EMPLOYMENT AGREEMENT
Exhibit 10.3
THIS EMPLOYMENT AGREEMENT is made this 8th day of November, 2002, between U.S. Wireless Data, Inc., a Delaware corporation (the “Company”), and Xxxxxxx X. Xxxxx, an individual who presently resides at 00 Xxxx Xxxxx, Xxxxxxxxx Xxxxxx, Xxx Xxxx 00000 (the “Executive”).
WHEREAS, the parties hereto wish to enter into an employment agreement to document the employment of the Executive in the “Position” described below, and to set forth certain additional agreements between the Executive and the Company.
NOW, THEREFORE, in consideration of the mutual covenants, agreements and representations contained herein, the parties hereto agree as follows:
1. TERM. The Company will employ the Executive, and the Executive will serve the Company, under the terms of this Agreement for a term of one (1) year, from February 11, 2003, which term shall be subject to automatic renewal for successive one-year terms unless either party notifies the other party of its or his intent not to renew this Agreement (which non-renewal may be for any or no reason by either party) at least ninety (90) days prior to the end of the applicable term or renewal term. Notwithstanding the foregoing, the Executive’s employment hereunder may be earlier terminated, as provided in Section 4 hereof. The term of this Agreement, as in effect from time to time in accordance with the foregoing, shall be referred to herein as the “Term.” The period of time between the commencement and the termination of the Executive’s employment hereunder shall be referred to herein as the “Employment Period.”
2. EMPLOYMENT.
a.Position. The Company hereby employs the Executive for the Employment Period, as its Executive Vice President, Chief Administrative Officer and Secretary on the terms and conditions set forth in this Agreement.
b. Authority and Duties. The Executive shall perform all duties and functions and discharge all responsibilities as are customarily performed by the Executive Vice President, Chief Administrative Officer and Secretary of a publicly-held company and, in addition, all duties, functions and responsibilities specified by the Chief Executive Officer of the Company to the extent such specifications are consistent with the Executive’s position as Executive Vice President, Chief Administrative Officer and Secretary. The Executive shall report directly and be responsible to the Chief Executive Officer of the Company. During the Employment Period, the Executive shall devote his full business time, skill and efforts to the business of the Company and use his best efforts in performing services for the Company. Notwithstanding the foregoing, the Executive may (i) make and manage passive personal business investments of his choice (in the case of publicly held corporations not to exceed 1% of the outstanding voting stock) and serve in any capacity with any civic, educational or charitable organization or any trade association, without seeking or obtaining approval by the Board, provided such activities and service do not materially interfere or conflict with the performance of his duties hereunder, and (ii) with the approval of the Board, which approval shall not be unreasonably withheld, serve on the boards of directors of other corporations. The Executive shall work out of the Company’s offices located in the New York City metropolitan area; provided, however, the Executive shall be required to travel in performing services under this Agreement and to provide services to the Company from time to time at other locations to the extent required by the Company’s Board of Directors or Chief Executive Officer. Executive will not be required to relocate his residence outside of the New York City Metropolitan area.
3. COMPENSATION AND BENEFITS.
a. Salary. During the Employment Period, the Company shall pay to the Executive, as compensation for the performance of his duties and obligations under this Agreement, a base salary at the rate of $150,000 per annum, payable in arrears in accordance with the normal payroll practices of the Company in effect from time to time. The present normal payroll practices of the Company provide for base salary payments not less frequently than twice each month. Such base salary shall be subject to review each year worked; however, each party agrees that while there has been no promise or other inducement to Executive that his salary will be increased upon any such review(s), there is a commitment that such base salary may not be reduced.
b. Annual Bonus. During the Employment Period, the Executive shall have the opportunity to earn an annual cash bonus. The payment of any annual bonus shall be subject to the discretion of the Chief Executive Officer and the Board. Notwithstanding the foregoing, during the Employment Period, the Company shall pay to the Executive, as compensation for the performance of his duties and obligations under this Agreement, a minimum cash bonus at the rate of $18,750 per annum, payable in the same payrolls as Executive’s base salary.
