SEC Connect






Exhibit 10.2


 



[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH
CONFIDENTIAL TREATEMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL
WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO THE RULES APPLICABLE TO SUCH CONFIDENTIAL TREATMENT
REQUEST.






 



SERVICE AGREEMENT



Agreement No.


 



This agreement ("Agreement") is made between [***] and Track Group,
Inc. with a place of business at 405 South Main Street, Suite 700,
Salt Lake City, UT 84111 (“Track Group”).


 



This Agreement by the stated parties is effective as of December 7,
2016 (the “Effective Date”).


 



NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree as follows:


 



1. SERVICES


 



1.1            

Services. Provided that Track Group meets its obligations
and responsibilities as set forth in this Agreement and
Exhibit
A, [***] shall provide the
Monitoring Operations Services and Case Management Services set
forth on Exhibit
A. Exhibit A
is attached hereto and incorporated
herein (the “Services”).






 



1.2            

Service Levels.
[***] shall provide the Services in
accordance with the key performance indicators set forth in
Exhibit
A, (the “KPIs”) and
as described in this Agreement.






 



2. PRICING AND PAYMENT TERMS


 



2.1 Compensation


2.1.1. Monitoring Operations
Services - As consideration for
the Monitoring Operations Services provided hereunder, Track Group
shall pay [***] per day, per active case in accordance with the
pricing schedule set forth in Section I on Exhibit
B, which is attached hereto and
incorporated herein.


 


(a) Reports –
Track Group shall provide the
following reports related to Monitoring Operations
Services:


 


1. Active Case Report
– On a daily basis, [***]
shall, by accessing the Track Group software, run a report (the
“Active Case Report”) setting forth the number of
active cases from the prior day. The Active Case Report shall be
delivered the basis for the billing calculations according to the
Pricing Schedule on Exhibit B
attached hereto.


 


2. [***] Staff Report
- On a daily basis, [***]
shall, by accessing the Track Group software, run a report (the
“[***] Staff Report”) showing the activity of [***]
staff, on an individual basis, within Tracker Pal (Track
Group’s proprietary web-based software service) from the
prior day.


 


(b) Records –
Track Group shall keep and maintain at
its regular place of business separate and complete books and
records of the information relied upon to create the Active Case
Reports and [***] Staff Reports. Track Group shall maintain such
books and records, including information stored in databases or
other computer systems, for a period of one (1) year from the date
of final payment under this Agreement. [***] or its duly authorized
agents or representatives shall have the right to inspect said
books and records at Track Group’s premises during Track
Group’s regular business hours upon reasonable prior notice
to Track Group.


 


2.1.2. Case Management Services
- As consideration for the Case
Management Services provided hereunder, Track Group shall pay [***]
per month, per active case in accordance with the pricing set forth
in Section II on Exhibit
B.


 


2.1.3. Software
Development – [***] shall
bill software development at a rate of [***] per
hour.


 


2.1.4. Sales and Use Taxes
– Notwithstanding Section
2.3 below, all pricing set forth in Sections 2.1.1, 2.1.2, 2.1.3
and Exhibit B shall be inclusive of all sales and use taxes, and
Track Group shall not be responsible or liable for any additional
taxes or fees.


 


 




 

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH
CONFIDENTIAL TREATEMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL
WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO THE RULES APPLICABLE TO SUCH CONFIDENTIAL TREATMENT
REQUEST.






 



2.2. Billing – [***]
shall invoice Track Group monthly for services
rendered.  Payment shall be made by Track Group to [***]
within thirty (30) days of the invoice date. Interest on any amount
which is past due shall accrue at the rate of 1.5% per month, or if
such rate exceeds the maximum rate allowed by law, then at such
maximum rate, and shall be payable on demand.


 



2.3. Taxes – Except with
respect to [***]’s net income and any sales or use taxes,
Track Group will pay, as the same respectively come due, all taxes
and governmental charges of any kind whatsoever together with any
interest or penalties that may at any time be lawfully assessed or
levied against or with respect to the equipment or services
provided hereunder.


 



3. ADMINISTRATIVE FEE


 


Upon
execution of this Agreement, Track Group will invoice [***] for a
one-time administrative fee of $60,000. Fifty percent (50%) shall
be due within fifteen (15) days of the Effective Date and fifty
percent (50%) shall be due thirty (30) days thereafter. In the
event this Agreement is terminated for convenience by Track Group
within the first six (6) months following the Effective Date, Track
Group shall refund the administrative fee in full.


