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Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is made and entered into as of
the 29th day of August, 1996, by and between Security Associates
International, Inc., and its subsidiaries and affiliates (collectively, the
"EMPLOYER"), and Xxxxx X. Xxxxxxx ("XXXXXXX").
RECITALS
A. The Employer desires that Xxxxxxx continue to provide services for the
benefit of the Employer and Xxxxxxx desires to accept such continued employment
with the Employer.
B. The Employer and Xxxxxxx acknowledge that Xxxxxxx is, and will continue
to be, a member of the senior management team of the Employer and, as such,
will participate in implementing the Employer's business plan.
NOW, THEREFORE, in consideration of the above premises and the following
mutual covenants and conditions, the parties agree as follows:
1. Employment. The Employer shall continue to employ Xxxxxxx as its
President, and Brannen hereby accepts such continued employment on the
following terms and conditions.
2. Duties. Xxxxxxx shall work for the Employer in a full-time capacity.
Xxxxxxx shall, during the term of this Agreement, continue to have the duties,
responsibilities, powers, and authority customarily associated with the
position of President. Xxxxxxx shall report to, and follow the direction of,
the Board of Directors of the Employer (the "BOARD"). Xxxxxxx shall
diligently, competently, and faithfully perform all duties, and shall devote
his entire business time, energy, attention, and skill to the performance of
duties for the Employer and will use his best efforts to promote the legitimate
business interests of the Employer. It shall not be considered a violation of
the foregoing for Xxxxxxx to serve on corporate, industry, religious, civic, or
charitable boards or committees, so long as such activities do not
significantly interfere with the performance of Brannen's responsibilities as
an employee of the Employer in accordance with this Agreement.
3. Term of Employment. This Agreement shall be entered into for a period
of three (3) years, commencing on the date hereof and ending on August 29, 1999
(the "INITIAL TERM"). The term of employment shall be renewed automatically
for successive periods of one (1) year each (a "RENEWAL TERM") after the
expiration of the Initial Term and any subsequent Renewal Term, unless the
Board provides Xxxxxxx, or Xxxxxxx provides the Board, with written notice to
the contrary at least six (6) months prior to the end of the Initial Term or
any Renewal Term, as the case may be.
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4. Compensation.
A. Salary. The Employer shall pay Xxxxxxx an annual salary of
$125,000 (the "BASE SALARY"), payable in substantially equal periodic
installments in accordance with the Employer's payroll policy from time to
time in effect. The Base Salary shall be subject to any payroll or other
deductions as may be required to be made pursuant to law, government
order, or by agreement with, or consent of, Brannen. Increases to the Base
Salary shall be made following an annual salary review, the first of which
shall take place in or around September, 1997, and all subsequent reviews
shall occur in or around September of each year thereafter. The Base
Salary shall not be reduced, and the term Base Salary shall refer
thereafter to the Base Salary, as it may be increased from time to time.
B. Performance Bonus. In accordance with the Employer's practice
from time to time in effect, the Employer shall award Xxxxxxx an annual
bonus in an amount to be determined by the Employer based upon Brannen's
and the Employer's performance and the achievement of other goals and
objectives set by the Employer (the "Performance Bonus").
C. Long-Term Incentive Plan. After entering into this Agreement, the
Employer shall grant the Executive incentive stock options (in
accordance with Section 422 of the Internal Revenue Code of 1986, as
amended) under the Employer's Stock Option Plan to purchase shares of the
Employer's common stock, the number of shares of which shall be agreed
upon by the parties. The stock options shall be granted at an exercise
price equal to the "fair market value" of such common stock on the date of
the grant. The stock options shall vest and become exercisable on August
1, 1999. The stock options granted hereunder shall expire by their terms
on the first to occur of (i) ten (10) years from the date of their grant,
(ii) three (3) months after the Executive's employment is terminated under
Paragraph 6A, 6D, 6E or 6F (twelve (12) months in the event employment
terminates under Paragraph 6B), or (iii) the Executive's termination of
employment under Paragraph 6C. If the incentive stock options shall, at
any time, be determined not to qualify as incentive stock options under
Section 422 of the Code, such options shall automatically convert into,
and be treated as, non-qualified stock options. The actual terms and
conditions of the Stock Option Plan shall be established by the Employer,
and shall be memorialized in a written document to be prepared by the
Employer and which will be incorporated herein by reference.
