EMPLOYMENT AGREEMENT BETWEEN CATUITY INC. AND ALFRED H. (JOHN) RACINE
EMPLOYMENT
AGREEMENT BETWEEN
CATUITY
INC. AND XXXXXX X. (XXXX) XXXXXX
This
Employment Agreement is made and entered into as of October 31, 2007 between
Catuity Inc. (the “Company”), a Delaware corporation, and Xxxxxx X. (Xxxx)
Xxxxxx (the “Executive”).
1. Employment.
Company
hereby employs Executive, and Executive hereby accepts employment with Company,
on the terms and conditions hereinafter set forth.
2. Term.
The
term of this Agreement will commence on November 1, 2007 (the “Commencement
Date”) and end on March 31, 2008 and will automatically renew for one more
six-month term if the company has not completed a material transaction or
earlier terminated as hereinafter set forth. This agreement shall have a final
expiration date of October 31, 2008, unless extended by act of the board of
Catuity.
3. Duties
and Responsibilities.
Executive shall serve with the duties of President, CEO and Director (or in
such
other position as may be mutually agreed upon by Executive and the Board) and
shall have such responsibilities, duties and authority as may be assigned to
him
by the Board.
4. Service
on Board of Directors.
The
Executive shall serve on the Board of Directors of the Company and any of its
subsidiaries, affiliates or divisions, and as an officer of any subsidiary,
affiliate or division, if elected. When this Agreement terminates, Executive
will, if requested by the Board of Company, tender his resignation from any
and
all such Board positions.
5. Outside
Activities.
During
the term of this Agreement, Executive is free to advise, volunteer or otherwise
provide compensated services to other companies or organizations so long as
such
activities do not materially interfere with the completion of his duties and
responsibilities. This work may include work for shareholders and lenders to
the
Company.
6. Place
of Employment.
Executive shall have him office, and perform him duties, within 75 miles of
the
center of Charlottesville, Virginia and he shall not be required to move from
the metropolitan Charlottesville, Virginia area; provided that, he shall from
time to time be required to travel when necessary in carrying out Company’s
business. Executive acknowledges that travel will be required to dispatch his
normal duties.
7. Reimbursement
of Expenses and Furnishing of Services to Executive.
During
the term of this Agreement, Executive shall be entitled to, including but
without limitation, an office at the company’s corporate headquarters, as well
as reimbursement, upon proper accounting, of reasonable expenses and
disbursements incurred by him in the course of his duties). All expense
reimbursements will be subject to compliance with IRS regulations so as to
be
deductible as ordinary and necessary business expenses, and to compliance with
Company’s normal policies and practices.
8. Base
Salary Compensation.
During
the term of Executive’s employment, he shall be paid a minimum base salary of
One Hundred Thousand Dollars
($100,000) per year. The Board shall review Executive’s salary at least
annually, and may increase Executive’s salary from time to time in their
discretion, and if so increased, such salary shall not be decreased thereafter
during the term of this Agreement. The Executive has held his current position
since joining the Company on in September 2004. With this contract, the
Executive has accepted a reduced compensation package. The Company confirms
that, in addition to its ongoing obligations under this contract, the Executive
is owed Sixty-Seven Thousand Five Hundred and Twenty-Five Dollars ($67,525.00)
in unpaid compensation.
9. Other
Benefits.
The
Company will make timely reimbursement to the Executive for 100% of the cost
of
private health insurance.
10.
Non
Disparagement of Executive. Company
shall not disparage Executive’s reputation or good name during or after the term
of this Agreement.
11.
Termination.
(a) Executive
may voluntarily terminate his employment hereunder at any time, on 30 days’
notice with or without cause.
(b) Company
may terminate this Agreement and the employment of Executive at any time, with
or without “Cause” (as defined below), on 30 days’ notice.
(c) Either
Company or Executive may terminate this Agreement after the “Disability” (as
defined below) of Executive, on 30 days’ notice.
(d) This
Agreement will terminate on Executive’s death.
12. Termination
Definitions.
