EXHIBIT 10.4
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EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of March 17, 1997 between
JFAX Communications, Inc. (the "Company") and Xx. Xxxxx Xxxxxxxxxx ("Employee").
The parties agree as follows with respect to the employment by the
Company of the Employee:
1. Position of Employee. The Employee will continue as the Chief
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Technical Officer of the Company, until such time as the Board of Directors of
the Company determines otherwise.
2. Term of Employment. The Employee's employment with the Company
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preceded the date of this Agreement and shall continue for an indefinite period
of time, but this Agreement and such employment may be terminated by either the
Company or the Employee at will, by notice to the other party, and whether or
not there shall be Cause (as defined below) or any other reason for such
termination. However, in case the Company shall terminate this Agreement and
the employment of Employee hereunder without Cause, then the Company will pay
severance to
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Employee, according to the schedule of regular salary amounts as set forth
below, for a period of three months after the date of such termination, or if
earlier, to the date Employee commences new employment (such severance pay shall
not, in any event, be less than one month's pay); provided that this sentence
shall not be applicable until such time as Employee has moved his residency to
California to take up his duties with the Company in California.
3. Salary. Employee's salary shall be at the annual rate of $60,000
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currently, increasing to $90,000 on April 1, 1997, and increasing to $110,000
when he moves his residency to California for purposes of his employment
hereunder, payable bi-weekly or on such other basis as the Company establishes
for employees generally, subject to applicable withholdings.
4. Bonus. Employee shall be entitled each fiscal quarter to
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participate in the bonus plan established by the Company for management
personnel up to a maximum of 35% of his quarterly salary level. Each quarterly
bonus shall be determined by the Board of Directors of the Company, based on
meeting performance objectives for
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Employee as established from time to time between the Company and the Employee.
Employee shall further be entitled, commencing from the time he moves to
California as aforesaid, to a monthly bonus of $400 per month for twelve months
only.
5. Stock Options. Employee agrees with the Company that, except as
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provided in the following provisions, he owns no shares of the Company's capital
stock and has no stock options or other rights to acquire any of such shares,
any prior ownership or entitlement of the Employee being embodied in the
following provisions. Employee is hereby granted options to purchase fifteen
(15) shares of the Company's common stock at an exercise price of $3,851.89 per
share. Such options shall vest one-sixth each fiscal quarter at the end of each
of the first 6 quarterly periods after the date hereof, the first such vesting
on June 30, 1997, and shall expire not later than the 10th anniversary of this
Agreement. Employee also has existing options (i.e., a prior award) to acquire
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thirty (30) shares of the Company's common stock at the exercise price of $1.00
per share, 15 of which options are already vested and 15 of
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which option will vest when he moves to California as aforesaid, and such 30
options have a term of 10 years and may be exercised at any time until their
termination whether or not Employee ceases to be employed by the Company. All
stock options of Employee shall otherwise be subject to customary anti-dilution
adjustments and other provisions, including vesting upon a change of control,
and, if and when practicable, registration of the subject shares on Form S-8, as
established for employee stock options generally , it being agreed, however,
that with respect to the 15 above-mentioned options exercisable at $3,851.89 per
share, if such options, or any of them, shall become vested in the future, and
Employee ceases to be employed by the Company, at a time when the Company has
not yet gone public, then for purposes of the timing of any exercise of such
options, but not for purposes of vesting, Employee will be treated as if he had
left the employment of the Company thirty days after the date the Company goes
public.
[Paragraphs 6 and 7 intentionally omitted.]
8. Expenses. The Company will reimburse Employee for customary,
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ordinary and necessary business expenses incurred by Employee in performing his
duties and
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activities on behalf of the Company. The Company will also reimburse Employee
for his expenses of relocating to California up to a maximum amount of $10,000.
Such expenses will be reimbursed only upon presentation by Employee of
appropriate documentation to substantiate such expenses.
9. Benefits. Employee shall be entitled to vacation, holidays,
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health insurance and other employee benefits on the same terms and conditions as
similarly situated employees. The Company specifically reserves the
unrestricted right to amend, decrease or abolish any such benefits at any time
so long as Employee is not treated less favorably than similarly situated
employees. Employee shall be solely responsible for his own taxes in respect of
salary, bonus, stock options, expenses and benefits hereunder. The Company
shall be entitled to withhold from any thereof as and to the extent required by
law.
10. No Other Employment. During his employment with the Company,
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Employee shall devote all his professional efforts to enhance the business of
the Company, and the Employee shall not engage in any other activity in
competition with or that would be adverse to the Company.
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11. Inventions and Copyrights. The Employee hereby irrevocably
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assigns to the Company and its successors and assigns his entire right, title
and interest in and to all Inventions (as defined below), copyrights and/or
designs which the Employee has made or may hereafter make, conceive, develop or
perfect, either alone or jointly with others, either: (i) during the term of his
employment by the Company (the "Term"), if such Invention, copyright and/or
design is related to the business of the Company or its affiliates or is related
to their research or development work; or (ii) with the use of any amount or
part of Trade Secrets (as defined below) of the Company or its affiliates; or
(iii) in any part whatsoever during the Company's regular working hours during
the Term of his employment or while the Employee was doing any work for the
Company or its affiliates.
