Exhibit 10.07
EMPLOYMENT AGREEMENT
I. This agreement is executed this 7th day of July, 2004 and made
effective as of March 15, 2004 ("Effective Date"), between Schimatic
Cash Transactions Xxxxxxx.xxx, Inc., a Florida corporation ("Employer",
"Company of "SCTN""), and Xxxxxx X. Xxxxxxx ("Diamond" or "Employee")
and (collectively the "Parties"). This agreement amends all prior
employment agreements. All aspects of the previous agreements that are
not specifically affirmed are to be considered void.
II. RECITALS
A. Employer is a Florida corporation, the principal business of
which is computer software solutions with particular expertise in
Smart Card Loyalty programs.
B. Employer's current headquarters office ("Corporate Office") is
000 X. Xxxx Xxxxxxx Xx., Xxx Xxxxx, XX 00000, and its back office
operations ("Operations Center") are currently located at 0000
Xxxxx Xxxxx Xx. in Midvale, Utah.
C. Company recognizes that Diamond has played a key role, and will
continue to play a key role, in the administration, finance and
legal areas of the business of SCTN.
D. Company desires to ensure the continued involvement of Diamond,
and is therefore entering this Employment Agreement for Diamond
to serve as Senior Vice President of Administration and Finance,
reporting to the CEO and on the Board of Directors.
The Parties wish to enter into a written agreement to memorialize the
terms of Employee's employment by the Employer.
III. AGREEMENT.
In consideration of the employment of Diamond by the Employer and other
good and valuable consideration, the parties hereto agree as follows:
A. Employment. The Employer agrees to employ Diamond as Senior Vice
President of Administration and Finance on the terms set forth
herein. Diamond accepts such employment and agrees to work full
time and use his best efforts in performing services for the
Employer, to include establishment of, and ongoing operation of,
all administrative, legal, and financial functions of the
Company.
B. Terms & Salary Employee's current salary will be five thousand
dollars ($5,000) per month. Employee will be given regular
reviews and, subject to employee's continued performance of
duties, employee will be given raises, bonuses, and additional
compensation in reasonable correlation with the salaries and
compensation packages of other senior executives. Except as
provided herein, the term of this Agreement shall be for a period
of three (3) years commencing on the Effective Date.
JED_________ Page 1 of 12 SCTN________
Diamond Employment Agreement (Cont)
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C. Stock, Stock Options and bonuses. The stock to be issued under
the terms of this agreement will settle all prior agreements
related to stock, stock options, and agreements to convert debt
into stock. Under previous agreements Diamond has the rights to
the following:
1. Stock options to purchase 10,000,000 shares at $0.15
per share;
2. 66,777 Shares for the month of February 2004;
3. 100,000 Shares per month for March, April, May and June
2004;
4. Convert unpaid expenses into shares of stock at $0.15
cents per share;
5. Convert unpaid salary to stock.; and
6. 1,000,000 shares to be issued with an issue date of
March 15, 2004;
Under this agreement, the above stock and options will be replaced
by the compensation schedule as follows, and Diamond is being
granted:
7. The 1,000,000 shares to be issued in the name of
Xxxxxxx X. Xxxxxxx, as her sole and separate property,
as of March 15, 2004 is affirmed;
8. The shares to be issued under the former agreements in
lieu of salary, for unpaid salary and for unpaid
expenses is to be settled at 500,000 shares to be
issued in the name of Xxxxxxx X. Xxxxxxx, as her sole
and separate property, with an issue date of June 15,
2004;
Because the position Diamond has taken with SCTN REQUIRES FAR MORE
TIME THAN Diamond has agreed to provide SCTN, Diamond has prepared
an invoice for $800,000.00 to go forward and service the company
full time, devoting all the time necessary to complete the tasks
of SCTN and to devote all of his efforts to SCTN, including
turning over his law practice to others and abandoning any
practice of law for anything other than SCTN business. Under this
agreement Diamond and SCTN agree to settle the invoice from
Diamond in the amount of $800,000.00 as follows:
JED_________ Page 2 of 12 SCTN________
Diamond Employment Agreement (Cont)
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9. Employer will issue 16,000,000 shares in the name of
Xxxxxxx X. Xxxxxxx, as her sole and separate property,
under the following terms:
a. The options for 10,000,000 shares are voided;
b. 1,500,000 shares are to be issued in the name of
Xxxxxxx X. Xxxxxxx, as her sole and separate
property, as of April 15,2004;
c. 1,500,000 shares to be issued in the name of
Xxxxxxx X. Xxxxxxx, as her sole and separate
property, as of May 15, 2004;
d. 1,500,000 shares are to be issued in the name of
Xxxxxxx X. Xxxxxxx, as her sole and separate
property, as of June 15, 2004;
e. 1,500,000 shares to be issued in the name of
Xxxxxxx X. Xxxxxxx, as her sole and separate
property, as of July 15, 2004; and
f. 10,000,000shares to be issued as of August 1, 2004
that are subject to being forfeited if Diamond
does not stay with the company until March 15,
2007. These 10,000,000 are to be released from
potential forfeiture at the rate of 312,500 shares
per month beginning on August 15, 2004 and 312,500
shares on the fifteenth of each subsequent month
until March 15, 2007 at which time any shares not
previously released will have all restrictions
removed. The terms of forfeiture for the
10,000,000 shares are explained in detail in III
D, E and F.
