INTEGRATED ALARM SERVICES GROUP, INC. EMPLOYMENT AGREEMENT
INTEGRATED
ALARM SERVICES GROUP, INC.
EMPLOYMENT
AGREEMENT
(hereinafter referred to as the “Agreement”) made as of the 1st
day of
March, 2003 and amended and restated as of the 22nd
day of
November, 2006, by and between INTEGRATED
ALARM SERVICES GROUP, INC.,
a
Delaware corporation, having an office at One Capital Center, 00 Xxxx Xxxxxx,
Xxxxxx, Xxx Xxxx 00000 (hereinafter referred to as “Employer”) and Xxxxxxx
X. Xxxxxxxxx,
an
individual residing at 00 Xxx Xxx Xxxx Xxxx, Xxxxxxxxxx, Xxx Xxxx 00000
(hereinafter referred to as “Employee”);
W
I T N E S S E T H:
WHEREAS,
Employer desires to employ Employee as the Chief Financial Officer of Employer;
and
WHEREAS,
Employee is willing to be employed as the Chief Financial Officer of Employer
in
the manner provided for herein, and to perform the duties of the Chief Financial
Officer of Employer upon the terms and conditions herein set forth;
NOW,
THEREFORE,
in
consideration of the promises and mutual covenants herein set forth it is agreed
as follows:
1. Employment
of Chief Financial Officer of Employer.
Employer hereby employs Employee as Chief Financial Officer.
2. Term.
a. Except
as
otherwise provided herein, Employer shall employ Employee for a period of
thirty-six (36) months commencing on March 1, 2003 (the "Term"). The Term of
this Agreement shall be automatically extended for additional one (1) year
periods, unless either party notifies the other in writing at least ninety
(90)
days prior to the expiration of the then existing Term of its intention not
to
extend the Term. Notwithstanding the forgoing sentence, the period of the
automatic one (1) year extension that began on March 1, 2006 and that would
otherwise end on March 1, 2007 shall be extended for an additional period ending
on November 1, 2008. Thereafter, the Term shall be automatically extended for
additional one (1) year periods, unless either party notifies the other as
provided in this Section 2. During the Term, Employee shall devote substantially
all of his business time and efforts to Employer and its subsidiaries and
affiliates.
3. Duties. The
Employee shall perform those functions generally performed by persons of such
title and position, shall attend all meetings of the stockholders and the Board,
shall perform any and all related duties and shall have any and all powers
as
may be prescribed by resolution of the Board, and shall be available to confer
and consult with and advise the officers and directors of Employer at such
times
that may be required by Employer. Employee shall report directly to the
Employer’s Chief Executive Officer.
4. Compensation.
a.
(i)
Employee shall be paid a minimum of $160,000 per year during the Term. Employee
shall be paid periodically in accordance with the policies of the Employer
during the Term, but not less than monthly.
(ii) Employee
is eligible for an annual bonus, if any, which will be determined and paid
in
accordance with policies set from time to time by the Board.
b. Employer
shall include Employee in its health insurance program available to Employer’s
executive officers and shall pay 100% of the premiums for such
program.
c. Employee
shall have the right to participate in any other employee benefit plans
established by Employer.
d. (i)
In the
event of a “Change of Control” whereby:
(A) A
person
(other than a person who is an officer or a director of Employer on the
effective date hereof), including a “group” as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, becomes, or obtains the right to become,
the beneficial owner of Employer securities having 51% or more of the combined
voting power of then outstanding securities of the Employer that may be cast
for
the election of directors of the Employer;
(B) at
any
time, a majority of the Board-nominated slate of candidates for the Board is
not
elected;
(C) Employer
consummates a merger in which it is not the surviving entity;
(D) substantially
all Employer’s assets are sold; or
(E) Employer’s
stockholders approve the dissolution or liquidation of Employer;
then
(ii)
(A)
All
stock options and warrants, including any restricted shares, (“Rights”) granted
by Employer to Employee under any plan or otherwise prior to the effective
date
of the Change of Control, shall become vested, accelerate and become immediately
exercisable, and
(B) if
at any
time within two years of the said Change of Control, Employee is not retained
by
Employer or the surviving entity, as applicable, under terms and conditions
substantially similar to those herein, or if Employee’s duties require Employee
to move to a location not acceptable to Employee, then in addition, Employee
shall be eligible to receive a one time cash bonus, equal on an after-tax basis
to two times his average compensation for the three previous fiscal years.
Such
compensation shall include salary, bonus, and any other compensation pursuant
hereto. Such bonus shall be paid within thirty (30) days of the change of
Employee’s employment conditions. Employer shall have no further obligation to
compensate Employee under this Agreement or any other severance or salary
continuation arrangement of Employer.
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5. Expenses.
Employee shall be reimbursed for all of his actual out-of-pocket expenses
incurred in the performance of his duties hereunder, provided such expenses
are
acceptable to Employer, which approval shall not be unreasonably withheld,
for
business related travel and entertainment expenses, and that Employee shall
submit to Employer reasonably detailed receipts with respect
thereto.
6. Paid
Time Off.
