Digital Ally, Inc. Key Executive Retention Agreement
Exhibit
10.19
Digital
Ally, Inc.
This Key
Executive Retention Agreement (“Agreement”) is effective as of the latest
date set forth on the signature page below, and is between Digital
Ally, Inc., a Nevada corporation (“Employer”), and Xxxxxx
Xxxxxxxx (“Executive”).
RECITALS
Whereas,
Employer has employed Executive as an at-will Executive at Employer’s office
located in Overland Park, Kansas prior to the date of this Agreement;
and
Whereas,
Employer recognizes that various third parties from time to time desire to alter
Employer’s ownership, business strategies, management and operations, and
Employer desires to retain Executive’s talents now and in the future without
undue distraction. Employer intends for this Agreement to be an
incentive for Executive to continue employment with Employer.
Now,
therefore, Employer and Executive agree as follows:
AGREEMENT
1. Definitions. The following capitalized
terms used herein shall have the meanings set forth below.
(a) “Cause” means (i) Executive has acted in bad
faith and to the detriment of Employer; (ii) Executive has refused or failed to
act in accordance with any specific lawful and material direction or order of
his or her supervisor; (iii) Executive has exhibited, in regard to employment,
unfitness or unavailability for service, misconduct, dishonesty, habitual
neglect, incompetence, or has committed an act of embezzlement, fraud or theft
with respect to the property of Employer; (iv) Executive has abused alcohol or
drugs on the job or in a manner that affects Executive’s job performance; and/or
(v) Executive has been found guilty of or has plead nolo contendere to the commission of a crime involving
dishonesty, breach of trust, or physical or emotional harm to any person. Prior
to termination for Cause, Employer shall give Executive written notice of the
reason for such potential termination and provide Executive a thirty (30) day
period to cure such conduct or act or omission alleged to provide grounds for
such termination.
(b) “Change in
Control” means (i) one
party alone, or acting with others, has acquired or gained control over more
than fifty percent (50%) of the voting shares of Employer; or
(ii) Employer merges or consolidates with or into another entity or
completes any other corporate reorganization, if more than fifty percent (50%)
of the combined voting power of the surviving entity’s securities outstanding
immediately after such merger, consolidation or other reorganization is owned by
persons who were not shareholders of Employer immediately prior to such merger,
consolidation or other reorganization; or (iii) a majority of Employer’s Board
of Directors is replaced and/or dismissed by the shareholders of Employer
without the recommendation of or nomination by Employer’s current Board of
Directors; or (iv) Employer’s Chief Executive Officer (the “CEO”) is replaced
and/or dismissed by shareholders without the approval of Employer’s Board of
Directors; or (v) Employer sells, transfers or otherwise disposes of all or
substantially all of the consolidated assets of Employer and Employer does not
own stock in the purchaser or purchasers having more than fifty percent (50%) of
the voting power of the entity owning all or substantially all of the
consolidated assets of Employer after such purchase.
(c) “Death or
Disability” means
Executive’s (i) death; or (ii) becoming incapacitated or disabled so as to
entitle Executive to benefits under Employer’s long-term disability plan; or
(iii) becoming permanently and totally unable to perform Executive’s duties for
Employer, with or without reasonable accommodation, as a result of any physical
or mental impairment supported by a written opinion by a physician jointly
selected by Employer and Executive.
(d) “Good
Reason” means either (i) a
material adverse change in Executive’s status as an executive or other key
employee of Employer, including without limitation, a material adverse change in
Executive’s position, authority, or aggregate duties or responsibilities; or
(ii) any adverse change in Executive’s base salary, target bonus or benefits; or
(iii) a request by Employer to materially change Executive’s geographic work
location.
(e) “Resignation” means Executive’s decision to
terminate employment, and may be for or without Good Reason as reflected in a
letter Executive shall send to the CEO or Board of
Directors.
2. At-Will
Employment. Executive remains an
at-will employee, and either party may terminate the relationship at any time
with or without cause. However, in certain circumstances as provided
below, Executive will be entitled to Severance Benefits if employment is
terminated without Cause or a Resignation is submitted for Good
Reason.
3. Severance
Benefits. If
any Change in Control occurs, and if, during the one (1) year period following
the Change in Control, Employer terminates Executive’s employment without Cause
or Executive submits a Resignation for Good Reason (the effective date of such
termination or resignation, the “Termination Date”), then:
(a) Employer shall pay Executive severance
pay equal to twelve (12) months of Executive’s base salary at the higher of the
rate in effect immediately prior to the Termination Date or the rate in effect
immediately prior to the occurrence of the event or events constituting Good
Reason, payable on the Termination Date in a lump sum net of required tax
withholdings, plus all other amounts then payable by Employer to Executive less
any amounts then due and owing from Executive to Employer;
(b) Employer shall provide continuation of
Executive’s health benefits at Employer’s expense for eighteen (18) months
following the Termination Date; and
(c) Executive’s outstanding employee stock
options shall fully vest and be exercisable for a 90-day period following the
Termination Date.
The
benefits described in the foregoing paragraphs (a) through (c) are referred to
herein as the “Severance Benefits.”
Executive
is not entitled to Severance Benefits for a termination based on Death or
Disability, Resignation without Good Reason, or termination for
Cause. Following the Termination Date, Employer shall also pay
Executive all reimbursements for expenses in accordance with Employer’s
policies, within ten (10) days of submission of appropriate evidence
thereof by Executive.
4. Change
in Control Benefit. If any Change in Control
occurs and Executive continues to be employed as of the completion of such
Change in Control, as payment for Executive’s additional efforts on behalf of
Employer during such Change in Control, Employer shall pay Executive a Change in
Control benefit payment equal to three (3) months of Executive’s base salary at
the rate in effect immediately prior to the Change in Control completion date,
payable in a lump sum net of required tax withholdings.
5. General. This Agreement contains
the entire agreement of the parties relating to the subject matter
hereof. This Agreement may be modified or terminated only by an
instrument in writing signed by both parties hereto. Any notice to be
given under this Agreement shall be sufficient if it is in writing and is sent
by personal delivery, email, or certified or registered mail to Executive at his
or her address as the same appears on the books and records of Employer or to
Employer at its principal office in Overland Park, Kansas. This
Agreement shall be deemed to have been entered into and shall be construed and
enforced in accordance with the laws of the State of Kansas without regard to
its conflicts of laws provisions. In the event of any dispute between
the parties related to this Agreement, the exclusive venue of the courts shall
be the location of Executive’s principal place of employment. The
prevailing party as determined by the court will be entitled to recover
reasonable attorney fees.
[Signatures on following
page.]
IN WITNESS WHEREOF, the
undersigned have executed this Key Executive Retention Agreement as of the
latest date set forth below.
EMPLOYER:
Date:
March 30,
2009
Digital
Ally, Inc.
By: /s/ Xxxxxxx X.
Xxxx
Its:
Chairman, CEO and
President
EXECUTIVE:
Date:
March 30,
2009
/s/ Xxxxxx
Xxxxxxxx
Name: Xxxxxx
Xxxxxxxx
