Exhibit 10.1
EMPLOYMENT AGREEMENT
I. This agreement is executed this 1st day of July, 2005 and made effective as
of May 17, 2005 ("Effective Date"), between Schimatic Cash Transactions
Xxxxxxx.xxx, Inc., a Florida corporation ("Employer" or "Company" or
"SCTN"), dba Smart Chip Technologies, and Xxxxx Xxxxxx ("Xxxxxx" or
"Employee") and (collectively the "Parties").
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 Administrative Office ("Corporate Office") is
located at 000 X. Xxxx Xxxxxxx Xx., Xxx Xxxxx, XX 00000.
C. It is anticipated that Xxxxxx will play a key role in the
administrative, financial and marketing areas of the company because
of his knowledge, experience and achievement in previous companies
similar in nature.
D. Company desires to employ Xxxxxx in this capacity, and is therefore
entering this Employment Agreement for Xxxxxx to serve as Executive
Vice-President reporting to the CEO, with full responsibility for all
areas of Finance, Administration, Sales, Marketing and Business
Development.
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 Xxxxxx by the Employer and other good
and valuable consideration, the parties hereto agree as follows:
A. Employment. The Employer agrees to employ Xxxxxx in the capacity as
described above and as a Director on the Board of Directors on the
terms set forth herein. Xxxxxx accepts such employment and agrees to
work full time and use his best efforts in performing services for the
Employer.
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Xxxxxx Employment Agreement (Cont.)
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B. Inventions. Employee shall promptly disclose to the company any and
all inventions, discoveries, developments, improvements, machines,
appliances, processes, software, firmware, products, or the like
whether patentable or not, which are related to the Company's business
(all of which are referred to herein as "inventions") which Employee
may invent, conceive, produce, or reduce to practice, either solely or
jointly with others, at any time (whether or not during working hours)
during the period of employment. All such inventions which in any way
relate to the goods, materials, or services developed, produced, used
or sold by the Company or any of it's subsidiaries shall at all times
and for all purposes be regarded as acquired and held by Employee in a
fiduciary capacity for, and solely for the benefit of the Company. No
termination of employment or of this agreement shall release Employee
or the Employee's heirs or legal representatives from the foregoing
obligations as to such inventions.
C. Terms & Salary. Employee's current salary will be two hundred twenty
five thousand dollars ($225,000) per year, subject to partial
deferment as described below. Employee will be given regular reviews
and, subject to employee's continued performance of duties, employee
will be given raises, bonuses, and additional compensation, if
recommended or warranted, as approved by the company's Board of
Directors, in addition to any other compensation already due. Except
as provided herein, the term of this Agreement shall be for a period
of three (3) years commencing on the Effective Date, and will
automatically renew for two (2) one (1) year periods unless notified
in writing by the employer within sixty (60) days prior to the
employee contract expiration date that his services are no longer
required.
D. Full and the Partial Salary Deferment. For the first six months of
Xxxxxx'x Employment Contract, Xxxxxx agrees to defer 100% of his
salary unless during such time the Company has received sufficient
funding, or begins to receive revenues, adequate to support its
on-going operation. For the next six months of Xxxxxx'x Employment
Contract, Xxxxxx agrees to defer 80% of his salary unless during such
time the Company has received sufficient funding, or begins to receive
revenues, adequate to support its on-going operation. After 12 months,
for a period of up to 12 months unless otherwise agreed to by Xxxxxx
in writing to continue deferment of salary until the end of the
Employment Agreement or unless during such time the Company has
received sufficient funding, or begins to receive revenues, adequate
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Xxxxxx Employment Agreement (Cont.)
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to support its on-going operation, Xxxxxx agrees to defer 60% of his
salary. At any point in time, any and all deferred salary may be
converted to Company 144 stock at the rate of five cents ($.05) per
share, at Xxxxxx'x option. Xxxxxx will be granted one million
(1,000,000) shares of stock as a signing bonus, and will earn an
additional two million (2,000,000) shares on the anniversary of this
Agreement for each of the next three (3) years.
E. Place of Work. At the present time, the Company intends to maintain
its Product Development and back office operations in Toronto, Canada,
Operations Office in Sandy, Utah, and its Administrative Office at 000
Xxxx Xxxx Xxxxxxx Xxxx. Employee's principal place of business shall
be his home office. Notwithstanding the foregoing, Employee agrees to
travel, as deemed necessary, to the Company's Product Development,
Operations or Administrative Office 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 to
reimburse Employee for all approved travel, lodging and associated
expenses during the term of this Agreement:
F. Benefits.
1. Fringe Benefits. Xxxxxx 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 as cash flow dictates:
a. Group Health, Dental and Life Insurance. Xxxxxx 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.
b. Long Term Disability. Xxxxxx 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. Travel Expenses. Employer shall reimburse Xxxxxx for all
reasonable business travel expenses including:
transportation and lodging for commuting to the Company's
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Xxxxxx Employment Agreement (Cont.)
