EXHIBIT (C)(7)
DH TECHNOLOGY, INC.
EMPLOYMENT AGREEMENT
This Agreement is entered into as of July 14, 1997, by and between DH
Technology, Inc., a California corporation (the "Company") and Xxxxxx Xxxxx
(the "Employee"). Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to them in the Merger Agreement (defined
below).
WHEREAS, Axiohm SA, a French corporation ("Axiohm"), Axiohm IPB, Inc., a
Delaware corporation and wholly-owned subsidiary of Axiohm ("Purchaser") and
the Company have entered into an Agreement and Plan of Merger (the "Merger
Agreement") which will result in a change in the ownership and control of the
Company and Axiohm becoming a wholly-owned subsidiary of the Company (the
"Transaction"); and
WHEREAS, the Company desires to retain the Employee on a full-time basis in
the capacity of Chief Financial Officer of the Company following the time at
which the Purchaser accepts for payment Shares tendered pursuant to the Offer
(the "Consummation of the Offer"), and the Employee desires to accept such
employment; and
WHEREAS the parties desire and agree to enter into an employment
relationship by means of this Agreement;
NOW THEREFORE in consideration of the promises and mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:
1. Condition Precedent. This Agreement shall become effective upon the
Consummation of the Offer and shall supersede any prior agreement or
understanding between the Employee and the Company relating to the Employee's
employment by the Company. Prior to the Consummation of the Offer, this
Agreement shall be of no force or effect.
2. Position and Duties. The Employee shall be employed, as of the
Consummation of the Offer, as Chief Financial Officer of the Company,
reporting to the Chief Executive Officer of the Company and assuming and
discharging such responsibilities as are commensurate with the Employee's
position. In performing his basic duties, the Employee shall work at his
current location, although the Employee acknowledges that frequent travel may
be necessary in carrying out his duties hereunder. The Employee shall perform
his duties faithfully and to the best of his ability and shall devote his full
business time and effort to the performance of his duties hereunder; provided,
however, that the foregoing shall not preclude the Employee from engaging in
civic, charitable or religious activities, from devoting a reasonable amount
of time to private investments, or from being employed by, rendering services
to or serving on the boards of directors of other entities, so long as such
activities, employment and/or service do not materially interfere or conflict
with his responsibilities to the Company.
3. Employment Relationship. The Company and the Employee acknowledge that
the Employee's employment is and shall continue to be at-will, as defined
under applicable law. If the Employee's employment terminates for any reason,
the Employee shall not be entitled to any payments, benefits, damages, awards
or compensation other than as provided by this Agreement, or as may otherwise
be available in accordance with the Company's established employee plans and
policies at the time of termination.
4. Compensation.
(a) Base Salary. For all services to be rendered by the Employee pursuant to
this Agreement, the Employee shall receive a minimum annual base salary of
$160,000, payable monthly in accordance with the Company's normal payroll
practices, increased from time to time by the Board of Directors of the
Company (the "Board") consistent with past practices.
(b) Bonus. Beginning with the Company's current fiscal year, and for each
fiscal year thereafter during the term of this Agreement, the Employee shall
be eligible to receive a minimum target bonus of $50,000 based on performance
of the Company as set forth in the Company's annual operating plan established
by the Chief Executive Officer of the Company and the Board (the "Target
Bonus").
(c) Option. Within six (6) months after the closing of the Transaction, the
Company shall grant an option to the Employee for a number of shares of the
Company's Common Stock to be determined by the Compensation Committee of the
Board (the "Shares"), at a per Share purchase price no greater than the then
current fair market value of a Share, pursuant to the Company's 1992 Stock
Plan (the "1992 Plan") and standard form of stock option agreement. Subject to
the terms of the 1992 Plan, fifty percent (50%) of the Shares shall vest on
the date twenty-four (24) months after the date of grant, and an additional
twenty-five percent (25%) of the Shares shall vest at the end of each year
thereafter.
(d) Automobile Allowance. During the term of this Agreement, the Company
shall provide the Employee an automobile allowance of not less than $900 per
month. The Employee agrees to have available for business use a four-door
automobile suitable for customers and clients.
5. Other Benefits. The Employee shall be entitled to participate in the
employee benefit plans and programs of the Company, if any, to the extent that
his position, tenure, salary, age, health and other qualifications make him
eligible to participate in such plans or programs, subject to the rules and
regulations applicable thereto. The Company reserves the right to cancel or
change the benefit plans and programs it offers to its employees at any time.
6. Expenses. The Company shall reimburse the Employee for reasonable travel,
entertainment or other expenses incurred by the Employee in the furtherance of
or in connection with the performance of the Employee's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.
