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Exhibit 10.28
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered
into as of this 21st day of April, 1998, between eSoft, Inc., a Delaware
corporation (the "Company"), and XXXXX XXX XXXX, an individual person (the
"Executive").
RECITAL
A. The Company desires to employ the VICE PRESIDENT OF
MARKETING, and the Executive desires to be employed by the Company in such
position upon the terms and conditions set forth in this Agreement.
B. The Executive acknowledges that during the course of the
Executive's employment the Executive will receive or be exposed to certain
confidential information and trade secrets (collectively referred to as
"Confidential Information") of the Company. The Executive also acknowledges that
this Confidential Information is among the Company's most important assets and
that the value of this Confidential Information would be diminished or
extinguished by disclosure.
AGREEMENT
In consideration of the mutual promises contained herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Employment; Position; Term. The Company hereby employs the
Executive and the Executive hereby accepts employment with the Company in the
capacity of VICE PRESIDENT OF MARKETING. Subject to Section 4, the term of
Executive's employment under this Agreement (the "Term") shall be for 36 months,
beginning APRIL 20, 1998 and ending APRIL 19, 2001.
2. Duties, Responsibilities and Authority. In his capacity as
VICE PRESIDENT OF MARKETING for the Company, the Executive shall have primary
responsibility for advertising, sales promotion, pricing, product management and
market research. Also, Executive establishes marketing goals necessary to reach
corporate sales, profitability and product support goals. The Executive shall
report to and be subject to the direction and control of the President of the
Company. The Executive shall devote substantially all of his full professional
and managerial time and effort to the performance of his duties as VICE
PRESIDENT OF MARKETING and he shall not engage in any other business activity or
activities which, in the reasonable good-faith judgement of the President of the
Company, conflict with the performance of his duties under this
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Agreement, except for the Executive's current consulting agreement which
expires on June 31, 1998.
3. Compensation
(a) Salary. For services rendered under this Agreement, the
Company shall pay the Executive a salary at the rate of $10,416.67 per month.
(b) Bonuses. The Executive shall be eligible to receive a
performance bonus based upon mutually agreed performance criteria for each
fiscal quarter of the Company completed during the term of this Agreement
beginning with the fiscal quarter commencing April 1, 1998. The maximum
aggregate amount of the bonuses shall be $12,500 per quarter. The payment of the
Executive's performance bonus shall be made as soon as practicable but no later
than sixty (60) days following the end of the fiscal quarter. The Executive
shall not be entitled to a minimum performance bonus.
(c) Annual Review. The Executive's salary, bonus, options
and terms of the severance in Section 7 of this Agreement shall be reviewed
annually beginning January 1, 1999 and may be increased as the Board deems
appropriate, but shall not be decreased during the term without mutual
agreement.
(d) Stock Options. The Executive has been granted incentive
stock options pursuant to the Company's Stock Option Plan to purchase up to
60,000 shares of the Company's common stock at an exercise price equal to the
fair market value of the Company's common stock on the day of the grant. Shares
shall vest over a 36 month period with no vesting until the beginning of the
eighth month at which time seven-thirty-sixths (7/36) of the options will vest,
and then one-thirty-sixth (1/36) will vest after the beginning of each month
thereafter. Vesting shall occur as long as the Executive remains an employee of
the Company. The options, once vested shall have an expiration date of 4 years
from the date of grant of the option. In addition, the Executive may participate
in stock option programs of the Company upon such terms as the administrators of
such programs in their discretion determine.
(e) Benefits and Vacation. The Executive shall be eligible
to participate in such insurance programs (health, disability or life) or such
other health, dental, retirement or similar employee benefits programs as the
Board may approve, on a basis comparable to that available to other officers and
executive employees of the Company. The Executive shall be entitled to a minimum
of three (3) weeks of paid vacation per year. Vacation time may be accumulated
for up to one year beyond the year for which it is accrued and may be used any
time during such year. Any vacation time not used during such additional year
shall be forfeited. The value of any accrued but unused and unforfeited vacation
time shall be paid in cash to the Executive upon termination of his employment
for any reason.
(f) Reimbursement of Expenses. The Company shall reimburse
the Executive in a timely manner for all reasonable out-of-pocket expenses
incurred by the Executive in connection with the performance of his duties under
this Agreement; provided that the
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Executive presents to the Company an itemized accounting of such expenses
including reasonable supporting data.
