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EXHIBIT 10.3
[CATUITY INC. LETTERHEAD]
December 5, 1999
CONFIDENTIAL
Mr. Xxxxxxx Xxxx
00 Xxxxxxx Xxxx,
Xxxxxx Xxxxxx Xxxxxx XX 00000
Re: Your Employment Agreement with Catuity, Inc.
Dear Xxxxxxx:
Catuity Inc., a Delaware corporation (`Catuity'), is pleased to offer you a
position as its President and Chief Executive Officer on the terms set forth in
this letter agreement. As you know, Catuity is the parent company of Chip
Application Technologies Limited ("C.A.T."), an Australian company that has, we
believe, developed some highly competitive network application software for
merchant incentive and other program. Catuity is listed on the Australian Stock
Exchange and proposes to apply for listing on NASDAQ.
This agreement will be effective as of the date hereof (the "Effective Date")
subject to your acceptance by execution of a counterpart copy of this letter
where indicated below. Your start date of employment will be no later than
January 15, 2000. Your right to receive salary, bonus, benefits, shares, etc.
will commence with your start date of employment.
1. REPORTING, DUTIES AND RESPONSIBILITIES, EMPLOYEE INVENTION ASSIGNMENT AND
CONFIDENTIALITY AGREEMENT.
In this position, you will report to the Board of Directors of Catuity.
Your specific duties and responsibilities will be determined by the
Board from time to time but will include executive management of Catuity
and its subsidiaries, development and implementation of strategy and
investment community relations. This offer is for a full-time position,
located at the principal offices of Catuity located in the United States
(to be determined by the board in consultation with you and currently
anticipated to be either Denver, Colorado or Detroit, Michigan) except
as travel to other locations (including overseas locations) may be
necessary to fulfill your responsibilities. You also will execute
Xxxxxxx's standard form of Employee Invention Assignment and
Confidentiality Agreement, which is attached.
2. SALARY, BONUS, BENEFITS, AND VACATION.
(a) SALARY.
Your initial base salary will be US$20,000 per month, which is an
annualized salary of US$240,000, and is payable in accordance with
Catuity's customary payroll practice as in effect from time to time;
your salary commences on the date you first report for work with
Catuity. This salary will be reviewed by the Board in conjunction with
your annual performance review, but will not decline.
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(b) CASH PERFORMANCE BONUS.
Your cash performance bonus plan (commencing for calendar year 2000)
will be determined each year at the time of budget review as determined
by the Board of Directors, in consultation with you. Your first year
cash performance bonus will be fixed at US$60,000 to be paid in four
equal installments on 31 March, 30 June, 30 September and 31 December,
2000.
(c) STOCK OPTION GRANT.
On the date you first report to work with Catuity, Catuity will be issue
you stock options under our Stock Option Plan (currently being
finalized), exercisable at the lower of
(i) the weighted average trading price of Catuity shares on the
Australian Stock Exchange for the 30 days immediately prior to
NASDAQ listing (converted to US$ at 0.65); and
(ii) the weighted average trading price of Catuity shares on the
NASDAQ market for the 30 days immediately following NASDAQ
listing and
(iii) The weighted average trading price of Catuity shares on the
Australian Stock Exchange for the month of January 20900
(converted to US$ at 0.65).
but not less than 85% of the fair market value of Catuity shares as of
date of grant.
All options will have an expiry date of the earlier of 31 December 2008
and the date six months after cessation of your employment with Catuity,
subject to additional provisions of the Plan.
In total you will be issued stock options on 315,000 shares of Common
Stock (adjusted for any stock splits) in Catuity. The stock options will
have the following vesting provisions (i.e. options will not be
exercisable until vested):
(i) 75,000 options will vest upon the date you first report to work
with Xxxxxxx; and
(ii) 12,000 options will vest at the end of each quarter, conditioned
upon your continued employment by Catuity on the last day of each
quarter, commencing on 31 March 2000 and concluding on 31
December 2004.
(d) BENEFITS AND VACATION.
You will be eligible to participate in, without limitation, the
retirement plans and medical, dental, life and disability insurance
plans being established for Catuity; Catuity will reimburse you for
those costs that you incur to exercise your COBRA rights to extend your
existing insurance coverage until the effective date of your Catuity
insurance coverage, which Catuity insurance coverage, will be provided
for the term of this Agreement. In addition, you will be entitled,
without loss of compensation, to three weeks of vacation during the
first year of your employment, three weeks of vacation during the second
year of your employment, and four weeks of vacation during the third and
each successive year of your employment. You may only accrue unused
vacation up to a maximum of six weeks; otherwise, additional vacation
will cease to accrue until you reduce the accrued, unused amount through
use of vacation.
