Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT, entered into August 13, 2020 by and between Rego
Payment Architectures, Inc., a Delaware corporation (the “Company”) and Peter S.
Pelullo (the “Employee”).

 

WITNESSETH:

 

WHEREAS, the Company wishes to employ the Employee as President, Chief Executive
Officer, and Board Director of the Company and the Employee is willing to serve
the Company in such capacity.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
other good and valuable consideration, the parties hereto agree as follows:

 

Section 1.      Employment

 

The Company will employ the Employee, and the Employee will perform services for
the Company and its subsidiaries, on the terms and conditions set forth in this
Agreement.

 

Section 2.      Duties

 

The Employee will serve the Company as its President, Chief Executive Officer
and Board Director. The Employee will have such duties and responsibilities as
are assigned to him by the Board of Directors of the Company commensurate with
the Employee’s position, including responsibility for all strategic and
operational matters relating to the Company and its subsidiaries, subject to the
direction of the Board of Directors. The Employee will perform his duties
hereunder faithfully and to the best of his abilities and in furtherance of the
business of the Company and its subsidiaries, and will devote his full business
time, energy, attention and skill to the business of the Company and its
subsidiaries and to the promotion of its interests, except as otherwise agreed
by the Company.

 

Section 3.      Term

 

This Agreement shall have an initial term of two years, beginning as of the
Employee’s first day of work, August 13, 2020 (the “Effective Date”). It shall
renew for successive one-year periods unless either party gives notice of intent
to not renew this Agreement at least 60 days prior to the renewal date.
Notwithstanding the foregoing Section 3, this Agreement and the Employee’s
employment hereunder shall be “at will” and is terminable at any time by either
party, without further economic obligation beyond the termination date except as
required by law.

 

   

 

 

Section 4.      Salary

 

The Employee will receive as compensation for his duties and obligations to the
Company pursuant to this Agreement during its effectiveness a base salary at the
annual rate of (i) Two Hundred Thousand Dollars ($200,000) during the first year
after the Effective Date,

 

(ii) It is agreed between the parties that the Company will review the base
annual salary annually and, in light of such review, may (but will not be
obligated to), in the discretion of the Board of Directors of the Company or any
Compensation Committee thereof, increase such applicable annual base salary
taking into account any change in the Employee’s responsibilities, increases in
the cost of living, performance by the Employee, and other pertinent factors.

 

Section 5.      Bonus

 

The Employee will be eligible for an annual bonus in the form of cash or Company
common stock as determined at the sole discretion of the Board of Directors of
the Company or any Compensation Committee thereof.

 

Annual bonuses payable hereunder shall be calculated after the close of the end
of the calendar year, and thereafter paid in a single lump sum by no later than
the 15th day of the third month following the end of the calendar year in which
the right to the bonus is no longer subject to a substantial risk of forfeiture
(as defined for purposes of Internal Revenue Code Section 409A, including
Treasury Regulations Section 1.409A-1(d)).

 

Section 6.      Equity Compensation

 

(a)       Options. As of the Effective Date or promptly thereafter following
approval of the Board of Directors of the Company, the Employee will be granted
a non-statutory stock option to acquire 500,000 shares of the common stock of
the Company at an exercise price of $0.25 per share (or if greater, the fair
market value of such stock on the grant date). The option will vest immediately.
The grant of options will be memorialized in, and the options subject to, a
separate option agreement to be entered into between the Employee and Company in
accordance with the existing equity incentive plans of the Company. Upon the
sale or change in control of more than 50% of the Company, the Employee will be
granted a non-statutory stock option to acquire 500,000 shares of the common
stock of the Company at the exercise price of the closing price per share on the
date of sale or change of control (or if greater, the fair market value of such
stock on the grant date). The option will vest immediately upon issuance. The
grant of options will be memorialized in, and the options subject to, a separate
option agreement to be entered into between the Employee and Company in
accordance with the existing equity incentive plans of the Company.

 

(b)       Common Stock. As of the Effective Date or promptly thereafter
following approval of the Board of Directors of the Company, the Employee will
be granted 250,000 shares of the common stock of the Company. The shares will
vest immediately. Upon the sale of the Company or change in control of more than
50% of the Company, the Employee will be granted 250,000 shares of the common
stock of the Company. The shares will vest immediately.

 

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Section 7.      Employee Benefits

 

Subject to any applicable probationary or similar periods, during the period of
his employment with the Company, the Employee will be entitled to participate in
all employee benefit programs of the Company applicable to senior officers of
the Company, as such programs may be in effect from time to time. Subject to any
applicable probationary or similar periods, during his period of employment with
the Company, the Employee will also be entitled to participate in all retirement
programs of the Company for which current employees are eligible, as such
programs may be in effect from time to time (including the Company’s 401(k)
plan).

 

Section 8.      Business Expenses

 

All reasonable travel and other out-of-pocket expenses incidental to the
rendering of services by the Employee hereunder will be paid by the Company,
and, if expenses are paid in the first instance by the Employee, the Company
will reimburse his therefor upon presentation of proper invoices, subject in
each case to compliance with the Company’s reimbursement policies and
procedures. All reimbursements will be paid in the same taxable year in which
the expense is incurred, provided that expenses incurred toward the end of the
calendar year that cannot administratively be reimbursed before the year end
shall be reimbursed by no later than March 15th of the calendar year following
the calendar year in which the expense was incurred.