(g) Relocation Assistance. The Company shall reimburse the
Executive in a timely manner for up to $2,500 of reasonable out-of-pocket
expenses incurred by the Executive in connection with the relocation of
Executive's current Evergreen residence to a residence in Boulder.
4. Termination.
(a) Termination by the Company without Cause.
Notwithstanding anything to the contrary contained herein but subject to Section
7 hereof, the Company may, by delivering thirty (30) days' prior written notice
to the Executive, terminate the Executive's employment at any time without Cause
(as hereinafter defined).
(b) Termination by the Executive without Cause.
Notwithstanding anything to the contrary contained herein but subject to Section
7 hereof, the Executive may, by delivering thirty (30) days' prior written
notice to the Company, terminate the Executive's employment hereunder.
(c) Termination by the Company for Cause. The Company may
terminate the Executive's employment for Cause immediately upon written notice
stating the basis for such termination. "Cause" for termination of the
Executive's employment shall only be deemed to exist if the Executive has (i)
breached this Agreement and if such breach continues or recurs more than thirty
(30) days after notice from the Company specifying the action which constitutes
the breach and demanding its discontinuance, (ii) exhibited willful disobedience
of lawful directions of the President or of the Board, or (iii) committed gross
malfeasance in performance of his duties hereunder or acts resulting in an
indictment charging the Executive with the commission of a felony; provided that
the commission of acts resulting in such an indictment shall constitute Cause
only if a majority of the directors who are not also subject to any such
indictment determine that the Executive's conduct has substantially adversely
affected the Company or its reputation. A material failure to perform his duties
hereunder that results from the disability of the Executive shall not be
considered Cause for his termination.
(d) Termination by the Executive for Cause. The Executive
may terminate employment for Cause immediately upon written notice stating the
basis for such termination. "Cause" for termination of employment by the
Executive shall only be deemed to exist if the Company has breached this
Agreement and if such breach continues or recurs more than thirty (30) days
after notice from the Executive specifying the action which constitutes the
breach and demanding its discontinuance, or if the Company is engaged in
unlawful activity or requests the Executive to engage in unlawful activity.
5. Disability. In the event of disability of the Executive
during the term hereof, the Company shall, during the continuance of his
disability but only for a maximum of 90 days following the determination of
disability, pay the Executive his then current salary, as
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provided for in Section 3(a), and adjusted pursuant to Section 3(b), and
continue to provide the Executive all other benefits provided hereunder. As used
herein, the term "disability" shall mean the complete and total inability of the
Executive, due to illness, physical or comprehensive mental impairment, to
substantially perform all of his duties as described herein for a consecutive
period of thirty (30) days or more.
6. Death. In the event of the death of the Executive, except
with respect to any benefits which have accrued and have not been paid to the
Executive hereunder, the provisions of this Agreement shall terminate
immediately. The Executive's estate shall have the right to receive compensation
due to the Executive as of and to the date of his death and shall have the right
to receive an additional amount equal to one-twelfth (1/12th) of the Executive's
annual compensation then in effect.
7. Severance. In the event that the Executive's employment is
terminated by the Company other than for Cause or death of the Executive, or in
the event there is either a material change in the responsibilities of the
Executive or a loss of position within six (6) months after a Change of Control
(as defined in Section 12 of this Agreement), or if Executive terminates this
Agreement for Cause, the Executive shall be entitled to receive his then current
salary and benefits, as provided for in Sections 3(a) and 3(e), and adjusted
pursuant to Section 3(b), payable in semi-monthly installments, for the greater
of three (3) months or that number of months which equals the number of years
that have elapsed from the initial date of this Agreement until the date of the
Executive's termination by the Company; provided, however, that if any of such
payments would (i) constitute a "parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986 (the "Code") and (ii) but for
this provision, be subject to the excise tax imposed by Section 4999 of the Code
(the "Excise Tax"); the amount payable hereunder shall be reduced to the largest
amount which the Executive determines would not result in any portion of the
payments hereunder being subject to the Excise Tax. If the Executive voluntarily
resigns his employment hereunder or if his employment is terminated for Cause,
the Executive shall not be entitled to any severance pay or other compensation
beyond the date of termination of his employment.