D. Other Benefits. During the term of this Agreement, the Employer
shall:
(1) include Xxxxxxx in any life insurance, disability
insurance, medical, prescription, dental or health insurance
(including dependent coverage) (which premiums for the medical,
prescription, dental and health insurance coverage shall be entirely
paid for by the Employer), savings, pension and
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retirement plans and other benefit plans or programs
(including, if applicable, any excess benefit or supplemental
executive retirement plans) maintained by the Employer for the
benefit of its executives;
(2) include Xxxxxxx in such perquisites as the Employer may
establish from time to time that are commensurate with his position
and at least comparable to those received by other executives of
the Employer;
(3) provide Xxxxxxx with six (6) weeks paid vacation/time off
per annum; and
(4) provide Xxxxxxx with an automobile expense reimbursement
allowance of one thousand dollars ($1,000.00) per month to
reimburse him for the use of an automobile and the operating
expenses thereof.
5. Expenses. The Employer shall reimburse Xxxxxxx for all reasonable and
necessary business expenses, provided Xxxxxxx submits paid receipts or other
documentation acceptable to the Employer.
6. Termination. Notwithstanding anything in Paragraph 3 of this
Agreement to the contrary, the term of this Agreement shall terminate
upon the first to occur of the following events:
A. At the end of the term of this Agreement, including any Renewal
Terms, provided advance notice of such termination is given in accordance
with Paragraph 3 hereof.
B. Upon Brannen's death or the date Xxxxxxx is given written notice
that he has been determined to be disabled by the Employer. For purposes
of this Agreement, Xxxxxxx shall be deemed to be disabled if Xxxxxxx, as
a result of illness or incapacity, shall be unable to perform
substantially his required duties for a period of four (4) consecutive
months or for any aggregate period of six (6) months in any twelve (12)
consecutive month period. A termination of Brannen's employment by the
Employer for disability shall be communicated to Xxxxxxx by written
notice and shall be effective on the thirtieth (30th) day after receipt
of such notice by Xxxxxxx, unless Brannen returns to full-time
performance of his duties before such thirtieth (30th) day.
C. On the date the Employer provides Xxxxxxx with written notice
that he is being terminated for "CAUSE." For purposes of this Agreement,
Xxxxxxx shall be deemed terminated for Cause if the Employer terminates
Xxxxxxx after Xxxxxxx:
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(1) shall have been convicted of any felony including, but not
limited to, a felony involving fraud, theft, misappropriation,
dishonesty, or embezzlement;
(2) shall have committed willful acts that materially impair
the goodwill or business of the Employer or cause material damage
to its property, goodwill, or business; and
(3) shall have refused to, or willfully failed to, perform his
material duties hereunder.
No act or failure to act on the part of Xxxxxxx shall be considered
"willful" unless it is done, or omitted to be done, by Brannen in bad
faith or without reasonable belief that his action or omission was in the
best interests of the Employer. A termination of Brannen's employment for
Cause shall be effected in accordance with the following procedures. The
Employer shall give Xxxxxxx written notice ("NOTICE OF TERMINATION FOR
CAUSE") of its intention to terminate Brannen's employment for Cause,
setting forth in reasonable detail the specific conduct of Xxxxxxx that it
considers to constitute Cause and the specific provision(s) of this
Agreement on which it relies, and stating the date, time and place of the
Board Meeting for Cause. The "BOARD MEETING FOR CAUSE" means a meeting of
the Board at which Brannen's termination for Cause will be considered,
that takes place not less than ten (10) and not more than twenty (20)
business days after Xxxxxxx receives the Notice of Termination for Cause.
Xxxxxxx shall be given an opportunity, together with counsel, to be heard
at the Board Meeting for Cause. Brannen's termination for Cause shall be
effective when and if a resolution is duly adopted at the Board Meeting
for Cause by a two-thirds vote of the entire membership of the Board,
stating that in the good faith opinion of the Board, Xxxxxxx is guilty of
the conduct described in the Notice of Termination for Cause, and that
such conduct constitutes Cause under this Agreement.
