Exhibit 10.4.9

June 7, 2004

John Elliott
218 Las Ondas
Santa Barbara, CA 93109

Dear John:

Re:  Amendment to Employment Agreement

We refer to the employment agreement dated August 12, 2003.  724 desires and you
have agreed to make certain amendments to the Agreement, on the terms and
conditions set forth in this letter agreement.

In consideration of the foregoing and the mutual agreements contained herein
(the receipt and adequacy of which are acknowledged), 724 and you agree as
follows:

Terms and Conditions 

 

•

Effective date: June 7, 2004

 

•

Title: Vice President, Product Management

 

•

Manager: John Sims

Salary:

Your base salary will be $14,5833.33 per month or $175,000 USD per annum. You
shall be eligible to participate in our 2004 Annual Executive Bonus Plan, which
allows for bonus to be earned on a quarterly basis if the Company achieves
positive EBITDA.  Actual bonus amounts earned will depend on the level of EBITDA
achieved.  Earned bonus amounts will be accrued on a quarterly basis, and will
be paid out annually, following the completion of the fiscal year.

Vacation

You will now earn 1.67 vacation days per month and be eligible for 4 weeks
vacation for each full calendar year.

Stock Options

Your stock options will continue to vest as per the vesting schedule outlined in
your stock option agreements.

Termination.

(a)          Termination of Employment.   Neither 724 nor you make any
representation to the other that employment will continue for a set period of
time or that employment will be terminated only under particular circumstances. 
Both 724 and you may terminate your employment at any time or for any reason,
subject to the provisions of this agreement.

(b)          Termination Obligations.  You agree as follows:

 

(i)

All property, including, without limitation, all equipment, tangible proprietary
information (including confidential data), documents, books, records, reports,
notes, contracts, lists, computer disks (and other computer-generated files and
data), and copies thereof, created on any medium and furnished to, obtained by,
or prepared by you in the course of or incident to your employment, belongs to
724 or its affiliates and shall be returned promptly to 724 upon termination of
your employment by either 724, for any reason (and whether for Cause or not), or
you.

 

 

 

 

(ii)

All benefits to which you are otherwise entitled shall cease upon your
termination for any reason (and whether for Cause or not), unless explicitly
continued either under this agreement, under any specific written policy or
benefit plan of 724 or its affiliates, or as may be required by statute.

 

 

 

 

(iii)

Upon termination of employment for any reason (and whether for Cause or not)
under this agreement, you shall be deemed to have resigned from all offices and
directorships then held with 724 or any subsidiary.  You shall sign any document
or do such things that are reasonably required by 724 to give effect to any such
resignation.  Should you fail to do so, any director of 724 is hereby
irrevocably authorized in your name and on his or her behalf to sign any
document or do any thing that is required to give effect thereto.

 

 

 

 

(iv)

Your obligations under this section  “Termination” shall survive the termination
of this agreement and the termination of employment for any reason (and whether
for Cause or not).

 

 

 

 

(v)

Following any voluntary termination of employment or termination for Good Reason
by you, you shall, where reasonably requested by 724, reasonably cooperate with
724 for a reasonable period of time after such termination of employment in the
orderly transition of duties and work assignments to other employees of 724 and
its affiliates,

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provided that 724 continues to pay you compensation on a per diem basis, at a
rate equal to your base salary in effect at your date of termination, during any
such reasonable period of time that your cooperation is requested.  You shall
also reasonably cooperate, at 724’s expense, in the defense of any action
brought by any third party against 724 and its affiliates that relates in any
way to your acts or omissions while employed by 724 and its affiliates.

(c)          Termination upon Death.  If you die during your employment, this
agreement shall automatically terminate.

(d)          Termination upon Disability. If during your employment, you shall
become physically or mentally incapacitated and as a result thereof you are
unable to perform the essential functions of your position with or without a
reasonable accommodation, for a continuous period of more than 120 days, then
724 and you specifically agree that this agreement has been frustrated, and
therefore 724 is entitled to terminate your employment on one month’s notice or
grant you one month’s salary in lieu of notice.

(e)          Termination of Employment Term Without Cause. Subject to Section
(g), 724 reserves the right to terminate your employment without Cause at any
time upon paying to the you a lump sum amount (the “Severance Amount”) equal to
the sum of the following:

 

i.

six (6) months of your then current base salary; and

 

 

 

 

ii.

the product of  six (6) multiplied by your Average Monthly Bonus

less statutory deductions and withholdings, which amount the parties agree is
pay-in-lieu of reasonable notice. You agree to release 724 and its affiliates
from any action, cause of action, claim or demand against 724 or any other
person, which may arise as a consequence of such termination and to sign a
waiver and release to this effect in a form satisfactory to 724 as a condition
to receiving payment under this Section (e). For purposes of this agreement,
“Average Monthly Bonus” means an amount equal to the quotient obtained by
dividing the total amount of bonus earned by you in the twelve (12) months
immediately prior to the date of your termination by twelve (12).

