Document:

Exhibit 10.1

EXECUTIVE
EMPLOYMENT 

		AGREEMENT	

 

This
EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of July 1, 2021, by and between Red Cat Holdings,
Inc., a Nevada corporation (“Company”) and Joseph Hernon, an individual (“Executive”). As used herein,
the “Effective Date” of this Agreement shall mean July 1, 2021.

 

W I T
N E S S E T H:

 

WHEREAS,
the Executive desires to be employed by the Company as Chief Executive Officer and the Company wishes to employ the Executive in such
capacity; and

 

NOW,
THEREFORE, in consideration of the foregoing and their respective covenants and agreements contained in this document the Company
and the Executive hereby agree as follows:

 

1.  
Employment and Duties. The Company agrees to employ, and the Executive agrees to serve as the Company’s Chief Financial
Officer. The duties and responsibilities of the Executive shall include the duties and responsibilities as the Company’s Board of
Directors (“Board”) may from time to time assign to the Executive and reasonably commensurate with those duties and
responsibilities normally associated with and appropriate for someone in the position of Chief Financial Officer. As used herein, “Board”
and “Compensation Committee” shall include the Board of Directors and Compensation Committee of the Company.

 

The
Executive shall devote all his business time and best efforts to the performance of his duties under this Agreement and shall be subject
to, and shall comply with the Company policies, practices and procedures and all codes of ethics or business conduct applicable to his
position, as in effect from time to time. Notwithstanding the foregoing, the Executive shall be entitled to (i) serve as a member of the
board of directors of a reasonable number of companies, subject to the advance approval of the Board, which approval shall not be unreasonably
withheld, conditioned or delayed; (ii) serve on civic, charitable, educational, religious, public interest or public service boards, subject
to the advance approval of the Board, which approval shall not be unreasonably withheld, and (iii) manage the Executive’s personal
and family investments, in each case, to the extent such activities do not materially interfere, as determined by the Board in good faith,
with the performance of the Executive’s duties and responsibilities hereunder.

 

2.  
Term. The term of this Agreement shall commence on the Effective Date and shall continue for a period of one (1) year following
the Effective Date and shall be automatically renewed for successive one (1) year periods thereafter unless either party provides the
other party with written notice of his or its intention not to renew this Agreement at least three (3) months prior to the expiration
of the initial term or any renewal term of this Agreement. “Employment Period” shall mean the initial one (1) year
term plus renewals, if any.

 

3.  
Place of Employment. The Executive’s services shall be performed at the Company’s offices or such other location(s)
as mutually agreed upon in writing between the Company and the Executive.

 

4.  
Base Salary. The Company agrees to pay the Executive a base salary (“Base Salary”) equal to $186,000
per annum. Executive’s Base Salary shall never be less than 75% of the Base Salary of the Chief Executive Officer. The Base Salary
shall be paid in periodic installments in accordance with the Company’s regular payroll practices. The Base Salary may only be increased,
but not decreased without the written consent of the Executive. At the option of Executive in any fiscal year of the Company in which:
A) at any time market cap is at least $500,000,000; and B) traded price per share is at least $6.00 per share stock price on a national
securities exchange for 60 consecutive days (the “Incentive Criteria”), Executive may elect to receive all or any portion
of Base Salary for a subsequent period in shares of Common Stock valued at the thirty-day VWAP for each pay period for which the election
is applicable.

 

5.  
Annual Bonus/Target Incentive Bonuses.

 

	(a)	Bonuses. The Executive shall be eligible to receive an annual bonus the (“Annual Bonus”) of up to one-hundred fifty (150%) percent of the Base Salary, to be paid in cash, as reasonably determined by the Compensation Committee and/or the Board of Directors of the Company (the “Compensation Committee”). Executive and the Compensation Committee will work to define a set of goals and objectives for the term of the Agreement as a basis for determining a bonus award(s). Such goals will be quantitative as well as qualitative in nature. The Annual Bonus shall be paid by the Company to the Executive promptly after determination that the relevant targets, if any, have been met, it being understood that the attainment of any financial targets associated with any bonus shall not be determined until following the completion of the Company’s annual audit and public announcement of such results and shall be paid promptly following the Company’s announcement of earnings, subject to cash availability. Notwithstanding the foregoing, the Executive shall be entitled to receive the full Annual Bonus upon achieving the Incentive Criteria during the prior fiscal year and thereupon Executive may elect to receive all or any portion of Annual Bonus for a prior period in shares of Common Stock valued at the thirty-day VWAP on the date set for payment of the Annual Bonus by the Board of Directors or the Compensation Committee for which the election is applicable.

                                                                                 

                                                                                If the Compensation Committee is unable to act or if there shall be no such Compensation Committee, then all references herein to the Compensation Committee (except in the proviso to this sentence) shall be deemed to be references to the Board. Upon termination from employment for other than cause, the Executive shall be entitled to receive a pro-rata portion of the Annual Bonus calculated based upon the last day of the fiscal quarter in which his employment is terminated, regardless of whether he is employed by the Company through the conclusion of the fiscal quarter or year, as the case may be, on which the Annual Bonus is based.

	(b)	Equity Awards. Executive shall receive an initial award (the “Initial
Award”) and be eligible for such grants of awards under the Company’s 2019 Equity Incentive Plan (or any successor or
replacement plan adopted by the Board and approved by the stockholders of the Company) (the “Plan”) as the Compensation
Committee or Board may from time to time determine (the “Share Awards”).
The Initial Award shall be as set forth on Exhibit A annexed hereto vesting as set forth (the “Executive Vesting Schedule”).
Share Awards shall be subject to the applicable Plan terms and conditions, provided, however, that Share Awards shall be subject to any
additional terms and conditions as are provided herein or in any award, Board resolution or certificate(s), which shall supersede any
conflicting provisions governing Share Awards provided under the Plan.

 

 

6.         
Severance Compensation.

 

(a)
Upon termination of employment for any reason, the Executive shall be entitled to: (A) all Base Salary earned through the date of termination
to be paid according to Section 4; (B) any Annual Bonuses, pro-rated, to be paid in accordance with Section 5(a) and
Section 5(b) above (unless termination is for Cause, as defined below) ; (C) all accrued but unused vacation time, and (d) reimbursement
of all reasonable expenses as set forth in Section 8.

 

(b)
Upon termination of employment by Company for any reason other than for cause (“Cause”) as defined in Section 11(c),
or upon termination of employment by Executive for good reason (“Good Reason”) as defined in Section 11(d)(1), Executive
shall be entitled to receipt of all vested and unvested shares contemplated in the Executive Award in accord with the any vesting schedule
as if no termination occurred.

 

(c)
In the event of a termination by the Company without Cause, by the Executive for Good Reason or by the Executive within one hundred eighty
days (180) days of the occurrence of a Change of Control (as defined below) and subject to the additional provisions of Section 11(d)(3),
then in addition to the severance compensation set forth in Section 6(a) and 6(b), Executive shall also be entitled to the following enhanced
separation benefits (“Enhanced Separation Benefits”): (i) the greater of Executive’s continued Base Salary through
the balance of the Employment Period, as renewed, or twenty four (24) months of Executive’s then Base Salary; (ii) continued participation
in Company welfare benefit plans (including health benefits) on the same terms as immediately prior to termination and to be paid in full
by the Company for the period of time set forth in this Section 6(c) (not to be less than twelve (12) months of continuation of benefits)
and (iii) immediate vesting of all stock options/equity awards.

