EXHIBIT 10.54
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of the 6th day of August, 2001, by and between Security Associates
International, Inc., on behalf of itself and its subsidiaries and affiliates
(collectively, the "Employer"), and Xxxx Xxxxxxx ("Executive"). Certain
capitalized terms used herein are set forth in Section 19 below.
RECITALS
A. The Employer desires that Executive provide services for the
benefit of the Employer, and Executive desires to accept such employment with
the Employer, upon the terms and conditions set forth herein.
B. The Employer and Executive acknowledge that Executive is, and will
continue to be, a member of the senior management team of the Employer.
NOW, THEREFORE, in consideration of the above premises and the
following mutual covenants and conditions, the parties agree as follows:
1. Employment. During the Employment Period (as defined below), the
Employer shall employ Executive (with Executive having the title of Chief
Operating Officer), and Executive hereby accepts such employment, in each case
on the terms and conditions set forth in this Agreement.
2. Duties. Executive shall, during the Employment Period, have the
duties, responsibilities, powers and authority customarily associated with the
position of Chief Operating Officer or otherwise as designated from time to time
by the Chief Executive Officer or the Board of Directors of the Employer (the
"Board"), and Executive shall report to, and follow the direction of, the Board.
Executive shall diligently, competently and faithfully perform all such duties
and responsibilities and shall devote substantial energy, attention and skill to
the performance of such duties and responsibilities and will use his best
efforts to promote the legitimate business interests of the Employer. During the
Employment Period, Executive shall work for the Employer in a full-time
capacity. It shall not be considered a violation of the foregoing for Executive
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 Executive's duties and responsibilities as an employee of the
Employer in accordance with this Agreement or violate any of the provisions of
Paragraph 5 below.
3. Term of Employment. The term of the Executive's employment with the
Employer (the "Employment Period") shall commence on the date first set forth
above and extend until December 31, 2002 (subject to extension as set forth in
the immediately following sentence), unless earlier terminated as set forth in
Section 6 below. Provided that no termination as set forth in Section 6 below
(or any notice thereof) has been made prior to such time, the Employment Period
shall be extended automatically for successive periods of one (1) year each
(each, a "Renewal Term")
on December 31, 2002 and at the end of any subsequent Renewal Term, unless the
Board provides Executive, or Executive provides the Board, with written notice
to the contrary at least thirty (30) days prior to December 31, 2002 or the end
of any Renewal Term, as the case may be. In connection with the expiration or
termination of the Employment Period for any reason, Executive agrees that he
shall execute and deliver to the Employer, and the Employer agrees that it shall
execute and deliver to Executive, a mutual release (in a form reasonably
acceptable to Executive and the Employer) of any and all claims that either then
has or in the future may have against the other (other than with respect to
post-Employment Period obligations under this Agreement) (the "Mutual Release").
4. Compensation.
A. Salary. During the Employment Period, the Employer shall
pay Executive an annual salary of $200,000 (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, and by any other agreement with, or consent of, Executive.
B. Signing Bonus. The Employer shall pay Executive, as a
signing bonus, an aggregate of $50,000 (the "Signing Bonus"), subject to any
payroll or other deductions as may be required to be made pursuant to law,
government order, and by any other agreement with, or consent of, Executive.
One-third of the Signing Bonus (i.e., $16,666.67) shall be paid on the date of
execution and delivery of this Agreement by the Employer and Executive, and
(provided that Executive is, on each of the following specified dates, then
employed by the Employer or no longer employed by the Employer solely as a
result of a termination of Executive by the Employer not for Cause or a
resignation by Executive for Good Reason) an additional one-third of the Signing
Bonus shall be paid on December 31, 2001 and the final one-third of the Signing
Bonus shall be paid on March 31, 2002; provided, however, that (upon Executive's
written election) the payment of all or any portion of any of the foregoing
amounts shall be deferred for a period of time as is stipulated in any such
written election, with payment in full of the applicable amount to be made by
the Employer upon the expiration of such period (provided that Executive was, on
the applicable foregoing specified date (i.e., December 31, 2001 or March 31,
2002, as the case may be) then employed by the Employer or no longer employed by
the Employer solely as a result of a termination of Executive by the Employer
not for Cause or a resignation by Executive for Good Reason).
