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 Xxxxxxx X.
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 Executive 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 in its entirety and without
limitation the employment agreement entered into by and between the Employee
and the Company on December 3, 1985 (the "Prior Agreement"). Prior to the
Consummation of the Offer, this Agreement shall be of no force or effect, and
the Employee's employment relationship with the Company shall be governed by
the Prior Agreement.
2. POSITION AND DUTIES. The Employee shall be employed, as of the
Consummation of the Offer, as Chief Executive Officer of the Company,
reporting to the Company's Board of Directors (the "Board") 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 equal to his base salary approved by the Board in the normal course
prior to the Transaction, payable monthly in accordance with the Company's
normal payroll practices, increased from time to time by the Board consistent
with past practices, provided that in no event shall the Employee's annual
base salary be less than $225,000.
(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% of the
Employee's annual base salary based on performance of the Company as set
forth in the Company's annual operating plan to be agreed upon by the
Employee 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, on a date
chosen by the Employee and the Compensation Committee of the Board, 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 one forty-eighth (1/48th) of the Shares shall
vest at the end of each month thereafter.
(d) AUTOMOBILE ALLOWANCE. During the term of this Agreement, the
Company shall make available to the Employee for his use an automobile
purchased by the Company. The Employee shall have the right to purchase the
automobile from the Company for $1 after three years from the date first
written above. Alternatively, the Company may provide the Employee with a car
allowance of not less than $1200 per month. The Company shall pay the cost
of maintenance and other automobile related expenses.
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
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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 two times the Employee's Current Compensation (one and
one-half the Employee's Current Compensation if such Termination occurs after
the first anniversary of the Consummation of the Offer but on or before the
second anniversary of the Consummation of the Offer, and one times the
Employee's Current Compensation if such Termination occurs after the second
anniversary of the Consummation of the Offer); 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
twenty-four (24) months following such termination, and may be continued in
the Employee's discretion and at the Employee's expense indefinitely
thereafter. 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 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
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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 Board 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 Board 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 Employee's three-year average annual base salary and
three-year average annual bonus over the three preceding fiscal years.
(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 by the Board
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 by the Board 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 by the Board 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 by the Board to a facility or a location more
than thirty-five (35) miles from his current location; (v) any purported
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termination of the Employee by the Board 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 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.
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(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).
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.
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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.
By: /s/ Xxxxx Xxxxxxx
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Title: Vice President
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XXXXXXX X. XXXXX:
/s/ Xxxxxxx Xxxxx
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