(f)          Termination for Good Reason.  You may terminate your employment for
Good Reason at any time.  Upon such termination for Good Reason,

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724 shall pay you the Severance Amount.  You agrees to release 724 and its
affiliates from any action, cause of action, claim or demand against 724 or any
other person, which may arise as a consequence of such termination and to sign a
waiver and release to this effect in a form satisfactory to 724 as a condition
to receiving payment under this Section (f).  For purposes of this agreement,
“Good Reason” will exist at any time following the occurrence of one or more of
the following events without your written consent:

 

(i)

subject to Section (g), the assignment to you of any duties materially
inconsistent with your position, authority, duties or responsibilities pursuant
to this agreement or any other action by 724 that results in a material
diminution in such position, authority, duties or responsibilities;

 

 

 

 

(ii)

a reduction of greater than five percent in your total target income as set
forth in Schedule “A”; or

 

 

 

 

(iii)

relocation, without your consent of your place of employment by more than fifty
(50) miles; provided, however, that you shall not terminate your employment
hereunder unless you first give notice of your intention to terminate and the
grounds for such termination, and 724 has not, within thirty (30) days following
receipt of such notice, cured such Good Reason.

(g)          Special Considerations on Change of Control. Notwithstanding
Section (e) and Section (f)(i), you acknowledge and agree that if a Change of
Control has occurred, and in connection with that Change of Control, (i) the
acquirer (or its affiliate) offers you employment or continues your employment
in a position that is, when taken as a whole, comparable in all significant
respects to your position, authority, duties and responsibilities with 724 prior
to such Change of Control (it being understood that your title or reporting
relationship may change as a result of the Change of Control), and (ii) your
employment is not terminated by the acquirer (or its affiliate) within twelve
(12) months of the Change of Control, then 724 shall not be obligated to pay you
the Severance Amount. For purposes of the foregoing, “Change of Control” means
any one person, corporation or other entity acquires directly or indirectly (i)
50% or more of 724’s voting securities, or (ii) all or substantially all of
724’s assets.

(h)          Termination of Employment Term for Cause. 724 may at any time and
without notice immediately terminate your employment for Cause and you shall
have no right to receive any compensation or benefit hereunder (with the
exception of compensation earned but unpaid as of the termination date).  For
purposes of this agreement, “Cause” will exist at any time following the
occurrence of one or more of the following events:

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(i)

any willful act of personal dishonesty, fraud or misrepresentation taken by you
in connection with your responsibilities as an employee which was intended to
result in your substantial gain or personal enrichment at the expense of  724 or
its affiliates;

 

 

 

 

(ii)

your conviction of a felony (other than driving-related offenses), or the
equivalent in a jurisdiction other than the United States, on account of any act
which was materially injurious to 724 or any of its affiliates, or the
reputation of 724 or any of its affiliates, as reasonably determined by the
Board of Directors of 724;

 

 

 

 

(iii)

your willful and continued failure to substantially perform your principal
duties and obligations of employment (other than any such failure resulting from
incapacity due to physical or mental illness;

provided, that for purposes of this Section (g), no act or failure to act shall
be considered “willful” unless done or omitted to be done by you in bad faith
and without reasonable belief that the act or omission was in or not opposed to
the best interests of  724; provided, further, that 724 shall not terminate your
employment under clause (iii) of this Section (g) unless 724 first gives notice
of its intention to terminate and the grounds for such termination, and you have
not, within thirty (30) days following receipt of such notice, cured such
failure.

(i)          Voluntary Termination Period.  You may terminate this agreement
upon giving of 12 weeks’ prior notice to 724 (or such lesser period of time as
the parties may agree upon), in which case this agreement shall terminate at the
expiration of such 12 week period without any other notice or any payment of
salary or benefit plan contributions subsequent to the termination of this
agreement.

(j)          Treatment of Stock Options, Restricted Stock and Other Securities. 
Notwithstanding any other provisions of this agreement, upon any termination of
you for any reason and whether for Cause or not, any options, restricted stock
or other securities held by you but subject to vesting which is contingent upon
continued employment with 724 or its affiliates shall be governed by the
provisions of the applicable stock plans and repurchase and award agreements.”

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You agree that you will, in the performance of your duties, promote the
interest, business and reputation of 724 and perform all such duties as are
essential or conducive to the efficient management of the company in accordance
with its rules and policies. Without limiting the foregoing, you agree to
execute and abide by 724’s code of ethics, insider trading policy and other
applicable company policies.

Yours very truly,

724 SOLUTIONS (US) INC.

 

 

 

 

By:

/s/ JOHN SIMS

 

 

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John Sims

 

 

Chief Executive Officer

 

ACCEPTED AND AGREED as of this_____ day of June 2004.

 

/s/ JOHN ELLIOTT

 

 

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John Elliott

 

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