EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.1
This Executive Employment Agreement
(“Agreement”) is entered into as of this date of
December 1, 2016, by and between TRACK GROUP, INC., a Delaware
corporation (“Company”) and Xxxxx Xxxxxxx, an
individual resident of the State of Illinois
(“Executive”).
WHEREAS, Executive has been employed by the Company since
June 2014 and his employment has been governed by the Executive
Employment Agreement dated December 1, 2012 between the Executive
and Emerge Monitoring, Inc., which was acquired by the Company in
June 2014 (the “Emerge Agreement”);
WHEREAS, the Company and the Executive are desirous of
continuing Executive’s employment pursuant to the terms of
this Agreement, superseding all previous agreements both oral and
written.
NOW,
THEREFORE, the parties hereto agree as follows:
1.
Employment. Company hereby
agrees to employ Executive as its President and Executive hereby
accepts such employment in accordance with the terms of this
Agreement and the terms of employment applicable to regular
employees of Company. In the event of any conflict or ambiguity
between the terms of this Agreement and terms of employment
applicable to regular employees, the terms of this Agreement shall
be definitive. Executive’s duties shall be performed at the
Company’s offices in Romeoville, Illinois. The parties
acknowledge that Executive will be required to travel in connection
with the performance of his duties.
2.
Duties of Executive. During
the Employment Term as defined in Paragraph 5, Executive will
perform his duties faithfully and to the best of his ability and
will devote his full business efforts and time during normal
working hours to the Company. Executive will report to the Chief
Executive Officer of the Company. Executive shall be responsible
for duties typical of the office held by the Executive including
but not limited to, worldwide sales, customer relations and
operations for the Company’s products and services.
Furthermore, Executive shall perform such other duties and projects
as may be assigned by the Chief Executive Officer of the Company or
the Board of Directors of the Company that are consistent with his
position.
3.
Compensation. Executive
shall be paid compensation during the Employment Term as
follows:
A. A
base salary of $240,000.00 per calendar year, payable in
installments according to the Company’s regular payroll
schedule. The base salary shall be effective retroactively to
October 1, 2016.
B.
Subject to the approval of the Board of Directors, you will be
granted an incentive stock option/warrant to purchase One Hundred
Thousand (100,000) registered shares of Company common stock issued
pursuant to the Company’s 2012 Equity Compensation Plan. The
option/warrant will be issued at an exercise price equal to the
closing sale price of the Company’s common stock as shown on
the OTC as of the date this Agreement is executed and ratified by
the Board of Directors. The option will be subject to the terms and
conditions of the warrant agreement, a copy of which is attached
hereto as Exhibit “A”, and the Company’s 2012
Equity Compensation Plan, which will include, among other things, a
vesting schedule. Vesting shall be as follows: fifty percent (50%)
of the options shall vest on September 30, 2017 and the remaining
options shall vest on September 30, 2018. The warrant agreement
shall contain a cashless exercise provision and piggyback
registrations rights. In the event of Executive’s death,
vested options/warrants shall be exercisable by Executive’s
estate.
C.
Executive shall continue as a full participant in any Employee
Bonus Plan and any Equity Compensation Plan instituted by the
Company (“the Plans”). Such Plans shall allow Executive
to earn: (i) a variable cash bonus based on individual and Company
performance and achieving specific Company milestones, and (ii)
additional restricted shares/units of the Company Common Stock
based on individual performance and achieving specific Company
milestones. Details the Plans are set forth on Exhibit
“B” attached hereto.
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4. Benefits.
A.
Holidays and Personal Time. Executive shall be entitled to paid
holidays and personal time off in accordance with the
Company’s holiday and personal time off policies but not less
than twenty (20) days of each calendar year during the Employment
Term, (as prorated for partial years) with the time and duration of
any specific personal time off mutually and reasonably agreed to by
the parties hereto.
B.
Medical, Dental and Group Life Insurance. Company agrees to include
Executive in the group medical, dental and hospital plan of the
Company and provide group life insurance for Executive. These
practices and procedures are subject to change upon mutual
agreement.
C.
Expense Reimbursement. Executive shall be entitled to reimbursement
for all reasonable expenses, including travel, temporary housing,
and entertainment, incurred by Executive in the performance of
Executive’s duties, including pre-employment travel expenses
relating to interviewing that have been submitted to the Company.
Executive will maintain records and written receipts and shall
follow all Company policies and procedures for reimbursement of
expenses.
5. Term, Termination and Severance.
A.
