EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS
EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered
into as of this 28th day of August, 2003 by
and between iSecureTrac CORPORATION,
a Delaware corporation, having its
principal offices at 5022 South 114th Street,
Omaha, NE 68137 (hereinafter referred to as the "Company"), and JOHN A.
SCIORTINO, AN INDIVIDUAL RESIDING AT 2374 JESSAMY COURT, HARRISBURG,
PENNSYLVANIA 17112 (hereinafter referred to
as the "Executive").
This Agreement
shall be effective as of August 28, 2003
("Effective Date").
WITNESSETH:
WHEREAS,
the Executive has demonstrated unique qualifications to act in
an
executive capacity for the Company,
and the Company
expects that
Executive's
contribution will be substantial and
meritorious; and
NOW
THEREFORE, in
consideration
of the foregoing,
the mutual
covenants
contained herein, and other good and valuable
consideration,
the receipt and
sufficiency of which is hereby
acknowledged, the parties agree as follows:
1.
EMPLOYMENT.
The Company agrees to employ the Executive, and the
Executive agrees to accept such employment,
all in accordance with
the terms of
this Agreement.
2.
CAPACITY AND DUTIES. The Executive shall serve as President and
General
Manager of Tracking Systems Corporation (TSC), a wholly owned
subsidiary of the
Company and serve in such other
offices as he may be
appointed or elected to
from time to time. The Executive shall
perform the duties assigned to him by the
Chairman of the board of directors of the Company (the "Board") and the
President of the Company to the best of his
ability in a diligent,
trustworthy,
businesslike, and efficient manner for the
purposes of advancing the business of
the Company and, to this end, will devote his full time and
attention to the
business of the Company. Furthermore,
Executive shall comply
with the Company's
rules and regulations as may be set forth
in the Company's Employee Handbook, or
similar document. In the event Executive observes
unlawful acts or practices by
the Company, he shall promptly notify the President of the Company or the
Chairman of the Board of Directors, as he
may deem appropriate. If the Executive
is elected as a director of the Company or
as a director of any of the Company's
affiliates or subsidiaries, the Executive will fulfill his duties as such
director without any additional
compensation.
3. TERM.
The term of
Executive's employment
hereunder (the
"Employment
Period") shall commence on the "Effective Date and continue on an
indefinite
basis, unless earlier terminated
hereunder.
4.
COMPENSATION.
(a) BASE SALARY. For
all services rendered
by the Executive
under
this
Agreement,
the Company
shall pay the
Executive an annual salary of
One
Hundred Seventy Thousand dollars, payable in semi-monthly
installments
beginning
August 16, 2003 ("Salary").
(b) EXPENSES. To the
extent not otherwise
paid for by the Company,
the
Company will reimburse
the Executive
for reasonable and necessary
expenses
incurred in promoting the Company's business, including expenses
for travel
and entertainment,
such reimbursement to
be made periodically
upon
presentation of appropriate receipts or other substantiation.
<PAGE>
(c) PLANS. The
Executive will be
permitted to
participate in such
pension,
profit sharing,
bonus, life insurance,
hospitalization,
major
medical,
vacation and other employee benefit plans of the Company that
may
be in
effect from
time to time,
to the extent that the Executive is
eligible
under the terms of those plans. Unless stated otherwise in this
Agreement,
Executive's benefits
under any such plans shall be the same as
those
extended to other
employees of the
Company and as may be published
by the
Company from time to time.
(d) TAXES, ETC. All compensation payable to Executive hereunder is
stated in
gross amount and shall be subject to all applicable withholding
taxes and
other normal payroll
deductions and any other amounts required
by law to
be withheld.
(e) QUARTERLY BONUSES.
Executive shall receive a bonus of
$10,000
for
each of the
third and fourth fiscal quarters for 2003 (each a
"Quarterly
Bonus"), PROVIDED THAT TSC meets or
exceeds, on an un-audited
basis,
the following
revenue targets
projected for said
fiscal quarters
(each a
"Quarterly Target"):
3rd Quarter, 2003:
$860,861
4th Quarter, 2003:
$884,253
In the event TSC's actual revenue for a fiscal quarter is
less than
the
corresponding
Quarterly Target,
the corresponding Quarterly Bonus
shall be
reduced by the same
percentage by which actual revenue was less
than the
corresponding Quarterly Target.