C. Earned Cash Incentive Bonus.
(i) Provided that Executive is, on June 30, 2002, then
employed by the Employer (or no longer employed by the Employer solely
as a result of a termination of Executive by the Employer not for Cause
or a resignation by Executive for Good Reason), the Employer shall, on
or prior to September 30, 2002, pay to Executive an amount equal to the
ECI applicable for the period beginning on July 1, 2001 and ending on
June 30, 2002 (the "First ECI Period").
(ii) Provided that Executive is, on December 31, 2002, then
employed by the Employer (or no longer employed by the Employer solely
as a result of a termination of
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Executive by the Employer not for Cause or a resignation by Executive
for Good Reason), the Employer shall, on or prior to March 31, 2003,
pay to Executive an amount equal to the ECI applicable for the period
beginning on July 1, 2002 and ending on December 31, 2002 (the "Second
ECI Period").
(iii) At the written election of Executive delivered to the
Employer on or prior to the 30th day following the public disclosure
(e.g., the filing of a Form 10-Q or Form 10-K) by the Employer of the
Employer's operating results for the First ECI Period or the Second ECI
Period, as the case may be, the Employer shall, in lieu of all or any
portion of the cash payments described in clauses (i) and (ii) above
(such amount being referred to herein as the "Designated Non-Cash
Amount"), issue to Executive, in certificated form, a number of duly
authorized shares of the Employer's common stock, par value $0.001 per
share ("Common Stock"), equal to the Designated Non-Cash Amount divided
by $2.50 (subject to adjustment for any subdivision or combination of
Common Stock occurring after the date of this Agreement), such shares
of Common Stock to be issued on or before the final date required for a
cash payment pursuant to clauses (i) and (ii) above.
D. Other Bonuses. The Board may in its sole and absolute
discretion (but it shall have no obligation to) award Executive an annual or
other bonus based upon Executive's and the Employer's performance and the
achievement of other goals and objectives that may from time to time be
established in advance by the Board with respect to Executive.
E. Other Benefits. During the Employment Period, the
Employer shall:
(1) include Executive in any life insurance, disability
insurance, medical, prescription, dental or health insurance (including
dependent coverage) (with payment of the individual premiums therefor
being allocated between the Employer and Executive in the same manner
as such premiums are allocated between the Employer and its other
employees generally), savings, pension and retirement plans and other
benefit plans or programs maintained by the Employer for the benefit of
its employees generally; and
(2) provide Executive with three (3) weeks paid vacation/time
off per calendar year.
F. Additional Consideration for Entry Into this Agreement. As
additional consideration for the Executive's execution and delivery of this
Agreement, the Employer shall grant to Executive as of the date of this
Agreement, pursuant to the Employer's Stock Option Plan adopted April 1, 1999,
as amended effective May 23, 2000 (the "Existing Option Plan"), a nonstatutory
stock option to purchase 900,000 shares of Common Stock in the form attached
hereto as Exhibit A, with an exercise price of $2.50 per share and an expiration
date of the tenth anniversary of the date of issuance (subject to earlier
termination as required by the Existing Option Plan and/or the form attached
hereto as Exhibit A), with such option vesting (i.e., becoming exercisable) with
respect to one-third (i.e., 300,000) of the applicable shares of Common Stock on
each of December 31, 2001, December 31, 2002 and December 31, 2003 (provided, in
each case, that Executive is, on such applicable date, then employed by the
Employer or no longer employed by the Employer solely as a
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result of a termination of Executive by the Employer not for Cause or a
resignation by Executive for Good Reason).
G. Expenses. The Employer shall reimburse Executive for all
reasonable and necessary business expenses, provided Executive submits paid
receipts or other documentation acceptable to the Employer.
