EXHIBIT 10.37
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is dated as of July 31, 1996 by and between JetFax, Inc., a
Delaware corporation with its principal place of business at 0000 Xxxxxx Xxxx,
Xxxxx Xxxx, XX 00000 (the "Company"), and Xxxxxxx Xxxxxxxx, an individual
residing at 000 Xxxxx Xxxxxx Xxxx, Xxxxx Xxxxxxx, XX 00000 ("Employee").
WHEREAS, the Company is engaged in the development, marketing, sale and
license of fax products and technologies;
WHEREAS, Employee has substantial experience and reputation in the business
of developing, marketing and maintaining software, systems and processes for
sale, license and use in connection with fax products and technologies;
WHEREAS, the Company wishes to retain the services of Employee and Employee
wishes to accept employment with the Company, all on the terms and conditions
herein set forth;
WHEREAS, Employee is the president and principal shareholder of Xxxxxxxx
Group, Inc. ("CGI"), a California corporation; and
WHEREAS, the Company and CGI have entered into an Asset Purchase Agreement
(the "Asset Purchase Agreement") made as of July 31, 1996, under which the
Company is purchasing certain of the assets of CGI;
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement, the Company
and Employee hereby agree as follows:
1. Employment.
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(a) Duties. The Company hereby employs Employee to render full-time,
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exclusive services to the Company during the Term (as defined in Section 1(b))
as Vice President, Software of the
Company. During the Term, Employee shall devote substantially his full time,
attention and energies to the operations and affairs of the Company and to the
promotion of its interests. The primary responsibilities of Employee as Vice
President, Software of the Company shall be to set policies for, determine
architectural design of and manage development, implementation and customer
support of the Company's personal computer software technology. As part of these
responsibilities, Employee shall participate as an active member in related
software quality assurance projects, assist in preparing marketing materials,
make presentations, perform competitive analyses, develop quality assurance
strategic plans and participate in the Company's lead generation programs.
Notwithstanding the foregoing, the precise duties, responsibilities and services
of Employee under this Agreement may be extended or curtailed from time to time
at the direction of the Company (in consultation with Employee) in a manner not
inconsistent with Employee's status and position hereunder and qualifications.
Employee hereby accepts such employment by the Company and agrees to undertake
and assume the responsibilities set forth above and such other comparable duties
as the Company may direct from time to time.
(b) Term. The initial term of this Agreement and of Employee's employment
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hereunder shall commence as of the date hereof, and, unless sooner terminated
pursuant to the provisions of Section 4, shall terminate at the close of
business on the date that is two years from the date hereof. (The initial term
of this Agreement and additional terms, if any, agreed to between the parties,
collectively the "Term".)
2. Compensation.
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(a) Salary. In consideration of the services performed by Employee
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hereunder, the Company shall pay Employee during the first year of the Term an
annual salary at a rate of One Hundred Ten Thousand US Dollars (US$110,000.00)
per year, subject to review and increase, if any, by the parties as of the date
that is one year from the date of this Agreement. Employee shall be paid on a
twice monthly basis, in accordance with the Company's standard payroll
procedures.
(b) Options.
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(i) Issuance. In further consideration of the services performed by
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Employee hereunder, upon execution of this Agreement, the Company shall offer
Employee an option to acquire One Hundred Eighty-Seven Thousand Five Hundred
(187,500) shares of the Company's common stock, such option to vest pro-rata
(with a one year cliff) over a period of four (4) years following the date
hereof, at an exercise price of fair market value as set by the Company's Board
of Directors. Such stock option shall be subject to typical terms and
conditions applicable to options issued under the Company's employee stock
option plan, including a limit on duration and restrictions on transferability.