8. Covenant Not to Compete.
(a) During the continuance of the Executive's employment
hereunder and for a period of twelve (12) months after termination of the
Executive's employment hereunder, pursuant to section 4.b or 4.c hereof, the
Executive shall not engage in any business which competes with the Company or
its affiliates anywhere in the United States or Canada during the Executive's
employment hereunder or at the time of termination.
(b) The Executive shall not, for a period of twelve (12)
months after termination of the Executive's employment hereunder, pursuant to
section 4.b or 4.c hereof, employ, engage or seek to employ or engage for
himself or any other person or entities, any individual who is or was employed
or engaged by the Company or any of its affiliates until the expiration of six
(6) months following the termination of such person's or entity's employment or
engagement with the Company or any of its affiliates.
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9. Trade Secrets and Confidential Information. During his
employment by the Company and for a period of five (5) years thereafter, the
Executive shall not, directly or indirectly, use, disseminate, or disclose for
any purpose other than for the purposes of the Company's business, any
Confidential Information of the Company or its affiliates, unless such
disclosure is compelled in a judicial proceeding. Upon termination of his
employment, all documents, records, notebooks, and similar repositories of
records containing information relating to any Confidential Information then in
the Executive's possession or control, whether prepared by him or by others,
shall be left with the Company or, if requested, returned to the Company.
10. Severability. It is the desire and intent of the
undersigned parties that the provisions of Sections 8 and 9 shall be enforced to
the fullest extent permissible under the laws in each jurisdiction in which
enforcement is sought. Accordingly, if any particular sentence or portion of
either Section 8 or 9 shall be adjudicated to be invalid or unenforceable, the
remaining portions of such section nevertheless shall continue to be valid and
enforceable as though the invalid portions were not a part thereof. In the event
that any of the provisions of Section 8 relating to the geographic areas of
restriction or the provisions of Sections 8 or 9 relating to the duration of
such Sections shall be deemed to exceed the maximum area or period of time which
a court of competent jurisdiction would deem enforceable, the geographic areas
and times shall, for the purposes of this Agreement, be deemed to be the maximum
areas or time periods which a court of competent jurisdiction would deem valid
and enforceable in any state in which such court of competent jurisdiction shall
be convened.
11. Injunctive Relief. The Executive agrees that any violation
by him of the provisions contained in Sections 8 and 9 are likely to cause
irreparable damage to the Company, and therefore he agrees that if there is a
breach or threatened breach by the Executive of the provisions of said sections,
the Company shall be entitled to pursue an injunction restraining the Executive
from such breach, and Executive will make no objection to the form of relief
sought. Nothing herein shall be construed as prohibiting the Company from
pursuing any other available remedies for such breach or threatened breach.
12. Miscellaneous.
(a) Notices. Any notice required or permitted to be given
under this Agreement shall be directed to the appropriate party in writing and
mailed or delivered, if to the Company, to eSoft, Inc., to the attention of the
President, at 0000-X Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, and if to the
Executive, at 0000 XXXXXXXXX XXXX, XXXXXXXXX, XX 00000. Notification addresses
may be changed with written notice.
(b) Binding Effect. This Agreement is a personal service
agreement and may not be assigned by the Company or the Executive, except that
the Company may assign this Agreement to a successor of the Company by merger,
consolidation, sale of substantially all of the Company's assets or other
reorganization (a "Change of Control"). Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, and legal representatives.
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(c) Amendment. This Agreement may not be amended except by
an instrument in writing executed by each of the undersigned parties.
(d) Applicable Law. This Agreement is entered into in the
State of Colorado and for all purposes shall be governed by the laws of the
State of Colorado.
(e) Attorney's Fees. In the event either party takes legal
action to enforce any of the terms of this Agreement, the unsuccessful party to
such action will pay the successful party's reasonable expenses, including
attorney's fees, incurred in such action.
(f) Entire Agreement. This Agreement supersedes and
replaces all prior agreements between the parties related to the employment of
the Executive by the Company.
SIGNATURES
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the first date mentioned above.
THE COMPANY:
By:
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Xxxxx X. Xxxxx
President & COO
THE EXECUTIVE:
By:
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Xxxxx Xxx Xxxx
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