c. Equity Participation. The Company’s Board of Directors has previously granted the Executive options to purchase shares of common stock of the Company, which options are subject to option agreements between the Company and the Executive and, if applicable, the Company’s applicable stock option plan. During the Employment Period, the Executive may have the opportunity to earn an annual stock option bonus. The payment of any such stock option bonus shall be subject to the discretion of the Chief Executive Officer and the Board. Upon the occurrence of a Change in Control, as such term is defined in Section 4(b)(3) below, all outstanding options granted by the Company to the Executive during the Employment Period, shall become vested and exercisable, subject to the other terms of the option(s).
d. Other Benefits. During the Employment Period, the Executive shall be entitled to participate in all of the employee benefit plans, programs and arrangements of the Company in effect during the Employment Period which are generally available to senior executives of the Company, subject to and on a basis consistent with the terms, conditions and overall administration of such plans, programs and arrangements, as amended from time to time. In addition, during the Employment Period, the Executive shall be entitled to fringe benefits and perquisites comparable to those generally available to all other senior executives of the Company, as amended from time to time.
x.Xxxxxxxx Expenses. During the Employment Period, the Company shall reimburse the Executive for all documented reasonable business expenses incurred by the Executive in the performance of his duties under this Agreement, in accordance with the Company's policies as in effect from time to time.
2
f. Indemnification. During the Employment Period and thereafter, the Company shall indemnify the Executive to the fullest extent permitted by applicable law. The Company shall enter into an Indemnification Agreement with Executive (“Indemnification Agreement”), the terms of which shall govern Executive’s rights to indemnification. At all times throughout the Employment Period, the Company shall maintain director and officer insurance in the amount of no less than $5 million and shall maintain adequate cash reserves to insure that the Company is capable of paying the premium(s) for such policy.
4. TERMINATION OF EMPLOYMENT.
a.Termination for Cause. The Company may at any time terminate the Executive's employment hereunder for cause. For purposes of this Agreement and subject to the Executive's opportunity to cure to the extent provided in Section 4.c. hereof, the Company shall have "cause" to terminate the Executive's employment hereunder if such termination shall be the result of:
(1) Willful fraud or dishonesty in connection with the Executive's performance hereunder except to the extent the Executive proves such dishonesty was both unintentional and covered only a matter which was de minimis;
(2) The failure by the Executive to perform his material duties hereunder or any other material breach by Executive of this Agreement;
(3) The failure by the Executive to follow, in a material manner, the lawful directions of or policies established by the Board of Directors or the Chief Executive Officer of the Company unless the tasks are of the type which could not reasonably be required of Executive pursuant to this Agreement;
(4) The conviction for, or plea of nolo contendere to, a charge of commission of a felony or crime involving moral turpitude;
(5) The Executive’s performance of any services under this Agreement while under the influence of drugs, alcohol or any controlled substance except, with respect to controlled substances only, to the extent Executive proves (a) taking any controlled substance was prescribed by a medical doctor to treat a medical problem, (b) such controlled substance was used only in accordance with said doctor’s instructions, and (c) taking such controlled substance does not and did not adversely affect Executive’s job performance during more than a de minimis period of time; or
(6) The Executive acting in a manner, which damages or could reasonably be expected to damage the business or reputation of the Company.
The parties agree that each of the foregoing breaches, events, crimes, behaviors, acts, inactions or occurrences constitutes independent grounds for “cause” and the failure of any breach, event, crime, behavior, act, inaction or occurrence to constitute “cause” under any paragraph of this Section 4.a. shall not prevent that same breach, event, crime, behavior, act, inaction or occurrence from constituting “cause” under a different paragraph of this Section 4.a.
