AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT
AMENDED
AND RESTATED
Agreement
made this 11th
day of
May, 2006, by and between XXXXXXX X. XXXXXXX, an individual ("Xxxxxxx"),
and USA
TECHNOLOGIES, INC., a Pennsylvania corporation ("USA").
BACKGROUND
Xxxxxxx
is the President and Chief Operating Officer of USA. Xxxxxxx and USA have
entered into an Employment And Non-Competition Agreement dated April 4, 1996,
a
first amendment thereto dated as of February 22, 2000, a second amendment
thereto dated as of April 15, 2002, a third amendment thereto dated as of
July
25, 2003, a fourth amendment thereto dated February 4, 2004,and a fifth
amendment thereto dated February 28, 2005. As more fully set forth herein,
the
parties desire to amend, completely restate, and replace the foregoing
agreements.
AGREEMENT
NOW,
THEREFORE, in consideration of the covenants set forth herein, and intending
to
be legally bound hereby, the parties agree as follows:
SECTION
1. Employment.
(a) USA
shall
employ Xxxxxxx as President and Chief Operating Officer, for a period commencing
on the date hereof and continuing through June 30, 2009 (the "Employment
Period"), and Xxxxxxx hereby accepts such employment. Unless terminated by
either party hereto upon at least 60-days notice prior to the end of the
original Employment Period ending June 30, 2009, or prior to the end of any
one-year extension of the Employment Period, the Employment Period shall
not be
terminated and shall automatically continue in full force and effect for
consecutive one year periods.
(b) During
the Employment Period, Xxxxxxx shall devote his full time, energy, skills,
and
attention to the business of USA, and shall not be engaged or employed in
any
other business activity whatsoever, whether or not such activity is pursued
for
gain, profit or other pecuniary advantage. During the Employment Period,
Xxxxxxx
shall perform and discharge well and faithfully such executive management
duties
for USA as shall be necessary and as otherwise may be directed by the Chairman
or Board of Directors of USA.
Nothing
contained in the prior paragraph shall prohibit Xxxxxxx from investing his
personal assets in businesses which do not compete with USA, where the form
or
manner of such investments will not require more than minimal services on
the
part of Xxxxxxx in the operation of the affairs of the business in which
such
investments are made, or in which his participation is solely that of a passive
investor; or from serving as a member of boards of directors, boards of
trustees, or other governing bodies of any organization, provided that USA
approves such activities in advance; or from participating in trade
associations, charitable, civic and any similar activities of a not-for-profit,
philanthropic or eleemosynary nature; or from attending educational events
or
classes. It is understood and agreed that any such permitted activities which
shall occur during business hours shall be limited to no greater than forty
hours per year.
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(c) If
during
the Employment Period, Xxxxxxx shall be required to take a role which is
substantively different than that contemplated by this Agreement, or if during
the Employment Period a USA Transaction (as such term is defined in the
Employment Agreement of Xxxxxx X. Xxxxxx, Xx.) shall occur, then Xxxxxxx
may
upon thirty days prior notice to USA, terminate the Employment Period. Upon
such
termination by Xxxxxxx, neither party shall have any further duties or
obligations hereunder, provided, however, that Xxxxxxx’ obligations under
Sections 5 and 6 hereof shall survive any such termination.
SECTION
2. Compensation
and Benefits
(a) In
consideration of his services rendered, commencing on the date hereof, USA
shall
pay to Xxxxxxx a base salary of $285,000 per year during the Employment Period,
subject to any withholding required by law. Xxxxxxx’ base salary may be
increased from time to time in the discretion of the Board of
Directors.
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For
each
of the fiscal years ending June 30, 2007, June 30, 2008, and June 30, 2009,
Xxxxxxx shall have the option to elect to have fifty percent (50%) of his
base
salary paid in Common Stock of USA (“Common Stock”) rather than cash. Any such
election must be made not later than 60-days following the commencement of
each
such fiscal year by appropriate notice by Xxxxxxx to USA. For purposes of
determining the number of shares to be issued to Xxxxxxx, the shares shall
be
valued at the average closing bid price for the Common Stock during the 30
trading days immediately preceding the date of any such election by Xxxxxxx.
