EXHIBIT 10.6
February 4, 2004
Xx. Xxxxxxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
HYPERCOM CORPORATION
0000 X. Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Re: Employment Agreement
Dear Xxxxx:
Upon execution by you, this letter will constitute your employment
agreement (this "Agreement") with Hypercom Corporation (the "Company") and your
existing employment agreement with the Company automatically will be superceded
by the terms of this Agreement.
1. Term. This Agreement will be effective as of October 22, 2003 and will
expire on February 28, 2007, unless mutually extended by the parties in
writing.
2. Positions with the Company. During the term of this Agreement, you will
serve as Chief Executive Officer of the Company. You will faithfully
and diligently perform all duties commensurate with these positions,
including those duties directed by the Company's Board of Directors
(the "Board"), as well as those set forth in the Company's Bylaws that
relate to such positions. You will report directly to the Board. In the
event that you cease to be employed as Chief Executive Officer of the
Company, you agree that you will resign as a director of the Company
and each of its subsidiaries at the request of a majority of the Board
(except you).
3. Compensation. You will receive the following compensation for your
services during your term of employment:
(a) You will receive a minimum base salary of $450,000 per year,
which will be subject to increase but not decrease at the
discretion of the Board. Your salary will be paid in equal
installments in accordance with the Company's salary payment
policies as in effect from time to time.
(b) During your term of employment, you will be eligible, but not
entitled, to receive bonus compensation during each of the
Company's fiscal years, subsequent to the fiscal year ending
December 31, 2003, in an aggregate annual amount of up to 60%
of your then salary for each such year if the Company achieves
certain performance goals. The Board will establish the
performance goals for each fiscal year, or portion(s) thereof,
following the final approval of the Company's budget for such
fiscal year. The determination of whether the Company has
achieved the performance goals and the amount, if any, and
timing of your bonus compensation will be determined by the
Board in its reasonable discretion.
(c) Upon execution of this Agreement by the Company and you, the
Company will grant to you 60,000 shares of unvested restricted
common stock of the Company. The restricted stock will vest in
three equal installments of 20,000 shares of common stock on
October 22 of each of the years 2005, 2006 and 2007; provided,
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February 4, 2004
Page 2
however, that if the term of this Agreement is not extended by
mutual agreement, or otherwise superceded by a mutually
acceptable agreement, which extension or superceding agreement
shall be effective on or before February 27, 2007, all shares
of restricted stock that have not previously vested shall
immediately vest on February 27, 2007. Vesting of each
particular installment of restricted stock will be subject to
the condition that you are an employee of the Company on the
vesting date for such installment. Any of the restricted stock
that has not already vested immediately will vest upon a
Change in Control, as defined on the attachment to this
Agreement.
(d) You will be eligible, but not entitled, to receive additional
grants of restricted capital stock of the Company in such
quantities and subject to such conditions as the Board may
determine in its sole and absolute discretion.
(e) The Company will provide you with a car allowance in a
reasonable amount to be determined by the Board and the
Company will pay the cost of a membership for you at a golf
club of your choice in the Atlanta, Georgia metropolitan area.
(f) You may participate in any incentive compensation plan,
pension or profit sharing plan, stock purchase plan, group
benefit plan, medical plan, bonus plan and/or other benefit
plans, either currently in effect or as may be established
from time to time by the Board, for which you as an officer of
the Company are eligible to participate. (You acknowledge that
you will not be entitled to any benefits under any
discretionary plan unless actually provided to you in
accordance with such plan).
(g) You will be eligible, but not entitled, to receive such other
compensation as may from time to time be granted to you by the
Board in its sole and absolute discretion, including
additional bonuses approved by the Board or the Board's
Compensation Committee.
(h) You will be permitted to take vacations and sick leave, in
accordance with the Company's policies and procedures as in
effect for officers of the Company.
4. Business Expenses. The Company will pay or reimburse you for all
ordinary and necessary business expenses incurred or paid by you in
furtherance of the Company's business, in accordance with the Company's
policies and procedures.
5. Termination for Cause. The Company may terminate you for Cause, as
defined on the attachment to this Agreement. Upon any termination for
Cause, you will be entitled to receive only that compensation due you
through the date of termination, together with any COBRA (at your cost)
or other benefits required by law.
6. Termination by Voluntary Resignation. In the event that you voluntarily
resign from the Company for reasons other than those set forth in
Paragraph 9 below, you will be entitled
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February 4, 2004
Page 3
to receive only that compensation due you through the date of your
resignation, together with any COBRA (at your cost) or other benefits
required by law.
7. Death or Disability.
(a) If during the term of this Agreement you die, then this
Agreement will terminate and your estate will be entitled to
receive the compensation due you through the date of your
death.
