Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the
“ Agreement ”) is made and entered into as of
June 11, 2008 by and between Securus Technologies, Inc., a
Delaware corporation (the “ Corporation ”), and
Richard A. Smith (the “ Executive ”).
RECITALS
WHEREAS, the Corporation desires to
employ the Executive in the capacity, hereinafter stated (referred
to in Section 1 below), and the Executive desires to become
employed by the Corporation in such capacity for the period and on
the terms and conditions set forth herein; and
WHEREAS, the Executive and the
Corporation each acknowledge and agree that the terms and
conditions of employment set forth below are reasonable and
necessary in order to protect the legitimate business interests of
the Corporation and to compensate the Executive for information,
knowledge and experience brought to or gained from the
Corporation.
NOW, THEREFORE, in consideration of
the premises and the mutual agreements set forth below, the parties
hereby agree as follows:
1. EMPLOYMENT / NOMINATION.
Effective on June 23, 2008 (the “ Effective Date
”) the Corporation hereby agrees to employ the Executive as
its Chairman and Chief Executive Officer, and the Executive hereby
accepts such employment, on the terms and conditions hereinafter
set forth. So long as the Executive continues to be employed by the
Corporation, the Corporation agrees to cause the Executive to be
nominated for election as a member of the Board of Directors (the
“ Board ”) of the Corporation. The
Executive’s appointment as Chairman shall be on
January 6, 2009.
2. EMPLOYMENT PERIOD. The period
of employment of the Executive by the Corporation hereunder (the
“ Employment Period ”) shall commence on the
Effective Date, and the Employment Period shall terminate on the
earlier of (i) July 1, 2012 (the “ Termination
Date ”) or (ii) the date Executive’s
employment hereunder is earlier terminated in accordance with
Section 5 of this Agreement.
3. POSITION AND DUTIES. The
Executive shall devote substantially all of his business time,
attention, skills and energies during the Employment Period to the
business of the Corporation, performing such specific functions on
behalf of the Corporation that are generally incident to and
consistent with the Executive’s position as the Board may
direct. The Executive shall hold the position of President and
Chief Executive Officer of the Corporation and shall report
directly to the Board and have all powers and duties which are
associated with such position in the industries in which the
Corporation is engaged. The Executive shall not, without prior
written consent from the Board (which consent shall not be
unreasonably withheld):
(a) serve
as or be a consultant to or employee, officer, agent or director of
any corporation, partnership or other entity other than the
Corporation and/or its subsidiaries (other than civic, charitable,
or other public service organizations); or
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(b) have
more than a five percent (5%) ownership interest in any enterprise
other than the Corporation if such ownership interest would have a
material adverse effect upon the ability of the Executive to
perform his duties hereunder.
Nothing
herein shall preclude the Executive from performing charity work
and managing his own personal investments and affairs so long as
such activities do not materially interfere with the performance of
the Executive’s duties hereunder.
4. COMPENSATION AND RELATED
MATTERS.
(a) BASE
SALARY. During the Employment Period, the Corporation shall pay the
Executive a base salary at the rate specified in
Exhibit A (the “ Base Salary ”),
which Base Salary shall be paid in equal installments in accordance
with the Corporation’s payroll policy, subject to
Section 5 below.
(b) BONUS.
During the Employment Period, the Executive shall receive the
bonuses as specified in Exhibit A .
(c) RESTRICTED
SHARES. The Executive shall be awarded restricted shares of the
Corporation’s Class B Common Stock, no par value, per
share (the “ Class B Stock ”), of the
Corporation as specified in Exhibit A .
(d) OTHER
BENEFITS. During the Employment Period, the Executive shall be
entitled to and eligible for group health insurance coverage and
any other fringe benefits in accordance with policies applicable
generally to salaried employees of the Corporation. The Executive
shall also be entitled to five (5) weeks paid vacation and
other paid absences during the Employment Period in accordance with
policies applicable generally to salaried employees of the
Corporation. The Executive shall be reimbursed for reasonable
expenses incurred in connection with and directly related to the
business of the Corporation and the performance of his duties
hereunder in accordance with the policies established by the
Corporation for reimbursement of such expenses.
(e) MOVING
EXPENSE REIMBURSEMENT. The Corporation shall reimburse the
Executive up to $50,000 for reasonable documented expenses to
relocate himself and his immediate family to Dallas, Texas, which
shall be paid as soon as practicable following the submission of
appropriate documentation, but no later than the end of the year
following the year in which the expenses are incurred.
