have under CyberGuard
plans (including medical, dental and life) will remain in place until your
Termination Date. If you wish to continue the coverage after your Termination
Date, you will pay the full amount of the premiums (including any incremental
expenses in connection with pre-existing conditions and increases in premiums as
permitted or required under COBRA). A separate notice under COBRA will be sent
to you from the CyberGuard Personnel Department regarding insurance.

<PAGE>   3

8. 401-k PLAN. Your participation in the CyberGuard 401-k Plan will cease at the
Termination Date. Upon request, you will sign an appropriate letter addressed to
the 401-k Plan administrators directing that no further payments be accepted on
your behalf. Your vesting in the 401-k plan shall be determined as of the
Termination Date, unless the 401-k Plan or ERISA requires otherwise.

9. RETURN OF EQUIPMENT. You agree to return, promptly upon request, any
CyberGuard equipment that you may have (such as a notebook or other computers),
and CyberGuard credit cards, key cards, and other items belonging to CyberGuard.

10. RESIGNATION. We agree that your resignation as the Chief Executive Officer
and President of CyberGuard and from any other officer position that you may
have held at CyberGuard and from any other officer or director position that you
may have held at CyberGuard's subsidiaries (including, without limitation, as
director of CyberGuard Europe Ltd. and CYBG Consultant, Inc.) shall be effective
as of January 2, 2001.

11. NO OTHER RIGHTS TO COMPENSATION. You acknowledge that once the payments set
forth in paragraph 4 of this letter are paid in full, you will have been paid in
full all amounts due or owed to you in the nature of salary, bonus, severance,
vacation pay, personal leave, sick leave, paid-time-off, living expenses and
other compensation of any kind whatsoever, for all services rendered to
CyberGuard as employee or in any other capacity whatsoever through the
Termination Date.

12.CERTAIN COMMUNICATIONS. CyberGuard and you agree that neither of us will say,
write or communicate in any manner to any person or entity anything
substantially derogatory about the other, regardless of the truth or falsity of
the information. Of course, nothing in this section shall be construed to
prevent either party from testifying truthfully under oath if compelled to do so
by court order or other legal compulsion. In this connection, for purposes
hereof, "CyberGuard" means and includes CyberGuard Corporation, and its current
officers, directors, employees, affiliates and representatives.

13. NON-SOLICITATION. You agree that for six (6) months after the Termination
Date, you will not, without the prior written consent of CyberGuard, directly or
indirectly, for yourself 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
CyberGuard, its affiliates, subsidiaries or predecessors in interest, unless
such employee or former employee has not been employed by CyberGuard, its
affiliates, subsidiaries or predecessors in interest during the 120 days prior
to your attempt to employ him, or (b) call on or solicit any of the actual or
currently targeted prospective customers of CyberGuard for the purpose of
offering any product or service that is in direct competition with the products
or services of CyberGuard.

14. NON-COMPETITION. You agree that for six (6) months after the Termination
Date, you shall not, directly or indirectly, be employed by, act as a consultant
or contractor for, be involved in a venture with, or otherwise engage in any
business enterprise or employment, with any of the following companies: Axent
Technologies, Inc., Check Point Software Technologies, Inc, Fore Systems, Inc.,
Network Associates, Inc., Secure Computing Corp., or Network-1 Security
Solutions, Inc. In the event that these geographical or temporal restrictions
are judicially determined to be unreasonable, we agree that these restrictions
shall be judicially reformed to the maximum restrictions which are reasonable.

(governing confidential information) of the Employment Agreement shall remain in
full force and effect for two years from the date hereof. Otherwise, in all
other respects, the Employment Agreement is hereby terminated and shall be of no
further force or effect.

<PAGE>   4

16. INJUNCTION/SPECIFIC PERFORMANCE SETOFF. You acknowledge that a breach of any
of the provisions of Sections 13, 14, or 15 hereof would result in immediate and
irreparable injury to the Company which cannot be adequately or reasonably
compensated at law. Therefore, you agree 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 you or your 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. You further agree that the Company may set off against or recoup from
any amounts due under this Agreement to the extent of any losses incurred by the
Company as a result of any breach by you of the provisions of Sections 13, 14,
or 15 hereof.