3
a. Termination for Good Reason. The Executive shall have the right at any time to terminate his employment with the Company for any reason upon thirty (30) days’ prior written notice. For purposes of this Agreement and subject to the Company’s opportunity to cure as provided in Section 4.c. hereof, the Executive shall have “good reason” to terminate his employment hereunder at any time during his employment if such termination shall be the result of:
| (1) | A breach by the Company of the compensation and benefits provisions set forth in Section 3 hereof; |
| (2) | A material breach by the Company of any other term of this Agreement; or |
| (3) | A "Change in Control" of the Company. |
For purposes hereof, a "Change in Control" of the Company shall occur or be deemed to have occurred only if any of the following events occurs:
| (i) | any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as the ownership of stock of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities; or |
| (ii) | individuals who, as of the date hereof (the “Effective Date”), constitute the Board of Directors of the Company (as of the Effective Date, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors of the Company provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of the office is in connection with an actual or threatened election contest relating to the election of the directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or |
| (iii) | the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 60% of the combined voting power of the voting securities of the company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person” (as hereinabove defined) acquires more than 50% of the combined voting power of the Company’s then outstanding securities; or |
4
| (iv) | the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or dispositions by the Company of all or substantially all of the Company’s assets. |
| (4) | A move by the Company of its executive offices outside of Manhattan and beyond a reasonable commuting distance. |
| (5) | A relocation by the Company of its executives to an office outside of Manhattan and beyond a reasonable commuting distance. |
b. Notice and Opportunity to Cure. Notwithstanding the foregoing, it shall be a condition precedent to the Company’s right to terminate the Executive’s employment for “cause” and the Executive’s right to terminate his employment for “good reason” that (1) the party seeking the termination shall first have given the other party written notice stating with specificity the reason for the termination (“breach”) and (2) if such breach is reasonably susceptible of cure or remedy, a period of thirty (30) days from and after the giving of such notice shall have elapsed without the breaching party having effectively cured or remedied such breach during such 30-day period, unless such breach cannot be reasonably cured or remedied within thirty (30) days, in which case the period for remedy or cure shall be extended for a reasonable time (not to exceed an additional thirty (30) days) provided the breaching party has made and continues to make a diligent effort to effect such remedy or cure.
c. Termination Upon Death or Permanent and Total Disability. The Employment Period shall automatically without further action be terminated by the death of the Executive. The Employment Period may be terminated by the Company at any time if the Executive shall be rendered incapable of performing his duties to the Company at the same level by reason of any medically determined physical or mental impairment that (i) can reasonably be expected to result in death or (ii) can reasonably be expected to last or has lasted for a period of three (3) or more consecutive months or for a period of four (4) or more months during any twelve (12) month period from the first date of the Executive’s impairment or absence or projected absence due to the disability (“Disability”). If the Employment Period is terminated by reason of a Disability of the Executive, the Company shall give thirty (30) days advance written notice to that effect to the Executive.
5
5. CONSEQUENCES OF TERMINATION.
a. Termination Without Cause or for Good Reason. In the event of termination of the Executive’s employment hereunder by the Company without “cause” (other than upon death or Disability) or non-renewal or by the Executive for “good reason” (each as defined in Section 4 hereof), subject to Section 8 the Executive shall be entitled to only the following pay and benefits:
(1) Severance Pay. If terminated during the Term for which more than six months remain in such Term, Executive shall receive severance payments for the remainder of the Term. If terminated during any Term for which less than six months remain in such initial Term, Executive shall receive severance payments for a period of six months following such termination (the “Severance Period.”). The amount of severance payments throughout the entire Severance Period shall be at a rate of the Executive’s base salary plus the guaranteed minimum annual bonus at the time of termination. In the event the Executive terminates this agreement for “good reason” due to a Change in Control as defined in section 4(e) hereof, the Executive shall be paid by the Company the severance pay as outlined above, plus an amount equal to the pro-rata portion of Executive’s annual cash bonus, if any, paid in the immediate prior year. Such pro-rata portion shall be calculated by taking the most recent cash bonus divided by the number of months remaining in the Severance Period, with the quotient being added to each regular payroll payment to the Executive throughout the Severance Period.
(2) Benefits Continuation. Continuation for the Severance Period of coverage under the group medical care, disability and life insurance benefit plans or arrangements in which the Executive is participating at the time of termination; provided, however, that the Company’s obligation to provide such coverages shall be terminated if the Executive obtains comparable substitute coverage from another employer at any time during the Severance Period. The Executive shall be entitled, at the expiration of the Severance Period, to elect continued medical coverage in accordance with Section 4980B of the Internal Revenue Code of 1986, as amended (or any successor provision thereto).
