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EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of
this day of February, 1999, between eSoft, Inc., a Delaware corporation (the
"Company"), and XXXXX XXXXXX, an individual person (the "Executive").
RECITAL
A. The Company desires to employ the Executive as VICE PRESIDENT OF
INTERNATIONAL SALES, 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 INTERNATIONAL SALES. Subject to Section 4, the
term of Executive's employment under this Agreement (the "Term") shall be for
36 months, beginning MARCH 1, 1999 and ending FEBRUARY 28, 2002.
2. Duties, Responsibilities and Authority. In the capacity as VICE
PRESIDENT OF INTERNATIONAL SALES for the Company, the Executive shall have
primary responsibility for the sales and distribution of the Company's products
and services in Europe, Asia/Pacific and Latin America. These responsibilities
include establishing and maintaining relationships with distributors,
resellers, and strategic business partners in each region. The Executive shall
be responsible for recruiting, hiring, directing, performing administrative
functions, setting and managing compensation and incentive plans for Regional
Directors in each region and other personnel as appropriate. The Executive
shall have primary responsibilities for meeting and exceeding the sales and
revenue objectives established for the International territory and markets. 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
Executive's full
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professional and managerial time and effort to the performance of the duties as
VICE PRESIDENT OF INTERNATIONAL SALES 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.
3. Compensation
(a) Salary. For services rendered under this Agreement, the Company
shall pay the Executive a salary at the rate of $8,250.00 per month.
(b) Incentive Pay. The Executive shall be eligible to receive a
quarterly Incentive Pay commission. The Incentive Pay is targeted at 1% of net
revenues received in the International Territory and is defined in the
Executive's Annual Sales Compensation Plan, attached hereto and updated
annually. 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.
(c) Bonuses. The Executive shall be eligible to receive a
performance bonus based upon attainment of minimum quarterly sales quota's. The
Performance Bonus is defined in the Executive's Annual Sales Compensation Plan,
attached hereto and updated annually. 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.
(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) 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, subject to
board approval. 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.
(f) 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
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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.
(g) 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.
(h) Relocation Allowance. The Company shall reimburse the Executive
for certain relocation expenses. These include the following: 1) two
househunting trips for the Executive and Spouse to Denver, Colorado such
househunting trips to include round-trip airfare and two (2) nights lodging at
a hotel (such airfare and hotel arrangements to be approved by the Company in
advance), 2) actual moving expenses up to a maximum of $7,500 using a moving
company approved in advance by the Company. Such relocation by the Executive to
the Company's headquarter's location is expected to occur no later than August
of 1999.
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.
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(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.
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 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 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.
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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.
9. Trade Secrets and Confidential Information. During Executive's
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
Executive's 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.
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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 __________________________________________. 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.
(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: /s/ Xxxxxxx Xxxx
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Xxxxxxx Xxxx
Chief Executive Officer
THE EXECUTIVE:
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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eSOFT, INC.
0000 Xxxxxxxx Xxxxx, Xxxxx X
Xxxxxxx, Xxxxxxxx 00000
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EMPLOYEE CONFIDENTIALITY AGREEMENT
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THIS AGREEMENT is between eSoft, Inc. (the "Company") and ____________
________ an individual residing at ___________________________________________
________ (the "Employee"), based on the following circumstances:
A. WHEREAS the Company owns and is developing several proprietary
software products and services which are and will be maintained as trade
secrets and unpublished copyrighted materials (the "Company's products"), and
B. WHEREAS the Employee is employed as a____________________________
for the Company, and will be given access to and substantial assistance from the
Company's staff in understanding many of the Company's products and plans,
including many of the Company's trade secrets and other confidential
information, and
C. WHEREAS the Company's products are developed at substantial expense
and give the Company an advantage over its competitors, but only so long as
they remain the secret and proprietary information of the Company, and
D. WHEREAS the Employee agreed to enter into this Agreement as a
condition of his/her employment by the Company, understands that he/she will
not be given access to confidential information concerning the Company's
products and plans until he/she enters into this Agreement and acknowledges
that this Agreement is reasonable and necessary for the protection of the
Company's trade secrets and other secret and confidential information, the
protection of which allows the Company to continue in business and to continue
to employ the Employee, THEREFORE
THE COMPANY AND THE EMPLOYEE agree to the following:
1. DEFINITIONS.
a. COMPETITIVE BUSINESS. As used in this Agreement, "competitive
business" means any business or enterprise engaged in the business of providing
any product or service then or historically provided by the Company, including,
but not limited to, computer software or systems for LAN or WAN connectivity to
the Internet within the geographical areas of the United States, including
Alaska and Hawaii, Puerto Rico, and Canada, as well as within the geographical
area of any other country, territory or sovereignty in which the Company has a
presence by virtue of having established a dealership for its products at the
time under consideration.
b. CONFIDENTIAL INFORMATION. As used in this Agreement, the term
"confidential information" means all of the following, whether now or later
existing, concerning the business, products, programs and activities of the
Company: (a) financial and pricing information, including, but not limited to
budgets, budget projections and plant information, (b) customer account lists,
(c) prospective customers identified by the Company, (d) internal customer
data, (e) creations, including, but not limited to, computer code and
programming materials, (f) any corporate strategy or plan, including, but not
limited to, pricing, marketing, manufacturing and data processing plans and
strategies, and (g) any information marked or otherwise identified by the
Company as confidential, including information identified as confidential in
any published Company policy.