12. No Disclosure of Confidential Information. The Employee
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recognizes, acknowledges and agrees that as a result of or in connection with
his employment he will have access to and obtain certain Confidential
Information, as defined below, relating to the Company's business and not
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generally known to the public or to the Company's competitors. The Employee
recognizes, acknowledges and agrees that the Confidential Information
constitutes a valuable, special and unique asset to the Company, access to and
knowledge of which is essential to the performance of the employee's duties.
The Employee specifically agrees that, except as directed by the Company's Board
of Directors or its Chief Executive Officer or as required by law, the Employee
will not at any time during or after the Term use or disclose any Confidential
Information to any person whomsoever or allow any Confidential Information to be
disclosed to any person whomsoever except in the good faith performance of his
duties.
13. Survival of Certain Provisions of this Agreement. Paragraphs 11,
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12 and 14 of this Agreement shall survive any termination of this Agreement and
Employee's employment, regardless of whether such termination was voluntary or
involuntary; for Cause or without Cause; by voluntary resignation or involuntary
discharge; by the Employee's death or disability; or otherwise.
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14. Definitions. As used in this Agreement, the following terms have
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the following meanings:
"Cause" shall mean (i) any act or failure to act, done or omitted in
bad faith, (ii) persistent unavailability for service, habitual neglect,
material misconduct (after notice and a reasonable opportunity to cure) or
dishonesty, or (iii) conviction of a felony (other than ordinary traffic
violations or similar minor offenses).
"Inventions" means and refers to any process, computer software
(including all manifestations and variations thereof) technique, machine,
device, composition of matter, instrument, tool or formula which is new or which
the Employee has a reasonable basis to believe may be new, whether or not
patentable or reduced to practice by the Company, its parent or its affiliates
or any other person, corporation, or other entity, including, without
limitation, inventions, Trade Secrets as defined below, know-how and software.
"Proprietary Information" means and refers to any and all non-public
materials and information (which has not become known or available to the public
or within the
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Company's industry) of the Company and/or any of the Company's parents,
affiliates, owners, clients, customers, suppliers, agents, licensees or
licensors of a confidential, proprietary or secret nature including, but not
limited to, the Company's, its parents' and affiliates' customers and prospects,
employee lists, business and strategic plans, marketing programs and surveys,
pricing information, research and development plans and activities, software
source code and documentation, and financial results, reports and statements.
"Trade Secrets" means and refers to information, including a formula,
pattern, compilation, program, device, method, technique or process that: (i)
derives independent economic value, actual or potential, from not being
generally known to and not being readily ascertainable by proper means by other
persons who can obtain economic value from its disclosure or use; and (ii) is
the subject of efforts that are reasonable under the circumstances to maintain
its secrecy.
"Confidential Information" means and refers, collectively, to all
Inventions, Proprietary Information and
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Trade Secrets, and each of them, as those terms are respectively defined in this
Paragraph 14.
15. Notices. All notices required or permitted hereunder shall be
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given in writing to the respective party at the address or facsimile telephone
number set forth below and shall be deemed given seventy-two (72) hours after
deposit in the United States certified mail, return-receipt requested, first-
class, postage prepaid. Notices delivered by overnight service shall be deemed
to have been given upon delivery or refusal of the same, charges prepaid to the
United States Postal Service or private courier. If any notice is transmitted
by facsimile or similar means, the same shall be deemed served or delivered upon
confirmation of transmission thereof, provided that a hard copy of such notice
is delivered by overnight service on the next business day following such
facsimile transmission. Either party may, by notice to the other, specify a
different address for notice purposes.
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If to the Company:
JFAX Communications, Inc.
c/o Orchard Capital Corporation
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
If to Employee:
Xx. Xxxxx Xxxxxxxxxx
00 Xxxxxxxxxxx Xxxxxx, Xxxxx 0X
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
16. General Provisions. This Agreement shall not be assigned by
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either party without the prior written consent of the other party, which consent
will not unreasonably be withheld. However, the obligations and benefits of the
Employee hereunder are personal and generally not assignable or delegable by
him. Any waiver of any provision or of any breach of any provision of this
Agreement shall be in writing and shall not be deemed to waive any other
provision or any other breach of this Agreement. This Agreement contains the
entire agreement between the Company and the Employee concerning the subject
matter hereof and supersedes any and or prior agreements or understandings, oral
or written, between the parties relating to the subject matter hereof and
Employee's
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employment by the Company. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES THEREOF.
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IN WITNESS WHEREOF, the Company and the Employee have each duly
executed this Agreement on the date first written above.
JFAX Communications, Inc.
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: President
/s/ Xxxxx Xxxxxxxxxx
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Xx. Xxxxx Xxxxxxxxxx
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