EMPLOYMENT AGREEMENT
This Employment Agreement is effective as of August 21, 1998, by and
between Xxxx X. Xxxxx ("Employee"), and U.S. Wireless Data, Inc., a Colorado
corporation ("USWD").
WHEREAS, Employee has agreed to resign as Chief Executive Officer and
as a Director of USWD effective upon execution of this Agreement; and
WHEREAS, Employee and USWD have agreed that Employee shall continue to
provide services to USWD pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual promises
and agreements hereinafter set forth, the parties agree as follows:
1. Services.
1.1 Services. Employee will perform, for and on behalf of USWD
(or any subsidiary or third party designated by USWD), those services identified
and agreed upon from time to time by Employee and USWD, including, but not
limited to, transition assistance, public relations and assistance with such
matters as may be assigned to him from time to time. Employee shall perform such
services to the best of his ability and shall be responsible to the Chief
Executive Officer of USWD.
1.2 Availability. Employee shall make himself available to
USWD for services to be rendered hereunder on a"full-time" basis, subject to
vacation and leave policies as are applicable to other executive level
management employees of USWD. USWD acknowledges that Employee will be
establishing a consulting business at the same time as he serves as an Employee
of USWD under this Agreement. USWD agrees that so long as such consulting
business does not violate any of the other terms or conditions of this
Agreement, such action by Employee shall not be deemed to violate this
Agreement.
2. Compensation and Benefits.
2.1 Fees. In consideration for the services performed by
Employee hereunder, USWD shall pay Employee an annualized salary of One Hundred
and Fifty Thousand Dollars ($150,000), to be paid twice monthly, at USWD's
regular pay dates.
2.2 Benefits. Employee shall be entitled to the benefits
generally available to other executive level management Employees of USWD,
including the benefits set forth on Exhibit A attached hereto, as the same may
be modified for all executive level USWD employees from time to time.
3. Term. The term of this Agreement shall commence on the date hereof
and continue for one year (the "Period of Employment"), unless sooner terminated
pursuant to the provisions of Section 6 below.
4. New Business Ideas. Employee agrees to disclose promptly to USWD the
full details of any and all business ideas ("Subject Ideas"), which are
conceived by Employee during the term of this Agreement and which relate to the
wireless credit and/or debit card transaction processing business of USWD.
Employee agrees to assign to USWD, without further consideration, his entire
right, title and interest in and to each and every Subject Idea described above,
which shall be the sole and exclusive property of USWD and that, if protectable
by copyright, they are "works made for hire," as that term is defined in the
United States Copyright Act (17 USCA, Section 101).
5. Confidential Information.
5.1 Employee acknowledges that prior to and during the term of
this Agreement, Employee has had, and may have access to, confidential
information with respect to the business of USWD and its affiliates and that
during the term of this Agreement and for two years thereafter, he will hold all
confidential information in confidence and not disclose or use it except to the
extent necessary to carry out his responsibilities under this Agreement.
5.2 All copies of confidential information in his possession
or control shall be returned promptly to USWD upon USWD's request.
5.3 Confidential information shall not include information
which: (1) is developed by Employee outside the scope of this Agreement and
independent of USWD's confidential information; (2) is or becomes public
knowledge without breach of this Agreement, or (3) is disclosed to Employee by a
third party without violation of any obligation of non-disclosure.
6. Termination. This Agreement, together with the employment
relationship and the Period of Employment, shall terminate under certain
circumstances as follows. The termination of the employment relationship and the
Period of Employment shall not terminate the obligation of the parties to comply
with those terms of this Agreement intended to extend beyond the termination of
the Period of Employment, including without limitation, those obligations with
respect to confidentiality and non-competition.
6.1 Death. This Agreement and the Period of Employment shall
automatically terminate upon the death of the Employee.
6.2 Disability. This Agreement and the Period of Employment
shall automatically terminate in the event of the Disability of the Employee and
Employee is entitled to draw benefits under the Company's short-term disability
policy, subject to any
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limitations imposed by applicable law. "Disability" shall have the meaning given
to such term in the Employer's short-term disability insurance policy as in
effect from time to time.