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You will further be entitled, at Xxxxxxx's expense, to be reimbursed for
10 economy class return airfares from Detroit to the location of
Catuity's principal office in the United States (if other than Detroit)
in each year of employment.
(e) RELOCATION
Catuity will pay reasonable relocation expenses, to the extent
necessary, for you to relocate to within the proximity of the principle
offices of Catuity in the United States when the location of these
offices is determined.
3. TERM AND TERMINATION.
The term of this agreement is for a period of five years commencing upon
the Effective Date.
(a) TERMINATION BY CATUITY FOR CAUSE.
Catuity may only terminate your employment and this agreement without
notice by reason of Termination for Cause. For purposes of this
agreement, "TERMINATION FOR CAUSE" will mean termination of your
employment by Xxxxxxx's Board, after consultation with you, for your
dishonesty, fraud, gross negligence in performance of your duties,
material breach of this agreement or any other contractual or fiduciary
obligation to Catuity or under any policy or procedure of Catuity,
intentional engagement in acts seriously detrimental to Catuity's
operations or your being charged by governmental authorities with a
felony. Upon your Termination for Cause by Catuity, you will be entitled
to receive cash and other compensation, which has accrued through the
date of termination, only,
(b) TERMINATION BY CATUITY WITHOUT CAUSE.
Catuity may only terminate your employment and this agreement without
cause on one year's written notice (it being Catuity's right to pay base
salary equal to one year's amount, in lieu of notice, in order to effect
immediate termination; in such case, you will be obligated, in accepting
such payment, to release Catuity from all other obligations other than
Catuity's obligation to pay cash and other compensation, which has
accrued through the date of termination to which you may be entitled.
including 50% of the options entitlement for the year of termination.
(c) TERMINATION BECAUSE OF DEATH, OR INCAPACITY DUE TO DISABILITY.
Your employment with Catuity and this agreement will also terminate upon
your death or by reason of your Incapacity Due to Disability. For
purposes of this agreement, "INCAPACITY DUE TO DISABILITY" means if, at
the end of any month, you are unable to perform substantially all of
your duties under this agreement in the normal and regular manner due to
illness, injury or mental or physical incapacity, and you have been
unable or will be unable, in the good-faith judgement of the Catuity
Board, so to perform for either (1) four consecutive full calendar
months, or (2) 90 or more of the normal working days during any 12
consecutive full calendar months. Nothing in this paragraph shall alter
Catuity's obligations under applicable law, which may, in certain
circumstances, result in the suspension or alteration of the foregoing
time periods. Upon your termination for death or Incapacity Due to
Disability, you will be entitled to receive cash and other compensation
which has accrued through the date of termination.
(d) VOLUNTARY TERMINATION BY YOU.
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You will be able to voluntarily terminate your employment and this
Agreement at any time, provided that you must give Catuity at least six
months advance written notice. Upon your voluntary termination, you will
be entitled to receive cash and other compensation, which has accrued
through the date of termination.
4. OTHER MATTERS.
You will not bring with you, or use, in the performance of your duties
hereunder any confidential or proprietary material of any former
employer, nor violate any lawful obligation to any former employer in
the performance of your duties hereunder.
Under your signature below, this will become our binding agreement with
respect to the subject matter of this letter, superseding in their
entirety all other or prior agreements and negotiations between us as to
the subject matter of this letter, will be binding upon and inure to the
benefit of our respective successors and assigns (although none of your
rights or obligations hereunder is assignable), and your heirs,
administrators and executors, will be governed by Delaware law, and may
only be amended in a writing signed by you and Catuity.
Xxxx, we are very excited to have you join us and look forward to working with
you. I think we can have an exciting next few years.
Sincerely,
/S/ XXXXX X. XXX XXXXX
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Xxxxx X. Xxx Xxxxx
Catuity, Inc.
Attachment: Employee Invention Assignment and Confidentiality Agreement
ACCEPTED AND AGREED:
/S/ XXXXXXX X. XXXX
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Xxxxxxx X. Xxxx
Date signed: _________________________
