Exhibit
10.2


 


EMPLOYMENT AGREEMENT


 


AGREEMENT made as of the
15th day of August, 2005 by and between eAcceleration Corp., a
Delaware corporation (the “Company”) and E. Edward Ahrens, an individual with
an address at 6358 NW Paddington Ct, Silverdale, Washington 98383 (hereinafter
called the “Employee”).


 


W
I T N E S S E T H:


 


WHEREAS, this Agreement is intended to supersede and
replace all prior agreements, understandings and arrangements between or among
the Company and the Employee relating to the employment of the Employee.


 


NOW, THEREFORE, it is agreed as follows:


 


1.             Retention
of Services.  The Company hereby
retains the services of Employee, and Employee agrees to furnish such services,
upon the terms and conditions hereinafter set forth.


 


2.             Term.  Subject to earlier termination on the terms
and conditions hereinafter provided, and further subject to certain provisions
hereof which survive the term hereof, the term of this Agreement (the “Term”)
shall be comprised of a five (5) year period of employment commencing on August 15,
2005, and shall be extended thereafter for additional one-year periods unless
or until the Company or the Employee provides sixty (60) days’ notice to the
other party of the termination of this Agreement.


 


3.             Duties
and Extent of Services During Period of Employment.


 


(a)           During the
term of employment, Employee shall be employed by the Company as Chief
Financial Officer or in such other equivalent positions with the Company and
its affiliates, as may be determined by the Board of Directors of the
Company.  In such capacity, Employee
agrees that he shall devote Employee’s full time business efforts to serving
the Company and its affiliates under the direction of the Board of Directors of
the Company, shall perform all duties incident to Employee’s position on behalf
of the Company to the best of Employee’s ability and shall perform such other
duties as may from time to time be assigned to him by the Board of Directors of
the Company.


 


(b)           The
Company and Employee agree that Employee shall perform Employee’s basic
responsibilities and duties hereunder at the office of the Company in Kitsap
County, Washington; subject, however, to the travel requirements of Employee’s
position to visit certain customers of the Company, in connection with the
Company acquiring the rights or license to market and sell certain products or
otherwise in connection with the business and investor relations of the
Company.


 


4.             Remuneration.  During the period of employment, Employee
shall be entitled to receive the following compensation for Employee’s
services:


 





















 


(a)           The
Company shall pay to Employee a salary at the rate of $104,000 per annum,
payable in equal bi-weekly installments, or in such other manner as shall be
consistent with the Company’s payroll practices.


 


(b)           In
addition to the salary provided in clause (a) above, not later than one
hundred ten (110) days after the end of each fiscal year of the Company, the
Company shall pay to Employee, as incentive compensation, an amount equal to
one percent (1.0%) of the Company’s Cash Flow (as defined below) for such
fiscal year. For all quarterly periods during the Term, beginning with the
third quarter of the Company’s 2005 fiscal year, the Company, not later than
sixty (60) days after the end of each such quarterly period, shall pay to
Employee an amount equal to one percent (1.0%) of the Company’s Cash Flow for
such quarterly period; provided, however, that for the fourth quarter of each
fiscal year, such amounts are required to be paid not later than one hundred
ten (110) days after the end of such quarterly period. For purposes of this
Agreement, “Cash Flow” shall mean, for the period for which the bonus is
calculated, an amount equal to the net income of the Company, before taxes,
depreciation, amortization, and extraordinary items, in each case computed in
accordance with United States generally accepted accounting principles,
consistently applied, plus (i) an amount equal to the Company’s non-cash
expenses less its non-cash gains or income (other than those removed from the
calculation of net income as set forth above), plus (ii) an amount equal
to the Company’s deferred revenues less its deferred expenses, in each case as
reflected on the Company’s statement of cash flows with respect to operating
activities.  In the event that this
Agreement is terminated other than pursuant to Section 9(a), the Employee
shall be entitled to receive the amount which would be payable under this
clause (b) for each fiscal quarter of any fiscal year in which Employee
was employed by the Company at the date of such termination.


 


5.          Employee
Benefits; Expenses.


 


(a)           During the
term of this Agreement, the Company shall provide to the Employee the right to
participate in the Company’s then existing medical and dental insurance and
other employee benefit plans and policies on the same terms as are then
generally available to the Company’s executive and managerial employees.


 


(b)           Employee
shall be entitled to paid vacation each year during the term of this Agreement
at the rate of four (4) weeks per annum. Vacation shall be taken each year
and, if not taken, shall be carried over for one (1) year and, if not
taken during such carry-over period, shall be forfeited.


