Exhibit 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), effective as of January 1,
1998, by and between Global Payment Technologies, Inc., a Delaware corporation,
with executive offices at 00 Xxxx Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx Xxxxxx, XX
00000 (the "Company"), and Xxxxxx X. Xxxxx, residing at 00 Xxxxxxxxx Xxxxx,
Xxxxxxxxxx, XX 00000, (the "Executive").
WITNESSETH:
WHEREAS, the Company desires to formalize the employment of the Executive
as a senior executive officer of the Company; and
WHEREAS, the Company and Executive desire to enter into an agreement
relating to such employment;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT
1.1 As of the commencement of the Employment Term (as hereinafter defined),
the Company hereby employs Executive in a senior executive capacity (it being
contemplated that he shall be elected and serve as the Vice President
Product/Market Development upon the terms and conditions herein contained, with
responsibility for the performance of such duties as may be from time to time
assigned to him by the Board of Directors of the Company (the "Board of
Directors"), its Chief Operating Officer or its Chief Executive Officer.
Executive hereby accepts employment.
1.2 The term of employment under this Agreement shall commence on the
effective date of this Agreement, and, subject to the terms hereof shall
terminate on December 31, 2000, provided, however, that the term of this
Agreement shall automatically be extended for additional one (1) year terms
beyond the initial term unless and until either the Company or Executive
provides sixty (60) days prior written notice to the other of its desire to
terminate this Agreement as of the end of the then current term of this
Agreement (such term of employment is referred to hereinafter as the "Employment
Term").
1.3 Throughout the Employment Term, Executive shall devote his best efforts
and all of his business time, attention and skills to the business and affairs
of the Company.
2. SALARY
2.1 During the Employment Term, Executive shall be entitled to receive a
base salary at the rate of $100,000 per year plus an additional non-refundable
draw against commissions (the "Draw"), payable in accordance with the Company's
regular payroll practice for senior executives of the Company; provided that
such base salary and Draw shall be reviewed by the COO, CEO, the Compensation
Committee and/or the Board of Directors as may be required, no less than
annually and may be increased, but not decreased. During the period January 1,
1998 through December 31, 1998, such Draw shall be at the rate of $40,000 per
annum. During the period January 1, 1999 through December 31, 1999, such Draw
shall be at the rate of $50,000 per annum. During the period January 1, 2000
through December 31, 2000, such Draw shall be at the rate of $60,000 per annum.
3. COMMISSIONS
For each year during the term of this Agreement, commencing with the first
year, Executive shall be entitled to receive commissions in an amount to be
determined by the CEO and COO in their sole discretion.
4. INCENTIVE STOCK OPTION PLAN
4.1 The Executive shall be entitled to participate in the Company's Stock
Option plan in a manner equal to that of other senior executives.
4.2 The ISO shall be subject to such other terms and conditions as are set
forth in the grant.
5. TERMINATION UNDER CERTAIN CONDITIONS
Subject to section 7(d), in the event that Executive's employment is
terminated by the Company (other than for "Cause" as hereinafter defined) or
Executive terminates his employment for "Good Reason" (as hereinafter defined)
prior to the end of the Employment Term, Executive shall be entitled to receive
in lieu of any and all other payments a severance payment in an aggregate amount
equal to (1) Executive's yearly base salary and draw against commissions in
effect on the date of his termination of employment hereunder (the "Severance
Payment") plus (2) any outstanding commissions due Executive (the "Outstanding
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Commissions"). The Severance Payment shall be payable in six equal monthly
installments, the first installment to be due and payable on the first day of
the month immediately following such termination. The Outstanding Commissions
payment(s) shall be made within a reasonable time period (within 30 days) of
such commissions being earned.
6. CERTAIN EMPLOYEE BENEFITS
6.1 During the Employment Term, Executive shall be entitled to participate,
to the extent he is eligible under the terms and conditions thereof, in any
benefit plan which the Company may from time to time provide to its senior
executives during the Employment Term. Unless otherwise specifically set forth
herein, the Company shall be under no obligation to institute or thereafter
continue the existence of any such benefit plan.
