Digital Ally, Inc. Key Executive Retention Agreement
Exhibit
10.22
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 Xxxxxxx X. XxXxx
(“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.
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.
Date:
December 23,
2008 EMPLOYER:
Digital Ally, Inc.
By: /s/ Xxxxxxx X.
Xxxx
Its: Chairman, CEO &
President
EXECUTIVE:
Date:
December 23,
2008 /s/ Xxxxxxx X.
McCoy_________________
Name: Xxxxxxx X.
XxXxx