6.3 Cause. This Agreement and the Period of Employment shall
terminate at the option of the Employer immediately upon delivery by Employer of
written notice to Employee that:
(a) Employee has acted or failed to act in such a
fashion as to constitute dishonesty, fraud, or other serious misconduct
deemed by Employer to have a material adverse effect upon the operation
of the Employer's business, or
(b) Employee has failed to successfully or
adequately perform his or her work obligations as the same have been
delegated to him or her, or
(c) Employee accepts full-time employment with
another employer or assumes obligations under any other job that
require Employee's full time commitment to such obligations or job.
This Agreement may not be terminated except as provided in this Section
6. In the event of any termination pursuant to paragraphs 6.1, 6.2 or 6.3 above,
Employee shall be entitled to receive his salary and/or other compensation
through the effective date of termination, but shall not be entitled to any
severance or other compensation following the effective date of termination. In
the event of termination pursuant to paragraphs 6.1 or 6.2 above, the Employee
shall be entitled to any benefits payable under any health, welfare or insurance
plan maintained by the Employer which covers such event.
7. Non-Competition.
7.1 Employee agrees that he possesses, by virtue of his
employment with USWD and the continuing relationship with USWD, knowledge,
skills and reputation in the industry in which USWD operates which are of
material importance to USWD and which are special, unique and extraordinary.
Employee acknowledges that the loss of his services, or the use of his services
by a competitor, may cause irreparable harm to USWD. Therefore, Employee agrees
that during the period commencing with the date hereof and ending one year after
his employment with USWD is terminated (the "Restricted Period") (voluntarily or
involuntarily) he will not knowingly, directly or indirectly, as a principal,
officer, director, shareholder (other than as a holder of 2% or less of a
publicly traded corporation's capital stock), partner, employee, consultant, or
in any other capacity whatsoever, engage in, be or become associated with, or
advise or assist any business, firm, partnership, individual, corporation, or
any other entity which is engaged in the business of creating, marketing,
selling, leasing or placing products or services which are competitive with the
business of USWD at the time Employee's relationship with USWD is terminated.
During the Restricted
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Period, Employee will not solicit any employee of USWD to leave the employ of
USWD or solicit the business of any client or customer of USWD (other than on
behalf of USWD).
7.2 It is agreed that Employee's services are unique, and that
any breach or threatened breach by Employee of any provision of this Section may
not be remedied solely by damages. Accordingly, in the event of a breach or
threatened breach by Employee of any of the provisions of this Section 7, USWD
shall be entitled to injunctive relief, restraining Employee and any business,
firm, partnership, individual, corporation, or entity participating in such
breach or attempted breach, from engaging in any activity which would constitute
a breach of this Section 7. Nothing herein, however, shall be construed as
prohibiting USWD from pursuing any other remedies available at law or in equity
for such breach or threatened breach, including the recovery of damages.
8. Stock Options. Employee is the holder of a non-qualified stock
option issued by USWD as of August 4, 1998, which is exercisable to purchase up
to a total of 600,000 shares of USWD's no par value common stock at $1.00 per
share through August 4, 2007, subject to vesting and termination as provided
therein (the "Stock Option"). A copy of the Stock Option Agreement is attached
hereto as Exhibit 2. Employee and USWD have also entered into an understanding
(as stated in the minutes of a meeting of the Board of Directors of USWD of
November 21, 1997) by which Employee is to be reimbursed by USWD for the
difference, if any, in tax consequences to him that arise as a result of the
Stock Option having been issued as a non-qualified option, as opposed to an
incentive stock option. Employee shall remain the owner and beneficiary of the
Stock Option, which shall continue in full force and effect through the Period
of Employment, subject to the same terms as existed prior to entry of this
Agreement; provided, however, that with respect to the accelerated vesting
provisions of the Stock Option upon the occurrence of "Certain Reorganizations"
of the Company, as described in Section 10 of the Stock Option Agreement, if
this Agreement is in effect at the time of any such reorganization, the number
of options that shall immediately vest upon any such reorganization shall be
limited to the number of options that would be vested as of the date one year
from the effective date of this Agreement.
9. Cooperation. Employee acknowledges that as Chief Executive Officer
and a director of USWD he had certain duties and obligations to USWD. Employee
agrees to take such actions, including the signing of formal USWD documents such
as reports, minutes and the like, as are reasonable and necessary and pertinent
to the time during which he served as Chief Executive Officer and a director of
USWD, to assist USWD in an orderly transition from his status as Chief Executive
Officer and a director of USWD.
10. Publicity. Except as may be otherwise required by law, Employee
shall have the right to review and approve any public announcements or
statements made by USWD or any person acting on USWD's behalf, which mention or
refer to Employee or his relationship with USWD.