6.2 The Executive shall be entitled to the full time use of an automobile
and shall be reimbursed by the Company at the rate of $7,200 per calendar year.
6.3 During the Employment Term, Executive shall be entitled to the use of a
private office and secretarial assistance, both appropriate for a senior
executive of the Company.
7. CHANGE OF CONTROL
(a) For the purpose of this Agreement, a "Change of Control" shall mean:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
35% or more (on a fully diluted basis) of either (i) the then outstanding
shares of common stock of the Company, taking into account as outstanding
for this purpose such common stock issuable upon the exercise of options or
warrants, the conversion of convertible stock or debt, and the exercise of
any similar right to acquire such common stock (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election
of directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (W) any acquisition
by the Company or any "affiliate" of the Company, within the meaning of 17
C.F.R. ss. 230.405 (an
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"Affiliate"), (X) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company or any Affiliate, (Y) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (X), (Y) and (Z) of subsection (iii) of this Section 7(a), and
(Z) any acquisition by an entity in which the Executive has a direct or
indirect equity interest; or
(ii) Individuals who, as of the effective date hereof, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors; provided,
however, that any individual becoming a director subsequent to such
effective date whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs
as a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board of
Directors; or
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (X) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination of
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the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, and (Y) no Person (excluding (I) any
employee, benefit plan (or related trust) sponsored or maintained by the
Company or any Affiliate of the Company, or such corporation resulting from
such Business Combination or any Affiliate of such corporation, or (II) any
entity in which the Executive has an equity interest, or any Affiliate of
such entity) beneficially owns, directly or indirectly, 20% or more (on a
fully diluted basis) of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Business Combination,
taking into account as outstanding for this purpose such common stock
issuable upon the exercise of options or warrants, the conversion of
convertible stock or debt, and the exercise of any similar right to acquire
such common stock, or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (Z) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board of Directors, providing for such Business Combination;
or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(b) The Company or its successor or purchaser shall notify Executive in
writing, no later than 10 days prior to a Change in Control, whether it desires
Executive to remain employed for a maximum of twelve months following the Change
in Control (the "Transition Period"). If Executive is notified that it is not
desired that he remain employed following the Change in Control, or if no such
notice is given or the notice references a Transition Period of more than twelve
months, Executive shall have the right to voluntarily terminate his employment
for the 60-day period following the Change in Control and, subject to Section
7(d) below, such termination shall be deemed to have occurred for Good Reason
for purposes of this Agreement.
(c) If Executive is properly notified that the Company or its successor or
purchaser desires Executive to remain employed for the Transition Period, and if
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Executive remains employed for the Transition Period, then Executive shall have
the right to voluntarily terminate his employment for the 60-day period
following the end of the Transition Period and, subject to Section 7(d) below,
such termination shall be deemed to have occurred for Good Reason for purposes
of this Agreement.
(d) If, following a Change in Control, Executive's employment is terminated
by the Company other than for Cause, or Executive terminates his employment for
Good Reason (including for this purpose under circumstances described in Section
7(b) and (c)), (i) the Severance Payment due to Executive pursuant to Section 5
shall be increased by 50% and (ii) such payment shall be made to Executive in a
single lump sum no later than five days following his termination.
8. TERMINATION FOR GOOD REASON
Executive may terminate his employment hereunder for Good Reason at any
time during the Employment Term, in which event Executive shall resign from all
of his positions with the Company. For purposes of this Agreement, "Good Reason"
shall mean the Executive's good faith determination that any of the following
has occurred (without Executive's express prior written consent):
(i) The assignment to executive by the Company of duties inconsistent
with those of a vice president or those of such other equivalent or more
senior position then held by Executive, if any (including status, titles,
offices and lines of reporting), except in connection with the termination
of Executive's employment for Cause (as described in paragraph 9),
disability (as defined in section 9.2(c) below), or as a result of
Executive's death or termination by Executive other than for Good Reason;
(ii) A reduction by the Company in Executive's base salary;
(iii) The taking of any action by the Company which would deprive
Executive of any material fringe benefit enjoyed by Executive at any time
during the Employment Term as set forth in paragraph 6; or
(iv) Any material breach by the Company of any provision of this
Agreement.