 


(c)           The
Company shall reimburse Employee, in accordance with the practice followed from
time to time for other executive and managerial officers of the Company, for
all reasonable and necessary business and traveling expenses, and other
disbursements incurred by Employee for or on behalf of the Corporation in the
performance of Employee’s duties hereunder, upon presentation by Employee to
the Company of an appropriate accounting or documentation of such.


 


6.          Disability.  If Employee, during the period of employment,
becomes unable for any 120 days in any twelve-month period due to ill health or
other physical or mental incapacity, to perform Employee’s services hereunder,
the Company may thereafter, upon at least 100 days’ 


 





















 


written notice to
Employee, place him on disability status. 
After such action by the Company, Employee shall no longer be entitled
to receive any compensation hereunder until the Employee returns to full-time
status.


 


7.          Confidential
Information.


 


(a)           In the
course of Employee’s employment by the Company, Employee will have access to
and possession of valuable and important confidential or proprietary data or
information of the Company and its operations. 
Employee will not during Employee’s employment by the Company or at any
time for a period of five (5) years thereafter divulge or communicate to
any person nor shall Employee direct any employee, representative or agent of
the Company or its affiliates to divulge or communicate to any person or entity
(other than to a person or entity bound by confidentiality obligations similar
to those contained herein and other than as necessary in performing Employee’s
duties hereunder) or use to the detriment of the Company or for the benefit of
any other person or entity, including without limitation any competitor,
supplier, licensor, licensee or customer of the Company, any of such
confidential or proprietary data or information or make or remove any copies
thereof, whether or not marked or otherwise identified as “confidential” or “secret.”  Employee shall take all reasonable
precautions in handling the confidential or proprietary data or information
within the Company to a strict need-to-know basis and shall comply with any and
all security systems and measures adopted from time to time by the Company to
protect the confidentiality of confidential or proprietary data or information.


 


(b)           The term “confidential
or proprietary data or information” as used in this Agreement shall mean
information not generally available to the public, including, without
limitation, all database information, personnel information, financial
information, customer lists, account lists or other account information, names,
telephone numbers or addresses, supplier lists, trade secrets, patented or
proprietary information, forms, information regarding products, operations,
systems, methods, financing, services, know how, computer and any other
processed or collated data, computer programs, pricing, marketing, media and
advertising data.


 


(c)           Employee
will at all times promptly disclose to the Company in such form and manner as
the Company may reasonably require, any inventions, improvements or procedural
or methodological innovations, including without limitation relating to
programs, methods, forms, systems, services, designs, marketing ideas, products
or processes (whether or not capable of being trademarked, copyrighted or
patented) conceived or developed or created by Employee during or in connection
with Employee’s employment hereunder and which relate to the business of the
Company (“Intellectual Property”). 
Employee agrees that all such Intellectual Property shall be the sole
property of the Company.  Employee
further agrees that Employee will execute such instruments and perform such
acts as may reasonably be requested by the Company to transfer to and perfect
in the Company all legally protectable rights in such Intellectual Property.


 


(d)           In
accordance with RCW 49.44.140, any assignment of inventions required by this
Agreement does not apply to an invention for which no equipment, supplies,
facility or trade secret information of the Company was used and which was
developed entirely on the Employee’s own time, unless (a) the invention
relates (i) directly to the business of the 


 





















 


Company or (ii) to
the Company’s actual or demonstrably anticipated research or development or (b) the
invention results from any work performed by the Employee for the Company.


 


(e)           As a
matter of record Employee attaches hereto as Exhibit A a complete
list of all inventions (including patent applications and patents) relevant to
the subject matter of Employee’s engagement pursuant to this Agreement which
have been made, conceived, developed or first reduced to practice by Employee,
alone or jointly with others, prior to Employee’s engagement with Company
pursuant to this Agreement that Employee desires to remove from the operation
of this Agreement, and Employee covenants that such list is complete.  If no such list is attached to this
Agreement, Employee represents that it has no such inventions at the time of
signing this Agreement.


