Bonds.com 10-Q [bci-10q_093013.htm]

 

 

Exhibit 10.1

 

 

BONDS.COM GROUP, INC.

MANAGEMENT INCENTIVE PLAN

 

1.                  Purpose. Bonds.com Group, Inc., a Delaware corporation (the
“Company”), establishes this Management Incentive Plan (the “Plan”) to promote
the interests of the Company and its stockholders by attracting, retaining and
motivating key employees of the Company in critical positions by awarding
bonuses.

 

2.                  Definitions. The following terms as used in the Plan have
the meanings set forth below:

 

“Adjusted EBITDA” has the meaning set forth on the attached Exhibit A.

 

“Bonus Pool Award” means a bonus awarded under the Plan.

 

“Board” means the Board of Directors of the Company.

 

“Bonus Pool” means the aggregate cash award established under this Plan.

 

“Change in Control” means the first to occur of the following:

 

(a) When any person or group of persons, as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) (excluding, for this purpose, the Company, a Subsidiary, and any
of their respective affiliates), is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing more than 50 percent of the combined
voting power of the Company’s then outstanding securities; or

 

(b) The occurrence of a transaction requiring shareholder approval and involving
the sale of all or substantially all of the assets of the Company;

 

provided that, in any event, the transaction must constitute either (x) a change
in the ownership of the Company within the meaning of Code Section
409A(a)(2)(A)(v) and Treasury Regulations Section 1.409A-3(i)(5)(v) or (y) a
change in the ownership of a substantial portion of the assets of the Company
within the meaning of Code Section 409A(a)(2)(A)(v) and Treasury Regulations
Section 1.409A-3(i)(5)(vii).

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committee” means the Compensation Committee of the Board, or such other
committee as the Board may designate to have responsibility to administer the
Plan.

  

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“Company” means Bonds.com Group, Inc., a Delaware corporation, and its
successors and assigns.

 

“Effective Date” means October 31, 2013.

 

“Participant” means any eligible employee granted a Bonus Pool Award by the
Committee (or by executives of the Company designated by the Committee to grant
such awards).

 

“Performance Period” means the period of time beginning on November 1, 2013 and
ending on the close of business on June 30, 2014.

 

“Person” means any individual, partnership, corporation, limited liability
company, limited liability partnership, unincorporated association, trust or
other entity.

 

“Plan” means this Management Incentive Plan of the Company, as amended from time
to time.

 

“Subsidiary” means, for any Person, any corporation or other entity of which the
securities or other ownership interests having the voting power to elect a
majority of the board of directors or other governing body are, at the time of
determination, owned by such Person, directly or through one or more
Subsidiaries. Unless otherwise provided, any reference to a “Subsidiary” herein
means a Subsidiary of the Company.

 

“Termination Event” means, with respect to any Participant, the termination of
the Participant’s employment with the Company (and its Subsidiaries) for any
reason, voluntarily or involuntarily, including, without limitation, by reason
of the Participant’s death or Disability.

 

“Treasury Regulations” means the regulations (to the extent not superseded,
overruled or repealed) promulgated by the Department of Treasury under the Code.

 

3.                  The Committee.

 

3.1              General Authority of the Committee. Subject to the terms of the
Plan and applicable law and subject to such resolutions, not inconsistent with
the Plan, as may be adopted by the Committee or the Board, the Committee shall
administer the Plan and shall have full power and authority, in its sole
discretion, to: (a) establish, amend, suspend, terminate or waive such rules and
regulations and appoint such agents as it deems necessary or advisable for the
proper administration of the Plan, (b) construe, interpret, and administer the
Plan and any instrument or agreement relating to, or any Bonus Pool Award made
under, the Plan, (c) make all other determinations and take all other actions
necessary or advisable for the administration of the Plan.

 

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3.2              Reservation of Authority by Board of Directors. Notwithstanding
anything to the contrary in the Plan, the Board may reserve to itself any of the
power and authority conferred on the Committee under the Plan. All references in
the Plan to the Committee shall include the Board whenever it is exercising the
power and authority of the Committee.

