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EXHIBIT 10.1
EMPLOYMENT AGREEMENT BETWEEN
CATUITY INC. AND DEBRA HOOPES
This
Employment Agreement is made and entered into as of December 6,
2006
between Catuity Inc. (the "Company"), a Delaware corporation, and
Debra Hoopes
(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 January 2, 2007
(the
"Commencement Date") and end on December 31, 2009, unless further
extended or
earlier terminated as hereinafter set forth. Commencement shall be
conditioned
on completion prior to the Commencement Date of a standard
background check on
Executive satisfactory to Company. Commencing on December 31, 2009
and on
December 31 of each year thereafter, the term of Executive's
employment shall be
extended for consecutive additional one-year terms unless either
party notifies
the other at least six months before termination of the
then-current term that
the notifying party does not wish the Agreement to be extended.
3.
DUTIES AND RESPONSIBILITIES. Executive shall serve with the duties
of
Senior Vice President and Chief Financial Officer of Company (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 her by
the Board. Executive shall devote substantially all of her working
time and
effort to the business and affairs of Company, except that she may
as
hereinafter provided serve as a member of the board of directors of
other
companies, charities, civic organizations and professional
organizations.
4.
SERVICE ON BOARD OF DIRECTORS. The parties do not presently
contemplate
that Executive shall serve on the Board of the Company. However, if
the Board
determines otherwise during the term of this Agreement, Executive
shall serve,
if and when elected, and re-elected, as a member of the Board of
Company or of
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 her
resignation
from any and all such Board positions.
5.
OUTSIDE ACTIVITIES. During the term of this Agreement, Executive
may
devote reasonable periods of time to serve as a member of the board
of directors
or of a committee of any organization involving no conflict of
interest with
Company, and she may engage in charitable, civic and community
activities and
manage her personal investments; provided that such activities do
not materially
interfere with the regular performance of her duties and
responsibilities under
this Agreement.
6.
PLACE OF EMPLOYMENT. Executive shall have her office, and perform
her
duties, within 75 miles of the center of Charlottesville, Virginia
and she shall
not be required to move from the metropolitan Charlottesville,
Virginia area;
provided that, she shall from time to time be
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required to travel when necessary in carrying out Company's
business. Executive
acknowledges that Company maintains offices and employees in
locations in the US
and Australia, and that accordingly significant and regular travel
will be
required to dispatch her 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 her in the course of her duties
(including
professional dues). 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, she
shall be paid a minimum base salary of One Hundred Eighty Five
Thousand dollars
($185,000) per year. The CEO and 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.
9.
OTHER BENEFITS. Executive shall be entitled to participate in all
bonus
or incentive plans and stock purchase plans in such manner as such
plans apply
to officers and senior executives of the Company generally, and in
all employee
benefit, including disability insurance coverage, medical and
fringe benefit
plans currently maintained, or hereafter adopted, by Company, as
such plans may
be amended or (or terminated) from time to time in accordance with
their terms,
in the same manner as such plans apply to officers and senior
executives of
Company of comparable or lesser position generally. Executive shall
be entitled
to three (3) weeks of personal time off, to be used at her
discretion but
scheduled in consultation with the Chief Executive Officer so as to
accommodate
Company's business interests, during each 12-month period
hereof.
10.
INCENTIVE COMPENSATION.
(a)
On or before December 15, 2006, Company shall compute the
volume
weighted average trading price of Company's common stock on the
Nasdaq Small Cap
Market during the thirty calendar days preceding (and ending on)
December 6,
2006. This price is referred to hereafter as the "Initial Market
Price".
(b)
Company hereby grants to Executive non-qualified options to
acquire
25,000 shares of Company stock, expiring ten years after the
Commencement Date
at a strike price equal to the Initial Market Price. This grant is
expressly
conditioned on obtaining stockholder approval of the grant, which
the Company
will seek at the next occurring regular annual meeting of
stockholders
(typically held in May). The 25,000 options will vest on the
following schedule:
25% on the Commencement Date; 25% on December 31, 2007; and the
remaining 50% on
December 31, 2008.
(c)
In addition, and subject to shareholder approval, the Company
will
award 50,000 shares of restricted stock to Executive on the
Commencement Date.
One-third of these restricted
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shares will vest when the 30 calendar day volume weighted average
trading price
on the Company's principal trading market (the "30-day VWAP")
exceeds two times
the Initial Market Price. Another one-third of these restricted
shares will vest
when the 30-day VWAP exceeds three times the Initial Market Price.
The final
third of these restricted shares will vest when the 30-day VWAP
exceeds four
times the Initial Market Price. If shareholders do not approve the
grant at the
next shareholder meeting, then all of the restricted shares will be
forfeited.
(d)
Additionally, Executive will be eligible for an annual bonus plan
for
each full year of this Agreement where if the Company achieves
EBITDA levels
compared to a Board-approved annual business plan (including the
effect of
bonuses), she will receive a bonus payable in shares of Company
common stock
("Bonus Shares") valued at the 30-day VWAP for December 1 through
31 of the year
for which the bonus is computed. The bonus will equal to a
percentage of
"eligible salary", according to "eligible salary" and bonus
parameters to be
designated by the Board prior to the beginning of the bonus year.
Company shall
compute and pay the bonus on or before April 15 of each year for
the prior year.
For 2007, "eligible salary" shall be 50% of the base salary
described in Section
8 as of the Commencement Date, and the following bonus parameters
apply:
<TABLE>
<CAPTION>
% of EBITDA
% of
annual salary
target achieved
for
a bonus
----------------
------------------
<S>
<C>
<100%
-0-
>100% but <105%
100%
>105% but <110%
105%
>110% but <115%
110%
>115% but <120%
115%
>120% but <125%
120%
>125% but <130%
125%
>or = 130%
130%
</TABLE>
(e)
If the Company has at least nine months operating positive cash
flow at
the time of the award, Executive may elect to receive 1/2 of the
bonus amount in
cash and reduce the Bonus Shares proportionally.
(f)
All equity grants or options will carry customary provisions to
adjust
the share amounts and/or exercise or trigger prices to
appropriately and
equitably respond to capital changes such as stock splits,
dividends,
recapitalizations and the like.
(g)
Company shall reasonably cooperate with Executive in handling
withholding tax obligations in respect of the foregoing
incentive/equity
compensation items, so as to minimize the adverse effects on
Executive of any
requisite withholding tax obligations. These means and methods may
include
cooperation in ensuring legal resale capabilities for shares, use
of shares to
satisfy withholding obligations (if share sales by Executive are
impermissible,
and if such a device is then permitted, and with due regard given
to Company's
liquidity position).
11.
NON DISPARAGEMENT OF EXECUTIVE. Company shall not disparage
Executive's
reputation or good name during or after the term of this
Agreement.
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12.
TERMINATION.
(a)
Executive may voluntarily terminate her employment hereunder at
any
time, on 30 days' notice without cause or "Good Reason" (as defined
below), or
with Good Reason as provided in Section 13(b) below.
(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.
13.
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 her duties under this Agreement in any material manner
after receipt of
notice of such failure from the Company specifying how she 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
equ