(3) Stock Options and Warrants. Any options or warrants to purchase shares of the Company’s Common Stock held by the Executive immediately prior to termination of employment within six months of a Change of Control or upon a termination by the Company without Cause or by Executive for Good Reason shall become immediately vested and exercisable, subject to the other terms of the Option or Warrant itself.
b. Other Terminations. In the event of termination of the Executive’s employment hereunder for any reason other than those specified in Section 5(a) hereof, the Executive shall be paid base salary and guaranteed minimum bonus only through the date of termination and Executive shall not be entitled to any severance, bonus or other pay, or any benefits continuation rights, except for benefits continuation rights as may otherwise be provided (e.g., Cobra benefits) under the applicable benefit plans relating to the Executive; provided, however, that upon termination for death or Disability, the Company in its sole and absolute discretion, will grant to Executive or his estate a pro rated bonus of up to the amount provided in connection with a termination without “cause”. Any accrued but unpaid bonus will be paid.
6
6. CONFIDENTIALITY. The Executive agrees that he shall not at any time during the Term hereof or at any time thereafter for any reason, in any fashion, form or manner, either directly or indirectly, divulge, disclose or communicate to any person, firm, corporation or other business entity, in any manner whatsoever, any confidential information or trade secrets concerning the business of the Company, including, without limiting the generality of the foregoing, the techniques, methods or systems of its operation or management, any information regarding its financial matters, or any other information concerning the business of the Company, its manner of operation, its plans or other data. The provisions of this Section 6 shall not apply to (i) information that is public knowledge other than as a result of disclosure by the Executive in breach of this Section 6; or (ii) information disclosed by Executive under a requirement of law or as directed by applicable legal authority having jurisdiction over the Executive.
7. INVENTIONS. The Executive is hereby retained in a capacity such that the Executive’s responsibilities include the making of technical and managerial contributions of value to the Company. The Executive hereby assigns to Company all right, title and interest in such contributions and inventions made or conceived by the Executive alone or jointly with others during the Employment Period which relate to the business of the Company. This assignment shall include, without limitation, (a) the right to file and prosecute patent applications on such inventions in any and all countries, (b) the patent applications filed and patents issuing thereon, and (c) the right to obtain copyright, trademark or trade name protection for any such work product. The Executive shall promptly and fully disclose all such contributions and inventions to the Company and assist the Company in obtaining and protecting the rights therein (including patents thereon), in any and all countries; provided, however, that said contributions and inventions will be the property of Company, whether or not patented or registered for copyright, trademark or trade name protection, as the case may be.
8. NON-COMPETITION. The Executive agrees that he shall not during the Employment Period and, if applicable, the Severance Period, without the approval of the Board of Directors of the Company, directly or indirectly, alone or as partner, joint venturer, officer, director, employee, consultant, agent, independent contractor, stockholder or otherwise (other than as provided below), engage in any “Competitive Business” within the United States. For purposes of the foregoing, the term “Competitive Business” shall mean any business involved in development, marketing, sale or support of products or services (a) which can reasonably be expected to cause customers not to use the Company’s or any of its subsidiaries’ or affiliates’ products or services or (b) which are similar to or competitive with products or services provided or supplied by the Company or any of its subsidiaries or affiliates. Notwithstanding the foregoing, the Executive shall not be prohibited during the non-competition period applicable above from acting as a passive investor by owning not more than one percent (1%) of the issued and outstanding capital stock of any publicly-held company. The Executive, at his option, may elect to eliminate the above restrictions in this Section 8 only during the Severance Period but any such election shall, without further action, be deemed an automatic and irrevocable relinquishment by Executive and termination of all of his rights to pay and benefits under Section 5(a). During the Employment Period and the Severance Period, if applicable, and for a period of one (1) year after the later of expiration of the Employment Period and the Severance Period, the Executive shall not, without the prior written consent of the Board of Directors of the Company, directly, or indirectly, alone or as partner, joint venturer, officer, director, employee, consultant, agent, independent contractor, stockholder or otherwise, (a) solicit or induce any employee, independent contractor or consultant of the Company or any current or future subsidiary or affiliate thereof to terminate or reduce his or her employment or engagement with the Company or any current or future subsidiary or affiliate thereof or (b) solicit the business of or any business from any current or future customer or supplier to the Company or any current or future subsidiary or affiliate thereof or induce any such customer or supplier not to do business with or reduce its business transactions with the Company or any subsidiary or affiliate thereof.