 

Section 9.      Vacations and Sick Leave

 

The Employee will be entitled to holidays, reasonable vacation and reasonable
sick leave each year, in accordance with policies of the Company, as determined
by the Board of Directors, provided, however, that the Employee will be entitled
to a minimum of four (4) weeks’ vacation per year.

 

Section 10.      Confidential Information

 

The Employee agrees to keep secret and retain in the strictest confidence all
confidential matters which relate to the Company or any affiliate of the
Company, including, without limitation, customer lists, client lists, trade
secrets, pricing policies and other business affairs of the Company and any
affiliate of the Company learned by his from the Company or any such affiliate
or otherwise before or after the date of this Agreement, and not to disclose any
such confidential matter to anyone outside the Company, or any of its
affiliates, whether during or after her period of service with the Company,
except as may be required in the course of a legal or governmental proceeding.
Upon request by the Company, the Employee agrees to deliver promptly to the
Company upon termination of his services for the Company, or at any time
thereafter as the Company may request, all Company or affiliate memoranda,
notes, records, reports, manuals, drawings, designs, computer files in any media
and other documents (and all copies thereof) relating to the Company’s or any
affiliate’s business and all property of the Company or any affiliate associated
therewith, which she may then possess or have under his control.

 

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Section 11.      Successors and Assigns

 

This Agreement will be binding upon and inure to the benefit of the Employee,
his heirs, executors, administrators and beneficiaries, and the Company and its
successors and assigns.

 

Section 12.      Governing Law

 

This Agreement will be governed by and construed and enforced in accordance with
the laws of the State of Pennsylvania, without reference to rules relating to
conflicts of law.

 

Section 13.      Entire Agreement

 

This Agreement constitutes the full and complete understanding and agreement of
the parties and supersedes all prior understandings and agreements as to
employment of the Employee. This Agreement cannot be amended, changed, modified
or terminated without the written consent of the parties hereto.

 

Section 14.      Waiver of Breach

 

The waiver of either party of a breach of any term of this Agreement will not
operate nor be construed as a waiver of any subsequent breach thereof.

 

Section 15.      Notices

 

Any notice, report, request or other communication given under this Agreement
will be written and will be effective upon delivery when delivered personally,
by overnight courier or by fax. Unless otherwise notified by any of the parties,
notices will be sent to the parties as follows: (i) if to the Employee, at the
address set forth in the Company’s records; and (ii) if to the Company, to Rego
Payment Architectures, Inc. 21171 South Western, Suite 2705 Torrance, CA 90501.
Attention: Board of Directors.

 

Section 16.      Severability

 

If any one or more of the provisions contained in this Agreement will be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions contained
herein will not in any way be affected or impaired thereby.

 

Section 17.      Counterparts

 

This Agreement may be executed in counterparts, each of which will be deemed to
be an original but all of which together will constitute one and the same
instrument. Delivery of signatures by facsimile or electronic image shall be
valid for all purposes hereunder.

 

Section 18.      Internal Revenue Code Section 409A Compliance.

 

(a)       The parties hereto recognize that certain provisions of this Agreement
may be affected by Section 409A of the Internal Revenue Code and guidance issued
thereunder, and agree to amend this Agreement, or take such other action as may
be necessary or advisable, to comply with Section 409A.

 

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(b)       Notwithstanding anything herein to the contrary, it is expressly
understood that at any time the Company (or any successor or related employer
treated as the service recipient for purposes of Internal Revenue Code Section
409A) is publicly traded on an established securities market (as defined for
purposes of Internal Revenue Code Section 409A), if a payment or provision of an
amount or benefit constituting a deferral of compensation is to be made pursuant
to the terms of this Agreement to the Employee on account of a Separation from
Service at a time when the Employee is a Specified Employee (as defined for
purposes of Internal Revenue Code Section 409A(a)(2)(B)(i)), such deferred
compensation shall not be paid to the Employee prior to the date that is six (6)
months after the Separation from Service or as otherwise permitted under
Treasury Regulations Section 1.409A-3(i)(2).

 

(c)       For purposes of this Agreement, the following definitions shall apply:

 

(i)“Separation from Service” means, generally, a termination of employment with
the Company (or any successor or related employer treated as the service
recipient for purposes of Internal Revenue Code Section 409A), and shall have
the same meaning as such term has for purposes of Internal Revenue Code Section
409A (including Treasury Regulation Section 1.409A-1(h)).

 

(ii)“Involuntary Separation from Service” means a Separation from Service due to
the independent exercise of the unilateral authority of the Company (or any
successor or related employer treated as the service recipient for purposes of
Internal Revenue Code Section 409A) to terminate the Employee’s employment,
other than due to the Employee’s implicit or explicit request, where the
Employee was willing and able to continue employment with the Company.
Notwithstanding the foregoing, a termination for Good Reason may constitute an
Involuntary Separation from Service. Involuntary Separation from Service shall
have the same meaning as such term has for purposes of Internal Revenue Code
Section 409A (including Treasury Regulation Section 1.409A-1(n)).

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

The Company:

 

REGO PAYMENT ARCHITECTURES, INC.

 

 

 

By: /s/ Scott A. McPherson   Name: Scott A. McPherson   Title: Chief Financial
Officer  

 

 

 

    Employee:                     /s/ Peter S. Pelullo   Peter S. Pelullo    

 

 

 

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