(b) If during the term of this Agreement you become so disabled or
incapacitated by reason of any physical or mental illness or
any drug or alcohol addiction so as to be unable to perform
the services required of you pursuant to this Agreement for a
continuous period of three months, then, at the option of the
Company, this Agreement will terminate at the end of such
three month period, provided that during such period of
disability or incapacity, you will be paid the full salary,
benefits and expenses otherwise payable to you, less the
amount you receive from any Company-provided disability
insurance for the period of such illness or incapacity.
(c) In addition, in the case of termination by death or disability
under this Paragraph 7, for a period of eighteen months from
the date of your termination, the Company will pay for the
COBRA benefits due you or your estate.
8. Termination by the Company Other than for Cause; Expiration of
Agreement.
If (i) you are terminated without Cause, or (ii) the term of this
Agreement expires pursuant to Paragraph 1, and is not extended by
mutual agreement, or otherwise superceded by a mutually acceptable
agreement, which extension or superceding agreement shall be effective
on or before February 28, 2007, you will receive:
(a) Payment equal to two times your then current base salary in a
lump sum upon effectiveness of the release contemplated by
Paragraph 16 below;
(b) Accelerated vesting of all your options that are
"in-the-money", and a minimum period of 90 days after your
termination within which to exercise your vested options (or,
if longer, the period permitted by your option grants),
provided, however, that if the acceleration of your options
under this provision were to occur before a Change in Control
and, would cause a charge to the Company's earnings, then at
the Company's option it may offer you a consulting position
during which your options would continue to vest; and
(c) For a period of eighteen months from the date of your
termination, the Company will pay for the COBRA benefits due
you.
9. Resignation Following Change of Control.
Xx. Xxxxxxxxxxx X. Xxxxxxxxx
February 4, 2004
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In the event that you resign for Good Reason, as defined in the
attachment to this Agreement, following a Change of Control, as defined
in the attachment to this Agreement, you will receive:
(a) Payment equal to two times your then current base salary in a
lump sum upon effectiveness of the release contemplated by
Paragraph 16 below; and
(a) For a period of eighteen months from the date of your
termination, the Company will pay for the COBRA benefits due
you.
10. Covenant Not to Compete.
For a period of one year from any termination of your employment
hereunder, including any completion of the term of this Agreement (or,
if later, upon conclusion of your service as a consultant), you will
not, directly or indirectly, for your own benefit or for, with or
through any other individual, firm, corporation, partnership or other
entity, whether acting in an individual, fiduciary or other capacity,
own, manage, operate, control, advise, invest in (except as a 1% or
less shareholder of a public company), loan money to, or participate or
assist in the ownership, management, operation or control of or be
associated as a director, officer, employee, partner, consultant,
advisor, creditor, agent, independent contractor or otherwise with, or
acquiesce in the use of your name by, any business enterprise that is
in direct competition with the Company or any subsidiary, within the
United States of America or any other country that the Company conducts
business at the time of your termination.
In addition to the foregoing, at all times during the period of your
employment and for one year after any termination thereof (or, if
later, upon conclusion of your services as a consultant), you will not,
directly or indirectly (as described above), for your benefit or for,
with or through any business enterprise, hire, employ, solicit, or
otherwise encourage or entice any of the Company's (or subsidiary's)
employees or consultants to leave or terminate their employment with
the Company.
You and the Company consider the restrictions contained in this
Paragraph 10 to be reasonable for the purpose of preserving the
Company's rights and interests. If a court makes a final judicial
determination that any such restrictions are unreasonable or otherwise
unenforceable against you, you and the Company agree to modify the
provisions held to be unenforceable to preserve each party's
anticipated benefits thereunder to the maximum extent legal.
You acknowledge and agree that the Company's remedies at law for breach
or threatened breach of any of the provisions of this Paragraph 10
would be inadequate. Therefore, you agree that in the event of a breach
or threatened breach by you of the provisions in this Paragraph 10, the
Company will be entitled to, in addition to its remedies at law and
without posting any bond, equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent
injunction, or any other equitable
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February 4, 2004
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remedy that may then be available. You further agree that you will not
oppose the Company's request for such equitable relief.
11. Personal Rights and Obligations. This Agreement and all rights and
obligations hereunder are personal and will not be assignable by either
you or the Company except as provided in this Paragraph 11, and any
purported assignment in violation thereof will be null and void. Any
person, firm or corporation succeeding to the business of the Company
by merger, consolidation, purchase of assets or otherwise will assume
by contract or operation of law the obligations of the Company
hereunder and in such a case you will continue to honor this Agreement
with such business substituted for the Company as the employer.
12. Notices. Any notice, election or communication to be given under this
Agreement will be in writing and delivered in person or deposited,
certified or registered, in the United States mail, postage prepaid,
addressed as follows:
If to the Company:
Hypercom Corporation
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attn: General Counsel
If to you:
Xx. Xxxxxxxxxxx X. Xxxxxxxxx
____________________________
____________________________
or to such other addresses as the Company or you may from time to time
designate by notice hereunder. Notices will be effective upon delivery
in person or upon receipt of any facsimile or e-mail, or at midnight on
the fourth business day after the date of mailing, if mailed.