SCTN and Diamond agree that in full payment of Diamond's invoice for Eight
Hundred Thousand dollars ($800,000.000.00) SCTN shall cause Sixteen Million
(16,00,000) shares of common stock in SCTN to be issued in the name of Xxxxxxx
X. Xxxxxxx, as her sole and separate property, as soon as there is an
opportunity to have additional shares authorized for issuance by the
shareholders, as follows. One Million five hundred thousand (1,500,000) shares
to have an issue date of April 15, 2004, One Million five hundred thousand
(1,500,000) shares to have an issue date of May 15, 2004, One Million five
hundred thousand (1,000,000) shares to have an issue date of June 15, 2004, One
Million five hundred thousand (1,500,000) shares to have an issue date of July
15, 2004 and Ten Million (10,000,000) shares to have an issue date of August 1,
JED_________ Page 3 of 12 SCTN________
Diamond Employment Agreement (Cont)
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2004. The Seven Million Five Hundred Thousand (7,500,000) shares with an issue
date of July 15, 2004 and prior to July 15, 2004 cannot be forfeited. The Ten
Million shares issued on August 1, 2004 are subject to forfeiture if Xxxxxx X.
Xxxxxxx resigns or is terminated for cause as outlined in III H 5 c of this
agreement. See below. If Xxxxxx X. Xxxxxxx is terminated for any other reason
the shares shall no longer be subject to any forfeiture as of the effective date
of the termination.
D. If Diamond dies during the term of this agreement, then 60% of all shares
that were subject to forfeiture on the date of death will be turned over to SCTN
and the balance will have all restrictions removed.
E Beginning on August 15, 2004 and on the fifteenth of each succeeding month
through February 15, 2007 the number of shares that can be forfeited for lack of
performance by Xxxxxx X. Xxxxxxx is reduced by 312,500 per month. On March 15,
2007 all shares with any remaining restrictions or possibility of forfeiture
will have all restrictions and possibility of forfeiture removed.
F. Xxxxxx X. Xxxxxxx agrees that shares subject to forfeiture shall not be
subject to sale by him, he can transfer them but only subject to the provision
that such shares cannot be sold or transferred by transferee while they are
subject to forfeiture. The Company will retain physical position of all stock
subject to forfeiture, but Xxxxxx X. Xxxxxxx shall have all other rights
including the right to vote such shares while they are subject to forfeiture as
long as they have not been forfeited.
G. Place of Work. At the present time, Diamond intends to work in the offices
of the Diamond Law Firm, but shall have the option of working out of his home
unless SCTN provides a suitable office for him. Should the Company decide to
relocate the Administrative Office outside of the San Xxxxxxxx Valley, then his
principal office shall be his home, for which Company agrees to provide all
equipment and supplies deemed necessary by the Employee for the fulfillment of
his duties. Notwithstanding the foregoing, Employee agrees to travel, as the
Company deems necessary, to the Company's Administrative Center and any other
locations necessary for the fulfillment of his duties. The expenses associated
with such travel shall be reimbursed by the Company. The Company agrees:
1. To reimburse Employee for travel, lodging and associated expenses
during the term of this Agreement;
2. In the event the company and employee elect to have the Employee
relocate to a new location upon relocation of the Administrative
Office, Company agrees to provide Employee a moving allowance not
to exceed $20,000.
JED_________ Page 4 of 12 SCTN________
Diamond Employment Agreement (Cont)
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H. Benefits.