<PAGE>
(f) ANNUAL
BONUS FOR 2003. Executive shall receive a bonus of
$20,000
for fiscal 2003 ("Annual Performance Bonus"), PROVIDED THAT TSC
meets or
exceeds, on an
un-audited basis,
the following
revenue target
projected
for fiscal 2003 ("Annual Target"):
$3,413,145
In the event TSC's
actual revenue for
fiscal 2003 is less than the
Annual
Target, the Annual
Performance Bonus
shall be reduced by the same
percentage
by which actual revenue for fiscal 2003 was less than the
Annual
Target.
(g) ANNUAL BONUS AFTER
2003. After 2003,
Executive and the Board
shall
agree, on an annual basis to a bonus plan ("Annual Bonus Plan")
under
which Executive may
earn certain bonuses
up to fifty percent (50%)
of his
annual salary.
The Annual
Bonus Plan shall be reasonable and
attainable
and shall contain
measurable quarterly
and annual goals.
The
Annual
Bonus Plan shall be determined by the Compensation Committee of
the
Board of
Directors in
consultation with
Executive and shall be
reviewed
for
reasonability
with respect to any changed
circumstances
effecting
Executive's
ability to
achieve the quarterly and annual goals.
Furthermore, the
Annual Bonus Plan for Executive shall be, at a minimum,
at the
level of any Senior Vice President in terms of earnable bonuses.
In
the event
the Annual Bonus Plan is not acceptable to Executive, he may
appeal any
perceived deficiencies to the full Board and the Board
shall
thereupon
make the final
determination
as to the contents of
the Annual
Bonus
Plan.
5. STOCK
INCENTIVES.
(a) The Company's
stockholders approved
the Company's 2001 Omnibus
Equity
Incentive Plan (the "Plan") on June 15, 2001. Subject to the terms
and
conditions
of the Plan,
the Company
hereby grants to the
Executive
options to
purchase in the aggregate 250,000 shares of the Company's
common
stock (the "Options").
The Options will
furthermore be subject to
the terms
and conditions
described in the
applicable notice of
grant of
stock
option and stock option agreement and the vesting
requirements set
forth in
this Section 5. The exercise price of each of these Options
shall
be a sum
equal to eighty-five
percent (85%) of the
average daily closing
price of
the Company's common stock on the so-called OTC Bulletin Board
or
other
nationally recognized
exchange for the first
full week immediately
preceding
the date on which the
Options were granted pursuant to this
Section 5
(the "Exercise
Price"). The Options shall vest and become
exercisable with
respect to the first 10,417 shares subject thereto when
the
Executive completes one month of continuous service from July __,
2003
and with
respect to an
additional
10,417 shares subject thereto when
Executive
completes each month
of continuous service thereafter until all
250,000
shares have vested or until termination of employee's service. In
lieu of
the foregoing Options, the Company may grant Executive Options
not
subject to
the Plan, but on the same or similar terms.
(b) IN ADDITION TO THE OPTIONS GRANTED ABOVE, the Company hereby
grants
Executive options to purchase 250,000 shares of the Company's
common
stock (the
"Performance Options")
at an exercise
price of $0.47
(forty
seven cents) per
share. The
Performance
Options shall vest and
become
exercisable on March
31, 2004 as follows:
100% of the Performance
Options
in the event the
audited financial statements of Transaction
Systems
Corporation
(TSC) for the fiscal
year 2003 report actual revenue
to have
met or exceeded
the Annual
Target. In the event TSC's actual
revenue
for fiscal 2003 is less than the Annual Target, the Performance
Options
shall be reduced by the same percentage by which actual revenue
for fiscal
2003 was less than the Annual Target.
(c) The Company shall,
within a reasonable period not to exceed six
months,
register the shares
underlying the Options issued to Executive if
<PAGE>
such
shares are not already
registered.
The term "registered" for the
purposes
of this Section 5(c) refers to a registration effected by
preparing
and filing a
registration
statement in compliance with the
Securities
Act of 1933, as
amended, and the
declaration
or ordering of
effectiveness of such registration statement.
(d) Notwithstanding
any provision to the contrary contained herein,
Executive
acknowledges and agrees that by signing this Agreement he
agrees
not to
sell any of the
Company's Equity Securities (whether acquired
pursuant
to this agreement or otherwise) at a time when applicable laws,
Company
policies or an agreeme