Employee shall be entitled to receive 22 vacation days and four sick/personal
days (which shall be referred to together as "paid time off"), commencing in
the
first year of this Agreement, after each year of employment upon dates agreed
upon by Employer. The extent to which unused paid time off from one year shall
be carried forward to any later year shall be governed by Employer’s paid time
off policy in effect from time to time. Upon separation of employment, for
any
reason, paid time off accrued and not used shall be paid in accordance with
Employer’s paid time off policy then in effect and the determination of the
amount of paid time off accrued and not used shall be made by the Employer
in
its sole discretion pursuant to such policy.
7. Secrecy.
At no
time shall Employee disclose to anyone any confidential or secret information
(not already constituting information available to the public) concerning the
internal affairs, business operations, and trade secrets of
Employer.
8. Covenant
Not to Compete.
(a) Subject
to, and limited by, Section 9(b)(iii), Employee will not, at any time, during
the term of this Agreement, and for two (2) years thereafter, either directly
or
indirectly, engage in, with or for any enterprise, institution, whether or
not
for profit, business, or company, competitive with the business (as identified
herein) of Employer as such business may be conducted on the date thereof,
as a
creditor, guarantor, or financial backer, stockholder, director, officer,
consultant, advisor, employee, member, or otherwise of or through any
corporation, partnership, association, sole proprietorship or other entity;
provided, that an investment by Employee, his spouse or his children is
permitted if such investment is not more than four percent (4%) of the total
debt or equity capital of any such competitive enterprise or business and
further provided that said competitive enterprise or business is a publicly
held
entity whose stock is listed and traded on a national stock exchange, the NASDAQ
Stock Market, or the over-the-counter bulletin board or any successor thereto.
As used in this Agreement, the business of Employer shall be deemed to include
wholesale monitoring and related support services, and financing solutions
and
products, within the security alarm industry.
(b) For
a
period two years from the date of termination of this agreement, Employee shall
not contact for the purpose of solicitation, or solicit any of the Employer’s
dealers, customers, employees or suppliers.
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9. Termination.
a. Termination
by Employer
(i) Employer
may terminate Employee’s employment upon written notice for Cause. For purposes
hereof, “Cause” shall mean (A) Employee’s willful misconduct which actually
results in a material adverse effect on the business and affairs of Employer,
(B) the Employee’s willful disregard of lawful instructions of Employer’s Board
of Directors consistent with Employee’s position relating to the business of
Employer or willful neglect of duties or failure to act, which, actually results
in a material adverse effect on the business and affairs of Employer, (C)
engaging by the Employee in conduct that constitutes activity in competition
with Employer; (D) the conviction of Employee for the commission of a felony;
and/or (E) the habitual abuse of alcohol or controlled substances.
Notwithstanding anything to the contrary in this Section 9(a)(i), Employer
may
not terminate Employee’s employment under this Agreement for Cause unless
Employee shall have first received notice from the Board advising Employee
of
the specific acts or omissions alleged to constitute Cause, and such acts or
omissions continue after Employee shall have had a reasonable opportunity (at
least 30 days from the date Employee receives the notice from the Board), and
such greater time as may be reasonable required to cure if Employee is
diligently pursuing the cure to completion, to correct the acts or omissions
so
complained of. In no event shall alleged incompetence of Employee in the
performance of Employee’s duties be deemed grounds for termination for Cause.
Further, termination shall in no way be based on any subjective standard of
job
satisfaction or performance.
(ii) This
Agreement automatically shall terminate upon the death of Employee, except
that
Employee’s estate shall be entitled to receive any amount accrued under Section
4(a) and Section 6.
b. Termination
by Employee
(i) Employee
shall have the right to terminate his employment under this Agreement upon
thirty (30) days’ notice to Employer given within ninety (90) days following the
occurrence of any of the following events (A) through (F) or within six months
following the occurrence of event (G):
(A) Employee
is not elected or retained as the Chief Financial Officer;
(B) Employer
acts to materially reduce Employee’s duties and responsibilities hereunder.
Employee’s duties and responsibilities shall not be deemed materially reduced
for purposes hereof solely by virtue of the fact that Employer is (or
substantially all of its assets are) sold to, or is combined with, another
entity, provided that Employee shall continue to have the same duties and
responsibilities with respect to Employer’s business, and Employee shall report
directly to the chief executive officer and/or board of directors of the entity
(or individual) that acquires Employer or its assets;
(C) Employer
acts to change the geographic location of the performance of Employee’s duties
from the Albany, New York area. For purposes of this Agreement, the Albany,
New
York area shall be deemed to be the area within thirty (30) miles of the current
address of the Employer as set forth above;
4
(D) a
Material Reduction (as hereinafter defined) in Employee’s rate of base
compensation, or Employee’s other benefits. “Material Reduction” shall mean a
ten percent (10%) differential;
(E) a
failure
by
Employer to obtain the assumption of this Agreement by any
successor;
(F) a
material breach of this Agreement by Employer, which is not cured within thirty
(30) days of written notice of such breach by Employer;
(G) A
Change
of
Control.
(ii) Anything
herein to the contrary notwithstanding, Employee may terminate this Agreement
upon thirty (30) days’ written notice.