(f) LIFE
INSURANCE PREMIUMS. During the Employment Period, the Corporation
shall reimburse the Executive up to $3,500 annually for premiums of
an insurance policy on the life of the Executive, which shall be
paid as soon as practicable following the submission of appropriate
documentation, but no later than the end of the year following the
year in which the expenses are incurred.
(g) BI-ANNUAL
PHYSICAL. The Corporation shall pay up to $10,000 bi-annually of
the direct costs of an executive physical examination at the Mayo
Clinic, which shall be paid as soon as practicable following the
submission of appropriate documentation, but no later than the end
of the year following the year in which the expenses are
incurred.
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(h) HOME
AND WIRELESS INTERNET. The Executive shall be entitled to receive
an expense reimbursement of up to $150 per month for home and
wireless internet services during the Employment Period, which
shall be paid as soon as practicable following the submission of
appropriate documentation, but no later than the end of the year
following the year in which the expenses are incurred.
5. TERMINATION.
(a) TERMINATION
FOR CAUSE. Prior to the end of the Employment Period, the
Corporation may terminate the Executive’s employment under
this Agreement for “Cause.” For purposes of this
Agreement, the Corporation shall have Cause to terminate the
Executive’s employment hereunder in the event that:
(i) the Executive becomes habitually addicted to alcohol or
illegal drugs and such addiction materially and adversely affects
(A) the performance of the Executive’s obligations under
this Agreement or (B) the Corporation; (ii) the Executive
discloses confidential information in violation of paragraph 6(a)
and such disclosure has a material adverse effect on the
Corporation, (iii) the Executive engages in competition in
violation of paragraph 6(d) or 6(e); (iv) the Executive has
committed any act of willful misconduct, embezzlement or wrongful
conversion of money or property belonging to the Corporation or its
subsidiaries, or any act of fraud against the Corporation or its
subsidiaries or in the performance of his duties for the
Corporation that adversely affects the business of the Corporation;
(v) the Executive is convicted of a felony at any time
hereafter, which is reasonably likely to either (A) have an
adverse effect on the Corporation or its business or
(B) result in the incarceration of the Executive;
(vi) the Executive has failed to comply with any lawful (as
determined by the Corporation’s outside counsel) and material
directive of the Board related to and consistent with his
employment duties promptly following notice to the Executive of
such failure; (vii) the Executive has willfully failed to
substantially perform his duties hereunder (other than any such
failure resulting from the Executive’s death or health), and
such failure continues for more than 15 days after written
notice thereof to the Executive; or (viii) the Executive has
been convicted of any criminal act of egregious misconduct
involving serious moral turpitude to the extent that the
Executive’s credibility and reputation no longer conform to
the standard of the Corporation’s executives. Any
determination of whether the Executive has failed to substantially
perform his duties shall not be based solely on the performance or
financial condition of the Corporation. The Executive will be
furnished an opportunity upon at least 15 days prior written
notice to state his case to the Board with counsel prior to any
termination for “Cause.” If the Executive’s
employment is terminated by the Corporation for Cause or the
Executive voluntarily resigns other than as a result of
Constructive Discharge, the Corporation shall pay the Executive any
Base Salary accrued or owing to the Executive hereunder through the
date of termination and shall reimburse the Executive for any
expenses incurred prior to the date of termination and otherwise
reimbursable pursuant to Section 4(e), less any amounts owed by the
Executive to the Corporation, and the Corporation shall have no
further liability or obligation to the Executive hereunder or in
respect of his employment. Any amount due under this Section 5(a)
shall be paid in a lump sum within 30 days after the end of
the Employment Period.