If
any such election is made, the shares issuable to Xxxxxxx for the fiscal
year
would vest ratably on a quarterly basis. Xxxxxxx acknowledges that the issuance
of the shares to him represents taxable income to him and that he (and not
USA)
shall be responsible for the payment of any and all income taxes attributable
to
the issuance of the shares to him. Xxxxxxx shall make appropriate cash payments
to USA to pay for any withholding tax liability of USA in connection with
the
shares. Xxxxxxx acknowledges that the Common Stock has not been registered
under
the Securities Act of 1933, as amended (the “Act”) or under any state securities
law, and the Common Stock can not be sold or transferred unless such Common
Stock has been registered under the Act or such state securities laws, or
unless
USA has received an opinion of its counsel that such registration is not
required. Xxxxxxx
understands that USA has not agreed to register the Common Stock under the
Act
or any state securities laws. In
addition, the certificates representing the Common Stock shall contain such
legends, or restrictive legends, or stop transfer instructions, as shall
be
required by applicable Federal or state securities laws, or as shall be
reasonably required by USA or its transfer agent.
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(b) In
addition to the base salary provided for in subparagraph (a), Xxxxxxx shall
be
eligible to receive such bonus or bonuses as the Board of Directors of USA
may,
in their discretion, pay to Xxxxxxx from time to time based
upon his performance and/or the performance of USA. All awards in this regard
may be made in cash or in Common Stock.
(c) Xxxxxxx
shall be entitled to be reimbursed by USA for all reasonable expenses reasonably
incurred by Xxxxxxx in connection with his employment duties hereunder. Such
expenses shall include but not be limited to all reasonable business travel
expenses such as tolls, gasoline and mileage. Xxxxxxx shall reasonably document
all requests for expense reimbursements.
(d)
At
the
time of the signing of this Agreement by each of USA and Xxxxxxx, USA shall
issue to Xxxxxxx options to acquire up to 18,000 shares of USA Common Stock
for
an exercise price of $7.50 per share (which is equal to the average
closing bid price for the Common Stock during the 30 trading days immediately
preceding the execution and delivery by USA and Xxxxxxx of this
Agreement).
The
options shall vest as
follows: 6,000 on the date hereof; 6,000 on June 30, 2007; and 6,000 on June
30,
2008.
The
options shall be exercisable at any time within five years of vesting. All
of
the terms and conditions of the options are set forth in the Option Certificate
attached hereto as Exhibit "A".
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Xxxxxxx
acknowledges that such options are not incentive stock options as such term
is
defined in Section 422 of the Internal Revenue Code of 1986, as amended,
or part
of an employee stock purchase plan as defined in Section 423 thereunder.
As a
result, among other things, taxable income will be realized by Xxxxxxx at
the
time of the exercise of any such options.
Xxxxxxx
also acknowledges that neither the options nor the Common Stock underlying
the
options have been registered under the Securities Act of 1933, as amended
(“Act”), or under any state securities laws, and neither the options nor the
Common Stock underlying the options can be sold or transferred unless such
options or Common Stock have been registered under the Act or such state
securities laws, or unless USA has received an opinion of counsel that such
registration is not required. Xxxxxxx understands that USA has not agreed
to
register the options or the underlying Common Stock under the Act or any
state
securities laws.
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(e)
On the date of the execution and delivery by each of USA and Xxxxxxx of this
Agreement, USA shall issue to Xxxxxxx 50,000 nonvested shares of Common Stock
as a bonus. These shares shall vest as follows: 16,667 on June 1, 2006; 16,667
on January 1, 2007; and 16,666 on June 1, 2007. Xxxxxxx acknowledges that
the Common Stock has not been registered under the Act or under any state
securities law, and the Common Stock can not be sold or transferred unless
such Common Stock has been registered under the Act or such state securities
laws, or unless USA has received an opinion of its counsel that such registration
is not required. Xxxxxxx acknowledges that the issuance of the shares to him
represents taxable income to him and that he (and not USA) shall be responsible
for the payment of any and all income taxes attributable to the issuance of
the shares to him. Xxxxxxx shall make appropriate cash payments to USA to
pay for any withholding tax liability of USA in connection with the shares.
In addition, the certificates representing the Common Stock shall contain
such legends, or restrictive legends, or stop transfer instructions, as shall
be required by applicable Federal or state securities laws, or as shall be
reasonably required by USA or its transfer agent.
SECTION
3. Termination.
Notwithstanding anything else contained herein, USA may terminate the employment
of Xxxxxxx at any time upon notice delivered to Xxxxxxx in the event that
(i)
Xxxxxxx commits any criminal or fraudulent act; or (ii) Xxxxxxx breaches
any
term or condition of this Agreement; or (iii) Xxxxxxx willfully abandons
his
duties hereunder. Upon such termination neither party hereto shall have any
further duties or obligations hereunder whatsoever; provided, however, that
Xxxxxxx' obligations under Sections 5 and 6 hereof shall survive any such
termination.
