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Exhibit 10.27
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as
of this 12th day of April, 1998, between eSoft, Inc., a Delaware corporation
(the ''Company"), and XXXXXX XXXXXXXXX, an individual person (the "Executive").
RECITAL
A. The Company desires to employ the CHIEF FINANCIAL
OFFICER, 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 Chief Financial Officer. Subject to Section 4, the
term of Executive's employment under this Agreement (the "Term") shall be for
36 months, beginning April 16, 1998 and ending April 15, 2001.
2. Duties, Responsibilities and Authority. In his
capacity as Chief Financial Officer of the Company, the Executive shall have
primary responsibility for the establishment and maintenance of the Company's
financial policies and plans, accounting, budgeting, treasury, tax, insurance,
and investor relations. Responsibilities also include the Company's
relationship with financial institutions, investors and government agencies.
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 Chief Financial Officer and he shall not engage in any other business
activity or activities which, in the judgement of the President of the Company,
conflict with the performance of his duties under this Agreement.
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3. Compensation
(a) Salary. For services rendered under this
Agreement, the Company shall pay the Executive a salary at the rate of $7,500
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 $5,000 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 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.
(d) Stock Options. The Executive has been granted
incentive stock options pursuant to the Company's Stock Option Plan to purchase
up to 40,000 shares of the Company's common stock at an exercise price equal to
the offering price of the Company's common stock in the Initial Public Offering
completed in March, 1998. 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 four (4) 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 Executive presents to the
Company an itemized accounting of such expenses including reasonable supporting
data.
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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 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.
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, pay the Executive his 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 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
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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 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 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, 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,
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 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.
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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 an injunction restraining the
Executive from such breach. 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 Xxxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx, 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.
(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.
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(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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XXXXXX XXXXXXXXX
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