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(b) TERMINATION
WITHOUT CAUSE. Prior to the end of the Employment Period,
(i) the Corporation may terminate the Executive’s
employment under this Agreement for a reason other than Cause or no
reason whatsoever (i.e., without Cause); or (ii) the Executive may
terminate his employment under this Agreement due to Constructive
Discharge (as defined below) so long as the Executive gives the
Board written notice of the event giving rise to such Constructive
Discharge within sixty (60) days of the occurrence thereof and
such Constructive Discharge remains uncured by the Corporation
thirty (30) days after the Board’s receipt of such
notice; provided that if the Corporation has not cured a
breach of this Agreement within the thirty (30) day period
referenced in clause (iii) of the definition of Constructive
Discharge set forth below this sentence will not be deemed to grant
the Corporation an additional thirty (30) day cure period with
respect to such breach. If the Executive’s employment is
terminated without Cause or by Constructive Discharge pursuant to
this Section 5(b) prior to the expiration of the Employment Period,
the Corporation shall pay to the Executive an amount equal to
(A) the lesser of (1) two-times the Executive’s
annual Base Salary or (2) the amount of remaining Base Salary
that would have been payable to the Executive from the date of such
termination of employment through the Termination Date; provided
that such amount shall not be less than one-times the
Executive’s annual Base Salary, plus (B) the benefits
set forth in Sections 4(d) and 4(f) (other than accrued but unused
vacation pay) which were paid to the Executive in the year prior to
the year in which his employment was terminated, plus (C) a
pro-rated bonus for the year in which Executive was terminated
(based on the number of months the Executive was employed by the
Corporation in such year), if the bonus target for such year was
being achieved on the date of termination (on a pro rata basis,
based on the number of months the Executive was employed by the
Corporation in such year) (collectively, the “ Severance
Payment ”); provided that the Severance Payment
shall be conditioned upon the Executive’s voluntary execution
of a written general release substantially in the form of
Exhibit B hereto (the “ Release ”);
provided further , that the Corporation shall have
the right to modify the Release to reflect facts and circumstances
existing at the time of the Executive’s termination. The
Corporation shall pay fifty percent (50%) of the Severance Payment
in one payment within thirty (30) days after the end of the
Employment Period provided that such release has been in full force
and effect for at least ten (10) days, and pay the remaining
portion of the Severance Payment on the date that is twelve
(12) months after the last day of the Employment Period;
provided, however, that if the Executive is a “specified
employee” within the meaning of Internal Revenue Code
Section 409A(a)(2)(B)(i), no portion of the Severance Payment
that is deferred compensation subject to Section 409A will be
made before the date that is six (6) months after the payment
date provided in the previous clause. For purposes of this
Section 5(b), the term “ Constructive Discharge
” means:
(i) a
material adverse reduction in the Executive’s job function,
authority, duties or responsibilities, or a similar change in the
Executive’s reporting relationships;
(ii) a
required relocation of Executive of more than seventy
(70) miles outside of Dallas/Ft. Worth, Texas;
(iii) any
breach of any of the material terms of this Agreement by the
Corporation which is not cured within thirty (30) days
following written notice thereof by the Executive to the
Corporation; or
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(iv) during
the Employment Period, any failure to nominate and/or elect the
Executive as a member of the Board and/or any removal of the
Executive as a member of the Board (other than for Cause or
pursuant to applicable law).
6. CONFIDENTIAL INFORMATION,
REMOVAL OF DOCUMENTS, DEVELOPMENTS AND NON-COMPETITION,
RELEASE.
(a) CONFIDENTIAL
INFORMATION. The Executive shall hold in a fiduciary capacity for
the benefit of the Corporation and its subsidiaries all trade
secrets, confidential information, proprietary information,
knowledge and data relating to the Corporation and/or the
businesses or investments of the Corporation which was obtained by
the Executive in connection with the Executive’s employment
by the Corporation and its subsidiaries including such information
with respect to any products, improvements, formulas, designs or
styles, processes, services, customers, suppliers, marketing
techniques, methods, know-how, data, future plans or operating
practices (“ Confidential Information ”);
provided that “Confidential Information” shall
not include information that (i) is or becomes generally
available to the public other than as a result of a disclosure by
the Executive or (ii) is or becomes available to the Executive
on a non-confidential basis from a source that is not known to the
Executive to be prohibited from disclosing such information to the
Executive by a legal, contractual or fiduciary obligation. Except
as may be required or appropriate in connection with his carrying
out his duties under this Agreement, the Executive shall not,
without the prior written consent of the Corporation or as may
otherwise be required by law or legal process, communicate or
divulge any such Confidential Information to anyone other than the
Corporation and those designated by the Corporation. The
Corporation, understands, acknowledges and agrees that,
notwithstanding this Section 6, the Executive may disclose to
his advisors the terms and conditions of this Agreement to the
extent reasonably necessary to enforce this Agreement.
(b) REMOVAL
OF DOCUMENTS. All records, files, drawings, letters, memoranda,
reports, computer data, computer disks, electronic storage media,
documents, models and the like relating to the business of the
Corporation and/or the business of any of its subsidiaries, which
the Executive prepares, uses or comes into contact with and which
contain Confidential Information shall be the exclusive property of
the Corporation to be used by the Executive only in the performance
of his duties for the Corporation and shall not be removed by the
Executive from the premises of the Corporation (without the written
consent of the Corporation) during or after the Employment Period
unless such removal shall be required or appropriate in connection
with his carrying out his duties under this Agreement, and, if so
removed by the Executive, shall be returned to the Corporation
immediately upon termination of the Executive’s employment
hereunder, or earlier request by the Corporation (with the
Executive retaining no copies thereof nor any notes or other
records relating thereto).
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