EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment Agreement (“Agreement”) is made and effective this date of December 12, 2016, by and between TRACK GROUP, INC., a Delaware corporation (the “Company” and, together with its subsidiaries, the “Company Group”) and PETER K. POLI, an individual resident of the State of Michigan (“Employee”).

 

NOW, THEREFORE, the parties hereto agree as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(i) Cause. For purposes of this Agreement, “Cause” shall mean (a) Employee’s continued violations of Employee’s material obligations hereunder which are demonstrably willful or deliberate on Employee’s part and which are materially injurious to the Company Group, but only after there has been delivered to Employee a written demand for performance from the Company which describes the basis for the Company’s belief that Employee has not substantially performed his/her duties, (b) Employee’s engagement in willful misconduct related to his position with the Company which is materially injurious to the Company Group, (c) Employee’s conviction of a felony, an act of fraud against or the misappropriation of property belonging to the Company Group, (d) Employee’s breaching in any material respect, the terms of any confidentiality or proprietary information agreement between Employee and the Company, or (e) Employee’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 (x) Employee’s resignation of employment following or in connection with any of the following: (a) without the Employee’s express written consent, a reduction in Employee’s job title or reporting relationships, (b) without the Employee’s express written consent, a substantial reduction in Employee’s duties, authority and responsibilities, as determined immediately prior to such reduction or removal of the Employee from such position and responsibilities, unless the Employee is provided with a position of greater organization level, title, reporting relationship, duties, authority, compensation and status; (c) without the Employee’s express written consent, a reduction in the Employee’s base salary, bonus or equity compensation, or benefits, of greater than three percent (3%) compared to Employee’s base salary, bonus or equity compensation, or benefits, in effect immediately prior to such reduction; (d) without the Employee’s express written consent, the material relocation of the Employee’s primary office to a location more than 35 miles away from Romeoville, Illinois, or (e) the Company’s non-renewal of this Agreement in accordance with Section 5.A., or (f)any termination of the Employee’s employment by the Company without Cause or any purported termination for which the grounds relied upon by the Company do not in fact constitute Cause or otherwise are not valid.

 

 

(i) Restricted Stock, Warrants and Option Vesting. All Restricted Stock, Warrants and Options and other equity or equity-based compensation shall become one hundred percent (100%) vested and fully exercisable and the Company Group shall have no repurchase right. All Restricted Stock, Warrants and Options and other equity or equity-based compensation shall, to the extent applicable, contain a cashless exercise provision for Employee’s acquisition of the Stock, Warrants and/or Options, and piggyback registrations rights.

 

(ii) Severance Payment. Employee shall receive an amount equal to (i) twelve (12) months of Employee’s base salary (at the Employee’s highest base salary during the Employment Term ) plus (ii) if Employee has not received payment of his annual bonus with respect to any performance period that ended prior to such termination of employment, the annual bonus for such performance period. The portion of the Severance Payment described in clause (i) shall be payable over 26 equal bi-weekly installments over a 52 week period in accordance with the Company’s regular pay-roll schedule, and the portion of the Severance Payment described in clause (ii) shall be payable at the time such bonus would have been paid absent such termination of employment.

 

(iii) COBRA Benefits. “COBRA” as used herein shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended. Employee shall receive a lump sum payment in an amount equal to the cost of COBRA continuation for a period of twelve (12) months. Subject to Section 10, such payment shall be made within fifteen (15) days following Employee’s termination of employment.

 

 

 

Accrued Obligations means (i) any base salary earned but not paid through the date of termination; (ii) any compensation deferred by Employee 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 Employee under the then applicable benefit plans of the Company; (iv) any bonus compensation earned, but not yet paid; and (v) any amounts owing to Employee for reimbursement of expenses properly incurred by Employee prior to the date of termination and which are reimbursable in accordance with Paragraph 4.C.

 

 

 

 

 

 

 

 

(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 Employee shall have the right to accelerate or defer the delivery of payments except in accordance with Section 409A.

 

(c) Employee’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 Employee 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 Employee’s “separation from service”, and (B) Employee’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 Employee 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.

 

 

 

 

{at Employee’s most recent address on file with the Company}

 

Track Group, Inc.

1215 W. Lakeview Court

Romeoville, IL 60446

 

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.