 

(d) Upon
termination of Executive’s continued benefits (either pursuant to Section 6(a), 6(b) or 6(c) as the case may be), the
Executive may continue coverage with respect to the Company’s group health plans as permitted by the Consolidated Omnibus
Budget Reconciliation Act of 1985 (“COBRA”) for himself and each of his “Qualified Beneficiaries” as
defined by COBRA (“COBRA Coverage”). The Company shall reimburse the amount of any COBRA premium paid for COBRA
Coverage timely elected by and for the Executive and any Qualified Beneficiary of the Executive, and not otherwise reimbursed,
during the period that ends on the earliest of (x) the date the Executive or the Qualified Beneficiary, as the case may be, ceases
to be eligible for COBRA Coverage, (y) the last day of the consecutive eighteen (18) month period following the date of the
Executive’s termination of employment and (z) the date the Executive or the Qualified Beneficiary, as the case may be, is
covered by another group health plan. To reimburse any COBRA premium payment under this paragraph, the Company must receive
documentation of the COBRA premium payment within ninety (90) days of its payment.

 

7.         
Clawback Rights. The Annual Bonus, and any and all stock based compensation (such as options and equity awards) (collectively,
the “Clawback Benefits”) shall be subject to “Clawback Rights” as follows: during the period that
the Executive is employed by the Company and upon the termination of the Executive’s employment and for a period of three (3) years
thereafter, if there is a restatement of any financial results from which any metrics were determined to be achieved which were the basis
of the granting and calculation of such Clawback Benefits to the Executive, the Executive agrees to repay any amounts which were determined
by reference to any Company financial results which were later restated (as defined below), to the extent the Clawback Benefits amounts
paid exceed the Clawback Benefits amounts that would have been paid, based on the restatement of the Company’s financial information.
All Clawback Benefits amounts resulting from such restated financial results shall be retroactively adjusted by the Compensation Committee
to take into account the restated results, and any excess portion of the Clawback Benefits resulting from such restated results shall
be immediately surrendered to the Company and if not so surrendered within ninety (90) days of the revised calculation being provided
to the Executive by the Compensation Committee following a publicly announced restatement, the Company shall have the right to take any
and all action to effectuate such adjustment. The calculation of the revised Clawback Benefits amount shall be determined by the Compensation
Committee in good faith and in accordance with applicable law, rules and regulations. All determinations by the Compensation Committee
with respect to the Clawback Rights shall be final and binding on the Company and the Executive. The Clawback Rights shall terminate following
a Change of Control as defined in Section 11(f), subject to applicable law, rules and regulations. For purposes of this Section 7, a restatement
of financial results that requires a repayment of a portion of the Clawback Benefits amounts shall mean a restatement resulting from material
noncompliance of the Company with any financial reporting requirement under the federal securities laws and shall not include a restatement
of financial results resulting from subsequent changes in accounting pronouncements or requirements which were not in effect on the date
the financial statements were originally prepared (“Restatements”). The parties acknowledge it is their intention that
the foregoing Clawback Rights as relates to Restatements conform in all respects to the provisions of the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 (“DoddFrank Act”) and require recovery of all “incentive-based” compensation,
pursuant to the provisions of the Dodd-Frank Act and any and all rules and regulations promulgated thereunder from time to time in effect.
Accordingly, the terms and provisions of this Agreement shall be deemed automatically amended from time to time to assure compliance with
the Dodd-Frank Act and such rules and regulations as hereafter may be adopted and in effect.

 

8.         
Expenses. The Executive shall be entitled to prompt reimbursement by the Company for all reasonable ordinary and necessary
travel, entertainment, and other expenses incurred by the Executive while employed (in accordance with the policies and procedures established
by the Company for its senior executive officers) in the performance of his duties and responsibilities under this Agreement; provided,
that the Executive shall properly account for such expenses in accordance with Company policies and procedures. Reimbursement of such
expenses shall be paid out even after Executive’s termination for any reason, so long as the expenses were incurred during Executive’s
employment with the Company.

 

9.          Other
Benefits. During the term of this Agreement, the Executive shall be eligible to participate in incentive, stock purchase,
savings, retirement (401(k)), and welfare benefit plans, including, without limitation, health, medical, dental, vision, life
(including accidental death and dismemberment) and disability insurance plans (collectively, “Benefit Plans”), in
substantially the same manner and at substantially the same levels as the Company makes such opportunities available to the
Company’s managerial or salaried executive employees and/or its senior executive officers.

 

10.       Vacation.
During the term of this Agreement, the Executive shall be entitled to accrue, on a pro rata basis, thirty (30) paid vacation days
per year. Vacation shall be taken at such times as are mutually convenient to the Executive and the Company and no more than fifteen
(15) consecutive days shall be taken at any one time without Company approval in advance.

 

11.      
Termination of Employment.

 

(a)
Death. If the Executive dies during the Employment Period, this Agreement and the Executive’s employment with the Company
shall automatically terminate and the Company’s obligations to the Executive’s estate and to the Executive’s Qualified
Beneficiaries shall be those set forth in Section 6(a) and 6(d) regarding severance compensation.

 

(b)
Disability. In the event that, during the term of this Agreement the Executive shall be prevented from performing his essential
functions hereunder to the full extent required by the Company by reason of Disability (as defined below), this Agreement and the Executive’s
employment with the Company shall automatically terminate. The Company’s obligation to the Executive under such circumstances shall
be those set forth in Section 6(a) and 6(d) regarding severance compensation. For purposes of this Agreement, “Disability”
shall mean a physical or mental disability that prevents the performance by the Executive, with or without reasonable accommodation, of
his essential functions hereunder for an aggregate of ninety (90) days or longer during any twelve (12) consecutive months. The determination
of the Executive’s Disability shall be made by an independent physician who is reasonably acceptable to the Company and the Executive
(or his representative), be final and binding on the parties hereto and be made taking into account such competent medical evidence as
shall be presented to such independent physician by the Executive and/or the Company or by any physician or group of physicians or other
competent medical experts employed by the Executive and/or the Company to advise such independent physician.

 

(c)
Cause.

 

(1)
At any time during the Employment Period, the Company may terminate this Agreement and the Executive’s employment hereunder for
Cause. For purposes of this Agreement, “Cause” shall mean: (a) the willful and continued failure of the Executive to
perform substantially his material duties and responsibilities for the Company (other than any such failure resulting from the Executive’s
death or Disability) after a written demand by the Board for substantial performance is delivered to the Executive, which specifically
identifies the manner in which the Board believes that the Executive has not substantially performed his duties and responsibilities,
which willful and continued failure is not cured by the Executive within thirty (30) days following his receipt of such written demand;
(b) the conviction of, or plea of guilty or nolo contendere to, a felony, or (c) fraud, dishonesty or gross misconduct which is
materially and demonstratively injurious to the Company. Termination under clauses (b) or (c) of this Section 11(c)(1) shall not be subject
to cure.

 

(2)
For purposes of this Section 11(c), no act, or failure to act, on the part of the Executive shall be considered “willful”
unless done, or omitted to be done, by him in bad faith and without reasonable belief that his action or omission was in, or not opposed
to, the best interest of the Company. Between the time the Executive receives written demand regarding substantial performance, as set
forth in subparagraph (1) above, and prior to an actual termination for Cause, the Executive will be entitled to appear (with counsel)
before the full Board to present information regarding his views on the Cause event. Under no circumstances shall Executive be terminated
under Section 11(c)(1)(a) before the expiration of the 30-day cure period. After such hearing, termination for Cause must be approved
by a majority vote of the full Board (other than the Executive). For terminations pursuant to Sections 11(c)(1)(b) and (c), the Board
may suspend the Executive with full pay and benefits until a final determination by the full Board has been made.