13. Entire Agreement. Except for any confidentiality agreement, option
awards, or restricted stock awards to which you are subject, this
Agreement constitutes and embodies the full and complete understanding
and agreement of the Company and you with respect to your employment by
the Company and supersedes all prior understandings or agreements
whether oral or in writing. This Agreement may be amended only by a
writing signed by you and the Company. This Agreement may be executed
in any number of counterparts, each of which will be considered a
duplicate original.
14. Arbitration. Any controversy relating to this Agreement or relating to
the breach hereof will be settled by arbitration conducted in Phoenix,
Arizona in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. The award rendered by
the arbitrator(s) will be final and judgment upon the award rendered by
the arbitrator(s) may be entered upon it in any court having
jurisdiction
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February 4, 2004
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thereof. The arbitrator(s) will possess the powers to issue mandatory
orders and restraining orders in connection with such arbitration. The
expenses of the arbitration will be borne by the losing party unless
otherwise allocated by the arbitrator(s). This agreement to arbitrate
will be specifically enforceable under the prevailing arbitration law.
During the continuance of any arbitration proceedings, the parties will
continue to perform their respective obligations under this Agreement.
Nothing in this Agreement will preclude the Company or any affiliate or
successor from seeking equitable relief, including injunction or
specific performance, in any court having jurisdiction, in connection
with the non-compete provisions herein and any obligations of
confidentiality.
15. Governing Law. This Agreement will be governed by and interpreted in
accordance with the laws of the State of Arizona.
16. Withholding and Release. You acknowledge and agree that payments made
to you hereunder may be subject to withholding. You further acknowledge
and agree that payment of any of the benefits to be provided to you
under this Agreement following any termination of your employment is
subject to your compliance with any reasonable and lawful policies or
procedures of the Company relating to employee severances, including
the execution and delivery by you of a release reasonably satisfactory
to the Company of any and all claims that you may have against the
Company or related persons, except for (i) the continuing obligations
provided herein, and (ii) for any continuing obligations of
indemnification due you as an officer or director (or a former officer
or director).
Very truly yours,
Xxxx X. Xxxxxx
Executive Vice President, and
Chief Financial Officer, and
Administrative Officer
ACCEPTED:
/s/ Xxxxxxxxxxx X. Xxxxxxxxx
Xxxxxxxxxxx X. Xxxxxxxxx
Date: February 4, 2004
Xx. Xxxxxxxxxxx X. Xxxxxxxxx
February 4, 2004
Page 7
Definitions
"Cause" means if the Board, in its reasonable and good faith
discretion, determines that you:
(1) have developed or pursued interests substantially adverse to
the Company,
(2) have materially breached any employment or confidentiality
agreement or otherwise materially failed to discharge the duties of your
office(s) as set forth in the Company's Bylaws or in the minutes of the Board of
Directors,
(3) have not devoted all or substantially all of your business
time, effort and attention to the affairs of the Company (or such lesser amount
as has been agreed to in writing by the Company),
(4) are charged with or convicted of a felony, or
(5) have engaged in activities or omissions that are detrimental to the
well-being of the Company.
"Change of Control" means and includes each of the following:
(1) there shall be consummated any consolidation or merger of the
Company in which the Company is not the continuing or surviving entity, or
pursuant to which common stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the
Company's common stock immediately prior to the merger have at least 80%
ownership of beneficial interest of common stock or other voting securities of
the surviving entity immediately after the merger;
(2) there shall be consummated any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of assets or
earning power aggregating more than 40% of the assets or earning power of the
Company and its subsidiaries (taken as a whole), other than pursuant to a
sale-leaseback, structured finance or other form of financing transaction;
(3) the stockholders of the Company shall approve any plan or
proposal for liquidation or dissolution of the Company; or
(4) during any period of two consecutive years, individuals who at
the beginning of such period constituted a majority of the Board shall fail to
constitute a majority thereof, unless the election, or the nomination for
election by the Company's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
"Good Reason" means, without your consent:
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February 4, 2004
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(1) you suffer a reduction in position or a material change in
your functions, duties or responsibilities;
(2) your annual salary is reduced by the Company or there is a
material reduction in your current benefits (other than a reduction in the
benefits as part of overall reduction applicable to all or substantially all
other officers); or
(3) you are required to reside other than in Maricopa County,
Arizona, Dade County, Florida or Georgia.
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
BY AND AMONG
HYPERCOM CORPORATION
AND
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS BORROWERS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
XXXXX FARGO FOOTHILL, INC.
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED DECEMBER 31, 2003
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