17. RELEASE. In order to clearly define the intent of this termination
arrangement, the following release provisions will become effective as described
below. You specifically acknowledge and agree as follows:

     (h)  You have been given at least twenty-one (21) full days within which to
          consider this Agreement, including the release set forth below;

     (i)  You are advised that you have the right and may consult with an
          attorney prior to executing this Agreement and acknowledge the
          opportunity to consult an attorney;

     (j)  You have seven (7) days following the execution of this Agreement to
          revoke the Agreement and the Agreement will not become effective or
          enforceable until after this seven (7) day period has expired;

     (k)  You recognize that you are specifically releasing, among other claims,
          any claims under the Age Discrimination in Employment Act of 1967 and
          all amendments thereto;

     (l)  You entered into this Agreement voluntarily and on your free will;

     (m)  You are not waiving rights or claims that may arise after the date
          this Agreement is executed;

     (n)  In consideration of the execution and delivery of this Agreement, and
          other good and valuable consideration, the receipt and sufficiency of
          which is hereby acknowledged by you ("You"), You hereby fully and
          forever release and discharge CyberGuard and its agents, officers,
          directors, employees, successors and assigns, of and from any and all
          responsibilities, duties, obligations, claims, debts, sums of money,
          accounts or causes of action or actions, costs, losses, damages or
          liabilities of whatsoever character, nature, kind or designation in
          law or in equity, absolute or contingent, matured or unmatured,
          suspected or unsuspected, known or unknown, which You or anyone
          claiming under, by or through You now has, ever had or could ever have
          or become entitled to assert against CyberGuard or its agents,
          officers, directors, employees, successors or assigns by reason of any
          conduct, matter, cause, or thing whatsoever; without limiting the
          generality of the foregoing release, You hereby release any claims
          for: (i.) salary, bonus, accrued vacation, paid-time-off, benefits or
          compensation of any kind whatsoever whether arising as an employee or
          otherwise; (ii.) violations of any federal, state or municipal
          employment practices laws, rules or regulations, including without
          limitation laws, rules or regulations regarding discriminatory
          practices, including without limitation, age discrimination; and
          (iii.) breaches of any agreements of any kind whatsoever between You
          and CyberGuard. If at anytime CyberGuard fails to make the payments
          required in Section 4 above, You may give CyberGuard written notice of
          Your intention to cancel this release, at which time CyberGuard shall
          have ten days to make any delinquent payments to cure the default, or
          this release shall terminate. This release shall not affect Your
          rights or CyberGuard's obligations as to (1) the Warrant, (2) the
          Options as stated herein, or (3) any compensation due you as a
          director of the Company.

<PAGE>   5

18. MISCELLANEOUS. With the exception of (i) the Warrant and (ii) the stock
option agreements for the Director Options and the Special Option, this
Agreement constitutes the entire agreement between us with respect to the
subject matter hereof, and all prior agreements, understandings, writings and
commitments, oral or written, with respect to the subject matter hereof are
hereby terminated and merged into this Agreement. This Agreement shall not be
amended except by the written agreement by CyberGuard and you. This Agreement
shall be binding upon, and shall inure to the benefit of, each of us, and our
permitted respective heirs, legal representatives, successors and assigns. This
Agreement may be executed in counterparts, all of which together shall
constitute one and the same instrument. Words such as "hereof", "hereunder",
"hereby' "herein" and similar words refer to this Agreement as a whole and not
to any particular section of this Agreement. This Agreement shall be governed
by, and construed and enforced in accordance with the laws of the State of
Florida, without giving effect to the choice of law provisions thereof. Any and
all disputes arising hereunder shall be decided in the courts of the State of
Florida or the federal courts located therein. Each of us agrees to submit to
personal jurisdiction and to waive any objection as to venue in Broward County,

If you agree with the terms of this letter, please indicate by signing in the
space provided below.


David L. Manning
Chairman, Compensation Committee
Board of Directors, CyberGuard Corporation


David R. Proctor