D. On the date Xxxxxxx terminates his employment for "Good Reason."
For purposes of this Agreement, "GOOD REASON" means:
(1) the assignment to Xxxxxxx of any duties inconsistent in
any respect with Paragraph 2 of this Agreement, or any other action
by the Employer that results in a diminution in Brannen's position,
authority, duties or responsibilities, other than an isolated,
insubstantial and inadvertent action that is not taken in bad
faith and is remedied by the Employer after receipt of notice
thereof from Xxxxxxx;
(2) any requirement by the Employer that Brannen's services be
rendered primarily at a location or locations other than within the
greater Chicago metropolitan area and for other than a de minimis
period of time;
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(3) any breach of this Agreement by the Employer that is not
remedied by the Employer promptly after receipt of notice thereof
from Xxxxxxx;
(4) any failure by the Employer to comply with any provision
of Paragraph 4 of this Agreement, other than an isolated,
insubstantial and inadvertent failure that is not taken in bad
faith and is remedied by the Employer promptly after receipt of
notice thereof from Xxxxxxx;
(5) any purported termination of Brannen's employment by the
Employer for a reason or in a manner not expressly permitted by
this Agreement; or
(6) the resignation by Xxxxxxx following a "CHANGE IN
CONTROL." A "Change in Control" shall be deemed to occur on
the earliest of (a) the acquisition by any entity, person, or group
of beneficial ownership, as that term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934, of more than 30% of the
outstanding capital stock of the Employer entitled to vote for the
election of directors ("VOTING STOCK"); (b) the commencement by any
entity, person, or group (other than the Employer or a subsidiary of
the Employer) of a tender offer or an exchange offer for more than
20% of the outstanding Voting Stock of the Employer; (c) the
effective time of (1) a merger or consolidation of the Employer with
one or more corporations as a result of which the holders of the
outstanding Voting Stock of the Employer immediately prior to such
merger hold less than 80% of the Voting Stock of the surviving or
resulting corporation, or (2) a transfer of substantially all of the
property or assets of the Employer other than to an entity of which
the Employer owns at least 80% of the Voting Stock; and (d) the
election to the Board, without the recommendation or approval of the
incumbent Board, of the lesser of (1) three directors, or (2)
directors constituting a majority of the number of directors of the
Employer then in office.
A termination of employment by Xxxxxxx for Good Reason shall be
effectuated by giving the Employer written notice ("NOTICE OF TERMINATION
FOR GOOD REASON") of the termination within three (3) months (six (6)
months in the event of a Change in Control) of the event constituting Good
Reason, setting forth in reasonable detail the specific conduct of the
Employer that constitutes Good Reason and the specific provisions of this
Agreement on which Xxxxxxx relies. A termination of employment by Xxxxxxx
for Good Reason shall be effective on the fifth (5th) business day
following the date when the Notice of Termination for Good Reason is
given, unless the notice sets forth a later date (which date shall in no
event be later than thirty (30) days after the notice is given).
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E. On the date Xxxxxxx terminates his employment for any reason,
other than a reason set forth in Paragraph 6D, provided that Xxxxxxx
shall give the Employer six (6) months written notice prior to such date
of his intention to terminate this Agreement.
F. On the date the Employer terminates Brannen's employment for any
reason, other than a reason set forth in Paragraph 6C, provided that the
Employer shall give Xxxxxxx six (6) months written notice prior to such
date of its intention to terminate this Agreement.
7. Compensation Upon Termination. If Brannen's services are terminated
pursuant to Paragraph 6, Xxxxxxx shall be entitled to his Base Salary through
his final date of active employment, plus any accrued but unused vacation/time
off pay. Additionally, if Brannen's services are terminated pursuant to
Paragraphs 6A, 6B, 6D or 6F, Xxxxxxx or, in the case of his death, his
designated beneficiary (or, if there is no such beneficiary, Brannen's spouse
or, if there is no spouse, his estate or legal representative) shall be
entitled to (a) severance pay, payable in accordance with the Employer's
payroll policy from time to time in effect, in an amount equal to 2.99 times
his Base Salary and the Performance Bonus awarded for the most recently
completed annual period, and (b) immediately exercise all incentive stock
options previously granted to him under Xxxxxxxxx 0X, whether or not such
options would otherwise have been exercisable on the date of termination.