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1. Fringe Benefits. Diamond shall be entitled to and shall receive
all benefits of employment generally available to other
executives of the Employer, including, without limitation,
participation in the following:
a. Group Health, Dental and Life Insurance. Diamond will be
eligible to participate in such group health, dental and
life insurance plans, which the Employer may keep in effect
during the Term, subject to the terms of any such plans. At
any time that the Employer does not have available Group
Health and Dental Insurance plans, during the Term and for
12 months thereafter, Employer shall pay any premiums
associated with the enrollment of the plan(s) of Employee's
choice.
b. Long Term Disability. Diamond will be eligible to
participate in such long term disability plans which the
Employer may keep in effect during the Term, and for 12
months thereafter, subject to the terms of any such plan.
c. Commuting and Relocation Expenses. Employer shall reimburse
Diamond for all reasonable business expenses including:
travel and lodging for commuting to the Company's Corporate
Office in Nevada and Operations Center located at Salt Lake
City, Utah, or anywhere to which either may be relocated.
The Company also agrees to pay the moving allowance to the
Corporate Office or new Operations Center Location (s) as
described in Section (G) above.
d. Business Expenses. The Employer shall pay the actual and
normal expenses incurred by Diamond for the benefit of the
Employer in performing his duties as Senior Administrative
Vice president of the Employer in accordance with the
Employer's expense reimbursement policy, as adopted from
time to time.
e. Vacation. Diamond shall be entitled to vacation benefits in
accordance with the employer's vacation policy, as currently
stated or as increased in the future, at the maximum level
of accrued and unused vacation benefits which Employer's
executives or employees are permitted to accrue in
accordance with the Employer's personnel policies.
JED_________ Page 5 of 12 SCTN________
Diamond Employment Agreement (Cont)
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f. Sick Leave/Personal Leave. Diamond shall be entitled to sick
leave and personal leave benefits in accordance with the
Employer's personnel policies, as adopted from time to time.
g. Accrual Year. Any of the benefits provided under this
Agreement or under Employer's personnel policies generally
which are accrued on a "per year" basis, are deemed to
accrue during each of Employer's fiscal years in accordance
with Employer's personnel policies applicable to its
employees generally. Any benefits accruing from the
Effective Date of hire through the end of the current fiscal
year will be prorated for such year.
2. Indemnity. Employer shall indemnify Diamond to the maximum extent
permissible under law as an agent, Director, and Officer for acts
taken by him during the Term on behalf of Employer provided such
acts are taken in good faith and in what is in the best interest
of Employer.
3. Directors' and Officers' Insurance. Employer agrees to obtain and
maintain a policy of directors and officers insurance covering
Employee's acts as a Director or Officer, as the case may be and
as may be limited by the terms of any such insurance policy, in a
face amount of no less than ONE MILLION DOLLARS ($1,000,000.00)
when the company has the funds to pay for such coverage.
4. Registration of Securities. The Company agrees to forthwith
register the securities underlying the Stock described in Section
III above and any stock appreciation rights or plan interests
(the "SAR"s), which may be deemed by the Securities and Exchange
Commission (the "SEC") to require registration, in order for
employee to be able to freely assign or trade the SAR's or the
underlying securities.
5. Termination.
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a. Termination as a result of a change of control or for good
cause. This Agreement is terminable prior to the expiration
of the Term, in the manner and to the extent set forth in
this section 5.
b. Death, Disability or Resignation During Term. This Agreement
shall automatically terminate upon the death of Diamond or
Employee's voluntary resignation during the Term. The
Employer or Diamond may terminate this Agreement upon
JED_________ Page 6 of 12 SCTN________
Diamond Employment Agreement (Cont)
-----------------------------------
reasonable determination of Employee's total disability. As
used herein, total disability means Employee's inability to
perform his normal and usual duties as Senior Vice President
for Administrative, Legal and Finance of the Employer due to
physical disability or mental illness for a period of ninety
(90) consecutive calendar days.
c. Termination for Cause. The Employer may terminate this
Agreement immediately, and except as otherwise set forth
below, without prior notice, for "Cause" which shall mean:
i. Employee's excessive use of alcohol or illegal
drug abuse;
ii. Any material dishonest act by Diamond relating
to the Employer's business;
iii. Any intentional act by Diamond intended to be
materially detrimental to the business or
reputation of the Employer;
iv. Employee's rendering any services to a firm or
entity which does business in a field
competitive with the business of Employer except
as may be expressly authorized in writing
pursuant by the Board, or
v. Employee's substantial failure to perform the
material services contemplated by this
Agreement, it being understood and agreed that
the Employer must give Diamond written notice of
such failure by the Employer and not less than
sixty (60) days with in which to cure such
failure before invoking the provisions of this
subparagraph v. in terminating Employee.
d. Without Cause or from Change of Control. This clause cannot
be used as a basis for termination of Diamond if SCTN has
not funded a budget adequate to employ the personnel needed
to carry out the functions of the responsibilities delegated
to Diamond. The Employer may terminate this Agreement during
the Term without Cause upon giving sixty (60) days prior
written notice of such termination. Such notice is deemed to
be given in the event of change of control as described in
section 11 below.