 



4. TERMINATION OF PRIOR AGREEMENT


 



Upon execution of this Agreement, the Services Agreement dated
January 7, 2009 between [***], as successor in interest to [***],
and Track Group, as successor in interest to [***], shall terminate
at the end of the day on December 6, 2016.


 



5. INDEMNIFICATION


 



5.1 Both Parties Indemnification. Each Party shall defend and indemnify the other
and their respective officers, directors, employees, suppliers,
licensors, contractors, advisors and agents against and from any
loss, debt, liability, damage, obligation, claim, demand, judgment
or settlement of any nature or kind, known or unknown, liquidated
or unliquidated, including without limitation, all reasonable costs
and expenses incurred including all reasonable litigation costs and
attorneys’ fees arising out of or relating to claims,
complaint, action, proceeding or suit of a third party (including
any investigation or inquiry by a governmental agency or
authority), that arise from or relate to, in whole or part, (i) the
negligence or willful misconduct of or (ii) breach of this
Agreement by the indemnifying Party, its employees, agents,
contractors, licensors or suppliers. The indemnities provided for
herein shall survive the termination of this
Agreement.


 



5.2 Track Group Indemnification. Track Group shall defend and indemnify [***] and
its respective officers, directors, employees, subsidiaries,
suppliers, licensors, contractors and agents against and from any
loss, debt, liability, damage, obligation, claim, demand, judgment
or settlement of any nature or kind, known or unknown, liquidated
or unliquidated, including without limitation, all reasonable costs
and


 



expenses incurred including all reasonable arbitration and/or
litigation costs and attorneys’ fees arising out of or
relating to claims, complaint, action, proceeding or suit of a
third party (including any investigation by a governmental agency
or authority), that arise from or relate to, in whole or in part,
Track Group’s electronic monitoring equipment, web-based
software (i.e. TrackerPAL, TrackerPAL Mobile), or analytics
software. Track Group’s indemnification of [***] pursuant to
this Section 5.2 shall not apply if the claims, complaint, action,
proceeding or suit of a third party arises from or relates solely
to software that is not part of Track Group’s products and
services referenced in this Section 5.2.


 



5.3 Procedure for Indemnification. The indemnified party promptly shall notify the
indemnifying party of any claims that are subject to
indemnification. The indemnified party shall have the right, at its
own expense, to participate either directly or through counsel in
any arbitration, litigation or settlement negotiations. The
indemnified party shall provide reasonable assistance and
cooperation in such defense at the indemnifying party’s
expense. The indemnifying party shall not agree to any settlement
without the written consent of the indemnified party and such
consent shall not be unreasonably withheld. The indemnification
provided herein shall survive the termination of this
Agreement.


 


 




 

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH
CONFIDENTIAL TREATEMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL
WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO THE RULES APPLICABLE TO SUCH CONFIDENTIAL TREATMENT
REQUEST.






 



6. LIMITATION OF LIABILITY


 



6.1. Limitation of Liability. Except as set forth in Section 5, in no event
shall either party be liable to the other for (i) any indirect,
special, exemplary, incidental or consequential damages of any kind
(including without limitation, lost profits or revenues); or (ii)
any punitive damages arising by virtue of any dealings between the
parties. Except as set forth in Exhibit A, Section 2.3,
[***]’s aggregate liability for damages (if any) of any kind
or nature arising out of or in connection with this Agreement will
not exceed the fees paid by Track Group for the services performed
by [***] under this Agreement during the 12-month period
immediately preceding the date of the loss.


 



7. INSURANCE


 



Each party shall procure and maintain insurance of the kinds and in
the minimum amounts enumerated below.


 



7.1. Worker’s
Compensation Insurance as required by the laws of the state in
which the services are to be performed, and Employer’s
Liability Insurance covering all employees acting within the course
and scope of their employment.


 



7.2. Commercial General
Liability Insurance written on ISO occurrence form GC 0001 10/93 or
equivalent, covering premises operations, fire damage, independent
contractors, products and completed operations, blanket contractual
liability, bodily injury, with minimum limits as
follows:


(1)
$3,000,000 each occurrence;


(2)
$3,000,000 general aggregate;


(3)
$3,000,000 products and completed operations aggregate;
and


(4)
$100,000 any one fire.



