EXHIBIT 10.3
EMPLOYMENT AGREEMENT
Employment Agreement, dated as of November 15, 2004, between Xxxxx Xxxxxxx
("Executive") an individual residing at 000-00 00xx Xxxx, Xxxxxx Xxxxx, XX 00000
and Enigma Software Group, Inc., a Delaware Corporation (the "Company") with an
office at 00 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000.
WHEREAS, the Executive is currently employed by the Company as its President and
Chief Executive Officer;
WHEREAS, the Company would like the Executive to continue as an employee of the
Company in his current position as President and Chief Executive Officer;
WHEREAS, the Executive and Company desire to set forth in writing the terms of
Executive's continued employment with the Company NOW, THEREFORE, for good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
agree as follows:
1. EMPLOYMENT
The Company agrees to continue the employment of Executive and Executive agrees
to continue as an employee of the Company upon the terms and conditions set
forth in this Agreement.
2. POSITION
The Company agrees that Executive shall continue to serve as President and Chief
Executive Company reporting to the Company's Board of Directors (the "Board").
3. DUTIES
Executive agrees to continue to perform the duties and responsibilities
currently being performed by the President and Chief Executive Officer of the
Company, together with such other duties and responsibilities that are
consistent with the office of Chief Executive Officer that the Board may from
time to time assign to him. Executive shall devote substantially all of his
business time, attention and energies to the business of the Company and to the
performance of his responsibilities and duties. Executive shall carry out such
responsibilities and duties in good faith and to the best of his ability.
4. TERM
The term of Executive's employment (the "Term") shall be for two years
commencing January 1, 2004 and terminating December 31, 2006; provided, that at
the end of each calendar year such Term shall be automatically extended for an
additional one year term unless either party to this Agreement shall have
notified the other in writing within 30 days prior to the end of the current
calendar year of such party's determination not to renew this Agreement.
5. COMPENSATION
a. Salary
Company shall pay Executive, in accordance with its normal payroll practices, an
annual salary of no less than $150,000 per year commencing January 1, 2004. The
Board may increase such salary from time to time after December 31, 2004 to take
into account such factors as the Board, in its sole discretion, shall consider
including the annual percentage change in the Consumer Price Index prepared by
the Bureau of Labor Statistics ("CPI") and salary levels of top executives at
comparable public or private companies.
b. Annual Performance Bonus
Commencing January 1, 2005 Executive shall be entitled to receive an annual
bonus based on the Company's financial performance. The Board, in its sole
discretion, shall determine the terms of such bonus including:
(i). Financial performance criteria that must be achieved for
a bonus to be earned,
(ii). Formula for calculating such annual bonus, and
(iii). Payment of any bonus earned in cash and/or stock.
c. Additional Incentive Awards
Commencing January 1, 2005 the Board, in its sole discretion, may establish one
or more long-term incentive programs for Executive consisting of (but not
limited to):
(i). Equity awards such as shares of Company stock or stock options
to purchase shares of Company stock; and
(ii). Awards payable in cash or shares of Company stock that are
based on Company financial performance over a period of at
least 2 years.
The terms of any award granted to Executive under this Paragraph 5(c) shall be
in accordance with the provisions specified in a separate written agreement
evidencing such award and executed by Executive and the Company.
d. Transaction Bonus
Executive shall receive a special bonus of $500,000 payable in cash or stock at
the discretion of the Board in the event that the Company becomes a public owned
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company on or after January 1, 2004 through an initial public offering of stock
under the Securities Act of 1933, as amended, or the acquisition or merger by
the Company with a company whose stock is publicly traded on an established
United States securities market (provided that the Company is the surviving
entity with respect to such acquisition or merger).
6. BENEFITS
During the Term of this Agreement, Executive shall be entitled to participate in
any employee benefit plan or program established by the Company for its senior
executives or other employees including, but not limited to, medical,
prescription, dental, disability, life, accidental death or other insurance
plans and any deferred compensation or retirement plan or program.
7. PERQUISITES
The Company shall provide the Executive with each of the following benefits set
forth below.
a. Company shall reimburse Executive for ordinary, necessary and
reasonable business expenses that Executive incurs in connection with
the performance of his duties under this Agreement including, but not
limited to, travel, office, and entertainment expenses.
b. Executive shall be entitled to five weeks paid vacation per year.
Vacation time shall accrue at a rate of 1 day for each 14.6 calendar
days that elapse. Within 30 days of the end of each calendar year, the
Company shall pay Executive in cash an additional amount equal to the
number of days vacation accrued and unused over such year multiplied
by the base salary in effect for Executive.
c. A company car selected by the Executive and an auto allowance of
$20,000 per year.
d. All legal, accounting and other costs directly or indirectly related
to the preparation and filing of Executive's federal and state income
tax returns including any fees incurred with respect to any court,
administrative or other proceeding instituted by Executive or any
government or administrative body with respect to such tax returns.