7. Termination.
(a) Involuntary Termination. If the Employee's employment with the Company
terminates as a result of Involuntary Termination, then, subject to Section 9:
(i) the Employee shall be entitled to receive a severance payment equal to one
times the Employee's Current Compensation, (provided, however, that the
severance payment shall be one and one-half times the Employee's Current
Compensation if such termination occurs in the first year following
Consummation of the Offer and Xxxxxxx Xxxxx' employment with the Company
terminates for any reason during such year, or one and one-quarter times the
Employee's Current Compensation if such termination occurs in the second year
following Consummation of the Offer and Xxxxxxx Xxxxx employment with the
Company terminates for any reason during such year); and (ii) the vesting and
exercisability of all outstanding stock options that were granted to the
Employee by the Company prior to the Consummation of the Offer shall
accelerate in full. Any severance payments to which the Employee is entitled
pursuant to this Section 7(a) shall be paid in lieu of any other severance or
severance-type benefits to which the Employee may be entitled under any other
company-sponsored plan, and shall be paid to the Employee in a lump sum within
fifteen (15) days of the Employee's Involuntary Termination.
(b) Disability. If the Employee's employment with the Company terminates as
a result of Disability, the Company shall make available to the Employee and
the Employee's spouse and dependents group health, life and other similar
insurance plans substantially comparable to the group health, life and other
similar insurance plans in which the Employee or such dependents participated
on the date of such termination (the "Company Coverage"). The Company Coverage
shall be at the Company's expense for twelve (12) months following such
termination. In addition, the Employee's stock options shall vest in full as
provided in clause (ii) of Section 7(a) above.
(c) Death. In the event of the Employee's death, this Agreement, to the
extent it has not already terminated, shall terminate on the last day of the
calendar month of the Employee's death. In addition (i) the Employee's
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estate or beneficiaries shall be eligible for those benefits (if any) as may
then be established under the Company's severance and benefits plans and
policies existing at the time of the Employee's death, and (ii) the Employee's
stock options shall vest in full as provided in clause (ii) of Section 7(a)
above.
(d) Other Termination. If the Employee's employment terminates other than in
an Involuntary Termination, or upon the Employee's Death or Disability, then
the Employee shall not be entitled to receive severance or other benefits
pursuant to this Agreement, but may be eligible for those benefits (if any) as
may then be established under the Company's severance and benefits plans and
policies existing at the time of such termination.
8. Definitions.
(a) Cause. "Cause" shall mean the occurrence of any one or more of the
following: (i) the Employee's conviction by, or entry of a plea of guilty or
nolo contendere in, a court of final jurisdiction for any crime which
constitutes a felony in the jurisdiction involved (other than a felony traffic
offense), which felony materially injures the Company, its prospects or its
reputation; (ii) the Employee's misappropriation of funds or commission of a
material act of fraud, whether prior or subsequent to the date hereof, upon
the Company; (iii) gross negligence by the Employee in the scope of the
Employee's services to the Company; (iv) a willful breach by the Employee of a
material provision of this Agreement; or (v) a willful failure of the Employee
to substantially perform his duties hereunder. Notwithstanding the foregoing,
the Employee shall not be deemed to have been terminated for Cause under
clause (iii), (iv) or (v) of this Section 8(a) unless the Chief Executive
Officer of the Company delivers a written notice to the Employee setting forth
the reasons for the Company's intention to terminate for Cause and
specifically identifying the manner in which the Chief Executive Officer
believes that the Employee has engaged in such conduct, which conduct is not
substantially corrected by the Employee within 10 days following his receipt
of such notice, and provides the Employee with an opportunity, together with
his counsel, if any, to be heard before the Board.
(b) Current Compensation. "Current Compensation" shall mean an amount equal
to the sum of (i) the Employee's average annual (or annualized) base salary
over the three preceding fiscal years (or such lesser number of years as may
be applicable to the Employee); and (ii) the Employee's average annual (or
annualized) bonus over the three preceding fiscal years; provided, however
that if there are fewer than three years of actual bonus history, the
Employee's average bonus shall be calculated by including the Employee's
Target Bonus for the fiscal year in which the termination occurs. For example,
if the termination occurs in 1999, average bonus shall be calculated based on
actual bonuses earned for 1997 and 1998 and Target Bonus for 1999.
(c) Disability. The Employee shall be considered to have suffered a
"Disability" for purposes of this Agreement if, at the end of any calendar
month during the term of this Agreement, the Employee is and has been for the
four consecutive full calendar months then ending, or for fifty percent or
more of the normal working days during the eight consecutive full calendar
months then ending, unable due to mental or physical illness or injury to
perform his duties under this Agreement in his normal and regular manner.