If any aggregate limit in a party’s primary and excess
coverage is reduced below $1,000,000 because of claims made or
paid, such party shall immediately obtain additional insurance to
restore the full aggregate limit and furnish to the other party a
certificate or other document satisfactory to the other party
showing compliance with this provision.


 



7.3. Automobile Liability
Insurance covering any auto (including owned, hired and non-owned
autos) with a minimum limit as follows: $1,000,000 each accident
combined single limit.


 



7.4. Professional Liability
Insurance (if applicable) with minimum limits of liability of not
less than $3,000,000.


 



7.5. Each party shall provide
certificates showing insurance coverage required by this contract
to the other party within 7 business days of the effective date of
this Agreement, but in no event later than the commencement of the
services or delivery of the goods under this Agreement. At any time
during the term of this contract, a party may make a written
request from the other party for certificates showing continuing
insurance coverage in compliance with the provisions of this
section, and the other party shall thereupon within 10 days supply
such certificates.


 



8. CONFIDENTIALITY OF AGREEMENT


 



Unless disclosure is required pursuant to court order, subpoena or
other regulatory authority, neither party shall disclose the terms
or existence of this Agreement without first obtaining the written
consent of the other party.


 


 




 

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH
CONFIDENTIAL TREATEMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL
WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO THE RULES APPLICABLE TO SUCH CONFIDENTIAL TREATMENT
REQUEST.






 



9. CONFIDENTIALITY


 



9.1. Each party acknowledges
that they will receive from the other party confidential
information and trade secrets relating to the other party’s
business (“Confidential Information”) in the course of
performing its obligations under this Agreement. Accordingly, the
parties hereby agree not to disclose or permit any third person or
entity access to the Confidential Information without the other
party’s prior written permission, unless disclosure is
required pursuant to court order, subpoena or other regulatory
authority. The parties further agree to insure that each
party’s employees participating in the performance of such
party’s obligations hereunder are advised of the confidential
nature of the Confidential Information and to insure by agreement
that they are prohibited from disclosing Confidential Information.
Confidential Information shall not include information in the
public domain, information properly received by the parties from a
third party, or information independently
developed.


 



9.2. Each party’s
obligations under this section shall survive any expiration or
termination of this Agreement.


 



10. OWNERSHIP OF CASE MANAGEMENT SOFTWARE SYSTEM


 



[***] shall retain all ownership and intellectual property
interests in all parts of the System (as defined below) and Updates
(as defined below), including title, copyright, patent rights,
trademarks, trade secrets and any other proprietary rights and
protections, whether currently existing or hereafter developed or
acquired, and whether or not perfected, including all applications,
disclosures and registrations with respect thereto. [***] shall not
have any ownership interests in data supplied by Track Group. All
rights owned by [***] that are not expressly granted by this
Agreement, including the right to derivative works, are reserved to
[***]. All rights, powers and privileges which arise out of this
Agreement are, and shall remain at all times, the sole and
exclusive property of [***]. Nothing contained in this Agreement
shall be deemed to convey to Track Group any title, ownership or
intellectual property interest in the System, Software or
Updates.


 



“System” means, collectively: (a) the Software;
(b) the server(s) presently located in [***] on which [***]
has installed the Software for use by [***] and its customers;
(c) all documentation and materials (whether written, printed,
electronic or in another format) made available to Track Group that
relate to or describe the System; and (d) all equipment and
connections maintained by [***] to allow [***] and its customers to
access the System.


 


 



“Software” means (a) the software programs,
including third-party software programs, provided by [***] pursuant
to this Agreement in connection with the System, including in
connection with either the Monitoring Operations Services or the
Case Management Services, (b) all firmware, operating systems,
network transport and protocols, interpreters, and administration,
management and database systems and applications used to support
the functionality of the foregoing, and (c) all Updates to any
of the foregoing or otherwise provided by [***] under this
Agreement.


 



“Updates” means any new releases, improvements,
modifications, upgrades, updates, fixes and additions to the System
that [***] issues from time to time to correct deficiencies,
improve or extend capabilities, comply with applicable law, and/or
to meet then-current industry-accepted specifications or
standards.