(a) “Cause”
means
(i)
the Executive’s commission of acts or omissions constituting active and
deliberate dishonesty as determined by the Board of Directors, (ii) Executive’s
actual receipt of an improper benefit or profit in money, property or services,
or (iii) if the Executive continuously fails to perform his duties under this
Agreement in any material manner after receipt of notice of such failure from
the Company specifying how he has so failed to perform. The Company may at
its
option terminate this Agreement for Cause by giving written notice of
termination to the Executive without prejudice to any other remedy to which
the
Company may be entitled at law, in equity, or under this Agreement. The notice
of termination required by this Section shall specify the ground for the
termination and shall be supported by a statement of all relevant facts. In
the
event of termination of this Agreement for Cause, the Executive shall be
entitled to no further compensation or other benefits under this Agreement,
except as to that portion of any unpaid salary and other benefits accrued and
earned by him hereunder up to and including the effective date of such
termination.
(b)
For
purposes of this Agreement, a "Change in Control" shall be deemed to have
occurred:
(i) if
any
person or group of persons acting together (other than (a) the Company or any
person (I) who as of the date hereof was a director or officer of the Company,
or (II) whose shares of Common Stock of the Company are treated as "beneficially
owned" by any such director or officer, or (b) any institutional investor
(filing reports under Section 13(g) rather than 13(d) of the Securities Exchange
Act of 1934, as amended, including any employee benefit plan or employee benefit
trust sponsored by the Company)), becomes a beneficial owner, directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of either the then-outstanding Common Stock of the Company or the combined
voting power of the Company's then-outstanding voting securities (other than
as
a result of an acquisition of securities directly from the Company);
(ii) if
the
Company sells all or substantially all of the Company's assets to any person
(other than a wholly--owned subsidiary of the Company formed for the purpose
of
changing the Company's corporate domicile);
(iii) if
the
Company merges or consolidates with another person as a result of which the
shareholders of the Company immediately prior to such merger or consolidation
would beneficially own (directly or indirectly), immediately after such merger
or consolidation, securities of the surviving entity representing less than
fifty percent (50%) of the then outstanding voting securities of the surviving
entity; or
(iv) if
the
new directors appointed to the Board during any twelve-month period constitute
a
majority of the members of the Board, unless (I) the directors who were in
office for at least twelve (12) months prior to such twelve-month period (the
"Incumbent Directors") plus (II) the new directors who were recommended or
appointed by a majority of the Incumbent Directors constitutes a majority of
the
members of the Board.
(v) For
purposes of this paragraph a “person” includes an individual, a partnership, a
corporation, an association, an unincorporated organization, a trust or any
other entity.
(d) “Disability”
means the inability of Executive due to accident or illness to perform the
essential functions of his job despite reasonable accommodations by Company,
where such inability is reasonably expected to last longer than 90 days. If
Executive is covered by a long-term disability insurance policy, then
“Disability” shall mean the long term disability of Executive (or comparable
term) as defined in the applicable long-term disability insurance
policy.
13. Compensation
After Termination.
(a) If
there
has been a Change in Control prior to the termination date, Executive’s
compensation shall be as follows:
(i) Company
shall pay Executive an amount equal to salary at his then-current rate for
the
greater of 12 months or the balance of the term of this Agreement.
(b) If
this
Agreement is terminated due to Executive’s death or Disability, Executive’s
compensation shall be as follows:
(i) Company
shall pay Executive an amount equal to 12 months’ salary at his then-current
salary rate.
(c) If
Company terminates this Agreement with Cause, Executive’s compensation shall be
as follows:
(i) Company
shall pay Executive only for cash compensation earned up to the date of
termination.
(d) If
this
Agreement ends at the normal expiration of a term, then:
(i) Company
shall pay Executive only for cash compensation earned up to the date of
termination.
(e) Notwithstanding
anything to the contrary contained herein, in the event it shall be determined
that any compensation payment or distribution by the Company to or for the
benefit of the Executive would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the “Code”), the Change
in Control severance payment will be reduced to the extent necessary so that
no
excise tax will be imposed, but only if to do so would result in the Executive
retaining a larger amount, on an after-tax basis, taking into account the excise
and income taxes imposed on all payments made to the Executive
hereunder.
14. Indemnification.
In
addition to any indemnification provided by the By-Laws of Company or otherwise,
Company shall indemnify and provide reasonable advances for expenses to
Executive, to the fullest extent permitted by the laws of the State of Delaware,
if Executive is made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by
reason of the fact that Executive is or was an officer, director or employee
of
Company or any subsidiary or affiliate thereof, in which capacity Executive
is
or was serving at Company’s request, against expenses, judgments, fines and
amounts paid in settlement incurred by him in connection with such action,
suit
or proceeding. Company shall exercise its reasonable commercial efforts to
maintain directors’ and officers’ insurance coverage as well as all other
appropriate malpractice and professional liability coverage on behalf of
Executive during the term of this Agreement at Company’s expense, in a manner
and coverage substantially similar to the D&O insurance currently in effect.