8. TERMINATION OF EMPLOYMENT
Upon the Executive's termination of employment with the Company for any reason,
the Company and Executive shall enter into a separation agreement with the
Company (TO BE DISCUSSED)
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9. NON-COMPETE; NON-DISCLOSURE; NON-SOLICITATION
a. Duty not to Compete
During the Term of this Agreement and for 12 months thereafter, Executive will
not, anywhere, directly or indirectly, own, manage, operate, control, be
employed by, participate in, provide services to, or be connected in any manner
with the ownership, management, operation or control of any entity that is
principally engaged in a business that is directly competitive with that of the
Company within the continental United States, except that Executive may own, for
investment purposes only, the capital stock or indebtedness of any company whose
capital stock is publicly traded.
b. Duty of Confidentiality
During the term of this Agreement and for 12 months thereafter, Executive shall
hold in a fiduciary capacity for the benefit of the Company and its affiliates
all secret or confidential information, knowledge or data relating directly to
the business of the Company or its affiliates, and their respective businesses,
including but not limited to trade secrets, (i) obtained by Executive during
Executive's employment by the Company and (ii) not otherwise in the public
knowledge. Executive shall not, without prior written consent of the Company,
except to the extent compelled pursuant to the order of a court or other body
having jurisdiction over such matter or based upon the advice of counsel
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by the Company; provided, however, that
Executive will assist the Company, at the Company's expense, in obtaining a
protective order, other appropriate remedy or other reliable assurance that
confidential treatment will be accorded such information disclosed pursuant to
the terms of this Agreement.
c. Solicitation of Employees
Executive agrees that while he is employed by the Company, and for a period of
12 months following the termination of such employment for any reason, he will
not employ, engage as a consultant, or form an association with any person who
is then or who, during the preceding 6 months, was an employee of the Company,
nor will he assist any other person in the solicitation of any person who is
then or who, during the preceding 6 months was an employee of the Company.
d. Solicitation of Customers
Executive agrees that while he is employed by the Company and for a period of 12
months following the termination of such employment for any reason, he will not
disturb, attempt to disturb or assist another in disturbing or attempting to
disturb any business relationship or agreement between the Company or any other
person or entity.
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e. Enforcement
Executive represents to the Company that the enforcement of the restrictions
contained in this section would not be unduly burdensome to Executive. Executive
agrees that the remedy at law for any breach by Executive of the provisions of
this section may be inadequate and that the Company shall be entitled to
injunctive relief. This section constitutes an independent and separable
covenant that shall be enforceable notwithstanding any right or remedy that the
Company may have under any other provision of this Agreement or otherwise.
10. MISCELLANEOUS
a. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all previous
written, and all prior or contemporaneous oral, negotiations,
understandings, arrangements, and agreements. Any amendment to this
Agreement must be in writing and signed by the parties to this
Agreement, or their successors in interest.
b. The headings in this Agreement are for reference only and are not part
of the substance of this Agreement.
c. All notices under this Agreement shall be delivered in writing to the
Company at 00 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 and to Executive at
000-00 00xx Xxxx, Xxxxxx Xxxxx, XX 00000 by Certified Mail, Return
Receipt Requested, or such other method mutually agreeable to the
Company and Executive.
d. This Agreement and all of the provisions hereof shall inure to the
benefit of and be binding upon the legal representatives, heirs,
distributees, successors (whether by merger, operation of law or
otherwise) and assigns of the parties hereto; provided, however, that
Executive may not delegate any of Executive's duties hereunder, and
may not assign any of Executive's rights hereunder, without the prior
written consent of the Company.
e. This Agreement may be executed in any number of counterparts by the
parties hereto, each of which when so executed and delivered shall be
an original, but all of which shall together constitute one and the
same instrument.
f. If any section, paragraph, term or provision of this Agreement shall
be held or determined to be unenforceable, the balance of this
Agreement shall nevertheless continue in full force and effect
unaffected by such holding or determination. In any such event, the
Executive and Company hereby agree that any such section, paragraph,
term or provision that is held or determined to be unenforceable as
written, shall nonetheless be in force and binding to the fullest
extent permitted by law.
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g. This Agreement will be interpreted and the rights of the parties
determined in accordance with the laws of the United States applicable
thereto and the internal laws of the State of New York applicable to
an agreement executed, delivered and performed therein without giving
effect to the choice-of-law rules thereof or any other principle that
could require the application of the substantive law of any other
jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
Enigma Software Group, Inc.
/s/ Colorado Xxxxx
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By: Colorado Xxxxx
Chairman of the Board
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
