Sample Business Contracts


Employment Agreement - CyberGuard Corp. and David R. Proctor

Employment Forms

  • Employers can customize an employment agreement that states the salary, benefits, working hours and other important provisions for their new or existing employee.
  • Answer simple questions to build a contract with a consultant. Specify the services rendered, when payment is due, as well as IP rights.
  • Employers who compensate their sales employees based on commissions can prepare an agreement to reduce misunderstandings by specifying the base salary and how commissions are calculated.
  • Companies may offer their business executives a contract that is different from the one provided to their regular employees. Executive employment agreements may be more complex because the compensation structure may include a combination of salary and commissions, provide for bonuses based on sales, stock or other financial targets, and include non-compete, confidentiality and severance provisions.
  • Independent sales representatives offer companies the potential to increase the sale of products or services without the burden of increasing headcount. Both parties should understand how commissions are calculated, when commissions will be paid, as well as how the representative will treat confidential information from the company and whether the representative may also sell a competing line of products or services.
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                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
March 11, 1999 by and between CyberGuard Corporation, a Florida corporation (the
"Company"), and David R. Proctor (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 and Chairman of the Board of Directors of the Company.

     2. TERM. The term ("Term") of this Agreement shall commence on March 15,
1999, 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 of employment
hereunder, the 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 Austin TX, and it is not contemplated or expected that
Employee will change his principal residence from Austin TX to South Florida.
Furthermore, nothing in this Agreement shall preclude the Employee from 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 or from engaging in charitable and community
activities, or from managing his personal investments.

     4. COMPENSATION.

          a. SALARY. During his employment hereunder, Employee shall be paid a
     base salary of $182,00.00 per 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, but may not be
     reduced during the Term.

          b. OPTION AND BONUS. In addition to salary, Employee is hereby awarded
     an option to acquire 375,000 shares ("Option Shares") of Company common
     stock under the Company's Employee Stock Option Plan (the "Stock Option
     Plan"), at an exercise price of $1.25 per share. The Option Shares shall be
     exercisable as follows: the first 1/2 of the Option Shares shall be
     exercisable on the date hereof, and the remainder shall become exercisable
     one year from today. The Option Shares shall


<PAGE>   2

     become immediately exercisable upon the occurrence of certain events
     described in sections 7 and 8 of this Agreement. An agreement shall be
     prepared providing for other terms and conditions regarding the Option
     Shares that are typical of other executives option agreements, and this
     option agreement shall also provide for anti-dilution in the event that
     shares of Company stock are issued in settlement of any lawsuit pending
     against the Company. In addition, Employee shall participate in the
     management bonus program established by the Company with an initial annual
     targeted bonus equal to 100% of Employee's Base Salary (hereafter the
     "Management Bonus Program").

          c. 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.

          d. OTHER BENEFITS. During his employment here under, 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.

          e. VACATION. Employee shall be entitled to four weeks' vacation leave
     (in addition to holidays) in each calendar year during the Term; however,
     Employee may take only two weeks' vacation leave within any calendar month.
     Except with respect to vacation time unused as the result of a request by
     the Company to postpone a vacation, and except for any Company policy that
     is more favorable to Employee, any unused vacation from one calendar year
     shall not carry-over to any subsequent calendar year.

          f. EXPENSE REIMBURSEMENT. As a condition to employees agreement to
     enter into this Agreement, the Company has agreed to reimburse Employee for
     all his expenses in connection with his travel from Austin, TX to Fort
     Lauderdale FL, as well as his expenses in connection with his living away
     from home in Fort Lauderdale, FL. If Employee believes that it is in the
     best interests of the Company to work over a weekend, he shall have the
     option to have his spouse fly to Fort Lauderdale at Company expense. 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.

     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


<PAGE>   3

be entitled to the benefits of Paragraph 7b. of this Agreement. "Good Reason"
means:

          a. The Company materially breaches the provisions of this Agreement
     (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

          b. The Company fails 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; or

          c. the Company demotes or otherwise elects or appoints the Employee to
     lesser offices or responsibilities than set forth in Section 1 hereof, 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 the Employee's positions
     as described in Section 3; or

          d. The Company decreases Employee's compensation (salary or percentage
     of bonus opportunity); or

          e. The Company materially reduces 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, shall not be considered as giving rise to "Good
     Reason"; or

          f. The Employee is required, without his prior written consent, to
     relocate his office more than seventy-five miles from the office Employee
     currently reports to.