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SECTION
4. Death
and Disability.
(a) If
Xxxxxxx shall die during the Employment Period, this Agreement shall terminate
as of the date of such death and except for any base salary or bonuses accrued
as of such date USA shall have no further duties or obligations hereunder
whatsoever.
(b) If
USA
determines in good faith that Xxxxxxx is incapacitated by accident, sickness
or
otherwise so as to render him mentally or physically incapable of performing
the
services required of him hereunder for an aggregate of ninety (90) consecutive
days, upon the expiration of such period or at any time thereafter, by action
of
USA, Herbert’s employment hereunder may be terminated immediately, upon giving
him 30 days written notice to that effect, and upon such termination except
for
any base salary or bonuses accrued as of such date neither party hereto shall
have any further duties or obligations hereunder; provided, however, that
Herbert’s obligations under Sections 5 and 6 hereof shall survive any such
termination. USA shall be entitled to rely upon the advice and opinion of
any
physician of its choosing in making any determination with respect to any
such
disability. In the case of such termination, USA agrees to maintain existing
health care and disability benefits on behalf of Xxxxxxx for a minimum of
one
year following the date of termination.
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SECTION
5. Business
Secrets.
(a) Except
in
connection with his duties hereunder, Xxxxxxx shall not, directly or indirectly,
at any time from and after the date hereof, and whether or not the Employment
Period has terminated, or whether or not Herbert’s employment has terminated for
any reason whatsoever, make any use of, exploit, disclose, or divulge to
any
other person, firm or corporation, any trade or business secret, customer
or
supplier information, documents, know-how, data, marketing information, method
or means, or any other confidential (i.e. not already otherwise disseminated
to
or available to the public) information concerning the business or policies
of
USA, that Xxxxxxx learned as a result of, in connection with, through his
employment with, or through his affiliation with USA, whether or not pursuant
to
this Agreement.
(b) From
and
after the date hereof, except in connection with his duties hereunder, and
for a
one (1) year period following the termination of the Employment Period, or
for a
one (1) year period following the termination of Herbert’s employment hereunder
if earlier, Xxxxxxx shall not solicit, or divert business from, or serve,
or
sell to, any customer or account of USA of which Xxxxxxx is or becomes aware,
or
with which Xxxxxxx has had personal contact as a result of, in connection
with,
through his employment with, or through his affiliation with USA, whether
or not
pursuant to this Agreement. Notwithstanding
the prior sentence, following the termination of Herbert's
employment with USA, Xxxxxxx shall be permitted to sell products to customers
or
accounts of USA, provided such products are not competitive with, or similar
to,
any products of USA, whether such products are offered now or at any time
in the
future by USA.
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(c)
All
documents, data, know-how, designs, inventions, names, marketing information,
method or means, materials, software programs, hardware, configurations,
information, data processing reports, lists and sales analyses, price lists
or
information, or any other materials or data of any kind furnished to Xxxxxxx
by
USA, or developed by Xxxxxxx on behalf of USA or at USA's direction or for
USA's
use, or otherwise devised, developed, created, or invented in connection
with
Xxxxxxx’ employment hereunder or his affiliation with USA, are and shall remain
the sole and exclusive property of USA, and Xxxxxxx shall have no right or
interest whatsoever thereto, including but not limited to, any copyright
or
patent interest whatsoever. If USA requests the return of any such items
(including all copies) at any time whatsoever, Xxxxxxx shall immediately
deliver
the same to USA.
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(d) All
documents, data, know-how, designs, products, ideas, equipment, inventions,
names, devices, marketing information, method or means, materials, software
programs, hardware, configurations, information, or any other materials or
data
of any kind developed by Xxxxxxx on behalf of USA or at its direction or
for
USA's use, or otherwise devised, developed, created, or invented in connection
with Herbert’s employment with USA or Herbert’s affiliation with USA, and
whether before or after the date of this Agreement, are and shall remain
the
sole and exclusive property of USA, and Xxxxxxx does not and shall not have
any
right, title or interest whatsoever thereto. Xxxxxxx hereby affirms and agrees
to the work-for-hire doctrine and acknowledges that all such rights to
intellectual property shall belong exclusively to USA and not to Xxxxxxx.
Any
and all rights of ownership in connection with any of the foregoing shall
belong
solely to USA, and all copyright, patent, trademark, or similar rights or
interests shall be the sole and exclusive property of USA. Xxxxxxx hereby
assigns, transfers, and conveys to USA all of his right, title and interest
in
and to any and all such inventions, discoveries, improvements, modifications
and
other intellectual property rights and agrees to take all such actions as
may be
required by USA at any time and with respect to any such invention, discovery,
improvement, modification or other intellectual property rights to confirm
or
evidence such assignment, transfer and conveyance. At USA's direction and
request, Xxxxxxx shall execute and deliver any and all forms, documents,
or
applications required under any applicable copyright, patent, trademark,
or
other law, rule or regulation.
