SEVERANCE
AGREEMENT
This SEVERANCE AGREEMENT (this
“ Agreement ”) is made and entered into freely
and voluntarily, by and between JOHN W. SMOLAK (hereinafter
referred to as “ Officer ”) and HYPERCOM
CORPORATION (hereinafter referred to collectively with all of its
subsidiaries and controlled affiliates as the " Company
”).
WHEREAS , the parties mutually
wish to memorialize the terms and conditions of the termination of
Officer’s employment with the Company.
NOW, THEREFORE , in
consideration of the acts, payments, covenants and mutual
agreements herein described and agreed to be performed, Officer and
the Company agree as follows:
1. Resignation . Officer
hereby resigns from all positions with the Company (including as an
officer of Hypercom and an officer or director of various
subsidiaries), effective as of 3:00 p.m., Phoenix time,
March 21, 2005 (the “ Effective Date
”).
2. Economic Terms . The
Company agrees that, in consideration for Officer’s covenants
herein, Officer will be entitled to receive, through the one
(1) year anniversary of the Effective Date, continued payments
aggregating $330,000, payable equally over the severance payment
term, in accordance with the Company’s normal payroll
practices provided, however, that the first of such payments shall
be applied (net of tax withholding) to offset the overpayment of a
bonus to Officer relating to 2004 in the amount of $10,000. Officer
acknowledges that he will not be paid any bonus, vacation, sick or
other pay during his severance payment period. In addition, Officer
and the Company acknowledge and agree that the Stock Option
Agreements between them dated April 22, 2002 and July 26,
2002 (the “Options”), shall remain in effect, and
ultimately terminate, in accordance with their respective terms.
For purposes of this Agreement and the Options, Officer shall be
deemed terminated without “cause”.
3. Release and Covenant Not to
Sue .
(a) Each party hereby forever
releases, discharges, cancels, waives, and acquits the other party
and its or his representatives (which shall include, as applicable,
spouse, heirs, executors, administrators, successors, assigns,
affiliates, subsidiaries, corporate parents, agents, directors,
officers, owners, attorneys) of and from any and all rights,
claims, demands, causes of action, obligations, damages, penalties,
fees, costs, expenses, and liability of any nature whatsoever,
whether in law or equity, which a party has, had or may hereafter
have against it arising out of, or by reason of, any cause or
matter, existing as of the date of execution of this Agreement,
WHETHER KNOWN TO THE PARTY AT THE TIME OF EXECUTION OF THIS
AGREEMENT OR NOT, other than for breach of this Agreement.
(b) This FULL WAIVER OF ALL
CLAIMS includes, without limitation, attorney’s fees, any
claims, demands, or causes of action arising out of, or relating in
any manner whatsoever to, the employment and/or termination of the
employment of Officer by the Company, such as, BUT NOT LIMITED TO,
any charge, claim, lawsuit or other proceeding arising under the
Civil Rights Act of 1866, 1964, 1991, Title VII as amended by the
Civil Rights Act of 1991, the Americans with Disabilities Act, the
Age Discrimination in Employment Act (ADEA), the Labor Management
Relations Act (LMRA), the Employee Retirement Income Security Act
(ERISA), the Consolidated Omnibus Budget Reconciliation Act, the
Fair Labor Standards Act (FLSA), the Equal Pay Act, the
Rehabilitation Act of 1973, and the Family and Medical Leave Act of
1993, worker’s compensation laws, or any other federal,
state, or local statute, or any contract, agreement, plan or
policy.
(c) Each party further
covenants and agrees not to institute, nor cause to be instituted,
any legal proceeding, including filing any claim or complaint with
any government agency alleging any violation of law or public
policy or seeking worker’s compensation, against the Company
(or any of its representatives) premised upon any legal theory or
claim whatsoever, including without limitation, contract, tort,
wrongful discharge, personal injury, interference with contract,
breach of contract, defamation, negligence, infliction of emotional
distress, fraud, or deceit, except to enforce the terms of this
Agreement.
(d) Each party acknowledges
that the considerations afforded the party under this Agreement are
in full and complete satisfaction of any claims a party may have or
had to the date hereof, including any arising out of
Officer’s employment with the Company or the termination
thereof.
(e) The foregoing shall not
apply to any conduct that constituted fraud, involved an
intentional or reckless misstatement or omission, or was not
performed in good faith and in (or at least not opposed to) the
best interests of the Company.
(f) Nothing herein shall limit
or modify the Company’s obligations to indemnify you and
advance expenses to you, as more fully provided in the
Company’s certificate of incorporation and bylaws.
4. Non-Competition;
Non-Solicitation .
(a) For a period of one
(1) year from the date hereof, Officer will not, directly or
indirectly, either as an officer, partner, owner, lender, director,
adviser or consultant or in any other capacity or through any
entity:
(i) engage in the design,
manufacture or sale of electronic payment solutions, including
point of sale/point of transaction terminals, peripheral devices,
transaction networking devices, transaction management systems and
application software, and related support and services
(collectively, the “ Competitive Activities ”),
within the Protected Territory (as defined below); provided
, that Officer may own stock in the Company and less than 1% of any
other publicly traded company engaged in any or all of the
Competitive Activities.
(ii) solicit for hire, or hire,
any person who is, or within the one (1) year period preceding
the date of such activity was, an employee of or consultant to the
Company (other than as a result of a general solicitation for
employment); or
(iii) solicit any customer or
supplier of the Company or otherwise attempt to induce any such
customer or supplier to discontinue or materially modify its
relationship with the Company.
As used herein, the term “
Protected Territory ” means the entire world;
provided, however, that if (and only if) required by a final court
or arbitrator’s order in order for the provisions of this
Agreement to remain valid and enforceable against Officer,
“Protected Territory” shall mean any country in which
the Company does any business as of the Effective Date; provided,
further, that if (and only if) such reduced territory is not
sufficient in the determination of the court or arbitrator issuing
such order, “Protected Territory” shall mean the United
States, Canada, Brazil, Chile, Argentina, Colombia, Venezuela,
Mexico, European Community (including the United Kingdom), China,
Hong Kong, Taiwan, Japan, Turkey, Singapore, Russia, South Korea,
Australia and Puerto Rico.
(b) Officer represents to the
Company that he is willing and able to engage in businesses that
are not competing businesses hereunder and that enforcement of the
restrictions set forth in this Section 4 would not be unduly
burdensome to Officer. Officer hereby agrees that the period of
time provided for in this Section 4 and other provisions and
restrictions set forth herein are reasonable and necessary to
protect the Company and its successors and assigns in the use and
employment of the goodwill of the busine