 


(f)            All
written materials, books, records and documents made by Employee or coming into
Employee’s possession during Employee’s employment by the Company concerning
any products, processes or equipment manufactured, used, developed,
investigated, purchased, sold or considered by the Company or otherwise
concerning the business or affairs of the Company, including without limitation
any files, customer records such as names, telephone numbers and addresses,
lists, firm records, brochures and literature, shall be the sole property of
the Company, shall not be removed from the Company’s premises by the Employee,
and upon termination of Employee’s employment by the Company, or upon request
of the Company during Employee’s employment by the Company, Employee shall
promptly deliver the same to the Company. 
In addition, upon termination of Employee’s employment by the Company,
Employee will deliver to the Company all other Company property in Employee’s
possession or under Employee’s control, including, but not limited to,
financial statements, marketing and sales data, customer and supplier lists,
account lists and other account information, database information and other
documents, and any Company credit cards.


 


(g)           The
Employee acknowledges that the covenants contained in this Section 7 are
fair and reasonable in order to protect the Company’s business and were a
material and necessary inducement for the Company to agree to the terms of this
Agreement.  The Employee further
acknowledges that any remedy at law for any breach or threatened or attempted
breach of the covenants contained in this Section 7 may be inadequate and
that the violation of any of the covenants contained in this Section 7
will cause irreparable and continuing damage to the Company. Accordingly, the
Company shall be entitled to specific performance or any other mode of
injunctive and/or other equitable relief to enforce its rights hereunder,
including without limitation an order restraining any further violation of such
covenants, or any other relief a court might award, without the necessity of
showing any actual damage or irreparable harm or the posting of any bond or
furnishing of other security, and that such injunctive relief shall be
cumulative and in addition to any other rights or remedies to which the Company
may be entitled. The covenants in this Section 7 shall run in favor of the
Company and its successors and assigns. 
In addition, to the extent the Company is successful on the merits in
any proceeding to enforce the terms of this Section 7, the Employee agrees
to pay the Company the costs it incurs, including reasonable attorneys’ fees
and expenses, in bringing and prosecuting any such proceeding.


 





















 


(h)           The
provisions of this Section 7 shall survive the termination of this
Employment Agreement.


 


8.          Non-Competition.


 


(a)           During the
term of this Agreement and for one year thereafter (the “Restricted Period”),
the Employee shall not, without the written consent of the Company, directly or
indirectly,


 


(i)            become
associated with, render services to, invest in, represent, advise or otherwise
participate in as an officer, employee, director, stockholder, partner,
promoter, agent of, consultant for or otherwise, any business which is
conducted in any of the jurisdictions in which the Company’s business is
conducted and which is competitive with the business conducted by the Company;
provided, that this Section 8(a)(i) shall not prohibit the Employee
from purchasing or owning up to one percent (1%) of the outstanding capital
stock of a company which is listed or authorized for trading on any national
securities exchange, Nasdaq or the OTC Electronic Bulletin Board or is a
company with a class of securities registered under Section 12 of the
Securities Act of 1934, as amended;


 


(ii)           for the
Employee’s own account or for the account of any other person or entity (A) interfere
with the Company’s relationship with any of its suppliers, customers, accounts,
brokers, representatives or agents or (B) contact, telephone, meet,
solicit or transact any business with any material customer, account or
supplier of the Company who or which transacts or has transacted business with
the Company at any time during the term of this Agreement; or


 


(iii)          employ
or otherwise engage, or solicit, entice or induce on behalf of the Employee or
any other person or entity, the services, retention or employment of any person
who has been an employee, principal, partner, stockholder, sales
representative, trainee, consultant to or agent of the Company within one year
of the date of such offer or solicitation.


 


(b)           Nothing
herein contained shall be construed as prohibiting the Company from pursuing
any other remedies available to it for such violation, including but not
limited to any injunctive or other equitable relief or the recovery of damages
from the Employee.


 


(c)           The
Employee acknowledges that the covenants contained in this Section 8 are
fair and reasonable in order to protect the Company’s business and were a
material and necessary inducement for the Company to agree to the terms of this
Agreement.  The Employee further
acknowledges that any remedy at law for any breach or threatened or attempted
breach of the covenants contained in this Section 8 may be inadequate and
that the violation of any of the covenants contained in this Section 8 will
cause irreparable and continuing damage to the Company. Accordingly, the
Company shall be entitled to specific performance or any other mode of
injunctive and/or other equitable relief to enforce its rights hereunder,
including without limitation an order restraining any further violation of such
covenants, or any other relief a court might award, without the necessity of
showing any actual damage or irreparable harm or the posting of any bond or
furnishing of other security, and that such injunctive relief shall be
cumulative and in addition to any other rights or remedies to which the Company
may be entitled. The covenants in this Section 8 shall run in favor of the
Company and its successors and 


 





















 


assigns.  In addition, to the extent the Company is successful
on the merits in any proceeding to enforce the terms of this Section 8,
the Employee agrees to pay the Company the costs it incurs, including
reasonable attorneys’ fees and expenses, in bringing and prosecuting any such
proceeding.


