1
EXHIBIT 2.7
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of
this _______th day of January 1999, to become effective at the time set forth
in Section 1 hereof, between eSoft, Inc., a Delaware corporation (the
"Company"), and Xxx Xxxxx, an individual person (the "Executive").
RECITAL
A. The Company desires to employ the Executive as Director of Sales -
Europe, 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 Director of Sales - Europe. Subject to Section 4, the term of
Executive's employment under this Agreement (the "Term") shall be for 12
months, beginning on the first calendar day following the date on which the
Company acquires Apexx Technology, Inc.
2. Duties, Responsibilities and Authority. In the capacity as Director
of Sales - Europe for the Company, the Executive shall have primary
responsibility for establishing and managing distributor, reseller, end-user
and other channel sales activities in Europe, with specific responsibilities
for sales and revenue attainment for Europe. The Executive shall report to and
be subject to the direction and control of the Vice President of Sales of the
Company. The Executive shall devote substantially all of Executive's full
professional and managerial time and effort to the performance of the duties as
Director of Sales - Europe and shall not engage in other business activity or
activities which, in the reasonable good-faith judgement of the President of
the Company, conflict with the performance of duties under this Agreement.
1
2
3. Compensation
(a) Salary. For services rendered under this Agreement, the Company
shall pay the Executive a salary at the rate of $6,667.00 per month.
(b) Incentive Pay. The Executive shall be eligible to receive
incentive pay based on actual attainment of sales and revenue objectives. The
target incentive pay at 100% of quota is $20,000 per quarter. Sales and revenue
quota's will be established by the Vice President of Sales of the Company. The
payment of the Executive's incentive pay shall be made as soon as practicable
but no later than sixty (60) days following the end of the quarter.
(c) Stock Options. The Executive will be granted incentive stock
options pursuant to the Company's Stock Option Plan to purchase up to 25,000
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, subject to
board approval. The day of the grant will be the first calendar day following
the date on which the Company acquires Apexx Technology, Inc. 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.
(d) 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, 2000 and may be increased as the Board deems appropriate,
but shall not be decreased during the term without mutual agreement.
(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 Executive's 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 Executive's duties under
this Agreement; provided that the Executive presents to the Company an itemized
accounting of such expenses including reasonable supporting data.
2
3
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 Executive's 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
Executive's duties hereunder that results from the disability of the Executive
shall not be considered Cause for Executive's 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 Executive's
disability but only for a maximum of 90 days following the determination of
disability, pay the Executive the Executive's then current salary, as 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 Executive's duties as described herein for a
consecutive period of thirty (30) days or more.
3
4
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 Executive's 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 Executive's
then current salary and benefits, as provided for in Sections 3(a) and 3(e),
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 Intemal 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 Executive's employment hereunder or if Executive's
employment is terminated for Cause, the Executive shall not be entitled to any
severance pay or other compensation beyond the date of termination of
Executive's 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 directly 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.
9. Trade Secrets and Confidential Information. During Executive's
employment by the Company and for a period of three (3) 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
Executive's
4
5
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
Executive of the provisions contained in Sections 8 and 9 are likely to cause
irreparable damage to the Company, and therefore Executive 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 [INSERT ADDRESS FOR EXECUTIVE HERE]. 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.
(c) Amendment. This Agreement may not be amended except by an
instrument in writing executed by each of the undersigned parties.
5
6
(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:
-------------------------------------
Name: Xxxxxxx Xxxx
Title: Chief Executive Officer
THE EXECUTIVE:
By:
-------------------------------------
Xxx Xxxxx
6