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9. DISCHARGE FOR CAUSE
9.1 The Company shall have the right to terminate the employment of
Executive during the Employment Term. If the Company terminates the employment
of Executive other than for Cause, the provisions of paragraph 5 hereof shall
apply. If the Company terminates the employment of Executive for Cause, its
obligation under this Agreement to make any further payments to Executive shall
thereupon cease and terminate except for any obligations accrued but which
remain unpaid.
9.2 As used herein, the term "cause" shall be limited to (a) action by
Executive involving willful malfeasance or gross negligence having an adverse
effect on the Company, or (b) failure to act by Executive involving material
malfeasance or gross negligence having an adverse effect on the Company provided
that any action or failure to act by Executive shall not constitute "Cause" if;
in good faith, Executive believed such action or failure to act to be in or not
opposed to the best interests of the Company, or if Executive shall be entitled,
under applicable law or the Certificate of Incorporation or By-Laws of the
Company, to be indemnified with respect to such action or failure to act, (c) in
the event Employer makes a good faith determination that Executive is so
disabled, for mental or physical reasons, that he is unable to satisfactorily
perform his duties hereunder for an aggregate of 180 days during any period of
12 consecutive months, or (d) the death of Executive.
9.3 Termination of Executive for Cause pursuant to this section 9 shall be
communicated by a notice of termination.
10. EXPENSES
The Company shall reimburse Executive for reasonable expenses incurred in
connection with the performance of his duties hereunder upon presentation to it
by Executive from time to time of an itemized account of such expenditures in
accordance with the Company's procedures as in effect from time to time.
11. NONDISCLOSURE; NONCOMPETE; INVENTIONS
11.1 "Confidential Information" Defined. As used in this paragraph 11, the
term "Confidential Information" shall mean any and all information (verbal and
written) relating to the Company or any of its respective subsidiaries or any of
its respective activities, other than such information which can be shown by
Executive to be in the public domain (such information
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not being deemed to be in the public domain merely because it is embraced by
more general information which is in the public domain) other than as the result
of a breach of the provisions of section 11.2 below, including, but not limited
to, information relating to: technology; research; test procedures and results;
machinery and equipment; manufacturing processes; financial information;
products; identity and description of raw materials and services used;
purchasing; costs; pricing; engineering; customers and prospects; marketing; and
selling and servicing.
11.2 Nondisclosure of Confidential Information. Executive shall not, at any
time during the term of his employment by the Company (other than as may be
required in connection with the performance by him of his duties hereunder) or
thereafter directly or indirectly, use, communicate, disclose or disseminate any
Confidential Information in any manner whatsoever.
11.3 Noncompete Covenant. Unless Executive has terminated for Good Reason,
Executive shall not, during the period of his employment by the Company and for
a period of 15 months thereafter, directly or indirectly (a) engage in any
business (whether as owner, manager, operator, lender, partner, shareholder,
licensor, licensee, joint venturer, employee, consultant or otherwise) in which
the Company is engaged (or is actively considering engaging) during the term of
Executive's employment by the Company in any geographic area in which the
Company or any of its respective subsidiaries is so engaged or is actively
considering engaging, or (b) take any other action which constitutes an
interference with or a disruption of the activities of the Company or any of its
subsidiaries.
In addition, the Executive acknowledges the Company has equity investments in
certain subsidiaries and affiliates (hereinafter referred to as the
"Subsidiaries"). In the event either of the conditions in (i) or (ii) below are
satisfied, the Executive agrees to be bound by this noncompete covenant, as it
relates to the specific business.
(i) if the revenue across all Subsidiaries and the Company, from a
specific product line, service offering or single customer exceeds 5%
of the
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Company's revenue for its most recently completed fiscal year, or
(ii) if the revenue from any individual Subsidiary's specific product line,
service offering or single customer exceeds 15% of that Subsidiary's
total revenue for its most recently completed fiscal year.