Employment Term of Agreement. The Employment Term of this Agreement
shall commence on October 1, 2016 and shall continue in effect
until terminated by either party in accordance with the provisions
of this Section 5.
B.
Termination and Severance:
(I)
Definitions:
(i)
Cause. For purposes of this Agreement, “Cause” shall
mean (a) Executive’s continued violations of
Executive’s obligations which are demonstrably willful or
deliberate on Executive’s part after there has been delivered
to Executive a written demand for performance from the Company
which describes the basis for the Company’s belief that
Executive has not substantially performed his/her duties, (b)
Executive’s engagement in willful misconduct which is
injurious to the Company or its subsidiaries, (c) Executive’s
commission of a felony, an act of fraud against or the
misappropriation of property belonging to the Company or its
subsidiaries, (d) Executive’s breaching in any material
respect, the terms of any confidentiality or proprietary
information agreement between Executive and the Company, or (e)
Executive’s commission of a material violation of the
Company’s standards of employee conduct.
(ii)
Involuntary Termination Other than for Cause. “Involuntary
Termination Other than for Cause” shall mean (a) without the
Executive’s express written consent, a reduction in
Executive’s job title or reporting relationships, (b) without
the Executive’s express written consent a substantial
reduction in Executive’s duties, authority and
responsibilities, as determined immediately prior to such reduction
or removal of the Executive from such position and
responsibilities, unless the Executive is provided with a
comparable position (i.e., a position of equal or greater
organization level, title, reporting relationship, duties,
authority, compensation and status; (c) without the
Executive’s express written consent, a substantial reduction
in the Executive’s Base Salary, bonus or equity compensation,
or benefits, of greater than ten percent (10%) compared to
Executive’s Base Salary, bonus or equity compensation, or
benefits, in effect immediately prior to such reduction; (e) any
termination of the Executive by the Company without Cause or any
purported termination for which the grounds relied upon by the
Company are not valid.; or (f) the expiration of, or decision of
the Company, to not renew the Employment Term or any extension
term; or
II. If
Executive’s employment with the Company terminates as a
result of an Involuntary Termination Other than for Cause, in
addition to Accrued Obligations as defined below, the Executive
shall be entitled to receive the following severance and other
benefits.
(i)
Restricted Stock, Warrants and Option Vesting. All Restricted
Stock, Warrants and Options shall become one hundred percent (100%)
vested and fully exercisable and the Company shall have no
repurchase right. All Restricted Stock, Warrants and Options shall
contain a cashless exercise provision for Executive’s
acquisition of the Stock, Warrants and/or Options, and piggyback
registrations rights.
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(ii)
Severance Payment. Executive shall receive a cash payment equal to
twelve (12) months of Executive’s Base Annual Salary (at the
Executive’s highest Base Annual Salary) plus annual bonus
compensation, at the time of the Executive’s highest
compensation level, if such bonus is earned prior to his employment
with the Company terminating. The Severance Payment shall be
payable over 26 equal bi-weekly installments over a 52 week period
in accordance with the Company’s regular pay-roll
schedule.
(iii)
COBRA Benefits. “COBRA” as used herein shall mean the
Consolidated Omnibus Budget Reconciliation Act of 1986, as amended.
Executive shall receive a lump sum payment in an amount equal to
the cost of COBRA continuation for a period of not less than twelve
(12) months.
Accrued
Obligations means (i) any base salary earned but not paid through
the date of termination; (ii) any compensation deferred by
Executive prior to his termination of employment and not paid by
the Company (all of which will be paid in accordance with the terms
of and at the time provided in the underlying deferral
arrangement); (iii) any amounts or benefits owing to Executive
under the then applicable benefit plans of the Company; (iv) any
bonus compensation earned, but not yet paid; and (v) any amounts
owing to Executive for reimbursement of expenses properly incurred
by Executive prior to the date of termination and which are
reimbursable in accordance with Paragraph 4(c).
6.
Voluntary Termination; Termination
for Cause. If Executive’s employment with the Company
terminates voluntarily by Executive or for Cause by the Company,
then Executive is not eligible for any benefits under this
Agreement (except as to Accrued Obligations and amounts already
earned and/or stock options, warrants and/or restricted stock
already vested at that time). If Executive voluntarily terminates
his employment with the Company he shall provide written notice to
the Company Chief Executive Officer at least forty-five (45) days
prior to terminating such employment.
7.