 

3.3              Delegation. The Committee may delegate its powers and duties
under the Plan to one or more executive officers of the Company or a committee
of such executive officers, subject to such terms, conditions and limitations as
the Committee may establish in its sole discretion; provided, however, that the
Committee shall not delegate its power to (a) amend the Plan as provided herein,
or (b) approve the final determination of Adjusted EBITDA (defined below).

 

3.4              Liability; Indemnification. A member of the Committee and any
officer or employee of the Company properly delegated authority to carry out the
duties of the Committee pursuant to this Plan (each a “Protected Party”) is not
liable for, and the Company and each Participant releases each Protected Party
from all liability for, any punitive, incidental, compensatory, consequential,
or other damages or obligation to the Company or Participant for any act or
omission by the Protected Party with respect to the carrying out of such duties
pursuant to the Plan (including the person’s own negligence), or by any agent,
employee, professional advisor, or other expert used or engaged by the Protected
Party, if the act or omission does not constitute gross negligence or willful
misconduct and is done or omitted in good faith, on behalf of the Company, and
in a manner reasonably believed by the Protected Party to be both in the best
interests of the Company and within the scope of the authority granted to the
Protected Party under the Plan or by the Committee pursuant to the Plan. In
addition to such other rights of indemnification as they may have as directors
of the Company or as officers or employees of the Company, the Company shall
indemnify and hold harmless each Protected Party for any cost, loss, damage,
expense, or liability (including fines, amounts paid in settlement, and legal
fees and expenses) incurred by the person arising out of any act or omission for
which the Protected Party is released from liability pursuant to this Section
3.4.

 

4.                  Establishment of Bonus Pool. The Committee establishes a
Bonus Pool in the following amounts:

 

(a)On December 15, 2013, the amount of $225,000;

 

(b)On February 15, 2014, the amount of $150,000; and

 

(c)On July 15, 2014, the amount of Adjusted EBITDA generated during the
Performance Period, minus $375,000.

 

The Company shall pay all Bonus Pool Awards in cash. The Committee shall have
sole discretionary authority to approve the final determination of Adjusted
EBITDA for the Performance Period.

 

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5.                  Participants and Bonus Pool Awards.

 

5.1              Participants. The Committee may determine the percentage share
of the Bonus Pool to be paid as a Bonus Pool Award to any eligible employee (but
the sum of such individual percentages shall not exceed 100%). Alternatively,
the Committee may delegate to the Company’s executive officers (or a committee
of the Company’s executive officers) the selection of the eligible employees and
the percentage share of the Bonus Pool to be awarded to such employees. The
percentage share of the Bonus Pool awarded to any Participant or with respect to
different Participants will be determined by the Committee (or the designated
executives) in its (or their) sole discretion, and no employee is entitled to an
award.

 

6.                  Change in Control.

 

6.1              Effect of Change in Control. If a Change in Control occurs
during the Performance Period, the Company shall pay all remaining unpaid Bonus
Pool Amounts ($375,000 less the amounts paid thus far) to designated
Participants in a lump sum cash payment on the effective date of the Change in
Control. Further, the Performance Period shall be deemed to end on the effective
date of the Change in Control and the determination of Adjusted EBITDA shall be
based on the performance through the effective date of the Change in Control. If
the Change of Control occurs after February 15, 2014, the amount paid with
respect to Adjusted EBITDA will not be less than $100,000.

 

7.                  Effective Date; Amendment.

 

7.1              Effective Date. The Plan is effective as of the Effective Date.

 

7.2              Amendment and Termination of Plan. The Committee may, in its
sole discretion, amend, modify, suspend or discontinue the Plan without the
consent of the Participants, provided, however, that no such amendment,
modification, suspension or discontinuance shall be made that would materially
and adversely affect the rights of any Participant under any outstanding grant,
without his or her consent.