Notwithstanding the foregoing, Executive shall be permitted to own (as a passive
investment) not more than 1% of any class of securities which is registered
under the Securities Exchange Act of 1934 as amended; provided, however, that
said 1% limitation shall apply to the aggregate holdings of Executive and those
of all other persons and entities with whom Executive has agreed to act for the
purpose of acquiring, holding, voting or disposing of such securities.
11.4 Certain Activities. For purposes of clarification, but not of
limitation, Executive hereby acknowledges and agrees that the provisions of
section 11.3 above shall serve as a prohibition against him, during the period
referred to therein, directly or indirectly, hiring, offering to hire, enticing
away or in any other manner persuading or attempting to persuade any officer,
employee, agent, lessor, lessee, licensor, licensee, customer, prospective
customer or supplier of the Company or any of its subsidiaries to discontinue or
alter his or its relationship with the Company or any of its subsidiaries;
provided, however, that in the event Executive has terminated for Good Reason,
the 15 months period referred to in section 11.3 shall be reduced to 9 months
for purposes of this section 11.4.
11.5 Inventions. Executive shall assign, transfer, convey and deliver to
the Company, and hereby does assign, transfer and convey to the Company, all
right, title and interest in and to all ideas, concepts, inventions, devices and
improvements which pertain to methods, apparatus, designs, products, processes,
devices or services sold, leased, used under consideration or development by the
Company or any of subsidiaries, or which otherwise relate or pertain to the
business, functions or operations of the Company or any of its subsidiaries,
whether or not patentable or copyrightable (collectively called "Inventions"),
and in and to any
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and all patents, copyrights, trademarks and other protection with respect
thereto and applications therefor (including continuations,
continuations-in-part, divisions, reissues, renewals and extensions) for all
countries relating to such Inventions, which Executive, either alone or with
others, may make, conceive or reduce to practice during the term of his
employment by the Company (it being agreed that any Invention disclosed by
Executive within one year following the termination of his employment by the
Company shall be deemed to fall within the provisions of this section 11.5
unless proved by him to have been first conceived, made and reduced to practice
following the termination of his employment by the Company). Executive shall (i)
promptly communicate and disclose to the Company all information, data and
details concerning all Inventions, and (ii) during the term of his employment by
the Company and at any time thereafter, execute all papers and perform all acts,
and cooperate with the Company and its counsel in any other way which, in the
sole view of the Company, is necessary and proper to more fully effectuate the
provisions of this section 11.5. All expenses in connection with the obligations
of Executive under this section 11.5 shall be borne by the Company or its
nominee.
11.6 Records. During the period of his employment by the Company, Executive
shall make and maintain adequate and current written records of all Inventions,
in the form of notes, sketches, drawings and/or reports relating thereto, which
records shall be and shall remain the property of the Company and shall be
available to the Company at all times. Upon the termination of Executive's
employment for any reason whatsoever, all documents, records, notebooks and
other materials which refer or relate to any aspect of the business of the which
are in the possession of Executive, including all copies thereof, shall be
promptly returned to Employer.
11.7 Injunctive Relief. etc. The parties hereto hereby acknowledge and
agree that (i) the Company would be irreparably injured in the event of a breach
by Executive of any of his obligations under this paragraph 11, (ii) monetary
damages would not be an adequate remedy for any such breach, and (iii) the
Company shall be entitled to injunctive relief, in addition to any other remedy
which it may have, in the event of any such breach. It is hereby also agreed
that the existence of any claims which Executive may have against the Company or
its subsidiaries, whether under this Agreement or otherwise, shall not be a
defense to the enforcement by the Company of any of its rights under this
paragraph 11.