 

(3) Upon
termination of this Agreement for Cause, the Company shall have no further obligations or liability to the Executive or his heirs,
administrators or executors with respect to compensation and benefits thereafter, except for the obligation to pay the Executive
pursuant to Section 6(a). The Company shall deduct from all payments made hereunder, all applicable taxes, including income tax,
FICA and FUTA, and other appropriate deductions.

 

(d)
For Good Reason or a Change of Control or Without Cause.

 

(1)
At any time during the term of this Agreement and subject to the conditions set forth in Section 11(d)(2) below, the Executive may terminate
this Agreement and the Executive’s employment with the Company for “Good Reason” or on account of a “Change of
Control” (as defined in Section 11(f)). For purposes of this Agreement, “Good Reason” shall mean the occurrence
of any of the following events without Executive’s consent: (A) the assignment to the Executive of duties that are significantly
different from, and/or that result in a substantial diminution of, the duties that he assumed on the Effective Date (including reporting
to anyone other than solely and directly to the Board); (B) the assignment to the Executive of a title that is different from and subordinate
to the Chief Executive Officer of the Company, provided, however, for the absence of doubt following a Change of Control, should the Executive
be required to serve in a diminished capacity in a division or unit of another entity (including the acquiring entity), such event shall
constitute Good Reason regardless of the title of the Executive in such acquiring company, division or unit; (C) material breach by the
Company of this Agreement, or (D) a required relocation of the Executive's place of employment (as defined in Section 3) by more than
a 50 mile radius.

 

(2)
The Executive shall not be entitled to terminate this Agreement for Good Reason unless and until he shall have delivered written notice
to the Company within ninety (90) days of the date upon which the facts giving rise to Good Reason occurred of his intention to terminate
this Agreement and his employment with the Company for Good Reason, which notice specifies in reasonable detail the circumstances claimed
to provide the basis for such termination for Good Reason, and the Company shall not have eliminated the circumstances constituting Good
Reason within thirty (30) days of its receipt from the Executive of such written notice. In the event the Executive elects to terminate
this Agreement for Good Reason in accordance with Section 11(d)(1), such election must be made within the eighty (180) days following
the initial existence of one or more of the conditions constituting Good Reason as provided in Section 11(d)(1). In the event the Executive
elects to terminate this Agreement for a Change in Control in accordance with Section 11(d)(1), such election must be made within one
hundred eighty (180) days of the occurrence of the Change of Control.

 

(3)
In the event that the Executive terminates this Agreement and his employment with the Company for Good Reason or within one hundred eighty
(180) days of the occurrence of a Change of Control, or the Company terminates this Agreement and the Executive’s employment with
the Company without Cause, the Company shall pay or provide to the Executive (or, following his death, to the Executive’s heirs,
administrators or executors) the Enhanced Separation Benefits set forth in Sections 6(c) and 6(d); provided, that the Executive executes
an agreement releasing Company and its affiliates from any liability associated with this Agreement (excepting any payment obligations)
and such release is irrevocable at the time the separation payment is first payable under this Section 11 and the Executive complies with
his other obligations under Sections 12 and 13 of this Agreement. Subject to the terms hereof, one-half (1/2) of the compensation of the
Enhanced Separation Benefits payment shall be paid within thirty (30) days of the Executive’s termination of employment (“Initial
Payment”), provided that the Executive has executed a release (excepting payment obligations) and that if the release execution
period begins in one taxable year and ends in another taxable year, the Initial Payment shall not be made until the beginning of the taxable
year immediately following termination. The balance of the compensation of the Enhanced Separation Benefits shall be paid in substantially
equal installments on the Company’s regular payroll dates beginning with the first payroll date coincident with or immediately following
the Initial Payment and ending on the payroll date coincident with or immediately following the twelve (12) month anniversary of the Initial
Payment. The Company shall deduct from all payments made hereunder, all applicable taxes, including income tax, FICA and FUTA, and other
appropriate deductions.

 

(4) The
Executive shall not be required to mitigate the amount of any payment provided for in this Section 11(d) by seeking other employment
or otherwise, nor shall the amount of any payment provided for in this Section 11(d) be reduced by any compensation earned by the
Executive as the result of employment by another employer or business or by profits earned by the Executive from any other source at
any time before and after the termination date. The Company’s obligation to make any payment pursuant to, and otherwise to
perform its obligations under, this Agreement shall not be affected by any offset, counterclaim or other right that the Company may
have against the Executive for any reason.

 

(e)
Without “Good Reason” by the Executive. At any time during the term of this Agreement, the Executive shall be entitled
to terminate this Agreement and the Executive’s employment with the Company without Good Reason and other than for a Change of Control
by providing prior written notice of at least thirty (30) days to the Company. Upon termination by the Executive of this Agreement or
the Executive’s employment with the Company without Good Reason and other than for a Change of Control, the Company shall have no
further obligations or liability to the Executive or his heirs, administrators or executors with respect to compensation and benefits
thereafter, except for the obligations set forth in Sections 6(a). The Company shall deduct from all payments made hereunder, all applicable
taxes, including income tax, FICA and FUTA, and other appropriate deductions.

 

(f) 
Change of Control. For purposes of this Agreement, “Change of Control” shall mean the occurrence of any
one or more of the following: (i) the accumulation (if over time, in any consecutive twelve (12) month period), whether directly, indirectly,
beneficially or of record, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended) of more than fifty (50%) percent or more of the shares of the outstanding Common Stock of the Company, whether
by merger, consolidation, sale or other transfer of shares of Common Stock (other than a merger or consolidation where the stockholders
of the Company prior to the merger or consolidation are the holders of a majority of the voting securities of the entity that survives
such merger or consolidation) for purposes of clarity the Company expects to sell a number of shares and/or convert outstanding senior
debt and/or preferred stock to either preferred or common stock not limited to the period of this contract to raise funds and stabilize
its balance sheet and any such sales shall not constitute a change of control for purposes of this section or Agreement, (ii) a sale of
all or substantially all of the assets of the Company or (iii) during any period of twelve (12) consecutive months, the individuals who,
at the beginning of such period, constitute the Company, and any new director whose election by the Board or nomination for election by
the Company’s or Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the twelve (12) month period or whose election or nomination for election was previously
so approved, cease for any reason to constitute at least a majority of the Board.

 

(g)
Any termination of the Executive’s employment by the Company or by the Executive (other than termination by reason of the Executive’s
death) shall be communicated by written Notice of Termination to the other party of this Agreement. For purposes of this Agreement, a
“Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination
of the Executive’s employment under the provision so indicated, provided, however, failure to provide timely notification shall
not affect the employment status of the Executive.

 

12.      
Confidential Information.

 

(a)
Disclosure of Confidential Information. The Executive recognizes, acknowledges and agrees that he has had and will continue to
have access to secret and confidential information regarding the Company and Company, its subsidiaries and their respective businesses
(“Confidential Information”), including but not limited to, its products, methods, formulas, software code, patents,
sources of supply, customer dealings, data, know-how, trade secrets and business plans, provided such information is not in or does not
hereafter become part of the public domain, or become known to others through no fault of the Executive. The Executive acknowledges that
such information is of great value to the Company and Company, is the sole property of the Company and Company, and has been and will
be acquired by him in confidence. In consideration of the obligations undertaken by the Company herein, the Executive will not, at any
time, during or after his employment hereunder, reveal, divulge or make known to any person, any information acquired by the Executive
during the course of his employment, which is treated as confidential by the Company, and not otherwise in the public domain. The provisions
of this Section 12 shall survive the termination of the Executive’s employment hereunder.