7
9. BREACH OF RESTRICTIVE COVENANTS. The parties agree that a breach or violation of Sections 6, 7 or 8 hereof will result in immediate and irreparable injury and harm to the innocent party, who shall have, in addition to any and all remedies of law and other consequences under this Agreement, the right to an injunction, specific performance or other equitable relief to prevent the violation of the obligation hereunder.
10. NOTICE. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given within one business day of dispatch if sent by hand delivery or reputable overnight courier, addressed as follows:
| a. | If to the Company, to: |
U.S. Wireless
Data, Inc. |
| b. | If to the Executive, to: |
Xxxxxxx X.
Xxxxx |
or to such other respective addresses as the parties hereto shall designate to the other by like notice, provided that notice of a change of address shall be effective only upon receipt thereof.
11. ARBITRATION; LEGAL FEES. Except as provided in Section 9 hereof, any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in the city or metropolitan area where the Company’s headquarters are then located, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Company shall reimburse the Executive for all reasonable legal fees and costs and other fees and expenses which the Executive may incur in respect of any dispute or controversy arising against the Company under or in connection with this Agreement; provided, however, that the Company shall not reimburse any such fees, costs and expenses if the fact finder determines that the action brought by the Executive was substantially without merit.
12. WAIVER OF BREACH. Any waiver of any breach of the Agreement shall not be construed to be a continuing waiver or consent to any subsequent breach on the part either of the Executive or of the Company.
8
13. NON-ASSIGNMENT; SUCCESSORS. Executive may not assign or in any way transfer his rights or delegate or in any way transfer his duties or obligations under this Agreement. This Agreement shall inure to the benefit of the successors and assigns of the Company and this Agreement shall inure to the benefit of and be binding upon the heirs, representatives, estate and successors of the Executive.
14. WITHHOLDING OF TAXES. All payments required to be made by the Company to the Executive under this Agreement shall be subject to the withholding of such amounts, if any, relating to tax, and other payroll deductions as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation or as agreed to by Executive and Company.
15. SEVERABILITY. To the extent any provision of this Agreement or portion thereof shall be invalid or unenforceable, it shall be considered deleted there from and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.
16. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
17. GOVERNING LAW. Except as set forth in Section 3.f., this Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of New York, without giving effect to the conflict of law principles thereof. The parties have selected a New York choice of law for this Agreement because the Company's offices are located in New York.
18. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement by the Company and the Executive with respect to the subject matter hereof (except with respect to the stock options referred to in Section 3.c. which, except for the last sentence of Section 3.c., shall not be governed by this Agreement but shall be evidenced by a separate agreement between the parties) and supersedes any and all prior agreements or understandings between the Executive and the Company with respect to the subject matter hereof, whether written or oral. This Agreement may be amended or modified only by a written instrument executed by the Executive and the Company.
19. CAPTIONS. Paragraph captions contained in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit or extend or describe the scope of this Agreement or the intent of any provision hereof.
20. LEGAL COUNSEL. Each party hereto has retained counsel in connection with the drafting and negotiation of this Agreement . Each party hereby waives any right, claim or defense he may have that any provision of this Agreement or that any provision thereof is unenforceable, illegal, invalid or unconscionable arising out of or relating to his failure to retain counsel in connection with this transaction.
9
21. AGREEMENT NOT TO BE CONSTRUED AGAINST DRAFTSPERSON. This Agreement shall be construed without giving effect or regard to any principle that a contract should be construed against its draftsperson.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the restatement referenced above.
U.S.
WIRELESS DATA, INC.
|
EXECUTIVE
|
10