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11.8 Scope of Restriction. It is the intent of the parties hereto that the
covenants contained in this paragraph 11 shall be enforced to the fullest extent
permissible under the laws and public policies of each jurisdiction in which
enforcement is sought (Executive hereby acknowledging that said restrictions are
reasonably necessary for the protection of the Company). Accordingly, it is
hereby agreed that if any of the provisions of this paragraph 11 shall be
adjudicated to be invalid or unenforceable for any reason whatsoever, said
provision shall be (only with respect to the operation thereof in the particular
jurisdiction in which such adjudication is made) construed by limiting and
reducing it so as to be enforceable to the extent permissible, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of said provision in any other jurisdiction.
11.9 Nonexclusivity. The undertakings of Executive contained in this
paragraph 11 shall be in addition to, and not in lieu of, any obligations which
he may have with respect to the subject matter hereof, whether by contract, as a
matter of law or otherwise.
12. CAPACITY, ETC.
Employee hereby represents and warrants to Employer that: (a) he has full
power, authority and capacity to execute and deliver this Agreement, and to
perform his obligations hereunder, (b) said execution, delivery and performance
will not (and with the giving of notice or lapse of time or both would not)
result in the breach of any agreements or other obligations to
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which he is a party or otherwise bound, and (c) this Agreement is his valid and
binding obligation in accordance with its terms.
13. NOTICES
All notices or communications hereunder shall be in writing, addressed as
follows:
To the Company:
00 Xxxx Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx Xxxxxx, Xxx Xxxx 00000
To Executive:
Xxxxxx X. Xxxxx
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Any such notice or communication shall be sent certified or registered
mail, return receipt requested, postage prepaid, addressed as above (or to such
other address as such party may designate in writing from time to time), and the
actual date of receipt, as shown by the receipt therefor, shall determine the
time at which notice was given.
14. SEPARABILITY, LEGAL FEES
If any provision of this Agreement shall be declared to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability shall
not affect the remaining provisions hereof which shall remain in full force and
effect. The Company shall pay all legal fees and other fees and expenses which
Executive may incur in entering into this Agreement, if executed (provided the
amount of such legal fees shall not exceed $2,500) or in obtaining, or
attempting to obtain compensation or other benefits under this Agreement.
15. INDEMNIFICATION
The Company shall indemnify and hold harmless the Executive from and
against any and all damage, loss, liability or expense (including reasonable
attorneys' fees which shall be advanced by the Company) arising out of or with
respect to the performance of his duties
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hereunder in his capacity as an officer and employee of the Company (or any
subsidiary or affiliate thereof) to the maximum extent permitted by law. The
Executive shall notify the Company of any claim by any third party coming to his
attention which could result in any liability on the Company's part. The Company
shall have the right to conduct the defense against any such claim with counsel
of its selection. The obligations of the Company under this Section 16 shall
continue following the termination of this Agreement and/or the termination of
employment of the Executive with the Company.
16. BINDING EFFECT, ASSIGNMENT
(a) This Agreement shall be binding upon and inure to the benefit of the
heirs and representatives of Executive and the assigns and successors of the
Company, but neither this Agreement nor any rights hereunder shall be assignable
or otherwise subject to hypothecation by Executive or by the Company. The
Company shall not assign this Agreement to any successor or assign of the
Company without the written consent of Executive.
(b) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
17. GOVERNING LAW
This Agreement shall be construed, interpreted, and governed in accordance
with the laws of the State of New York.
18. ARBITRATION
Any controversy or claim arising out of or relating to this agreement, or
the breach thereof, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in New
York, New York, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
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19. ENTIRE AGREEMENT
This Agreement represents the entire agreement of the parties and shall
supersede any and all previous contracts, arrangements or understandings between
the Company and Executive with respect to the subject matter hereof. The
Agreement may be amended at any time by mutual written agreement of the parties
hereto.
20. HEADINGS
The headings contained herein are for the sole purpose of convenience of
reference, and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and Executive has hereunto set his hand effective as of the date set
forth above.
GLOBAL PAYMENT TECHNOLOGIES, INC.
By: /s/ Xxxxxxx Xxxx
---------------------------
Xxxxxxx Xxxx
Chairman of the Board
/s/ Xxxxxx X. Xxxxx
---------------------------
Xxxxxx X. Xxxxx
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