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SECTION
6. Restrictive
Covenant.
From and
after the date hereof, and for a one (1) year period following the termination
of the Employment Period, or for a one (1) year period following the termination
of Xxxxxxx’ employment hereunder if earlier, Xxxxxxx shall be prohibited from
competing in the United States with the business of USA as presently or as
hereinafter conducted, including but not limited to, the ownership and licensing
of credit card activated control systems in the vending, copying, debit card,
or
personal computer industries. For the purposes hereof, the term "competing"
shall mean acting, directly or indirectly, as a partner, principal, stockholder,
joint venturer, associate, independent contractor, creditor of, consultant,
trustee, lessor to, sublessor to, employee or agent of, or to have any other
involvement with, any person, firm, corporation, or other business organization
which is engaged in the businesses described in this Section.
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SECTION
7. Remedies.
Xxxxxxx
acknowledges that any breach by him of the obligations set forth in Sections
5
or 6 hereof would substantially and materially impair and irreparably harm
USA's
business and goodwill; that such impairment and harm would be difficult to
measure; and, therefore, total compensation in solely monetary terms would
be
inadequate. Consequently, Xxxxxxx agrees that in the event of any breach
or any
threatened breach by Xxxxxxx of any of the provisions of Section 5 or 6 hereof,
USA shall be entitled in addition to monetary damages or other remedies,
to
equitable relief, including injunctive relief, and to the payment by Xxxxxxx
of
all costs and expenses incurred by USA in enforcing the provisions thereof,
including attorneys' fees. The remedies granted to USA in this Agreement
are
cumulative and are in addition to remedies otherwise available to USA at
law or
in equity.
SECTION
8. Waiver
of Breach.
The
waiver by USA of a breach of any provision of this Agreement by Xxxxxxx shall
not operate or be construed as a waiver of any other or subsequent breach
by
Xxxxxxx of such or any other provision.
SECTION
9. Notices.
All
notices required or permitted hereunder shall be in writing and shall be
sent by
certified or registered mail, return receipt requested, postage prepaid,
as
follows:
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To
USA:
USA
Technologies, Inc.
000
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxxxxxx 00000
Attn:
Xxxxxx X. Xxxxxx, Xx.,
Chief
Executive Officer
To
Xxxxxxx:
Xx.
Xxxxxxx X. Xxxxxxx
00
Xxxxx
Xxxx
Xxxxxxxxx,
Xxxxxxxxxxxx 00000
or
to
such other address as either of them may designate in a written notice served
upon the other party in the manner provided herein. All notices required
or
permitted hereunder shall be deemed duly given and received on the second
day
next succeeding the date of mailing.
SECTION
10. Severability.
If any
term or provision of this Agreement or the application thereof to any person
or
circumstances shall, to any extent, be invalid or unenforceable, the remainder
of this Agreement or the application of any such term or provision to persons
or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by law. If
any of
the provisions contained in this Agreement shall for any reason be held to
be
excessively broad as to duration, scope, activity or subject, it shall be
construed by limiting and reducing it, so as to be valid and enforceable
to the
extent compatible with the applicable law.
SECTION
11. Governing
Law.
The
implementation and interpretation of this Agreement shall be governed by
and
enforced in accordance with the laws of the Commonwealth of Pennsylvania
without
regard to its conflict of laws rules.
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SECTION
12. Binding
Effect and Assignability.
The
rights and obligations of both parties under this Agreement shall inure to
the
benefit of and shall be binding upon their personal representatives, heirs,
successors and assigns. This Agreement, or any part thereof, may not be assigned
by Xxxxxxx.
SECTION
13. Entire
Agreement.
This
Agreement constitutes the entire agreement with respect to the subject matter
hereof between the parties hereto and except as provided herein there are
no
other agreements between the parties relating to the subject matter hereof.
This
Agreement may only be modified by an agreement in writing executed by both
USA
and Xxxxxxx. This Agreement shall supercede and completely replace the prior
employment agreements entered into between Xxxxxxx and USA.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and
year first above written.
USA TECHNOLOGIES, INC. | ||
|
|
|
By: | ||
Xxxxxx
X. Xxxxxx, Xx.,
Chief
Executive Officer
|
||
XXXXXXX X. XXXXXXX |
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