(ii) Anti-Dilution. In the event that after the date of this Agreement
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the Company issues additional shares of its capital stock at a price below
US$2.75 per share in such a manner as to trigger the anti-dilution provisions
contained in the Certificate of Designations of the Company's Series F Preferred
Stock, as the same may be amended, the Company shall issue to Employee
additional options to acquire shares of the Company's common stock under the
Company's employee stock option plan so as to increase the total number of
shares subject to Employee's then vested options by an amount equivalent (on a
pro-rata basis) to the increase in the number of shares of common stock into
which the Company's Series F Preferred Stock would then be convertible. This
Section 2(b)(ii) and the right to additional options hereunder shall terminate
upon the termination of the anti-dilution provisions contained in the
Certificate of Designations of the Company's Series F Preferred Stock (whether
by conversion of all of the Series F Preferred Stock or otherwise).
3. Expenses and Benefits.
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(a) Business Expenses. The Company shall pay directly, or reimburse
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Employee for, all reasonable, pre-approved travel and other business expenses
incurred by Employee in connection with the performance of his duties hereunder
upon presentation by Employee of expense statements or vouchers or such other
supporting information as the Company may request from time to time, provided
that such business expenses shall not exceed the aggregate amount budgeted
therefor.
(b) Employee Benefits. In addition to the benefits described herein,
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Employee shall be entitled to participate in the
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employee benefit plans, if any, maintained by the Company for the benefit of its
management level employees.
4. Termination.
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(a) By the Company For Cause. The Company may at any time at its option,
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exercised by notice to Employee, terminate Employee's employment for "Cause".
For the purposes of this Agreement, the term Cause shall mean:
(i) any material breach or default by Employee of any term or condition
of this Agreement or substantial failure of Employee to perform his duties and
responsibilities hereunder, including repeated refusals by Employee to comply
with any policies of the Company or any lawful directives of the Company, which
breach, default or failure to perform is not cured within five (5) business days
after written notice thereof;
(ii) any material breach or default by Employee of any term or
condition of the Proprietary Information and Inventions Agreement (as defined
below), which breach or default is not cured within five (5) business days after
written notice thereof;
(iii) any material breach or default by CGI of any term or condition of
the Asset Purchase Agreement, which breach or default is not cured within ten
(10) business days after written notice thereof;
(iv) willful misconduct or gross negligence by Employee in the
performance of his duties and responsibilities hereunder; or
(v) any conviction of Employee of a felony under the laws of the United
States or any State thereof.
(b) Death or Disability. Employee's employment hereunder shall terminate
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automatically upon Employee's death or permanent disability. The term
"disability" as used in this Section 4(b) shall mean the inability, because of
injury or sickness, to perform the substantial and material duties and
responsibilities of Employee's employment hereunder, while under the regular
care of a licensed physician, and while not gainfully employed in any occupation
reasonably consistent with Employee's
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education, training and experience. Employee will be considered permanently
disabled in the event he is unable to perform the substantial and material
duties and responsibilities of Employee's employment hereunder for a period of
120 days during any calendar year of the Term.
(c) Asset Purchase Agreement. In the event any of the following occurs
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such as to trigger the provisions of Section 8.12 of the Asset Purchase
Agreement and/or the termination of the provisions of Section 9.1 of the Asset
Purchase Agreement (a "Triggering Event"), then the Company may at any time
thereupon or thereafter, at its option, exercised by notice to Employee,
terminate Employee's employment hereunder:
(i) any material breach by the Company of any of the material covenants
for the payment of money set forth in the Asset Purchase Agreement to be
performed by the Company, which breach the Company fails to cure within sixty
(60) days following written notice from CGI specifying such breach, or
(ii) a petition for relief under any bankruptcy law is filed by or
against the Company, or a receiver is appointed for all or a substantial portion
of the Company's assets, and such petition or appointment is not dismissed or
vacated within sixty (60) days.
(d) Consequences of Termination. Upon expiration of this Agreement, or in
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the event Employee's employment is terminated for any reason, the Company shall
pay to Employee any compensation, as provided in Section 2, which has accrued
but which remains unpaid as of the date of such expiration or termination. Upon
expiration of this Agreement, or in the event Employee's employment is
terminated for any reason other than for material default of the Company
hereunder, the Company shall have no further obligations or liabilities to
Employee whatsoever under this Employment Agreement.