5. Protective Agreements.
A. Confidential Information. Executive agrees that he will
not, for any reason whatsoever, whether voluntarily or involuntarily, use for
himself or disclose to any person any "Confidential Information" of the Employer
acquired by Executive during his relationship with the Employer or any of its
predecessors. Confidential Information includes but is not limited to: (a) any
financial, business, planning, operations, services, potential services,
products, potential products, technical information and/or know-how, formulas,
production, purchasing, marketing, sales, personnel, customer, broker, supplier
or other information of the Employer; (b) any papers, data, records, processes,
methods, techniques, systems, models, samples, devices, equipment, compilations,
invoices, customer lists or documents of the Employer; (c) any confidential
information or trade secrets of any third party provided to the Employer in
confidence or subject to other use or disclosure restrictions or limitations;
(d) the terms of any agreement between the Employer and any employee,
subscriber, customer, dealer or supplier, (e) pricing strategy, (f) financial
results, (g) strategic systems software; and (h) any other information, written,
oral or electronic, whether existing now or at some time in the future, which
pertains to the Employer's affairs or interests or with whom or how the Employer
does business. The Employer acknowledges and agrees that Confidential
Information does not include (i) information that has properly entered the
public domain (through no fault or action of Executive), or (ii) information
that Executive is able to demonstrate was in his possession prior to the date of
his original employment with the Employer and its predecessors, except to the
extent that such information is or has become a trade secret of the Employer or
is or otherwise has become the property of the Employer. Executive agrees and
acknowledges that as of the end of the Employment Period, he shall return to the
Employer any and all property, tangible or intangible, relating to its business,
which he possessed or had control over at any time, including, but not limited
to, company- provided credit cards, building or office access cards, keys,
computer equipment, manuals, files, documents, records, software, customer data
base and other data, and that he shall not retain any copies, compilations,
extracts, excerpts, summaries or other notes of any such manuals, files,
documents, records, software, customer data base or other data. Executive
further acknowledges and agrees that he is estopped from and will not dispute in
any proceeding the enforceability of this Paragraph 5.
B. Additional Restrictions. Executive agrees that, he will
not, directly or indirectly, except on behalf of the Employer:
(1) during the Employment Period (except in the performance
of his employment duties hereunder) or at any time prior to the third
anniversary of the date of the expiration or termination thereof,
contact or solicit, or direct any person or entity to contact or
solicit, any of the Employer's customers for the purpose of providing
any products and/or services that are the same as or similar to the
products
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and services provided by the Employer to its customers both during the
Employment Period, or for the purpose of otherwise interfering with the
business relationships between the Employer and its customers; or
(2) without the prior express written consent of the
Employer, during the Employment Period or at any time prior to the
third anniversary of the expiration or termination thereof, solicit or
accept if offered to him, with or without solicitation, on his own
behalf or on behalf of any other person or entity (other than the
Employer), the services of any person who is a current employee of the
Employer (or was an employee of the Employer during the year preceding
such solicitation), nor solicit any of the Employer's current employees
(or any individual who was an employee of the Employer during the year
preceding such solicitation) to terminate employment or an engagement
with the Employer, nor agree to hire any current employee (or any
individual who was an employee of the Employer during the year
preceding such hire) of the Employer into employment with him or any
other person or entity (provided, in each case, that the foregoing
shall not apply with respect to Xxx Xxxxx or Xxxxxx Xxxxxxx); or
(3) during the Employment Period or at any time prior to the
first anniversary of the expiration or termination thereof, enter into
any agreement with any of the Employer's suppliers to provide services
or products that are the same as or similar to the services or products
sold to the Employer; or
(4) during the Employment Period or at any time prior to the
first anniversary of the expiration or termination thereof, conduct,
become associated with or participate in any business, whether as an
investor (excluding investments representing less than one percent (1%)
of the common stock of a public company), lender, owner, stockholder,
officer, director, employee, consultant, agent or in any other
capacity, involved in the marketing or providing of security alarm
monitoring or other services or products of the type then constituting
ten percent (10%) or more of the current year's (or most recent
completed year's) annual revenues of the Employer; provided, however,
that beginning at such time as Executive ceases to be employed by the
Employer on a full-time basis, Executive shall (without violation of
the foregoing clause) be permitted to provide consulting services
(which consulting services may not and shall not conflict with the
other provisions of this Paragraph 5) to one or more other persons or
entities, so long as such consulting services do not, in the case of
customers of the Employer, include any type of recommendation or
endorsement of any product or service offered by any competitor of the
Employer.