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11. Arbitration; Legal Fees. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by arbitration
in San Francisco, California, in accordance with the rules of the American
Arbitration Association then in effect. Such arbitration shall be presided over
by a single arbitrator if the parties agree on such person within fifteen (15)
days of the date of a written demand for arbitration by either party. If the
parties cannot so agree on a single arbitrator, then such arbitration shall be
before a three member panel and each party shall appoint one arbitrator within
thirty (30) days of the initial date of demand by either party. The two
arbitrators so appointed shall appoint the third arbitrator within 45 days of
the date of the initial demand for arbitration by either party. The arbitration
shall occur within 120 days of the initial demand for arbitration by either
party. Discovery shall be available in any such arbitration to the extent
necessary to prevent any party from being prejudiced by a lack of discovery.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction. The prevailing party in any such arbitration shall be entitled to
recover all reasonable legal fees and costs and other fees and expenses incurred
in respect of any dispute or controversy, which fees and costs may be included
in the award rendered by the panel in the proceeding. Notwithstanding this
provision, the parties agree that any action required as a result of the breach
or threatened breach of any term of this Agreement which may result in
irreparable injury to a party and which would therefore be appropriate for
injunctive relief may be brought in the court and location described in
paragraph 11.4 of this Agreement.
12. Miscellaneous.
12.1 Assignment. USWD may assign this Agreement or any of its
rights hereunder to any affiliate of USWD or to any successor to USWD who
assumes the business of USWD through merger, purchase of assets or any other
transaction. The duties and obligations of Employee hereunder are unique and
Employee shall therefore not be entitled to assign his duties and obligations
under this Agreement to any other person.
12.2 Entire Agreement and Amendment. This Agreement (together
with its attachments) constitutes the entire agreement between USWD and Employee
and any verbal or written communication between the parties prior to the
adoption of this Agreement shall be deemed merged herein and of no further force
and effect. This Agreement may only be altered or amended by a writing signed by
the Employee and an authorized officer of USWD.
12.3 Waiver. Neither the delay or failure by USWD or Employee
to exercise any right under this Agreement, nor partial or single exercise of
any such right, shall constitute a waiver of that or any other right.
12.4 Governing Law and Venue. This Agreement is entered into
in Emeryville, California, and as such it shall be interpreted and enforced
under the laws of the State of California applicable to contracts made to be
performed entirely within California.
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In the event that any one or more provision in this Agreement shall, for any
reason, held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such provision
had never been contained herein. Unless submitted to arbitration pursuant to
Section 11 of this Agreement, the proper venue for any legal action as to the
interpretation or enforcement of this Agreement shall be a court of appropriate
jurisdiction located in the San Francisco Bay area of California.
12.5 Interpretation. In the event that any one or more
provisions of this Agreement shall, for any reason, held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such provision had never been contained
herein. If any provision in this Agreement shall be held to be excessively broad
as to duration, activity or subject in any jurisdiction, it shall be construed
by limiting and reducing the provision which is deemed excessively broad. A
limitation or reduction in the application of any provision in one jurisdiction
shall not affect the application of the same provision in any other
jurisdiction.
12.6 Notices. Any notice required or permitted by this
Agreement shall be effective when received, and shall be sufficient if in
writing and personally delivered (including by express courier) or sent by
certified mail with return receipt to the address set forth at the end of this
Agreement or at such other address as may by notice be specified by one party to
the other.
12.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same Agreement.
12.8 Headings. The headings used for the sections, paragraphs
and subparagraphs of this Agreement are for convenience are not a substantive
part of this Agreement. The headings shall not be used to interpret or construe
any of the substantive terms of this Agreement.
12.9 Review and Construction. Each of the parties to this
Agreement has had the opportunity to have this Agreement reviewed by counsel of
their own choosing. Neither this Agreement nor any provision of this Agreement
shall be construed or interpreted "against" any party as a result of such
party's having "drafted" the Agreement or any provision of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
U.S. WIRELESS DATA, INC.
By: /s/ Xxx X. Xxxxxxxxx
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Name: Xxx X. Xxxxxxxxx
Title: President
EMPLOYEE
/s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
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EXHIBIT 1
BENEFITS PACKAGE DESCRIPTION
EXHIBIT 2
STOCK OPTION AGREEMENT