 


(d)           In case any
one or more of the terms or provisions contained in this Section 8 shall
for any reason be held invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not affect any other terms or provisions
hereof, but such term or provision shall be deemed modified or deleted as or to
the extent required by applicable law, and such modification or deletion shall
not affect the validity of the other terms or provisions of this Section 8.
In addition, if any one or more of the restrictions contained in this Section 8
shall for any reason be held to be unreasonable with regard to time, duration,
geographic scope or activity, the parties contemplate and hereby agree that
such restriction shall be modified and shall be enforced to the full extent
compatible with applicable law.  The
parties hereto intend that the covenants contained in this Section 8 shall
be deemed a series of separate covenants for each country, state, county and
city.  If, in any judicial proceeding, a
court shall refuse to enforce all the separate covenants deemed included in
this Section 8 because, taken together, they cover too extensive a
geographic area, the parties intend that those of such covenants (taken in
order of the cities, counties, states and countries therein which are lease
populous) which if eliminated would permit the remaining separate covenants to
be enforced in such proceeding shall, for the purpose of such proceeding, be
deemed eliminated from the provisions of this Section 8.


 


(e)           The
provisions of this Section 8 shall survive the termination of this
Employment Agreement.


 


9.          Termination.


 


(a)           The
Company may terminate the Employee’s services hereunder “for cause” by
delivering to Employee not less than ten (10) days prior to the date on
which the termination is to be effective, a written notice of termination for
cause specifying the act, acts or failure to act that constitute the
cause.  For the purposes of this
agreement, “for cause” shall mean;  (i) any
act of fraud or embezzlement which materially adversely affects the financial
or market interests of the Company or any affiliate thereof, (ii) in the
event of a conviction of the Employee for any violent felony or other serious
crime or any knowing violation of any federal or state securities law or
regulation, (iii) repeated failure to perform Employee’s duties hereunder
after notice and opportunity to cure, (iv) any material breach by the
Employee of this Agreement, or (v) the death of the Employee.


 


(b)           If the
Company terminates Employee’s employment hereunder for any reason other than “for
cause” as set forth in Section 9(a) hereof, the Company shall pay to
the Employee compensation pursuant to Sections 4(a) and 4(b) hereof
at the time and in the manner provided for herein, and no other compensation
payable hereunder shall be payable to the Employee. If the Company terminates
Employee’s employment hereunder “for cause” as set forth in Section 9(a) hereof
or if Employee resigns voluntarily from Employee’s employment by the Company,
Employee shall be paid the compensation pursuant to Sections 4(a) and 4(b) hereof
through the date of such termination but shall not be entitled to receive any
further compensation hereunder.  Employee
and the Company acknowledge that the foregoing provisions of this 


 





















 


paragraph 9(b) are
reasonable and are based upon the facts and circumstances of the parties at the
time of entering into this Agreement, and with due regard to future
expectations.


 


10.        Notices.  Any notice to be given to the Company
hereunder shall be deemed sufficient if addressed to the Company in writing and
delivered or mailed by certified or registered mail to it at 1050 NE Hostmark
Street, Suite 100B, Poulsbo, Washington 98730, Attention: President, or to
such other address as the Company may hereafter designate, and a copy to Joel
N. Bodansky, Hillis Clark Martin & Peterson, P.S., 500 Galland
Building, 1221 Second Avenue, Seattle, Washington 98101-2925.  Any notice to be given to Employee hereunder
shall be delivered or mailed by certified or registered mail to him at the
address set forth at the head of this Agreement or such other address as he may
hereafter designate.


 


11.        Change of
Control.


 


(a)           In the
event that at any time after any securities of the Company are publicly traded
there shall be a change in the control of the Company, as hereinafter defined,
or in any person directly or indirectly presently controlling the Company, as
hereinafter defined, Employee shall have the option, exercisable within six (6) months
of Employee’s becoming aware of such event, to terminate Employee’s employment
by the Company pursuant to this Employment Agreement forthwith.  Upon such termination, Employee shall have
the right to immediately receive as a lump sum payment an amount equal to three
(3) times the average of the total annual compensation paid by the Company
to Employee, with respect to the five fiscal years of the Company prior to the
change of control, minus $1.00.