 

(b)
The Executive affirms that he does not possess and will not rely upon the protected trade secrets or confidential or proprietary information
of any prior employer(s) in providing services to the Company or its subsidiaries.

 

(c)
In the event that the Executive’s employment with the Company terminates for any reason, the Executive shall deliver forthwith to
the Company any and all originals and copies, including those in electronic or digital formats, of Confidential Information; provided,
however, the Executive shall be entitled to retain (i) papers and other materials of a personal nature, including, but not limited to,
photographs, correspondence, personal diaries, calendars and rolodexes, personal files and phone books, (ii) information showing his compensation
or relating to reimbursement of expenses, (iii) information that he reasonably believes may be needed for tax purposes and (iv) copies
of plans, programs and agreements relating to his employment, or termination thereof, with the Company.

 

13.      
Section 409A.

 

The
provisions of this Agreement are intended to comply with or are exempt from Section 409A of the Code (“Section
409A”) and the related Treasury Regulations and shall be construed in a manner consistent with the requirements for
avoiding taxes or penalties under Section 409A. The Company and the Executive agree to work together in good faith to consider
amendments to this Agreement and to take such reasonable actions necessary, appropriate or desirable to avoid imposition of any
additional tax under Section 409A or income recognition prior to actual payment to the Executive under this Agreement.

 

It
is intended that any expense reimbursement made under this Agreement shall be exempt from Section 409A. Notwithstanding the foregoing,
if any expense reimbursement made under this Agreement shall be determined to be “deferred compensation” subject to Section
409A (“Deferred Compensation”), then (a) the right to reimbursement or in-kind benefits is not subject to liquidation
or exchange for another benefit, (b) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable
year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year (provided
that this clause (b) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code
solely because such expenses are subject to a limit related to the period the arrangement is in effect) and (c) such payments shall be
made on or before the last day of the taxable year following the taxable year in which the expense was incurred.

 

With respect
to the time of payments of any amount under this Agreement that is Deferred Compensation, references in the Agreement to
“termination of employment” and substantially similar phrases, including a termination of employment due to the
Executive’s Disability, shall mean “Separation from Service” from the Company within the meaning of Section
409A (determined after applying the presumptions set forth in Treasury Regulation Section 1.409A1(h)(1)). Each installment payable
hereunder shall constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b), including Treasury Regulation
Section 1.409A2(b)(2)(iii). Each payment that is made within the terms of the “short-term deferral” rule set forth in
Treasury Regulation Section 1.409A-1(b)(4) is intended to meet the “short-term deferral” rule. Each other payment is
intended to be a payment upon an involuntary termination from service and payable pursuant to Treasury Regulation Section
1.409A-1(b)(9)(iii), et. seq., to the maximum extent permitted by that regulation, with any amount that is not exempt from Code
Section 409A being subject to Code Section 409A.

 

Notwithstanding
anything to the contrary in this Agreement, if the Executive is a “specified employee” within the meaning of Section 409A
at the time of the Executive’s termination, then only that portion of the severance and benefits payable to the Executive pursuant
to this Agreement, if any, and any other severance payments or separation benefits which may be considered Deferred Compensation (together,
the “Deferred Separation Benefits”), which (when considered together) do not exceed the Section 409A Limit (as defined
herein) may be made within the first six (6) months following the Executive’s termination of employment in accordance with the payment
schedule applicable to each payment or benefit. Any portion of the Deferred Separation Benefits in excess of the Section 409A Limit otherwise
due to the Executive on or within the six (6) month period following the Executive’s termination will accrue during such six (6)
month period and will become payable in one lump sum cash payment on the date six (6) months and one (1) day following the date of the
Executive’s termination of employment. All subsequent Deferred Separation Benefits, if any, will be payable in accordance with the
payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if the Executive dies following
termination but prior to the six (6) month anniversary of the Executive’s termination date, then any payments delayed in accordance
with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of the Executive’s death
and all other Deferred Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit.

 

For
purposes of this Agreement, “Section 409A Limit” shall mean a sum equal to (x) the amounts payable within the terms
of the “short-term deferral” rule under Treasury Regulation Section 1.409A-1(b)(4) plus (y) the amount payable as “separation
pay due to involuntary separation from service” under Treasury Regulation Section 1.409A-1(b)(9)(iii) equal to the lesser of two
(2) times: (i) the Executive’s annualized compensation from the Company based upon his annual rate of pay during the Executive’s
taxable year preceding his taxable year when his employment terminated, as determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1);
and (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year
in which the Executive’s employment is terminated.

 

14.
Miscellaneous.

 

(a) Neither
the Executive nor the Company may assign or delegate any of their rights or duties under this Agreement without the express written
consent of the other; provided, however, that the Company shall have the right to delegate its obligation of payment of all sums due
to the Executive hereunder, provided that such delegation shall not relieve the Company of any of its obligations hereunder.

 

(b)
During the term of this Agreement, the Company (i) shall indemnify and hold harmless the Executive and his heirs and representatives to
the maximum extent provided by the laws of the United States and by the Company’s bylaws and (ii) shall cover the Executive under
the Company’s directors’ and officers’ liability insurance on the same basis as it covers other senior executive officers
and directors of the Company.

 

(c)
This Agreement constitutes and embodies the full and complete understanding and agreement of the parties with respect to the Executive’s
employment by the Company, supersedes all prior understandings and agreements, whether oral or written, between the Executive and the
Company, and shall not be amended, modified or changed except by an instrument in writing executed by the party to be charged. The invalidity
or partial invalidity of one or more provisions of this Agreement shall not invalidate any other provision of this Agreement. No waiver
by either party of any provision or condition to be performed shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same time or any prior or subsequent time.

 

(d)
This Agreement shall inure to the benefit of, be binding upon and enforceable against, the parties hereto and their respective successors,
heirs, beneficiaries and permitted assigns.

 

(e) The
headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

(f) 
All notices, requests, demands and other communications required or permitted to be given hereunder shall be in writing and shall
be deemed to have been duly given when personally delivered, sent by registered or certified mail, return receipt requested, postage prepaid,
or by reputable national overnight delivery service (e.g., Federal Express) for overnight delivery to the party at the address set forth
in the preamble to this Agreement, or to such other address as either party may hereafter give the other party notice of in accordance
with the provisions hereof. Notices shall be deemed given on the sooner of the date actually received or the third business day after
deposited in the mail or one business day after deposited with an overnight delivery service for overnight delivery.

 

(g)
This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, and each of the parties
hereto irrevocably consents to the jurisdiction and venue of the federal and state courts located in the State of Delaware for any disputes
arising out of this Agreement, or the Executive’s employment with the Company. The prevailing party in any dispute arising out of
this Agreement shall be entitled to his or its reasonable attorney’s fees and costs.

 

(h)
This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one of the same instruments. The parties hereto have executed this Agreement as of the date set forth above.

 

(i) 
The Executive represents and warrants to the Company, that he has the full power and authority to enter into this Agreement and
to perform his obligations hereunder and that the execution and delivery of this Agreement and the performance of his obligations hereunder
will not conflict with any agreement to which the Executive is a party.

 

(j) 
The Company represents and warrants to the Executive that it has the full power and authority to enter into this Agreement and
to perform its obligations hereunder and that the execution and delivery of this Agreement and the performance of its obligations hereunder
will not conflict with any agreement to which the Company is a party.

 

[Signature
page follows immediately] 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	 	 

     

    

IN WITNESS
WHEREOF, the Executive and the Company have caused this Executive Employment Agreement to be executed as of the date first above written.