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c. CREATION. As used in this Agreement, the term "creation" means
any: (a) computer program or code, (b) arithmetic, logarithmic, analog, digital
or other formula, (c) product, marketing or business plan composition, writing
or work, writings, and compositions of words, numbers or analogs, including any
combination of them, (d) any other computer programming material in any form or
medium or expression, and (e) computer hardware structures and configurations,
which concern or relate to any present or prospective, product, program or
activity of the Company.
d. PROSPECTIVE CUSTOMER. As used in this Agreement, the phrase
"prospective customer of the Company" means any person or firm directly
solicited by the Company, other than through general advertising, within the
six (6) month period prior to the date under consideration.
2. PROPRIETARY RIGHTS OF THE COMPANY. The Employee may participate in
the development of the Company's products, marketing materials, and/or business
plans due to the Employee's involvement in the creative process with the
Company's technical, development, marketing and/or management staff, and, to
the extent of the Employee's participation and contribution, all resulting
products and product enhancements, marketing and/or business plan materials
shall be deemed to be made for hire, free from any claim or right of the
Employee. The Employee shall promptly inform the Company of any product or
literature, or any component of either or both of them, in the development or
creation of which he/she participated and shall cooperate with the Company,
even after the termination of his/her employment by the Company, in securing
the product or literature as the Company's sole property; the Employee's
cooperation shall be without further compensation, although the Company shall
reimburse the Employee for any reasonable, documented out-of-pocket expenses
incurred by the Employee in so cooperating.
3. CONFIDENTIALITY. The Employee acknowledges that all confidential
information, as defined in this Agreement, is made available in the strictest
confidence solely for the benefit and purposes of the Company and that
unauthorized disclosure of confidential information would harm the Company's
interests. Accordingly, the Employee agrees that during his/her employment by
the Company he/she will not, directly or indirectly, use for himself or to the
detriment of the Company or disclose to any party, other than as directed or
authorized by any officer of the Company, any confidential information. At the
termination of the Employee's employment by the Company, the Employee shall
promptly deliver all records and copies of confidential information to the
Company.
4. COMPETITIVE ACTIVITY.
a. AS AN EMPLOYEE OF ANOTHER. The Employee agrees that during
his/her employment by the Company he/she shall not engage in a competitive
business as an employee of or otherwise on behalf of any person, firm,
partnership, corporation or other entity.
b. AS AN OWNER OR OTHERWISE. The Employee agrees that during
his/her employment by the Company he/she shall not engage, directly or
indirectly, in a competitive business as an owner, officer, partner, joint
venture, principal or otherwise for himself.
5. PURPOSE. The Employee acknowledges that the protective provisions
of this Agreement are necessary for the Company to maintain its competitive
position and to preserve its trade secrets and proprietary information from
becoming public knowledge when it is the intent of both the Employee and the
Company that the Company's trade secrets, proprietary information and other
confidential information remain the sole and exclusive property of the Company.
6. REMEDIES; ENFORCEMENT. The Company's remedies for any breach of
this Agreement are in addition to any other rights of remedies it may have
against the Employee arising from his/her fiduciary duties as an employee of
the Company. The Employee acknowledges that any violation of the terms of this
Agreement would naturally result in irreparable harm to the Company and agrees
that a violation of the obligations respecting confidentiality, solicitation
and competition will entitle the Company to enjoin the Employee's conduct and
seek an accounting of profits realized by the Employee, in addition to any
other remedies that may be available to the Company. The Company shall be
entitled to recover all of its costs, including its reasonable attorney's fees,
in enforcing its rights and remedies under this Agreement.
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7. POLICIES. In addition to other Company policies, the Employee
agrees to act in accordance with all Company policies and procedures concerning
confidential information and employee cooperation in protecting and securing
Company property.
8. EMPLOYMENT. The Employee acknowledges that entering into this
Agreement is a condition of employment with the Company. This Agreement gives
the Employee no greater or lessor rights to continued employment with the
Company than the Employee otherwise has and shall remain in effect after the
Employee's employment with the Company terminates, regardless of the reason, or
lack of reason, for that termination.
9. SEVERABILITY. The provisions of this Agreement are severable and to
the extent any provision is found unenforceable, the remaining provisions of
this Agreement shall be enforced as if the unenforceable provision were
omitted.
10. LAW. This Agreement is to be governed by Colorado law.
DATED this day of , 19 .
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EMPLOYEE: COMPANY:
eSoft, Inc.
a Colorado Corporation
By:
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President