JED_________ Page 7 of 12 SCTN________
Diamond Employment Agreement (Cont)
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7. Severance Pay. This paragraph does not become effective until the
employer has one full quarter in which it records $300,000.00 in
revenue. If Employee's employment terminates due to his death,
disability or by Employer notice without cause as described in
Section 6 above at any time prior to the Term, Employer will pay
to Diamond or his legal designee(s), an amount equal to 25 % of
his annual Base Salary ("Severance Pay") and will immediately pay
all outstanding expenses and loans due to Diamond from the
Company if there are sufficient funds to pay these items;
otherwise, these expenses and loans will be paid out over a
twelve (12) month period and will earn a fifteen (15%) rate of
interest until fully paid.
8. No Severance Pay upon Resignation. It is expressly understood and
agreed that Diamond (or his personal representative, as the case
may be) shall not be entitled to any Severance Pay if he resigns
during the Term, but will immediately be paid all outstanding
expenses and loans due from the Company if sufficient funds are
available to pay these items; otherwise, these outstanding
expenses and loans will be paid out over a twelve (12) month
period and will earn a fifteen (15%) percent rate of interest
until fully paid.
9. Manner of Payment of Severance Pay. Any Severance Pay hereunder
will be paid at such intervals and in the manner dictated by the
Employer's normal pay practices but not to exceed 90 days after
severance.
10. Notice of Termination. The Employer shall give Diamond notice of
the termination of this Agreement pursuant to sub-section b, c, &
d of this Section 5 and, except as otherwise provided herein, the
termination of this Agreement shall be effective upon the giving
of such notice. Company will immediately pay all outstanding
expenses and loans due to Diamond from the Company.
11. Change of Control. As used in this section, the term "change of
control" means and refers to:
a. Any merger, consolidation, or sale of the Company such that
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") acquires
beneficial ownership, within the meaning of Rule 13d-3 of
the Exchange Act, of 20 percent or more of the voting common
stock of the Company or its subsidiary
JED_________ Page 8 of 12 SCTN________
Diamond Employment Agreement (Cont)
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b. Any transaction in which the Company sells or transfers all
or substantially all of its assets; A dissolution of
liquidation of the Company; or
d. The Company becomes a non-publicly held company.
e. A "change of control" as used in this section does not
include a direct capital investment in the company.
f. At the option of Employee, this agreement will continue in
full effect with, and be binding upon, any successor
organization following a Change of Control.
IV. Integration. This Agreement contains the entire agreement between the
parties and supersedes all prior oral and written agreements,
understandings, commitments and practices between the parties,
including, without limitation, all prior employment agreements, whether
or not fully performed before the date of this Agreement. No amendments
or waivers to this Agreement may be enforced by either a court of law or
an arbitrator unless such amendment or waiver is the subject of writing
signed by both parties.
V. Ambiguities . The general rule that ambiguities shall be construed
against the drafter of the agreement shall not apply.
VI. Strict Performance. Either party's failure to insist on the strict
performance of any provision of this Agreement will not be construed as
a waiver of the provision, which will continue in full force.
VII. Arbitration. Any controversy or claim arising out of or relating to this
agreement, or breach of this agreement, shall be settled by binding
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association and judgment on the award rendered by
the arbitrators may be entered in any court having jurisdiction. Within
five (5) business days after a demand has been made to arbitrate a
dispute, the parties will meet and attempt to agree on a single
arbitrator. If the parties are unable to agree on a single arbitrator,
then each party shall, before the expiration of such five (5) day
period, designate an arbitrator. Within (30) additional business days
thereafter the two arbitrators shall select a third arbitrator. If for
any reason they cannot agree on a third arbitrator, they may apply to
the Utah Superior Court for the name of a neutral party. The three
arbitrators shall hear all the evidence, and a majority vote shall set
the award of the arbitrators. Each party shall pay the fees of the
arbitrator he or it selects and of his or its own attorneys, and the
expenses of his or its witnesses and all other expenses connected with
presenting his or its case. Other costs of the arbitration, including
the cost of any record or transcripts of the arbitration, administrative
JED_________ Page 9 of 12 SCTN________
Diamond Employment Agreement (Cont)
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fees, the fee of the third arbitrator, and all other fees and costs,
shall be borne equally by the parties. Notwithstanding the foregoing,
the arbitrators may award reasonable attorneys' fees and costs to the
prevailing party in their award.