(iii) If
Employee shall terminate this Agreement under Section 9(b)(i), Employee shall
be
entitled to receive 24 months salary. Other than the payment of 24 months salary
to Employee, Employer shall have no further obligation to compensate Employee
pursuant to Section 4 above. If Employee shall terminate this Agreement pursuant
to Section 9(b)(ii), Employee shall only be entitled to any accrued and unpaid
compensation as of the date of termination as provided in Section 4(a)(i).
10. Consequences
of Breach by Employer; Employment Termination.
(a) If
Employer shall terminate Employee's employment under this Agreement in any
way
that is a breach of this Agreement by Employer, the following shall
apply:
(i)
Employee shall be entitled to payment of 24 months salary; and
(ii)
Employee shall be entitled to payment of any previously declared bonus as
provided in Section 4(a) above.
(b) In
the
event of termination of Employee's employment pursuant to Section 9(b)(i) of
this Agreement, the provisions of Section 8 shall not apply to
Employee.
11. Remedies.
Employer recognizes that because of Employee’s special talents, stature and
opportunities in the security alarm industry, and because of the special
creative nature of and compensation practices of said industry and the material
impact that individual projects can have on the Company’s results of operations,
in the event of termination by Employer hereunder, Employer acknowledges and
agrees that payments under Sections 10 and 4(d)(ii)(B), and the exercisability
of Rights under Section 4(e)(ii) constitute fair and reasonable provisions,
do
not constitute a penalty, and shall not be limited or reduced by amounts
Employee might earn or be able to earn from any other employment or ventures
during the remainder of the Term.
5
12. Excise
Tax.
In the
event that any payment or benefit received or to be received by Employee in
connection with a termination of his employment with Employer would constitute
a
“parachute payment” within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (“Code”) or any similar or successor provision and/or
would be subject to any excise tax imposed by Code Section 4999 or any similar
or successor provision then Employer shall assume all liability for the payment
of any such tax and Employer shall immediately reimburse Employee on a
“grossed-up” basis for any income taxes attributable to Employee by reason of
such Employer payment and reimbursements.
13. Attorneys’
Fees and Costs.
If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorneys’
fees, costs and necessary disbursements in addition to any other relief to
which
he may be entitled.
14. Entire
Agreement.
a.
This Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
herein and supersedes, effective as of the date of the amendment and restatement
hereof any prior agreement or understanding between Employer and Employee with
respect to Employee’s employment by Employer. The unenforceability of any
provision of this Agreement shall not affect the enforceability of any other
provision. This Agreement may not be amended except by an agreement in writing
signed by Employee and Employer, or any waiver, change, discharge or
modification as sought. Waiver of or failure to exercise any rights provided
by
this Agreement and shall not be deemed a waiver of any further or future
rights.
b. The
provisions of Sections 4, 5, 6, 7, 8, 9(a)(ii), 10, 11, 12, 14, 16, 17 and
18
shall survive the termination of this Agreement.
15. Assignment.
This
Agreement shall not be assigned to other parties.
16. Governing
Law.
This
Agreement and all the amendments hereof, and waivers and consents with respect
thereto shall be governed by the internal laws of the State of New York, without
regard to the conflicts of laws principles thereof.
17. Notices.
All
notices, responses, demands or other communications under this Agreement shall
be in writing and shall be deemed to have been given when
a. delivered
by hand;
b. sent
by
telex or telefax, (with receipt confirmed), provided that a copy is mailed
by
registered or certified mail, return receipt requested; or
c. received
by the addressee as sent by express delivery service (receipt requested) in
each
case to the appropriate addresses, telex numbers and telefax numbers as the
party may designate to itself by notice to the other parties:
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|
(i)
|
if
to the Employer:
|
Integrated
Alarm Services Group, Inc.
00
Xxxx
Xxxxxx, 0xx Xxxxx
Xxxxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxx X. May
Telephone: (000)
000-0000
Shearman
& Sterling LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx Xxxxxxxxxx, Esq.
Telephone: (000)
000-0000
|
(ii)
|
if
to the Employee:
|
Xxxxxxx
X.Xxxxxxxxx
00
Xxx
Xxx Xxxx Xxxx
Xxxxxxxxxx,
Xxx Xxxx 00000
18. Severability
of Agreement.
Should
any part of this Agreement for any reason be declared invalid by a court of
competent jurisdiction, such decision shall not affect the validity of any
remaining portion, which remaining provisions shall remain in full force and
effect as if this Agreement had been executed with the invalid portion thereof
eliminated, and it is hereby declared the intention of the parties that they
would have executed the remaining portions of this Agreement without including
any such part, parts or portions which may, for any reason, be hereafter
declared invalid.
7
IN
WITNESS WHEREOF, the undersigned have executed this agreement as of the day
and
year first above written.
INTEGRATED
ALARM SERVICES GROUP, INC.
By:
/s/
Xxxxxxx X. May
Xxxxxxx
X. May
Chief
Executive Officer
Employee:
/s/
Xxxxxxx X. Xxxxxxxxx
Xxxxxxx
X. Xxxxxxxxx
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