 

 

 

 

COMPANY:

 

RED CAT HOLDINGS,
INC. 

 

 

By: /s/ Joseph
Freedman          

Name: Joseph Freedman

Title: Director, Compensation
Committee

 

 

EXECUTIVE: 

 

/s/ Joseph Hernon                     

Joseph Hernon

Chief Financial Officer

 

 

 

 

    	 	 	 

     

    

EXHIBIT A

 

375,000 shares
of restricted common stock vesting as follows:

 

45,000 on 11/1/21

30,000 on 02/1/22

30,000 on 05/1/22

30,000 on 08/1/22

30,000 on 11/1/22

30,000 on 02/1/23

30,000 on 05/1/23

30,000 on 08/1/23

30,000 on 11/1/23

30,000 on 02/1/24

30,000 on 05/1/24

30,000
on 08/1/24

375,000 in
totalrekr_ex101

 

Exhibit 10.1

 

 

 

EMPLOYMENT
AGREEMENT

 

 

THIS EMPLOYMENT AGREEMENT (the
“Agreement”) is dated as of the 1st day of June, 2021,
by and between Rekor Systems, Inc. (the “Company”), a
Delaware corporation, and Michael Dunbar (the
“Executive”).

 

WITNESSETH
THAT:

 

The
Company desires to employ the Executive, and the Executive wishes
to accept such employment with the Company, upon the terms and
conditions set forth in this Agreement.

 

NOW THEREFORE, in consideration of the
mutual promises and agreements set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:

 

1. 

Employment and Effective
Date.

  

a)               The
Effective Date of this Agreement (the “Effective Date”)
is the date of execution and delivery by the Company and the
Executive.

 

b)               The
Executive’s title as of the Effective Date shall be Chief
Revenue Officer of the Company. The Executive shall report to the
Company’s President and Chief Executive Officer (the
“CEO”). The position is located at the headquarter
office in Columbia, Maryland. The position is considered
“exempt” and the Executive is not entitled to overtime
pay. The Executive hereby accepts such employment by the Company on
the terms and conditions hereinafter set forth.

 

c)               The
Parties agree that, notwithstanding anything to the contrary in
this Agreement, Executive will be a part-time employee from June 1,
2021 through July 11, 2021. During this period, this Agreement
shall be in effect, except that the Executive (i) will work a
minimum of 10 hours per week; (ii) will be compensated at a rate of
$7,500 per month; and (c) will not be eligible for the compensation
and benefits described in Sections 2 and 5 below.

 

d)                The
Executive’s full-time employment hereunder shall be effective
as of July 12, 2021 and shall continue until July 12, 2023, unless
terminated earlier pursuant to Section 8 of this Agreement;
provided that, on July 12, 2023 and each annual anniversary
thereafter (such date and each annual anniversary thereof, a
“Renewal Date”), the Agreement shall be deemed to be
automatically extended, upon the same terms and conditions, for
successive periods of one year, unless either party provides
written notice of its intention not to extend the term of the
Agreement at least ninety (90) days prior to the applicable Renewal
Date. The period during which the Executive is employed by the
Company hereunder on a full-time basis is hereinafter referred to
as the “Employment Term.”

 

2. 

Compensation.

  

a)               In
salary compensation for the Executive’s employment, the
Company shall pay the Executive a base salary at an annualized rate
of $375,000 (the “Base Salary”) in installments payable
in accordance with the Company’s customary payroll practices
and the law. The Executive shall be eligible for potential
discretionary increases to base salary on a regular
basis.

 

 

 

b)               The
executive shall be considered for periodic performance bonuses up
to 100% of base salary as determined by the Board in its sole
discretion. The Executive understands that nothing herein should be
interpreted as a guarantee of any discretionary performance bonus
or pro-rata bonus upon termination of employment.

 

c)               The
Executive shall be granted 50,000 shares of Restricted Stock Units
as described in Rekor System, Inc.’s Restricted Stock Unit
Agreement.

 

3.    
Duties. The
Executive shall have such executive-level duties as are assigned or
delegated to him by the CEO, consistent with his then-current
title. As of the Effective Date, the Executive’s title shall
be as indicated above. The Executive recognizes, however, that this
title can change, as can the executive duties associated therewith.
The Executive shall devote substantially all his working time and
attention to the business of the Company and shall cooperate fully
in the advancement of the best interests of the Company. Subject to
approval from the Company in writing in advance, the Executive,
during the term of this Agreement or any extensions or renewals
thereof agrees not to engage in any activities outside of the scope
of the Executive’s employment that would detract from, or
interfere with, the fulfillment of his responsibilities or duties
under this Agreement.

 

4.     
Expenses. Subject
to Section 8 and subject to compliance by the Executive with such
policies regarding expenses and expense reimbursement as may be
adopted from time to time by the Company, the Executive is
authorized to incur reasonable expenses in the performance of his
duties hereunder in furtherance of the business and affairs of the
Company, provided that the Company will reimburse the Executive for
all such reasonable expenses upon the presentation by the Executive
of an itemized account satisfactory to the Company in
substantiation of such expenses when claiming
reimbursement.

 

5.       
Employee Benefits;
Vacations. As of the first day of the month following the
first full month of employment, the Executive shall be eligible to
participate in such 401 (K), medical and other employee benefit
plans of the Company that may be in effect or modified from time to
time, to the extent eligible under the terms of those plans, on the
same basis as other similarly situated executive officers of the
Company. The Executive shall be entitled to paid vacation in
accordance with the policies of the Company in effect from time to
time, as determined by the Board.

 

6. 
Indemnification and
Liability Insurance.

 

a)               The
Executive shall be indemnified and held harmless consistent with
the provisions of the by-laws of the Company in effect at that time
but in no event shall the Executive receive diminished rights or
rights less than those rights provided by applicable
law.

 

b)               During
the Employment Term and for a period of two (2) years thereafter,
the Company shall purchase and maintain, at its own expense,
directors’ and officers’ liability insurance providing
coverage to the Executive on terms that are no less favorable than
the coverage provided to other directors and similarly situated
executives of the Company.

 

2

 

 

7.            Taxation
of Payments and Benefits. The Company shall make deductions,
withholdings and tax reports with respect to payments and benefits
under this Agreement to the extent that it reasonably and in good
faith believes that it is required to make such deductions,
withholdings and tax reports. Payments under this Agreement shall
be in amounts net of any such deductions or withholdings. Nothing
in this Agreement shall be construed to require the Company to make
any payments to compensate the Executive for any adverse tax effect
associated with any payments or benefits or for any deduction or
withholding from any payment or benefit.

 

8.            Termination.
Either the Executive or the Company may terminate the employment
relationship at any time, with or without Cause (as such term is
defined in Section 12) on advance notice as provided herein or with
immediate effect if the termination is for Cause. The Executive
agrees to give the Company at least fourteen (14) days prior
written notice if he decides to terminate his employment. Except in
the case of a termination for Cause, the Company agrees that it
will provide identical notice. Upon termination of the
Executive’s employment for any reason, the Executive will be
entitled to any earned but unpaid Base Salary, any bonus approved
prior to termination, reimbursement for unreimbursed expenses
properly incurred by the Executive prior the termination, his
vested stock grants and stock options. In addition, if terminated
for reasons other than Cause or if the Executive resigns for Good
Reason, the executive shall be entitled to such employee benefits,
if any, to which the Executive may be entitled under the
Company’s employee benefit plan(s) as of the termination.
Additionally:

 

a)               In
the event the Executive dies during the term of this Agreement,
Executive’s employment hereunder shall automatically
terminate as of the date of death.