 



11. TERM OF AGREEMENT


 



The term of this Agreement shall be three (3) years beginning on
the Effective Date and ending December 6, 2019 (the
“Term”). Thereafter, this Agreement, its terms and
conditions, and authorized amendments shall renew automatically for
succeeding periods of one (1) year each on the anniversary of the
Effective Date unless otherwise terminated as provided for herein.
Either party hereto may terminate this Agreement for convenience
upon one hundred and twenty (120) days written notice to the other
party.


 


 




 

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH
CONFIDENTIAL TREATEMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL
WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO THE RULES APPLICABLE TO SUCH CONFIDENTIAL TREATMENT
REQUEST.






 



12. CANCELLATION


 



Either party hereto may, in the event of a breach by the other
party of a material provision of this Agreement, serve written
notice to the offending party, of its intent to terminate this
Agreement. The offending party shall have forty-five (45) days from
the date of the notice to cure the deficiency (the “Cure
Period”). In the event that the offending party is unable to
cure the breach within the Cure Period, then the Agreement will
terminate upon the expiration of the Cure Period.


 



13. GENERAL


 



13.1. Applicable Law –
This Agreement shall be governed by and construed in accordance
with the laws of the State of Illinois.


 



13.2. Assignment – This
Agreement shall not be transferred or assigned by either party
without the prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed.


 



13.3. Entire Agreement –
This Agreement represents the entire agreement between the parties
with respect to the subject matter hereof, and supersedes all other
prior agreements, representations and understandings, oral and
written.


 



13.4. Relationship of Parties
– The relationship of [***] and its successors in interest,
on the one hand, and Track Group and its successors in interest, on
the other hand, is that of independent contractors, and not one of
principal and agent, joint venture or partnership. Neither party
shall have any authority to create or assume, in the name or on
behalf of the other party, any obligation, express or implied, nor
to act or purport to act as the agent or the legally empowered
representative of the other party for any purpose
whatsoever.


 



13.5. Notices – Any
notice required to be given hereunder shall be deemed to have been
given either when served personally or when sent by a recognized
overnight currier service – signature required, certified
U.S. mail addressed to the parties at the addresses set forth
above.


 



13.6. Each party represents and
warrants to the other that it has the full right, power and
authority to enter into and perform this Agreement and that
execution and performance of this Agreement will not place such
party in violation of any other agreement or legal
obligation.


 



13.7. Force Majeure - Neither
party shall be liable to the other party for any delay in
performance or nonperformance which is due to causes beyond such
party’s control, including, but not limited to, war, fire,
floods, sabotage, civil unrest, strikes, embargoes or delays, acts
of God, acts of third parties, acts of governmental authority or
any agent or commission thereof, accident, breakdown of equipment,
telecommunications services – both wireless and wire systems,
differences with employees or similar or dissimilar causes beyond
such party’s reasonable control.


 



13.8. If any provision of this
Agreement is held invalid, void or unenforceable under any
applicable statute or rule of law, it shall be deemed omitted, and
the balance of this Agreement shall be enforceable in accordance
with its terms.


 



13.9. The Parties desire to
resolve disputes arising out of or relating to this Agreement
without litigation.


 


13.9.1 Billing Disputes.
Track Group shall have the right to
dispute [***] invoices, provided Track Group has paid all
undisputed amounts in full when due. Track Group shall submit all
disputes to [***] within forty-five (45) days of the invoice in
question. If Track Group does not submit its dispute before the end
of the forty-five (45) day period, then Track Group waives the
right to dispute the charges. Track Group will submit all disputes
via a written statement containing reasonably sufficient detail
together with supporting documentation. Both parties shall use good
faith efforts to resolve the dispute within forty-five (45) days
from the date the dispute was delivered to [***] from Track Group.
At the end of such forty-five (45) day period, or after [***] makes
a decision on the dispute, whichever comes first, either party may
file to immediately commence arbitration in accordance with Section
13.9.2 of this Agreement. Once [***] makes a decision on the
dispute, the disputed amount shall be due or credited on the next
invoice.


 


 




 

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH
CONFIDENTIAL TREATEMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL
WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO THE RULES APPLICABLE TO SUCH CONFIDENTIAL TREATMENT
REQUEST.