(d) Involuntary Termination. "Involuntary Termination" shall mean (i)
without the Employee's express written consent, a reduction of the Employee's
duties, position or responsibilities relative to the Employee's duties,
position or responsibilities in effect immediately prior to such reduction, or
the removal of the Employee from such position, duties and responsibilities,
unless the Employee is provided with comparable duties, position and
responsibilities; (ii) without the Employee's express written consent, a
reduction of the Employee's base salary or Target Bonus (as set forth in
Section 4) in effect immediately prior to such reduction; (iii) a reduction in
the kind or level of employee benefits to which the Employee is entitled
immediately prior to such reduction with the result that the Employee's
overall benefits package is significantly reduced; (iv) without the Employee's
express written consent, the relocation of the Employee to a facility or a
location more than thirty-five (35) miles from his current location; (v) any
purported termination of the Employee which is not effected for Cause or for
which the grounds relied upon are not valid; or (vi) the failure of the
Company to obtain the assumption of this Agreement by any successors
contemplated in Section 11 below; provided, however, that an event described
above shall not constitute Involuntary Termination unless it is communicated
by the Employee to the Company
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in writing and is not corrected by the Company in a manner that is reasonably
satisfactory to the Employee (including full retroactive correction with
respect to any monetary matter) within ten days of the Company's receipt of
such written notice from the Employee.
9. Golden Parachute Excise Tax.
(a) Benefits Cap. In the event that the benefits under this Agreement, when
aggregated with any other payments or benefits received by the Employee, or to
be received by the Employee, would (i) constitute "parachute payments" within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), and (ii) but for this provision, would be subject to the excise
tax imposed by Section 4999 of the Code or any similar or successor provision,
then the Employee's benefits shall be reduced to such lesser amount or degree
as would result in no portion of such benefits being subject to the excise tax
under Section 4999 of the Code.
(b) Determination. Unless the Company and the Employee otherwise agree in
writing, any determination required under this Section shall be made in
writing by the Company's primary independent public accounting firm (the
"Accountants"), whose determination shall be conclusive and binding upon the
Employee and the Company for all purposes. For purposes of making the
calculations required by this Section, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and the Employee shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make its determination under this Section. The Company
shall bear all costs the Accountants may reasonably incur in connection with
any calculations contemplated by this Section.
10. Right to Advice of Counsel. The Employee acknowledges that he has had
the right to consult with counsel and is fully aware of his rights and
obligations under this Agreement.
11. Successors.
(a) Company's Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business and/or assets
shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the
same extent as the Company would be required to perform such obligations in
the absence of a succession. For all purposes under this Agreement, the term
"Company," shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
(b) Employee's Successors. Without the written consent of the Company, the
Employee shall not assign or transfer this Agreement or any right or
obligation under this Agreement to any other person or entity. Notwithstanding
the foregoing, the terms of this Agreement and all rights of the Employee
hereunder shall inure to the benefit of, and be enforceable by, the Employee's
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
12. Notice Clause.
(a) Manner. Any notice hereby required or permitted to be given shall be
sufficiently given if in writing and upon mailing by registered or certified
mail, postage prepaid, to either party at the address of such party or such
other address as shall have been designated by written notice by such party to
the other party.
(b) Effectiveness. Any notice or other communication required or permitted
to be given under this Agreement will be deemed given on the day when
delivered in person, or the third business day after the day on which such
notice was mailed in accordance with Section 12(a).
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13. Disputes. In the event that a dispute arises over the terms or
enforcement of this Agreement, the parties agree to submit such dispute to
binding arbitration in San Diego, California by a single arbitrator engaged
through JAMS-Endispute, Inc., its successor firm or another private dispute
resolution firm acceptable to both parties. The arbitrator shall be selected
as follows: the arbitration firm shall present its panel of available
arbitrators, and each party shall sign rank of preference to each of such
panel with number 1 being the highest rank. The person on the panel with the
lowest total score shall be the arbitrator for a dispute. The arbitrator shall
have absolute discretion or authority to limit discovery relevant to the
matter and the length of the proceeding before the arbitrator. The parties may
not submit written briefs. The arbitrator shall rule on the dispute in writing
within ten (10) days after the close of hearings. The time specified in this
Section may be extended upon mutual agreement of the parties. The decision of
the arbitrator may be entered or registered in any court of competent
jurisdiction for execution and enforcement. The arbitrator shall have the
power to allocate between the parties the costs of the proceeding and the
attorneys' fees incurred in the proceeding as he or she deems appropriate.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws, but not the choice of law
rules, of the state of California.
15. Severability. The invalidity or unenforceability of any provision of
this Agreement, or any terms hereof, shall not affect the validity or
enforceability of any other provision or term of this Agreement.
16. Integration. This Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and
supersedes all prior or contemporaneous agreements whether written or oral. No
waiver, alteration, or modification of any of the provisions of this Agreement
shall be binding unless in writing and signed by duly authorized
representatives of the parties hereto.
17. Taxes. All payments made pursuant to this Agreement shall be subject to
withholding of applicable income and employment taxes.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by a duly authorized officer, as of the day and year first
above written.
DH Technology, Inc.
/s/ Xxxxx X. Xxxxxxx
By: _________________________________
Executive Vice President
Title: ______________________________
Xxxxxx Xxxxx
/s/ Xxxxxx Xxxxx
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