 

b)               In
the event the Executive becomes totally disabled during the term of
this Agreement, this Agreement may be terminated by the Company as
of the date of total disability in its sole discretion. For
purposes of this Agreement, the Executive shall be deemed totally
disabled if the Executive becomes so physically or mentally
disabled as to be incapable, even with a reasonable accommodation
by the Company to the extent required by applicable law, of
performing the Executive’s duties for a period of ninety (90)
days in any twelve (12) month period. Any question as to the
existence of the Executive’s total disability as to which the
Executive and the Company cannot agree shall be determined in
writing by a qualified independent physician mutually acceptable to
the Executive or his representative(s) and the Company. Such
determination shall be final and conclusive for all purposes under
this Agreement.

 

c)               Subject
to compliance with Sections 8(d) and (e), in the event that the
Executive’s employment is terminated by the Company for
reasons other than death, Disability (as defined above) or Cause
(as defined in Section 12) or in the event the Executive resigns
his employment for Good Reason (as defined in Section 12), the
Executive will be provided a severance package equal to four (4)
months of the Base Salary for each full (1) year of employment, up
to a maximum of 12 months (the “Separation Payment”).
The Separation Payment shall be paid in twelve (12) equal monthly
installments and shall begin within fifteen (15) business days of
the effective date of the release noted in Section
8(g).

 

 

3

 

 

d)                In
the event that the Executive’s employment is terminated for
Cause or the Executive resigns without Good Reason, the Executive
will not be entitled to any Separation Payment or any other
severance remuneration.

 

e)                Upon
a Change in Control during the Executive’s employment, the
Company shall be entitled to terminate the Executive’s
employment within one hundred and twenty (120) days of the Change
in Control. In such event, the Company shall pay to the Executive,
within forty- five (45) days of the termination (or otherwise in
accordance with applicable law, if the law requires earlier or
later payment), an amount equal to two (2) times the
Executive’s Base Salary then in effect. For purposes of this
Agreement, a Change in Control shall mean (i) a merger,
consolidation or statutory share exchange in which the Company is a
constituent party and the Company issues capital shares pursuant to
such merger or consolidation, pursuant to which the equity holders
of the Company as constituted immediately prior to such transaction
will not own a majority, by voting power, of the capital shares of
(A) the surviving or resulting entity, or (B) if the surviving or
resulting entities a wholly-owned subsidiary of another entity
immediately following such merger or consolidation, the parent
corporation of such surviving or resulting entity; (ii) the sale,
exchange, lease, transfer, exclusive license or other disposition
of all or substantially all of the assets of the Company and its
subsidiaries, taken as a whole, whether occurring as part of a
single transaction or series of related transactions, or the
disposition (and whether by merger or otherwise) of one or more of
the subsidiaries if substantially all of the assets of the Company
and its Subsidiaries, taken as a whole, are held by such subsidiary
or subsidiaries, except where such sale, exchange, lease, transfer,
exclusive license or other disposition is to a wholly-owned
subsidiary of such person; or (iii) a transaction or series of
transactions pursuant to which any person(s) acting together
become(s) the “beneficial owner”(as defined in federal
securities law), directly or indirectly, of more than fifty percent
(50%) of the Company’s equity securities.

 

f)                Notwithstanding
any termination of the Executive’s employment for any reason,
the Executive will continue to be bound by the provisions of the
Proprietary Rights Agreement (as defined below).

 

g)               All
payments and benefits provided pursuant to Section 8(c) shall be
conditioned upon the Executive’s execution and non-revocation
of a general release of liabilities favoring the Company which is
prepared and provided by the Company, substantially in the form of
Exhibit A to this Agreement. The Executive’s refusal to
execute such general release shall constitute a waiver by the
Executive of any and all benefits referenced in Section 8(c). The
Company will not be obligated to commence or continue any such
payments to the Executive under Section 8(c) in the event the
Executive breaches the terms of this Agreement or the Proprietary
Rights Agreement and fails to cure such breach within thirty (30)
days of written notice thereof detailing such breach, if such
breach is deemed curable by the Company in its reasonable
discretion.

 

h)               The
Company shall have the right to offset against any Separation
Payment (i) any undisputed amount owed by the Executive to the
Company, provided that the Company possesses, or obtains from the
Executive, written confirmation of such undisputed amount,
and (ii) the amount of
any claims it has against the Executive by reason of any breach of
this Agreement.

 

 

4

 

 

i)   
       Immediately upon termination for any
reason, the Executive will return any documents, records, data,
apparatus, equipment and other physical property that have been
furnished to the Executive by the Company or produced by the
Executive in connection with Executive’s employment, which
will remain the sole property of the Company.

 

9.            Confidentiality,
Non–Solicitation and Invention Assignment Agreement.
The Company considers the protection of its confidential
information and proprietary materials to be very important.
Therefore, as a condition of the Executive’s employment, the
Executive has been required to execute a confidentiality,
non-solicitation and invention assignment agreement in the form
attached hereto as Attachment A (the “Proprietary Rights
Agreement”) on the date hereof.

 

10.            Documents,
Records, etc. Subject to the terms and provisions of the
Proprietary Rights Agreement: (a) all documents, records, data,
apparatus, equipment and other physical property, whether or not
pertaining to Confidential Information (as defined in the
Proprietary Rights Agreement), which are furnished to the Executive
by the Company or are produced by the Executive in connection with
the Executive’s employment will be and remain the sole
property of the Company; (b) the Executive will return to the
Company all such materials and property as and when requested by
the Company; and (c) the Executive will return all such materials
and property within ten (10) days upon termination of the
Executive’s employment for any reason.

 

11.            No
Conflict. Each party hereby represents and warrants to the
other that (a) this Agreement constitutes that party’s legal
and binding obligation, enforceable against it or him in accordance
with its terms, (b) it or his execution and performance of this
Agreement does not and will not breach any other agreement,
arrangements, understanding, obligation of confidentiality or
employment relationship to which it or he is a party or by which it
he is bound, and (c) while the Executive is employed by the
Company, it or he will not enter into any agreement, either written
or oral, in conflict with this Agreement or its or his obligations
hereunder.

 

12. 
Definitions.

 

a)               The
term “Cause” shall mean (i)
discovery by the Company that any of the material information
provided to the Company concerning the Executive’s
qualifications, employment history and experience, certifications
or licenses was untrue or that the Executive concealed a physical
or mental condition that could materially impair the
Executive’s ability to perform his responsibilities properly
without reasonable accommodation as required by applicable law, if
any, (ii) the
Executive’s intentional, willful or knowing failure or
refusal to follow, support or enforce any legal or regulatory
requirement applicable to the Company or the Company’s lawful
policies, as adopted by the Board from time to time, or perform the
Executive’s duties (other than as a result of physical or
mental illness, accident or injury); (iii) the Executive’s
intentional, willful or knowing failure or unreasonable refusal to
perform the Executive’s duties (other than as a result of
physical or mental illness, accident or injury) provided the
Executive is given written notice describing such failure and fails
to cure the same within fifteen (15) days after receipt of such
notice; (iv) dishonesty, willful or gross misconduct, gross
ineptitude, or willful violation of any law, rule, or regulation
(other than minor traffic violations or similar offenses) or other
illegal conduct by the Executive in connection with the
Executive’s employment with the Company or breach of
fiduciary duty that involves personal profit; (v) the
Executive’s conviction of, or plea of
guilty or nolo contendere to, a charge of commission of a felony
(exclusive of any felony relating to negligent operation of a motor
vehicle) or a crime of moral turpitude; (vi) competition with the
Company or unauthorized use of any trade secret or other
confidential information; and (vii) a material breach by the
Executive of this Agreement, the Proprietary Rights Agreement or
any other written agreement between the Executive and the Company
or any of its affiliates; provided, however, that the
Company shall be required to give the Executive fifteen (15)
calendar days prior written notice of its intention to terminate
the Executive for Cause and to provide the specific grounds thereof
in the event the Company invokes clause (ii) of this Section or a
finding of “gross ineptitude” as set forth in clause
(iv) of this Section, and the Executive shall have the opportunity
during such fifteen (15) day period to meet with a Company
representative designated by the Board and cure such event if such
event is capable of being cured; provided, further, that in the
event that the Executive terminates his employment with the Company
during such fifteen (15) day period for any reason, such
termination shall be considered a termination for Cause. For
purposes of this Section, (x) no act or failure to act on the part
of the Executive shall be considered “willful” unless
it is intentionally done, or intentionally omitted to be done, by
the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of
the Company; and (y) any willful or grossly negligent conduct of
the Executive that results in the failure of the Company to comply
with a significant financial statutory or regulatory requirement
shall be considered grounds for termination for Cause.