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Product Development Office in Canada, Operations Office in
Utah, Administrative Office in Nevada or anywhere to which
they may be relocated and travel to Customer locations.
d. Business Expenses. The Employer shall pay the actual and
normal expenses incurred by Xxxxxx for the benefit of the
Employer in performing his duties as described above in
accordance with the Employer's expense reimbursement policy,
as adopted from time to time. At the option of Employee, any
portion of any expenses due to Employee remaining unpaid
after thirty (30) days from when it was submitted for
reimbursement, may be converted to stock as follows: the
number of 144 restricted shares will be calculated at 5
cents ($.05) per share, divided into the amount due.
e. Vacation. Xxxxxx 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.
f. Sick Leave/Personal Leave. Xxxxxx 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 Xxxxxx 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.
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Xxxxxx Employment Agreement (Cont.)
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3. Directors' and Officers' Insurance. Employer agrees to obtain and
maintain, as soon as it is financially feasible, 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).
4. Termination.
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 4.
b. Death, Disability or Resignation During Term. This Agreement
shall automatically terminate upon the death of Employee or
Employee's voluntary resignation during the Term. The
Employer or Employee may terminate this Agreement upon
reasonable determination of Employee's total disability. As
used herein, total disability means Employee's inability to
perform his normal and usual duties as described herein, due
to physical disability or physical 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 Xxxxxx relating to the
Employer's business;
iii. Any intentional act by Xxxxxx that would 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
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Xxxxxx Employment Agreement (Cont.)
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v. Employee's substantial failure to perform the material
services contemplated by this Agreement, it being
understood and agreed that the Employer must give
Xxxxxx notice of such failure by the Employer and not
less than one hundred eighty (180) days with in which
to cure such failure before invoking the provisions of
this subparagraph v. in terminating Employee.
d. Without Cause. The Employer may terminate this Agreement
during the Term without Cause upon giving one hundred eighty
(180) days prior written notice of such termination.
5. Severance Pay. If Employee's employment terminates due to his
death, disability or by Employer notice without cause as
described in Section 4 above at any time prior to the Term,
Employer will pay to Xxxxxx or his legal designee(s), an amount
equal to his annual Base Salary ("Severance Pay and will
immediately pay all outstanding expenses and loans due to Xxxxxx
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 percent (15%)
annual rate of interest until fully paid.
6. No Severance Pay upon Resignation. It is expressly understood and
agreed that Xxxxxx (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 percent (15%) annual rate of
interest until fully paid. At the option of Employee, all or any
portion of these expenses or loans may be converted to stock as
follows: the number of 144 restricted shares will be calculated
at 5 cents ($.05) per share, divided into the amount due.
7. 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.
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Xxxxxx Employment Agreement (Cont.)
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8. Notice of Termination. The Employer shall give Xxxxxx notice of
the termination of this Agreement pursuant to sub-section b-d of
Section 4 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 Xxxxxx from the Company, as described
above.
9. 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
b. Any transaction in which the Company sells all or
substantially all of its assets;
c. A dissolution or 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 or a
conversion of outstanding debt.
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 to this
Agreement may be made except by a writing signed by both parties.
V. 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
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Xxxxxx Employment Agreement (Cont.)
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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 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.
VI. 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 or such other city where the Employee maintains residence.
VII. 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.
VIII. Severability of Provision. If any provision of this Agreement is invalid
or illegal, the other provision shall nevertheless remain in full force and
affect.
IX. 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 or
such other state where Employee maintains residence, at the option of
Employee.
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Xxxxxx Employment Agreement (Cont.)
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X. 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 supercedes any other outstanding Agreement between
the two parties that may have been executed prior to this date.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
July 1st, 2005.
Employer: SCTN Employee: Xxxxx Xxxxxx
000 X. Xxxx Xxxxxxx Xx, 000 Xxxxxx Xxxxx Xxxx
Xxx Xxxxx, XX 00000, Xxxxxxxxxx, Xxxx 00000
By:/s/ Xxxxx X. Xxxxx By:/s/ Xxxxx Xxxxxx
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Xxxxx X. Xxxxx, Chairman /CEO Xxxxx Xxxxxx, Executive
Vice-President
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