Disability; Death. If
Executive's employment terminates by reason of the Executive's
death, or by reason of Executive's Disability, then
Executive’s estate or heirs shall be entitled to receive the
Accrued Obligations and Severance Payment and other benefits set
forth in paragraph 5 herein.
8.
Proprietary Information.
During the term of this Agreement and thereafter, Executive shall
not, without the prior written consent of the Company’s Board
of Directors, disclose or use for any purpose (except in the course
of his/her employment under this Agreement and in furtherance of
the business of the Company or its subsidiaries) any confidential
information or proprietary data of the Company. As an express
condition of the Executive’s employment with the Company, the
Executive agrees to execute the confidentiality agreement attached
hereto as Exhibit “C”.
9.
Non-Competition. Executive
acknowledges that the nature of the Company’s business is
such that if Executive were to become employed by, or substantially
involved in, the business of a competitor the Company during the
twelve (12) months following the termination of Executive’s
employment, would cause substantial and irreparable harm to the
Company. Thus, to protect the Company’s goodwill, trade
secrets and confidential information, Executive agrees and
acknowledges that Executive will not directly or indirectly engage
in (whether as an employee, consultant, agent, proprietor,
principal, partner, stockholder, corporate officer, director or
otherwise), nor have any ownership interest in or participation in
the financing, operation, management or control of, consulting
with, any firm, corporation or business that competes with the
Company in the electronic, GPS or alcohol monitoring of people
within the corrections or law enforcement sectors, such competitors
include but are not limited to, the following entities and their
respective subsidiaries: The Geo Group, Inc., Numerex Corp., 3M
Company, Corrisoft LLC, Outreach Smartphone Monitoring, LLC, and
Securus Technologies. For this purpose, ownership of no more than
one-half of one percent (.5%) of the outstanding voting stock of a
publicly traded corporation shall not constitute a violation of
this provision.
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10.
Right to Advice of
Counsel/Compliance with Code Section 409A. The Executive
acknowledges that he has consulted with counsel and/or tax advisors
and is fully aware of his/her rights and obligations under this
Agreement. Notwithstanding any provision in this Agreement to the
contrary: (i) the relevant provisions of this Agreement shall be
construed in a manner so as to be exempt from or to comply with
Section 409A of the Internal Revenue Code of 1986, as amended from
time to time, and regulations and other interpretative guidance
issued thereunder, including without limitation any regulations or
other guidance that may be issued after the date of this Agreement.
To the extent required to carry out such intent:
(a) The
terms used herein will be interpreted to comply with the
requirements of Section 409A, including (without limitation) that a
termination of employment must constitute a “separation from
service,” as such term is defined in Section
409A.
(b)
Neither the Company nor Executive shall have the right to
accelerate or defer the delivery of payments except in accordance
with Section 409A.
(c)
Executive’s right to receive installment payments will be
treated as a right to receive a series of separate and distinct
payments.
(d)
With regard to any provision herein that provides for reimbursement
of costs and expenses or in-kind benefits (i) the right to
reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit, (ii) the amount of
expenses eligible for reimbursement, or in-kind benefits, provided
during any taxable year shall not affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other
taxable year, and (iii) such payments shall be made on or before
the last day of the taxable year following the taxable year in
which the expense was incurred.
(e) No
payment shall be subject to offset by any other payment unless
otherwise permitted by Section 409A.
(f)
Notwithstanding any other payment schedule provided herein, if
Executive is identified on the date of termination as a
“specified employee” within the meaning of Section
409A(a)(2)(B), then any payment that is considered nonqualified
deferred compensation subject to Section 409A, and payable on
account of a “separation from service,” will be made on
the date that is the earlier of (A) the expiration of the six
(6)-month period beginning on the date of Executive’s
“separation from service”, and (B) Executive’s
death (the “Delay Period”) to the extent required under
Section 409A. Upon the expiration of the Delay Period, all payments
delayed pursuant to this subsection (whether they would have
otherwise been payable in a single sum or in installments in the
absence of such delay) will be paid to Executive in a lump sum, and
all remaining payments due under this Agreement will be paid or
provided in accordance with the normal payment dates specified for
them herein. For purposes of Section 409A, Executive’s right
to receive any installment payment pursuant to this Agreement will
be treated as a right to receive a series of separate and distinct
payments.
11.