5. Covenants; Representation.
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(a) Non-Competition. As an inducement to the Company to acquire certain of
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the assets of CGI pursuant to the Asset Purchase Agreement and in order to
ensure the Company of the full benefit of the transfer of such assets pursuant
thereto, to preserve and protect the value thereof and to create a valuable
independent
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asset of the Company to enhance the earnings of the Company in future years,
Employee agrees that, for a period of five (5) years from the date of this
Agreement:
(i) Employee will not participate or engage, either alone or in
association with others, directly or indirectly (including through any direct or
indirect ownership interest in any entity other than the Company), whether as
proprietor, owner, partner, officer, director, manager, agent, consultant,
employee or otherwise, in any business or enterprise which develops, markets,
sells or otherwise deals in products or services which are directly or
indirectly competitive with products or services developed, marketed or sold by
the Company, other than as an owner of less than one percent (1%) of the
outstanding shares of stock of any corporation or less than five percent (5%) of
the outstanding shares of a corporation the shares of which are publicly traded
on a national stock exchange or in a national over-the-counter market; and
(ii) Employee will not solicit, interfere with, hire, offer to hire,
persuade or induce any person who is or was an officer, employee, customer,
supplier or agent of the Company or any of its subsidiaries or affiliates to
discontinue his relationship with the Company or any of its subsidiaries or
affiliates or accept employment by or enter contractual relations for
compensation with any other entity or person, or approach any such employee of
the Company or any of its subsidiaries or affiliates for any such purpose or
authorize or knowingly approve the taking of any such actions by any other
individual or entity.
(b) Return of Materials. Upon expiration of this Agreement or the
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termination of Employees's employment hereunder, Employee agrees that he will
(i) leave with the Company all records, drawings, notebooks and other documents
and materials pertaining to the Company's confidential information, whether
prepared by Employee or others, and (ii) leave with the Company any equipment,
tools or other devices owned by the Company then in Employee's possession.
(c) Equitable Remedies. Employee acknowledges (i) that any breach or
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attempted breach by Employee of any of the provisions of Section 5 or Section 6
could result in irreparable injury to the Company for which there would be no
adequate remedy at law; (ii)
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that if Employee should breach or attempt to breach such conditions, the Company
may seek through due process of law to enjoin Employee from further breaches or
attempted breaches of such provisions, or to compel compliance with such
provisions by specific performance, in addition to any other remedies available
to the Company in equity or at law; and (iii) that if a court of competent
jurisdiction determines that Employee has breached or attempted to breach any of
such provisions, Employee shall consent to the granting in such proceeding of an
injunction restraining Employee from further breaches of, or compelling
compliance by specific performance with, such provisions.
(d) Representation and Warranty of Employee. Employee represents and
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warrants to the Company that Employee is under no contractual or other
restriction or obligation which is inconsistent with his execution of this
Agreement, the performance of his duties hereunder or any of the rights of the
Company hereunder.
(e) Scope; Limitations. If any of the terms of this Section 5 shall for
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any reason be held to be excessively broad as to time, duration, geographical
scope, activity or subject, it shall be construed by limiting and reducing it so
as to be enforceable to the extent compatible with applicable laws that shall
then apply. Upon the occurrence of a Triggering Event, the provisions of
Section 5(a)(i) shall terminate and, notwithstanding the provisions of Section
5(a)(ii), Employee may solicit, hire or offer to hire any of the employees
listed on Schedule 8.1(c) to the Asset Purchase Agreement.
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6. Proprietary Information and Inventions. Immediately upon execution of
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this Agreement, Employee shall execute and deliver to the Company a Proprietary
Information and Inventions Agreement in the form attached hereto as Exhibit A
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(the "Proprietary Information and Inventions Agreement").
7. Miscellaneous.
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(a) Entire Agreement. This Agreement constitutes the entire agreement
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among the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral and written, among the
parties hereto with respect to the subject matter hereof.
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(b) Notices. All notices, requests or other communications required or
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permitted hereunder shall be given in writing by hand delivery, by commercial
overnight courier or by registered or certified mail, return receipt requested,
postage prepaid, to the party to receive the same at its respective address set
forth below, or at such other address as may from time to time be designated by
such party in accordance with this Section 7(b):
If to Employee, to: With a copy to:
Xxxxxxx Xxxxxxxx Xxxxxx X. Xxxxxx, Xx., Esq.