 

 

5

 

 

b)                The
term “Good
Reason” shall mean (i) any material reduction of the
Executive’s Base Salary, unless similar reductions are
imposed on all similarly situated executive officers of the
Company; (ii) any material breach by the Company of its obligations
under this Agreement including, but not limited to, its obligation
to assign Executive duties consistent with Section 3 of this
Agreement; (iii) a change without the Executive’s consent in
the principal location of the Company’s office to an office
that is more than sixty-five (65) driving miles by the shortest
reasonable driving route from the previous location (if such move
materially increases the Executive’s commute); and (iv) the
Company’s failure to obtain an agreement from any successor
to the Company to assume and agree to perform this Agreement in
generally the same manner and to the same extent that the Company
would be required to perform if no succession had taken place,
except where such assumption occurs by operation of law;
provided, however,
that in any case the Executive seeks to invoke “Good
Reason” under this Agreement, the Executive (x) must provide
the Company with written notice of the Executive’s intention
to terminate the Executive’s employment and the specific
grounds thereof within fifteen (15) days after the
Executive’s discovery of the event that the Executive
believes constitutes Good Reason; (y) must give the
Company an opportunity to cure for fifteen (15) days following
receipt of such notice from the Executive, if the event is capable
of being cured, or, if not capable of being cured, to have the
Company’s representatives meet with the Executive and the
Executive’s counsel to be heard regarding whether Good Reason
exists; and (z) must terminate employment within fifteen (15) days
after the end of the cure period if the Good Reason condition is
not cured.

 

c)               The
term “person” shall mean any
individual, corporation, firm, association, partnership, other
legal entity or other form of business organization.

 

         
13.  Section 409A of Internal Revenue Code.

a)                Anything
in this Agreement to the contrary notwithstanding, if at the time
of the Executive’s separation from service within the meaning
of Section 409A of the Internal Revenue Code (“Code”),
the Company determines that the Executive is a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of
the Code, then to the extent any payment or benefit that the
Executive becomes entitled to under this Agreement on account of
the Executive’s separation from service would be considered
deferred compensation subject to the 20 percent additional tax
imposed pursuant to Section 409A(a) of the Code as a result of the
application of Section 409A(a)(2)(B)(i) of the Code, such payment
shall not be payable and such benefit shall not be provided until
the date that is the earlier of (A) six months and one day after
the Executive’s separation from service, or (B) the
Executive’s death. If any such delayed cash payment is
otherwise payable on an installment basis, the first payment shall
include a catch-up payment covering amounts that would otherwise
have been paid during the six-month period but for the application
of this provision, and the balance of the installments shall be
payable in accordance with their original schedule.

 

b)                The
parties intend that this Agreement will be administered in
accordance with Section 409A of the Code. To the extent that any
provision of this Agreement is ambiguous as to its compliance with
Section 409A of the Code, the provision shall be read in such a
manner so that all payments hereunder comply with Section 409A of
the Code. The parties agree that this Agreement may be amended, as
reasonably requested by either party, and as may be necessary to
fully comply with Section 409A of the Code and all related rules
and regulations in order to preserve the payments and benefits
provided hereunder without additional cost to either
party.

  

c)               The
determination of whether and when a separation from service has
occurred shall be made by the Company in accordance with the
presumptions set forth in Treasury Regulation Section
1.409A-1(h).

 

d)               The
Company makes no representation or warranty and shall have no
liability to the Executive or any other person if any provisions of
this Agreement are determined to constitute deferred compensation
subject to Section 409A of the Code but do not satisfy an exemption
from, or the conditions of, such Section.

 

14.            Successors
and Assigns; Entire Agreement; No Assignment. This Agreement
shall be binding upon, and shall inure to the benefit of the
parties and their respective successors, heirs, distributes and
personal representatives including, with respect to the Company,
any successor of Company through merger, acquisition, corporate
reorganization, or any other business combination. This Agreement
and the Proprietary Rights Agreement contain the entire agreement
between the parties with respect to the subject matter hereof and
supersede other prior and/or contemporaneous arrangements or
understandings with respect thereto. The Executive may not assign
this Agreement without the prior written consent of the Company.
The Company may assign this Agreement, without the consent of the
Executive, to any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or
substantially all of the business or assets of the part of the
Company in which the Executive works. In the event of such an
assignment, the term “Company” as used herein shall be
deemed to refer to such assignee or successor.

 

6

 

 

15.            Notices.
All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall
be in writing and shall be deemed to have been given when
hand-delivered, mailed by registered or certified mail (three days
after deposited), or sent by a nationally recognized courier
service, to the following address (provided that notice of change
of address shall be deemed given only when received):

 

	

If to
the Company: 

	
Rekor Systems,
Inc. 

	
	

7172
Gateway Driv

	
	

Columbia,
Maryland 21046

Attn:
General Counsel

	
 

	
 

	

If to
Executive:

	
Michael
Dunbar 

 

or to
such other names and addresses as the Company or the Executive, as
the case may be, shall designate by notice to each other person
entitled to receive notices in the manner specified in this Section
15. A copy of any such notice or communication under this Section
15 shall be transmitted via electronic mail to the party’s
corresponding email address on the same day as the notice’s
or communication’s hand-delivery, mailing, or transmission by
courier service.

 

16.            Changes;
No Waiver; Remedies Cumulative. The terms and provisions of
this Agreement may not be modified or amended, or any of the
provisions hereof waived, temporarily or permanently, without the
prior written consent of each of the parties hereto. Either
party’s waiver or failure to enforce the terms of this
Agreement or any similar agreement in one instance shall not
constitute a waiver of any rights hereunder with respect to other
violations of this or any other agreement. No remedy conferred upon
the Company or the Executive by this Agreement is intended to be
exclusive of any other remedy, and each and every such remedy shall
be cumulative and shall be in addition to any other remedy given
hereunder or now or hereafter existing at law or in
equity.

17.            Construction.
Neither this Agreement nor any uncertainty or ambiguity in this
Agreement shall be construed against any party hereto, whether
under any rule of construction or otherwise, because the parties
acknowledge that each party has cooperated in the drafting,
negotiation and preparation of this Agreement.

 

18.            Governing
Law. This Agreement and (unless otherwise provided) all
amendments hereof and waivers and consents hereunder shall be
governed by the law of the State of Maryland, without regard to
conflicts of law principles.