Assignment. This Agreement
and all rights under this Agreement shall be binding upon, inure to
the benefit of, and be enforceable by the parties hereto and their
respective personal or legal representatives, executors,
administrators, heirs, distributes, devisees, legatees, successors
and assigns. This Agreement is personal in nature, and neither of
the parties to this Agreement shall, without consent of the other
(which consent will not be unreasonably withheld), assign or
transfer this Agreement or any right or obligation under this
Agreement to any other person or entity. If the Executive should
die while any amounts are still payable to the Executive hereunder,
all such amounts shall be paid in accordance with the terms of this
Agreement to Executive’s devisee, legatee, or other designee
or, if there be no such designee, to the Executive’s
estate.
12. Notices. All notices, requests, demands and other
communications called for hereunder shall be in writing and shall
be deemed given (i) on the date of delivery, or if earlier (ii) one
(1) day after being sent by a well-established commercial overnight
service, or (iii) three (3) days after being mailed by registered
or certified mail, return receipt requested, prepaid and addressed
to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in
writing:
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If to the
Executive:
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Xxxxx
Xxxxxxx
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{at
Executive’s most recent address on file with the
Company}
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If to the
Company:
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Attn: Chief
Executive Officer
0000
X. Xxxxxxxx Xxxxx
Xxxxxxxxxx,
XX 00000
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Or such other addresses or to the attention of such
other person as the recipient party has previously furnished to the
other party in writing in accordance with this
paragraph.
13. Notice of Termination by the Company. Any termination by
the Company of Executive’s employment with the Company shall
be communicated by a notice of termination to Executive at least
forty-five (45) days prior to the date of such termination. Such
notice shall indicate the specific termination provision or
provision in this Agreement relied upon (if any), shall set forth
in reasonable detail the facts and circumstances claimed to provide
a basis for termination under the indicated provisions, and shall
specify the termination date, and shall specify the amounts and
type of compensation and benefits to be provided to Executive as a
result of the termination.
14. Waiver. Failure or delay on the part of either party
hereto to enforce any right, power, or privilege hereunder shall
not be deemed to constitute a waiver thereof. Additionally, a
waiver by either party or a breach of any promise hereof by the
other party shall not operate as or be construed to constitute a
waiver of any subsequent waiver by such other party.
15. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any
other provision or any other jurisdiction, but this Agreement will
be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been
contained herein.
16. Integration. This Agreement, together with any attached
exhibits, represents the entire agreement and understanding between
the parties as to the subject matter herein and supersedes all
prior or contemporaneous agreements whether written or oral. No
waiver, alteration, or modification of any provision of this
Agreement will be binding unless in writing and signed by duly
authorized representatives of the parties hereto. In no way
limiting the foregoing, the parties acknowledge and agree that the
Emerge Agreement is null and void and this Agreement supersedes the
Emerge Agreement.
17. Headings. The headings of the paragraphs contained in
this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of any provision of this
Agreement.
18. Applicable Law and Dispute Resolution. This Agreement
shall be governed by and construed in accordance with the internal
and substantive laws, and not the choice of law rules, of the State
of Delaware. Any controversy or claim arising out of relating to
this Agreement which cannot be settled by good faith negotiation
between the parties shall be settled by binding arbitration
administered by the American Arbitration Association
(“AAA”) under its Employment Arbitration Rules and
Procedures (such rules and procedures being incorporated herein by
reference). Such arbitration shall be submitted to a single
arbitrator appointed by the AAA. Such arbitrator must be an
attorney with a minimum of 10 years of experience in employment
matters. The prevailing party in the arbitration shall be entitled
to recover its reasonable costs, attorney fees and out of pocket
expenses relating to the arbitration. Both parties agree that the
procedures outlined in this paragraph are the exclusive methods of
dispute resolution. Unless otherwise agreed by the parties any
arbitration shall be held in the Chicago, Illinois metro
area.
19. Counterparts. This Agreement may be executed in one or
more counterparts, none of which need contain the signature of more
than one party hereto, and each of which shall be deemed to be an
original, and all of which together shall constitute a single
agreement.
20. Tax Withholding. All payments made pursuant to this
Agreement will be subject to withholding of applicable taxes so
long as such withholding is reasonable and consistent with the
Company’s normal practices.
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IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by their duly authorized
officers, as of the day and year first above written.
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Executive
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By: /s/
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/s/
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GuyDubois
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Xxxxx
Xxxxxxx
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Chief Executive
Officer
Chairman of
the Board
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Date:
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Date:
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EXHIBIT “A”
Warrant Agreement Form
A-1
EXHIBIT “B”
Executive Bonus Formula
B-1
EXHIBIT “C”
Confidentiality Agreement
C-1