 



13.9.2 Arbitration. Except for
an action seeking a temporary restraining order or an injunction
relating to the purposes of this Agreement, or suit to compel
compliance with this dispute resolution process, the Parties agree
to use the following alternative dispute resolution procedures as
the sole remedy with respect to any controversy or claim arising
out of or relating to this Agreement or its breach. At the written
request of either Party, each Party will appoint a knowledgeable
representative to meet and negotiate in good faith to resolve any
dispute arising out of or relating to this Agreement. The
representatives shall have the discretion to determine the
location, format, frequency and duration of their negotiations, and
to utilize other alternative dispute resolution procedures such as
mediation to assist in the negotiations. All discussions and
correspondence among the representative shall be treated as
confidential information developed for the purposes of settlement,
exempt from discovery, and shall not be admissible in the
arbitration described below or in any lawsuit without the written
agreement of the Parties. If the negotiations do not resolve the
dispute within thirty (30) days of the initial written request, the
dispute shall be submitted to binding arbitration by a single
arbitrator experienced in the matters at issue and selected by the
American Arbitration Association (“AAA”). The Parties
acknowledge that this Agreement and any dispute shall be governed
by the Commercial Arbitration Rules of the AAA, such rules being
incorporated herein by reference. Any court with jurisdiction may
enter judgment upon the award rendered by the arbitrator. The
arbitration shall be held in Cook County, Illinois or such other
location as is mutually agreed upon by the Parties. The Parties
agree that the arbitration shall proceed ex-parte in the event that a party, after being duly
notified refuses to participate in the arbitration. The prevailing
party shall be entitled to all reasonable costs and
attorneys’ fees related to the Dispute resolution process
described herein including, but not limited to, the arbitration.
The parties agree that any such arbitration must be completed by
the arbitrator and parties within 120 days after appointment of the
arbitrator.


 



13.10. No rule of construction
requiring interpretation against the draftsman hereof shall apply
in the interpretation of this Agreement.


 



14. ENTIRE AGREEMENT


 



The representations made in this Agreement constitute the entire
agreement. No prior or contemporaneous negotiations,
understandings, or agreements shall be valid unless in writing and
signed by authorized representatives of each party.


 



15. COUNTERPARTS


 



This Agreement may be executed in any number of and by the
different parties hereto on separate counterparts, each of which
when so executed shall be deemed to be an original, and such
counterparts shall together constitute but one and the same
instrument.


 



16. RATIFICATION BY TRACK GROUPAUDIT COMMITTEE


 



The parties agree that the Track Group signature below is subject
to ratification by the Audit Committee of the Track Group Board of
Directors (“Ratification”). Notwithstanding the
foregoing, the parties further agree that the terms of this
Agreement shall govern the relationship of the parties and that
Track Group without regard to Ratification shall pay any fees
incurred for services provided by [***] under this Agreement. In
addition, in the event that the Audit Committee of the Track Group
Board of Directors fails to ratify this Agreement within 60
calendar days of the Effective Date, Track Group must abide by the
provisions of Section 11 with regard to termination for
convenience.


 



[Signatures on Following Page]


 


 



 

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IN WITNESS
WHEREOF, the parties have
(subject to ratification of the Track Group, Inc. Audit Committee
of its Board of Directors) executed this Agreement by their duly
authorized representatives, effective as of the latest date set
forth below.


 


 


	


TRACK GROUP, INC.

	


[***]


	

 



By: ________________________Date_________


 



Printed Name: ____________________________


 



Printed Title: _____________________________

	

 



By:_________________________Date________


 



Printed Name: ____________________________


 



Printed Title: _____________________________







RATIFIED
AND APPROVED


 


Track
Group, Inc.


 


 

By:        
_________________________________                                                                          
Date:_________________


Karen
Macleod, Director and Chairman


Track
Group Audit Committee


 


 




 

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH
CONFIDENTIAL TREATEMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL
WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO THE RULES APPLICABLE TO SUCH CONFIDENTIAL TREATMENT
REQUEST.






 


 



EXHIBIT A – SERVICES


 


[***]


 




 

A-1









 


 



[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH
CONFIDENTIAL TREATEMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL
WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO THE RULES APPLICABLE TO SUCH CONFIDENTIAL TREATMENT
REQUEST.






 


 


EXHIBIT
B – PRICING


[***]


 




 

B-1