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 Xxxxx Xxxxxx (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 Accounting 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 Accounting 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 her basic duties, the Employee shall work at her current location,
although the Employee acknowledges that frequent travel may be necessary in
carrying out her duties hereunder. The Employee shall perform her duties
faithfully and to the best of her ability and shall devote her full business
time and effort to the performance of her 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 her
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 $90,000, 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 $20,000 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
$500 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
her position, tenure, salary, age, health and other qualifications make her
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.
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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 (one-half 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 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 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 her duties hereunder. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated
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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 her receipt of such notice, and provides the Employee with an
opportunity, together with her 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 her duties
under this Agreement in her 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 her 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
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.
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(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 she has
had the right to consult with counsel and is fully aware of her 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).
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
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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.
By: /s/ Xxxxxxx Xxxxx
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Title: President and CEO
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XXXXX XXXXXX
/s/ Xxxxx Xxxxxx
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