VIII. Litigation. In the event legal action or arbitration is brought to
enforce any of the provisions of this Agreement or for any breach
thereof, reasonable attorneys' fees and costs shall be awarded to the
prevailing party or parties in said action. All legal action is to take
place in Salt Lake City, Utah..
IX. Notices. Any notice given pursuant to this Agreement must be sent by
United States Certified Mail (postage prepaid) and shall be deemed given
on dates on which the envelope or envelopes containing such notices are
deposited in the United States Mail. The Addresses of the parties to be
used for the giving of notices shall be as set forth on the signature
page of the Agreement. The parties hereto may change the addresses to
which notices to them may be sent by giving written notice thereof in
accordance with this paragraph.
X. Severability of Provision. If any provision of this Agreement is invalid
or illegal, the other provisions shall nevertheless remain in full force
and affect.
XI. Controlling Law. This Agreement is entered into in the State of Utah and
shall be interpreted and controlled by the laws of the State of Utah,
County of Salt Lake.
XII. Successors. The Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective successors and
assigns. This employment contract supersedes any other out-standing Sctn
Employment Contract between the two parties that may have been signed
prior to this date for this same time period.
XIII. Recap of Shares to be issued in the name of Xxxxxxx X. Xxxxxxx, as her
sole and separate property,:
A. One Million (1,000,000) shares as of March 15, 2004 due under a
previous agreement;
B. Five hundred thousand (500,000) shares as of June 15, 2004 as a
settlement for shares earned and convertible under previous
agreements;
C. One Million five hundred thousand (1,500,000) shares as of April
15, 2004 under this agreement;
JED_________ Page 10 of 12 SCTN________
Diamond Employment Agreement (Cont)
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D. One Million five hundred thousand (1,500,000) shares as of May
15, 2004 under this agreement;
E. One Million five hundred thousand (1,500,000) shares as of June
15, 2004 under this agreement;
F. One Million five hundred thousand (1,500,000) shares as of July
15, 20004, and
F. Ten Million (10,000,000) shares, subject to forfeiture as
explained above, as of August 1, 2004 under this agreement.
XIV. Other Agreements:
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A. Xxxxxx X. Xxxxxxx agrees that he will have no right to have
additional shares issued to him under this agreement, or any
other agreements with the Employer until the term of this
contract ends on March 15, 2007.
B. Diamond agrees that if the Company does not have sufficient
working capital to pay salaries in full, the Board will
determine when payments are made.
C. Diamond agrees there will be no conversion rights of salary or
expenses to stock or options for the term of this agreement.
D. All stock will be issued per the effective date indicated in
this agreement, but physical certificates representing that
stock will not be printed and delivered until the shareholders
meet and approve an increase to the limit of shares authorized.
JED_________ Page 11 of 12 SCTN________
I HAVE READ THIS AGREEMENT IN ITS ENTIRETY, I UNDERSTAND ITS TERMS, AND AGREE TO
BE BOUND BY ALL OF ITS TERMS, INCLUDING THE PROVISION FOR BINDING ARBITRATION. I
ALSO UNDERSTAND I HAVE THE RIGHT TO HAVE THIS AGREEMENT REVIEWED BY INDEPENDENT
COUNSEL AS XXXXXX XXXXXXX IS NOT INDEPENDENT AND DOES NOT REPRESENT SCTN ON THE
ISSUE OF THIS CONTRACT.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on July 7,
2004.
Employer: Employee:
SCTN Xxxxxx X. Xxxxxxx
330 E. Warm Springs Rd., 00000 Xxxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000 Xxxxx Xxxxx, XX 00000
By:/s/ Xxxxx X. Xxxxx By:/s/ Xxxxxx X. Xxxxxxx
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Xxxxx X. Xxxxx Xxxxxx X. Xxxxxxx
Chairman and CEO of SCTN
By:__________________________
Xxxxxxx XxXxxx, Director
000 Xxxx Xxxx Xxxxxxx Xxxx,
Xxx Xxxxx, XX 00000
JED_________ Page 12 of 12 SCTN________