     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 six months following the date of termination, so long as the


<PAGE>   4

          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 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 in a lump sum to Employee as compensation for
               services rendered to the Company a cash amount equal to twice the
               amount of 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 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 any Company stock option 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
               (including without limitation the Option Shares) and Rights shall
               become 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) two years following his
               termination of employment or (b) with respect to each Option 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 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


<PAGE>   5
          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 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. 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 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


<PAGE>   6

     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 twice the 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.,
          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 Section 13(d)(3) or
          Section 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


<PAGE>   7

          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

               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 any Company stock option plan and any
     related stock option agreements between the Company and Employee for
     Options, all Options (including without limitation the Option Shares) and
     Rights shall become immediately exercisable upon the occurrence of a 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. 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.

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.


<PAGE>   8

     11. RETIREMENT. A voluntary termination by Employee for reasons of
retirement 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 plan.

     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 employ ment 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.

          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


<PAGE>   9

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 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 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.



<PAGE>   10

     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: Chief Financial Officer

         To Employee:        David R. Proctor

         [at such address as appears in the records of the Company as being the
         last-known address of the Employee]

     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 counter parts, each of
which shall be deemed an original and both of which together shall constitute a
single agreement.

     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.

     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 or
disability) or if Employee terminates his employment with Good Reason, then the
payments and other benefits set forth



<PAGE>   11

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.

     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:

         -------------------------------
         DAVID R. PROCTOR


                        AMENDMENT TO EMPLOYMENT AGREEMENT

     THIS AMENDMENT ("Amendment"), dated as of May 4, 1999, amends the
EMPLOYMENT AGREEMENT (the "Agreement") that was made and entered into as of
March 11, 1999 by and between CyberGuard Corporation, a Florida corporation (the
"Company"), and David R. Proctor (the "Employee").

     WHEREAS, the Company, through its Board of Directors, desires to amend the
Agreement and Employee also desires to amend the 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:

     A. Section 1 of the Agreement shall be amended by deleting Section 1 in its
entirety and substituting the following in its place:

               "1. EMPLOYMENT. During his employment hereunder, Employee will
          serve as the Chief Executive Officer, President and Chairman of the
          Board of Directors of the Company."

     B. Section 4a of the Agreement shall be amended by deleting the words "a
base salary of $182,000 per year" and substituting in its place: "a base salary
of $5,000 per week".

     C. Section 4 of the Agreement shall be amended by adding the following
subsection 4g:

          g. ADDITIONAL OPTION. In addition to salary, bonus and options
          described in the Agreement, Employee is hereby awarded an option to
          acquire 100,000 shares ("Additional Option Shares") of Company common
          stock under the Stock Option Plan, at an exercise price of $1.00 per
          share. The Additional Option Shares shall become exercisable in 1/3
          increments on the first, second and third

<PAGE>   12

          anniversaries of the date on which Employee becomes President of the
          Company ( by way of example, if Employee became President of the
          Company on May 12, 1999, 33,333 Additional Option Shares would become
          exercisable on May 11, 2000, 33,334 Additional Option Shares would
          become exercisable on May 11, 2001, and the remaining 33,333
          Additional Option Shares would become exercisable on May 11, 2002).
          The Additional Option Shares shall become immediately exercisable upon
          the occurrence of certain events described in sections 7 and 8 of this
          Agreement. An agreement shall be prepared providing for other terms
          and conditions regarding the Option Shares that are typical of other
          executives option agreements, and this option agreement shall also
          provide for anti-dilution in the event that shares of Company stock
          are issued in settlement of any lawsuit pending against the Company.

     D. This amendment shall become effective as soon as Employee becomes
President of the Company.

     E. Other than as stated in this Amendment, the Agreement shall remain in
full force and effect.

IN WITNESS WHEREOF, this Amendment to Employment Agreement has been executed by
the parties as of the date first above written.

         COMPANY:

         CYBERGUARD CORPORATION

         By:
            ----------------------------
         Its:



         EMPLOYEE:

         -------------------------------
         DAVID R. PROCTOR


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