Xxxxxxx also shall be entitled to any benefits mandated under the Consolidated
Omnibus Budget Reconciliation Act of 1985 (COBRA) (for which the Employer shall
be obligated to pay all premiums and other costs associated with such COBRA
continuation coverage), or required under the terms of any death, insurance, or
retirement plan, program, or agreement provided by the Employer and to which
Xxxxxxx is a party or in which Xxxxxxx is a participant, including, but not
limited to, any short-term or long-term disability plan or program, if
applicable.
8. Notices. Any and all notices required in connection with this
Agreement shall be deemed adequately given only if in writing and (a)
personally delivered, or sent by first class, registered or certified mail,
postage prepaid, return receipt requested, or by recognized overnight courier,
(b) sent by facsimile, provided a hard copy is mailed on that date to the party
for whom such notices are intended, or (c) sent by other means at least as fast
and reliable as first class mail. A written notice shall be deemed to have
been given to the recipient party on the earlier of (a) the date it shall be
delivered to the address required by this Agreement; (b) the date delivery
shall have been refused at the address required by this Agreement; (c) with
respect to notices sent by mail or overnight courier, the date as of which the
Postal Service or overnight courier, as the case may be, shall have indicated
such notice to be undeliverable at the address required by this Agreement; or
(d) with respect to a facsimile, the date on which the facsimile is sent and
receipt of which is confirmed. Any and all notices referred to in this
Agreement, or which either party desires to give to the other, shall be
addressed to his residence in the case of Xxxxxxx, or to its principal office
in the case of the Employer.
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9. Waiver of Breach. A waiver by either party of a breach of any
provision of this Agreement by the other shall not operate or be construed as a
waiver or estoppel of any subsequent breach. No waiver shall be valid unless
in writing and signed by the party to be charged.
10. Entire Agreement. This Agreement sets forth the entire and final
agreement and understanding of the parties and contains all of the agreements
made between the parties with respect to the subject matter hereof. This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto, with respect to the subject matter hereof. No
change or modification of this Agreement shall be valid unless in writing and
signed by the Employer and Xxxxxxx. If any provision of this Agreement shall
be found invalid or unenforceable for any reason, in whole or in part, then
such provision shall be deemed modified, restricted, or reformulated to the
extent and in the manner necessary to render the same valid and enforceable, or
shall be deemed excised from this Agreement, as the case may require, and this
Agreement shall be construed and enforced to the maximum extent permitted by
law, as if such provision had been originally incorporated herein as so
modified, restricted, or reformulated or as if such provision had not been
originally incorporated herein, as the case may be.
11. Headings. The headings in this Agreement are inserted for convenience
only and are not to be considered a construction of the provisions hereof.
12. Execution of Agreement. This Agreement may be executed in several
counterparts, each of which shall be considered an original, but which when
taken together, shall constitute one agreement.
13. Attorneys' Fees. The Employer shall pay for all legal fees and
expenses associated with the preparation of this Agreement.
14. Successors.
A. This Agreement is personal to Xxxxxxx and, without the prior
written consent of the Employer, shall not be assignable by Xxxxxxx.
This Agreement shall inure to the benefit of and be enforceable by
Brannen's legal representatives.
B. This Agreement shall inure to the benefit of and be binding upon
the Employer and its successors and assigns.
C. The Employer shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Employer expressly
to assume and agree to perform this Agreement in the same manner and to
the same extent that the Employer would have been required to
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perform it if no such succession had taken place. As used in this
Agreement, "Employer" shall mean both the Employer as defined above and
any such successor that assumes and agrees to perform this Agreement, by
operation of law or otherwise.
15. Recitals. The recitals to this Agreement are incorporated herein as
an integral part hereof and shall be considered as substantive and not
precatory language.
16. Due Authorization. The Employer hereby warrants and represents that
(a) the execution, delivery, and performance of this Agreement has been duly
authorized by all necessary corporate action on the part of the Employer, (b)
the Employer has the requisite power and authority to execute, deliver, and
perform this Agreement, and (c) this Agreement is a valid and legally binding
obligation of the Employer, enforceable against the Employer in accordance with
its terms.
17. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Illinois, without reference to its
conflict of law provisions.
IN WITNESS WHEREOF, the parties have set their signatures on the date
first written above.
SECURITY ASSOCIATES
INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
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Its: President XXXXX X. XXXXXXX
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