EMPLOYMENT AGREEMENTEmployee Retention Agreement |
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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 Executives
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 Executives 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 Executives 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 Executives 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 Corporations 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 Corporations
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 Executives employment under this Agreement for Cause. For purposes of this
Agreement, the Corporation shall have Cause to terminate the Executives 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 Executives 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 Corporations 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
Executives 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 Executives
credibility and reputation no longer conform to the standard of the Corporations 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 Executives 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 Executives 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 Boards 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 Executives 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 Executives 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 Executives
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 Executives 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 Executives 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 Executives job function, authority, duties or
responsibilities, or a similar change in the Executives 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
Executives 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 Executives employment hereunder, or earlier request by the
Corporation (with the Executive retaining no copies thereof nor any notes or other records relating
thereto).
(c) DEVELOPMENTS. The Executive will make full and prompt disclosure to the Corporation of
all inventions, improvements, discoveries, methods, developments, software and/or works of
authorship relating in any way to the business, activities or affairs of the Corporation or any of
its subsidiaries, whether patentable or not, which are created, made, conceived or reduced to
practice (in whole or in part) by the Executive or under his direction or jointly with others
during the Employment Period, whether or not during normal working hours or on the premises of the
Corporation (collectively, Developments); provided that (i)
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Developments shall not include processes that (A) are not information or communication
technology-related and (B) the Executive utilized at least 70% of the components of such processes
prior to his employment with the Corporation; provided further that the Corporation
shall be entitled to use any such processes after the Executive ceases to be employed by the
Corporation. The Executive agrees to assign and does hereby assign to the Corporation a