C. Special Acknowledgment of Executive. Executive acknowledges
and agrees that the scope described above is necessary and reasonable in order
to protect the Employer in the conduct of its business and that, if he becomes
employed by another employer, he will be required to disclose the existence of
this Paragraph 5 to such employer and he consents to and the Employer is given
permission to disclose the existence of this Paragraph 5 to such employer.
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D. Certain Definitions. For purposes of this Paragraph 5: (i)
"customer" is defined as any person or entity that purchased any type of product
and/or service from the Employer or is or was doing business with the Employer
or Executive (including, but not limited to, any security alarm dealer and any
subscriber of any of the products or services of the Employer or any of its
affiliates) within the twelve (12) month period immediately preceding
termination of Executive's employment; and (ii) "supplier" is defined as any
person or entity who is or was supplying products or services (other than those
supplying generic products or services for administrative purposes (e.g.,
courier services, office supplies, utilities)) to the Employer or to the
Employer's dealers within the twelve (12) month period immediately preceding
termination of Executive's employment.
E. Special Remedies. It is agreed that breach of this
Paragraph 5 will result in irreparable harm and continuing damages to the
Employer and its business and that the Employer's remedy at law for any such
breach or threatened breach will be inadequate and, accordingly, in addition to
such other remedies as may be available to the Employer at law or in equity in
such event, any court of competent jurisdiction may issue a temporary and
permanent injunction, without the necessity of the Employer posting bond and
without proving special damages or irreparable injury, enjoining and restricting
the breach, or threatened breach, of this Paragraph 5, including, but not
limited to, any injunction restraining the breaching party from disclosing, in
whole or part, any Confidential Information.
6. Termination. Notwithstanding anything in Paragraph 3 of this
Agreement to the contrary, the Employment Period shall terminate upon the first
to occur of the following events:
A. Upon Non-Renewal. On December 31, 2002 (or if renewal has
occurred, at the end of the Renewal Term then in effect), provided advance
notice of such termination has been given in accordance with Paragraph 3 hereof.
B. Upon Death or Disability. Upon Executive's death or the
date Executive is given written notice that he has been determined to be
disabled by the Employer. For purposes of this Agreement, Executive shall be
deemed to be disabled if Executive, 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 Executive's employment by the
Employer for disability shall be communicated to Executive by written notice and
shall be effective on the thirtieth (30th) day after receipt of such notice by
Executive, unless Executive returns to full-time performance of his duties
before such thirtieth (30th) day.
C. For Cause. On the date the Employer provides Executive
with written notice that he is being terminated for "Cause". For purposes of
this Agreement, "Cause" shall mean Executive's (i) willful and continued failure
to perform substantially Executive's duties, which failure shall continue for
thirty (30) days, after notice for such substantial performance failure is
provided to Executive specifying the manner in which the Employer believes
Executive has not substantially performed, (ii) engaging in willful misconduct
that is materially injurious to the Employer, financially or otherwise
(including but not limited to conduct that constitutes competitive activity),
(iii) breach of this Agreement in any material manner, (iv) conviction of, or
plea of nolo contendre
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to, a felony or a misdemeanor involving moral turpitude, (v) habitual abuse of
alcohol or prescription drugs or (vi) abuse of controlled substances (it being
understood that no act or failure to act on the part of Executive shall be
considered "willful" unless it is done, or omitted to be done, by Executive in
bad faith or without reasonable belief that his action or omission was in the
best interests of the Employer).
D. For Good Reason. On the date Executive terminates his
employment for "Good Reason." For purposes of this Agreement, "Good Reason"
means:
(1) the assignment to Executive of any duties materially
inconsistent with Paragraph 2 of this Agreement, or any other action by
the Employer that results in a material diminution in Executive's
position, authority, duties or responsibilities from those designated
to Executive in connection with the implementation of this Agreement,
other than a subsequent isolated, insubstantial and inadvertent action
that is not taken in bad faith and is remedied by the Employer within
30 days after receipt of notice thereof from Executive;
(2) any requirement by the Employer that Executive relocate
(other than for reasonable and temporary instances) away from
Executive's primary residence as of the date of this Agreement;
(3) any breach of this Agreement by the Employer that is not
remedied by the Employer within 30 days after receipt of notice thereof
from Executive;
(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 within 15 days after receipt of notice thereof from
Executive; or
(5) the resignation by Executive within six (6) months
following a "Change in Control."