 


(b)           For
purposes of this Agreement, a change in control of the Company, or in any person
directly or indirectly controlling the Company, shall mean:


 


(i)            a change
in control as such term is presently defined in Regulation 240.12b-2 under
the Securities Exchange Act of 1934 (“Exchange Act”); or


 


(ii)           if any “person”
(as such term is used in Section 13(d) and 14(d) of the Exchange
Act) other than the Company or any “person” who on the date of this Agreement
is a director or officer of the Company, becomes the “beneficial owner” (as
defined in Rule 13(d)-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing twenty percent (20%) of the voting
power of the Company’s then outstanding securities, unless such person becomes
such a beneficial owner as a result of a transaction approved by a majority of
the board of directors of the Company; or


 


(iii)          if
during any period of two (2) consecutive years during the term of this
Agreement, individuals who at the beginning of such period constitute the Board
of Directors cease for any reason to constitute at least a majority thereof,
unless the election of each director who is not a director at the beginning of
such period has been approved in advance by directors representing at least
two-thirds (2/3) of the directors then in office who were directors at the
beginning of the period.


 


12.        Successors
and Assigns; Third Party Beneficiaries. 
This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the Company, and unless clearly inapplicable, all
references herein to the Company shall be deemed to include any such 


 





















 


successor.  In addition, this Agreement shall be binding
upon and inure to the benefit of the Employee and Employee’s heirs, executors,
legal representatives and assigns; provided, however, that the obligations of
Employee hereunder may not be delegated without the prior written approval of
the Board of Directors of the Company. 
In the event of any consolidation or merger of the Company into or with
any other corporation during the term of this Agreement, or the sale of all or
substantially all of the assets of the Company to another corporation, person
or entity during the term of this Agreement, such successor corporation shall
assume this Agreement and become obligated to perform all of the terms and
provisions hereof applicable to the Company, and Employee’s obligations
hereunder shall continue in favor of such successor corporation.


 


13.        Amendments.  This Agreement may not be altered, modified,
amended or terminated except by a written instrument signed by each of the parties
hereto.


 


14.        Prior
Agreements Superseded.  This
Agreement contains the entire agreement of the parties relating to the subject
matter hereof and supersedes any other agreements, oral or written, entered
into between Employee and the Company prior to the date of this Agreement
relating thereto.


 


15.        Applicable
Law.  This Agreement shall be
governed by, construed and enforced in accordance with the laws of the State of
Washington, without regard to conflicts of laws.


 


16.        Severability.  If any provision of this Agreement shall be
held by a court of competent jurisdiction to be contrary to law or public
policy, the remaining provisions shall remain in full force and effect.


 


17.        Waiver.  No term or provision hereof shall be deemed
waived and no breach consented to or excused, unless such waiver, consent or
excuse shall be in writing and signed by the party claimed to have waived,
consented or excused. A consent, waiver or excuse of any breach shall not
constitute a consent to, waiver of, or excuse of any other or subsequent breach
whether or not of the same kind of the original breach.


 


18.        Counterparts.  This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one and the same
agreement.


 


19.        Acknowledgment.
  Employee acknowledges that he has
carefully read this Agreement, has had an opportunity to consult counsel
regarding this Agreement and hereby represents and warrants to the Company that
Employee’s entering into this Agreement, and the obligations and duties
undertaken by Employee hereunder, will not conflict with, constitute a breach
of or otherwise violate the terms of any other agreement to which Employee is a
party and that Employee is not required to obtain the consent of any person,
firm, corporation or other entity in order to enter into and perform Employee’s
obligations under this Agreement.


 





















 


IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the day and year first above
written.


 


 


	
   

  	
  eAcceleration Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ E. Edward Ahrens

  	
   

  
	
   

  	
   

  	
  Name: E. Edward Ahrens

  
	
   

  	
   

  	
  Title: Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ E. Edward Ahrens

  	
   

  
	
   

  	
  E. Edward Ahrens

  
					



 





















 


EXHIBIT A


 


Inventions


 


1.             The
following is a complete list of all inventions or improvements relevant to the
subject matter of services pursuant to this Agreement that have been made or
conceived or first reduced to practice by Employee, alone or jointly with
others, prior to the first effective date of this Agreement that Employee
desires to remove from the operation of this Agreement entered into between the
Company and Employee.


 


(a)           No
inventions or improvements.


 


(b)           Any and
all inventions regarding:   Nothing


 


2.             Employee
proposes to bring to this relationship the following materials and documents of
a former employer.


 


(a)           No
materials or documents.


 


 


	
   

  	
  /s/ E. Edward Ahrens

  	
   

  
	
   

  	
  E. Edward Ahrens