000 Xxxxx Xxxxxx Xxxx Xxxxxx Xxxxx & Xxxxx LLP
Xxxxx Xxxxxxx, XX 00000 000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
If to the Company, to: With a copy to:
JetFax, Inc. Xxxxxxxx X. Xxxxxxx, Esq.
0000 Xxxxxx Xxxx General Counsel Associates LLP
Xxxxx Xxxx, XX 00000 0000 Xxxxxxxx Xxxxx
Xxxx.: Xxxxxx X. Xxxxxx, III Xxxxxxxx Xxxx, XX 00000
All such notices and communications hereunder shall be deemed given
when received if delivered personally, by courier or by mail, as evidenced by
the acknowledgment of receipt issued with respect thereto by the applicable
postal authorities or the signed acknowledgment of receipt of the person to whom
such notice or communication shall have been addressed.
(c) Expenses. The parties shall each bear their own expenses in
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connection with the negotiation, execution and delivery of this Agreement and
the performance of their respective obligations hereunder.
(d) Survival; Successors and Assigns. The provisions of Sections
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4(d), 5, 6 and 7 of this Agreement shall survive the expiration or termination
of this Agreement or the termination of Employee's employment hereunder for any
reason. This Agreement and the provisions thereof shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
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(e) Governing Law. The validity, construction, operation and effect
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of any and all of the terms and provisions of this Agreement shall be determined
and enforced in accordance with the laws of the State of California without
giving effect to principles of conflicts of law thereunder. Each of the parties
(a) hereby irrevocably consents and agrees that any legal or equitable action or
proceeding arising under or in connection with this Agreement shall be brought
exclusively in any federal or state court in the county in the State of
California in which, if the defendant is an individual, the defendant is
resident, or, if the defendant is a corporation, the defendant's headquarters
are located, (b) by execution and delivery of this Agreement irrevocably submits
to and accepts, with respect to any such action or proceeding for such party and
in respect of such party's properties and assets, generally and unconditionally,
the jurisdiction of the aforesaid courts, and irrevocably waives any and all
rights such party may have to object to such jurisdiction under the laws of the
State of California or the Constitution of the United States or otherwise, and
(c) irrevocably consents that service of process upon such party in any such
action or proceeding shall be valid and effective against it if made in the
manner provided in Section 7(b) hereof for delivery of notices hereunder.
(f) Modification. This Agreement may be amended or modified only upon
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the mutual written consent of both of the parties hereto.
(g) Waiver. Any failure of any party hereto to comply with any of the
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obligations or agreements set forth in this Agreement or to fulfill any
condition set forth may be waived only by written instrument signed by the other
party. No failure by any party to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver of such right, nor shall any single or
partial exercise of any right hereunder by any party preclude any other or
future exercise of that right or any other right hereunder by that party.
(h) Assignment. No party hereto may assign this Agreement without the
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prior written consent of the other party; provided, however, that the Company
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may, without Employee's consent, assign this Agreement and its rights and
obligations hereunder to any successor in interest to the Company in connection
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with any sale or transfer of all or substantially all of its assets or upon any
merger, consolidation or dissolution.
(i) Severability. If any provision of this Agreement shall be held
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invalid, unenforceable or illegal, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
and such provisions shall be enforced to the fullest extent possible in
accordance with the mutual intent of the parties hereto.
(j) Counterparts. This Agreement may be executed in any number of
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duplicate counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
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[Employment Agreement]
IN WITNESS WHEREOF, the parties have duly signed this Agreement as of
the day and year first written above.
JETFAX, INC. XXXXXXX XXXXXXXX
By: /s/Xxxxx X. Xxxxx /s/Xxxxxxx Xxxxxxxx
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Xxxxx X. Xxxxx
Vice President and CFO
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EXHIBIT A
(to Employment Agreement)
PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT
[attach]
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