(it being understood that 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 (other than TJS Partners or any of its
partners or other affiliates), as the term "group" 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
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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 Executive 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 Executive
relies. A termination of employment by Executive 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).
E. By Executive for Any Other Reason. On the date Executive
terminates his employment for any reason, other than a reason set forth in
Paragraph 6D, provided that Executive shall give the Employer three (3) months
written notice prior to such date of his intention to terminate this Agreement.
F. By the Employer for Any Other Reason. On the date the
Employer terminates Executive's employment for any reason, other than a reason
set forth in Paragraph 6C, provided that the Employer shall give Executive three
(3) months written notice prior to such date of its intention to terminate this
Agreement.
7. Compensation Upon Termination. If the Employment Period is
terminated pursuant to Paragraph 6, Executive shall be entitled to his Base
Salary through the final date of the Employment Period, plus any accrued but
unused vacation/time off pay. Additionally, if Executive's services are
terminated pursuant to Paragraphs 6A, 6B, 6D or 6F, Executive (or, in the case
of his death, his designated beneficiary (or, if there is no such beneficiary,
Executive's spouse or, if there is no spouse, his estate or legal
representative)) shall be entitled to be paid (for so long as no violation of
any of the provisions of Paragraph 5 of this Agreement has occurred and provided
that Executive has executed and delivered to the Employer prior thereto the
Mutual Release, that such Mutual Release has not prior thereto been revoked or
rescinded in any way by Executive and that no violation of any of the provisions
thereof shall have occurred) (a) (as severance pay) an amount equal to Base
Salary for the one-year period from the final date of the Employment Period
through the first anniversary thereof, payable in accordance with the Employer's
payroll policy from time to time in effect (and at the same times such Base
Salary would have been paid absent a termination of the Employment Period).
Executive 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 reimburse Executive for all premiums for such COBRA continuation
coverage through and including the month in which Executive attains the age of
65), or required under the terms of any death, insurance, or retirement plan or
program provided by the Employer and to which Executive was a participant at the
time of his death or disability giving rise to such termination, including, but
not limited to, any short-term or long-term disability plan or program, if
applicable.
8. Pre-emptive Rights.
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A. General. Except for issuances of Common Stock or any
securities containing rights or options to acquire shares of Common Stock (i)
pursuant to a bona fide underwritten public offering registered under the
Securities Act of 1933, as amended (the "Securities Act"), (ii) as consideration
in connection with the acquisition from an unaffiliated third party of all or
part of another company or business (whether by a purchase of stock or assets or
otherwise), (iii) to a lender in connection with its loan to the Employer or any
of its subsidiaries, (iv) upon the conversion or exercise of any securities of
the Employer or options or rights to acquire securities of the Employer, or (v)
to individual directors, officers, managers and employees of the Employer or its
subsidiaries (other than to any person who is an officer or employee of TJS), if
the Employer intends to issue any shares of capital stock of the Employer (or
any securities convertible into or exercisable or exchangeable for shares of
capital stock of the Employer) at any time during the Employment Period (a
"Subsequent Issuance"), the Employer will, at least 10 days prior to the
Subsequent Issuance, notify Executive in writing (the "Issuance Notice") of the
price of and any material terms and conditions relating to the proposed
Subsequent Issuance.
B. Election by Executive. Executive may elect to purchase (at
the same price and on the same terms and conditions (with the same rights,
duties, obligations and privileges) as set forth in the Issuance Notice) up to
the Pro Rata Portion (as defined below) of the total number of shares of capital
stock (or other such securities) to be issued in the Subsequent Issuance (the
"Issued Shares"). "Pro Rata Portion" means a percentage of the Issued Shares
equal to the quotient obtained by dividing (i) the number of shares of
outstanding Common Stock (including the number of shares of Common Stock
issuable upon exercise of any vested, outstanding options for Common Stock that
have been granted to Executive) that are held by Executive by (ii) the total
number of shares of Common Stock then outstanding (including the number of
shares of Common Stock issuable upon exercise of any vested, outstanding options
for Common Stock granted to Executive, Xxx Xxxxx and Xxxxxx Xxxxxxx). If
Executive exercises the preemptive right hereunder and the Subsequent Issuance
includes more than one class of stock or securities, Executive shall be required
to purchase the same strip of securities (i.e., classes of securities in the
same proportion) as are being offered by the Employer.