 

19.            Severability.
The Executive and the Company agree that should any provision of
this Agreement or the Proprietary Rights Agreement be declared
illegal, invalid or unenforceable by a Court of competent
jurisdiction, the validity of the remaining parts, terms or
provisions shall not be affected thereby, and said illegal or
invalid part, term or provision shall be deemed not to be a part of
this Agreement.

 

7

 

 

20.          Headings;
Counterparts. All section headings are for convenience only.
This Agreement may be executed in several counterparts, each of
which is an original, and may be transmitted electronically, with
such electronic copy serving as an original.

 

21.          Entire
Agreement. This Agreement and the Proprietary Rights
Agreement contain the entire agreement between the parties with
respect to the subject matter hereof and supersede other prior and
contemporaneous arrangements, agreements, promises, warranties and
understandings with respect thereto. No statement, representation,
warranty, covenant or agreement of any kind not expressly set forth
in this Agreement or the Proprietary Rights Agreement will affect,
or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.

 

IN WITNESS WHEREOF, the parties have
executed this Employment Agreement as of the date first above
written.

 

 

 

REKOR
SYSTEMS, INC.

 

/s/ Robert Berman

Name:
Robert Berman

Title:
Chief Executive Officer

 

 

 

 

 

 

 

 

/s/ Michael Dunbar

 

 

 

8

	

 

 

 

EXHIBIT
A

[FORM
OF RELEASE AGREEMENT]

 

THIS AGREEMENT AND RELEASE (this
“Agreement”), dated as of (“Effective
Date”), is entered into by and between Michael Dubar
(“Executive”) and Rekor Systems, Inc. (the
“Company”) (jointly, the
“Parties”).

 

WHEREAS, Executive is currently employed
by the Company; and

 

WHEREAS, Executive’s employment
with the Company will terminate effective as of [date].

 

NOW, THEREFORE, in consideration of the
mutual promises and covenants contained

in this
Agreement and other good and valuable consideration, the
sufficiency of which the Parties hereby acknowledge, Executive and
the Company hereby agree as follows:

 

1.            Executive
shall be provided severance pay and other benefits (the
“Severance Benefits”) in accordance with the terms and
conditions of the employment agreement by and between Executive and
the Company (the “Employment Agreement”); provided, that no such
Severance Benefits shall be paid or provided if Executive revokes
this Agreement pursuant to Section 4 below.

 

2.            Executive,
for and on behalf of himself and his heirs, successors, agents,
representatives, executors and assigns, hereby waives and releases
any common law, statutory or other complaints, claims, demands,
expenses, damages, liabilities, or causes of action (each, a
“Claim”) arising out of or relating to
Executive’s employment or termination of employment with the
Company, both known and unknown, in law or in equity, which
Executive may now have or ever had against the Company or any
equity holder, agent, representative, administrator, trustee,
attorney, insurer, fiduciary, employee, director or officer of any
member of the Company, including their successors and assigns
(collectively, the “Company Releasees”). Released
Claims include, without limitation, any claim for any severance
benefit which might have been due Executive under any agreement
executed by and between the Company and Executive, and any
complaint, charge or cause of action arising out of his employment
with the Company under any federal or state Law or regulation,
including, but not limited to, the Age Discrimination in Employment
Act of 1967 (“ADEA,” a law which prohibits
discrimination on the basis of age against individuals who are age
40 or older), the National Labor Relations Act, the Civil Rights
Act of 1991, the Americans with Disabilities Act of 1990, Title VII
of the Civil Rights Act of 1964, the Employee Retirement Income
Security Act of 1974, the Family Medical Leave Act, the Equal Pay
Act, the Securities Act of 1933, the Securities Exchange Act of
1934, the Rehabilitation Act of 1973, the Worker Adjustment and
Retraining Notification Act of 1988, all state anti- discrimination
and wage payment laws, all as amended, as well an any other
applicable federal, state and local statutes, ordinances and
regulations. By signing this Agreement, Executive acknowledges that
Executive intends to waive and release any rights known or unknown
Executive may have against the Company Releasees under these and
any other laws; provided, that Executive does
not waive or release (i) Claims with respect to the right to
enforce this Agreement or those provisions of the Employment
Agreement that expressly survive the termination of
Executive’s employment with the Company; (ii) Claims with
respect to any vested right
Executive may have under any employee benefit or compensation plan
of the Company; (iii) any rights to coverage under any applicable
insurance policy; or (iv) Claims that cannot be validly waived as a
matter of law.

 

 

1

	

 

 

 

THIS
MEANS THAT, BY SIGNING THIS RELEASE, EXECUTIVE WILL HAVE WAIVED ANY
RIGHT EXECUTIVE MAY HAVE HAD TO BRING A LAWSUIT OR MAKE ANY CLAIM
AGAINST THE COMPANY RELEASEES BASED ON ANY ACTS OR OMISSIONS OF THE
COMPANY RELEASEES UP TO THE DATE OF THE SIGNING OF THIS RELEASE, TO
THE EXTENT PROVIDED FOR ABOVE. NOTWITHSTANDING THE ABOVE, NOTHING
IN THIS AGREEMENT SHALL PREVENT EXECUTIVE FROM (I) INITIATING OR
CAUSING TO BE INITIATED ON HIS BEHALF ANY PROCEEDING AGAINST THE
COMPANY BEFORE ANY LOCAL, STATE OR FEDERAL AGENCY, COURT OR OTHER
BODY CHALLENGING THE VALIDITY OF THE WAIVER OF HIS CLAIMS UNDER
ADEA CONTAINED IN THIS AGREEMENT (BUT NO OTHER PORTION OF SUCH
WAIVER); OR (II) INITIATING OR PARTICIPATING IN (BUT NOT BENEFITING
FROM) AN INVESTIGATION OR PROCEEDING CONDUCTED BY A GOVERNMENTAL
AGENCY CHARGED WITH ENFORCING LAWS UNDER THEIR JURISDICTION, SUCH
AS THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION.

 

3.            Executive
acknowledges that Executive has been given twenty-one (21) days
from the date of receipt of this Agreement to consider all of the
provisions of this Agreement and, to the extent he has not used the
entire 21-day period prior to executing this Agreement, Executive
does hereby knowingly and voluntarily waive the remainder of said
21-day period. Executive further acknowledges that he has read this
agreement carefully, has been advised by the Company to consult an
attorney, and fully understands that by signing below he is giving
up certain rights which he may have to sue or assert a claim
against any of the Company Releasees, as described herein and the
other provisions hereof. Executive acknowledges that he has not
been forced or pressured in any manner whatsoever to sign this
agreement, and Executive agrees to all of its terms
voluntarily.

 

4.           Executive
shall have seven (7) days from the date of Executive’s
execution of this Agreement to revoke the release, including with
respect to all claims referred to herein (including, without
limitation, any and all claims arising under ADEA). If Executive
revokes the Agreement, Executive will be deemed not to have
accepted the terms of this Agreement.

 

5.           Each
party and its counsel have reviewed this Release and has been
provided the opportunity to review this Release and accordingly,
the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed
in the interpretation of this Release. Instead, the language of all
parts of this Release shall be construed as a whole, and according
to their fair meaning, and not strictly for or against either
party.

 

6.           This
Agreement will be deemed to be made and entered into in the State
of Maryland, and be governed by, and construed and enforced in
accordance with, the laws of the State of Maryland, without regard
to its principles of conflicts of laws.

 

 

2

	

 

 

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.

 

 

REKOR
SYSTEMS, INC.

 

 

 

By: 
                        
                 
     

Name                      
                 
     

Title: 
                     
                 
     

 

 Michael
Dunbar

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