 

8.                  Miscellaneous.

 

8.1              Withholding. The Company may require the Participant to pay to
the Company the amount of any taxes that the Company is required by applicable
federal, state, local or foreign law to withhold with respect to any Bonus Pool
Award.

 

8.2              No Contract of Employment; No Ownership of Company Equity or
Assets. The Plan shall not give a Participant any of the following: (a) any
stock or other equity ownership in the Company or any Subsidiary, or any
ownership interest in the assets of the Company or any Subsidiary, or (b) any
right to remain an employee of the Company or a Subsidiary or any right to limit
the Company’s or a Subsidiary’s ability to terminate the Participant’s
employment at any time and for any or no reason, with or without cause.

 

8.3              No Right to Award; No Uniformity. No employee shall have the
right to be granted a Bonus Pool Award. Subject to the express terms of the
Plan, there is no obligation for uniformity of treatment of employees or
Participants under the Plan. The terms and conditions of the Bonus Pool Awards
and the Committee’s determinations and interpretations with respect thereto need
not be the same with respect to any Participant or with respect to different
Participants, even if the Participants are similarly situated.

 

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8.4              Successors and Assigns. The Plan shall be binding on all
successors and assigns of the Company and the Participants, including, without
limitation, the estate of a Participant and the executor, liquidator,
administrator or trustee of such estate, and any receiver or trustee in
bankruptcy or representative of a Participant’s creditors.

 

8.5              Severability. If any provision of the Plan or any Bonus Pool
Award is or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or as to any Person or Bonus Pool Award, or would disqualify the
Plan or any Bonus Pool Award under any law, it shall be deemed amended to
conform to applicable laws or, if it cannot be construed or deemed amended
without, in the determination of the Committee, materially altering the intent
of the Plan, it shall be deleted and the remainder of the Plan shall remain in
full force and effect; provided, however, that, unless otherwise determined by
the Committee, the provision shall not be construed or deemed amended or deleted
with respect to any Participant whose rights and obligations under the Plan are
not subject to the law of such jurisdiction or the law deemed applicable by the
Committee.

 

8.6              Governing Law. The Plan and the rights of any Person under the
Plan shall be governed by and interpreted in accordance with the laws of the
State of Delaware, without regard to conflict of laws principles.

 

8.7              Captions and References. Captions contained in the Plan are
inserted only as a matter of convenience and in no way define, limit or extend
the scope or intent of the Plan or any provision of the Plan. Unless otherwise
expressly provided to the contrary, references in this Plan to sections,
paragraphs, exhibits and the like constitute references to the sections,
paragraphs, exhibits and the like of the Plan.

 

8.8              Compliance with Section 409A. Although the Company does not
guarantee the tax treatment of any particular payment or benefit under the Plan
or any Bonus Pool Award, the Company intends for the Plan to provide for
payments and benefits that either comply with, or are exempt from, Code Section
409A, and all provisions of the Plan shall be construed in a manner consistent
with this intent.

 

8.9              No Tax Advice. Each Participant, by accepting an Bonus Pool
Award, represents and warrants that he or she has reviewed or will review with
his or her own tax advisors the federal, state, local and employment tax
consequences of participating in the Plan, including, without limitation, under
Code Section 409A, and that, with respect to such matters, the Participant
relies solely on such advisors.

*    *   *

 

Adopted by the Board of Directors of the Company as of November 12, 2013.

 

  ATTESTED:       /s/ John Ryan  

John Ryan

Chief Financial Officer

 

 

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Exhibit A

 

“Adjusted EBITDA”

 

 

“Adjusted EBITDA” means net income before charging interest, taxes, depreciation
and amortization, and for purposes of this agreement, adjusted for expenses
associated with:

 

1. The internal staff restructuring of October 2013.

2. Any capital raise.

3 Legacy non-operating items (e.g., FINRA audit settlement).

4. Directors Fees.

5. Non-cash Stock based compensation expense.

6. Realized or unrealized gains or losses on derivative liabilities.

7. Accruals or payment of bonuses.

8. Other items agreed from time to time with the Committee that should be
adjusted for.

 

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