EMPLOYMENT AND NON-COMPETITION AGREEMENT
Agreement made as of this 24th day of February, 1997, by and between
XXXXXX X. XXXXXXX, an individual residing at 000 Xxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxxxxxx 00000 ("Xxxxxxx"), and USA TECHNOLOGIES, INC., a Pennsylvania
corporation ("USA"), with a place of business at 000 Xxxxx Xxxxxx, Xxxxx,
Xxxxxxxxxxxx 00000.
BACKGROUND
USA is in the principal business of owning and licensing credit card
activated control systems for the vending, copying, debit card and personal
computer industries. USA desires to engage Xxxxxxx and Xxxxxxx desires to be
engaged by USA as Senior Vice President and Chief Financial Officer of USA.
Because of, among other matters, the decreased value of the business of USA that
will result if Xxxxxxx would compete with USA or use or divulge certain
confidential information, Xxxxxxx has further agreed that he will be subject to
certain restrictions during and after his being an employee of USA.
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 Senior Vice President,
Treasurer, and Chief Financial Officer for a one year period commencing on
February 24, 1997 and continuing through February 28, 1998 (the "Employment
Period"), and Xxxxxxx hereby accepts such
1
employment. Unless terminated by either party hereto upon at least 30-days
notice prior to end of the original Employment Period ending February 28, 1998,
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 President or Board of Directors of USA.
SECTION 2. Compensation and Benefits
(a) In consideration of his services rendered, USA shall pay
to Xxxxxxx a base salary of $85,000 per year during the Employment Period,
subject to any withholding required by law, except that at no time shall his
base salary be less than 85% of the base salary of the Chief Executive Officer.
Xxxxxxx'x base salary may be increased from time to time in the discretion of
the Board of Directors.
(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
2
discretion, pay to Xxxxxxx from time to time.
(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 commencement of the Employment Period, USA will
issue to Xxxxxxx nonvested options to acquire up to 200,000 shares of Common
Stock, no par value, of USA ("Common Stock") for an exercise price of $.45 per
share. The vesting schedule of such options as well as all the other terms and
conditions thereof are set forth in the Option Certificate evidencing such
options which will be delivered to Xxxxxxx by USA at the commencement of the
Employment Period. The form of such Option Certificate is attached hereto as
Exhibit "A".
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 (the "Act"), or under any state securities laws, and
neither the options nor the Common Stock
3
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.
(e) USA shall pay Xxxxxxx'x reasonable moving expenses up to
the amount of $5,000 if he decides to move his current residence to a location
closer to USA's executive offices.
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'x obligations under Sections 5 and 6 hereof
shall survive any such termination.
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
4
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,
Xxxxxxx'x employment hereunder may be terminated immediately, upon giving him
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 Xxxxxxx'x 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.
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 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'x
employment hereunder if earlier, 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.
5
(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
Xxxxxxx'x 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.
(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'x 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.
SECTION 6. Restrictive Covenant. From and after the date hereof, and
for a one (1) year period following the termination of
6
the Employment Period, or for a one (1) year period following the termination of
Xxxxxxx'x 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.
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
7
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:
To USA:
USA Technologies, Inc.
000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xx., President
To Xxxxxxx:
Xx. Xxxxxx X. Xxxxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 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
8
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.
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.
9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
USA TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
-----------------------------------
Xxxxxx X. Xxxxxx, Xx., Chairman
and Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
XXXXXX X. XXXXXXX
10