Subject to requirements of any applicable insurance coverage, Executive shall
have the absolute right to engage counsel reasonably acceptable to Company
and
at legal rates deemed reasonably acceptable to Company, for the above-referenced
actions. Executive shall give prompt notice to Company of any claims made
against him for which he will seek indemnification.
15. Amendment
or Modification Waiver.
No
provision of this Agreement may be amended, modified or waived, unless such
amendment, modification or waiver shall be authorized by the Board or any
authorized committee of the Board, and shall be agreed to in writing, signed
by
Executive and by an officer of Company thereunto duly authorized. Except as
otherwise specifically provided in this Agreement, no waiver by either party
hereto of any breach by the other party hereto of any condition or provision
of
this Agreement to be performed by such other party shall be deemed a waiver
of a
subsequent breach of such condition or provision or a waiver of a similar or
dissimilar provision or condition at the same or any prior or subsequent time.
16. Severability.
In the
event that any provision or portion of this Agreement shall be determined to
be
invalid or unenforceable for any reason, the remaining provisions and portions
of this Agreement shall be unaffected thereby and shall remain in full force
and
effect to the fullest extent provided by law.
17. Successors.
This
Agreement shall be binding upon any successor of Company and such successor
shall be deemed substituted for Company under the terms of this Agreement;
but
any such substitution shall not relieve Company of any of its obligations
hereunder. As used in this Agreement, the term “successor” shall include any
person, firm, corporation or like business entity which at any time, whether
by
merger, purchase or otherwise, acquires all or substantially all of the assets
or business of Company. This Agreement may not be otherwise assigned by Company
without Executive’s written consent.
18. Confidential
Information.
Executive agrees not to disclose, either while in Company’s employ or at any
time thereafter, to any person not employed by Company or not engaged to render
services to Company any confidential agreement obtained by him while in the
employ of Company, including, without limitation, any of Company’s inventions,
processes, methods of distribution, customers or trade secrets; provided,
however, that this provision shall not preclude Executive from use or disclosure
of information known generally to the public or of information not considered
confidential by persons engaged in the business conducted by Company or from
disclosure required by law or court order.
19. Withholding.
Anything to the contrary notwithstanding, all payments required to be made
by
Company hereunder to Executive or his estate or beneficiary shall be subject
to
the withholding of such amounts, if any, relating to tax and other payroll
deductions as Company may reasonably determine it should withhold pursuant
to
any applicable law or regulation. In lieu of withholding such amounts, Company
may accept other provisions to the end that it has sufficient funds to pay
all
taxes required by law to be withheld in respect to any of such payments.
20. Notices.
For the
purpose of this Agreement, notices, demands or other communications provided
for
herein shall be in writing and shall be deemed to have been duly given when
delivered or (unless other specified) mailed by United States Certified Mail,
return receipt requested, postage prepaid, addressed as follows:
to
Executive: Xxxxxx
X.
(Xxxx) Xxxxxx
000
Xxxxxx Xxxxx
Xxxxxxxxxxxxxxx,
XX 00000
to
Company: Catuity
Inc.
0000
Xxxxxxxxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxxxxxxx,
XX 00000
or
to
such other address as any party may have furnished to the other in writing
in
accordance therewith, except that notices of change of address shall be
effective only upon receipt.
21. Construction
With Delaware Law.
The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Delaware.
22. Entire
Agreement of Parties.
This
Agreement contains the entire agreement of the parties and no party shall be
liable and bound except as provided herein, but this instrument does not
replace, rescind or abrogate any other agreement or plan between the parties
which may now be or may hereinafter become effective.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
| CATUITY INC. | ||
| |
|
|
| By: | ||
|
Xxxxxxxx X. Xxxxxxx, Xx., |
||
| Director and Chairman, Compensation Committee | ||
| “Company” | ||
| |
|
|
|
Xxxxxx X. (Xxxx) Xxxxxx |
||
| “Executive” | ||