C. Manner of Election. The election of Executive must be made
in writing and delivered to the Employer within 10 days after receipt by the
Employer of the Issuance Notice. If after notifying the Stockholders of a
Subsequent Issuance, the Employer elects not to proceed with the Subsequent
Issuance, any elections made by Executive with respect to such Subsequent
Issuance shall be deemed rescinded. In the event that the sale of all securities
contemplated by a Subsequent Issuance shall not have occurred within 180 days of
the date of delivery of the Issuance Notice, the securities remaining unsold
shall not thereafter be sold without the Employer again complying with the terms
and conditions of this Section 8.
C. Exclusions. A Subsequent Issuance shall not include (and
therefore Executive will not have a preemptive right in respect of) any
issuances of capital stock (or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Employer) made pro rata to the
holders of a class of capital stock, as a dividend on, subdivision of or other
distribution in respect of, such class of capital stock.
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9. 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
primary residence in the case of Executive, or to its principal office in the
case of the Employer.
10. 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 sought to be charged.
11. 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 (including the Original
Agreement), 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 Executive. 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.
12. Headings. The headings in this Agreement are inserted for
convenience only and are not to be considered a construction of the provisions
hereof.
13. 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 and the same agreement.
14. Attorneys' Fees. The Employer shall pay for all legal fees and
expenses associated with the preparation of this Agreement.
15. Successors.
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A. Personal Services Contract. This Agreement is personal to
Executive and, without the prior written consent of the Employer, shall not be
assignable by Executive. This Agreement shall inure to the benefit of and be
enforceable by Executive's legal representatives.
B. Successors and Assigns of the Employer. This Agreement
shall inure to the benefit of and be binding upon the Employer and its
successors and assigns.
C. Additional Obligation of the Employer. 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 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.
16. Recitals. The recitals to this Agreement are incorporated herein
as an integral part hereof and shall be considered as substantive and not
precatory language.
17. 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.
18. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Illinois, and any court action
commenced to enforce this Agreement shall have as its sole and exclusive venue
the County of Xxxx, Illinois. Each of the Employer and Executive irrevocably and
unconditionally: (i) agrees that any proceeding arising out of this Agreement
may be brought in the applicable court having jurisdiction over the County of
Xxxx, Illinois, (ii) consents to such jurisdiction, (iii) waives any objection
to such venue, and (iv) waives trial by jury in any proceeding relating to this
Agreement or any of the matters set forth herein.
19. Certain Defined Terms.
"Adjusted EBITDA" means the EBITDA for any period reasonably
adjusted to account for any unusual and non-recurring items reflected on the
Employer's financial statements for such period.
"Base EBITDA" means the Adjusted EBITDA for the three-month
period ending June 30, 2001, as further detailed on Exhibit B attached hereto.
"EBITDA" means the amount of the Employer's net income plus
the following to the extent deducted in calculating such net income: (i)
interest expense, (ii) income tax expense, (iii) amortization of intangible
assets and (iv) depreciation of tangible assets, as such income, expenses,
amortization and depreciation are reflected on the Employer's financial
statements for any period prepared in accordance with the Employer's past
practice.
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"EBITDA Improvement" means (i) in case of the First ECI
Period, four (4) times the increase, if any, in Adjusted EBITDA for the three
months ending June 30, 2002 less the Base EBITA, and (ii) in the case of the
Second ECI Period, four (4) times the increase, if any, in Adjusted EBITA for
the three months ending December 31, 2002 less the Adjusted EBITDA for the three
months ending June 30, 2002.
"ECI" (with respect to any given period) means twenty-four
percent (24%) of the EBITA Improvement with respect to such period.
* * * * *
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IN WITNESS WHEREOF, the parties have set their signatures on the date
first written above.
SECURITY ASSOCIATES
INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxxx
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Its: CEO
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/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
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