1
EXHIBIT 10.1
SETTLEMENT AGREEMENT AND GENERAL RELEASE
THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE (the "RELEASE") is made
and entered into as of this 25th day of July, 2001, by and between Security
Associates International, Inc., a Delaware corporation (the "Company"), and
Xxxxx X. Xxxxxxx ("XXXXXXX").
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. Termination of Employment. Effective the close of business on August
31, 2001, Xxxxxxx and the Company agree that (a) Xxxxxxx'x employment with the
Company will terminate and (b) Xxxxxxx will resign from his positions as an
officer and director of the Company. Xxxxxxx further agrees that he will not
hereafter seek reinstatement, recall or re-employment with the Company.
2. Settlement Payment.
(a) As a settlement payment, the Company shall pay Xxxxxxx (i) the
sum of $225,000, in installments of $56,250 on each of September 1, 2001,
December 1, 2001, March 1, 2002 and June 1, 2002; (ii) the sum of $200,000, in
installments of $50,000 on each of September 1, 2002, December 1, 2002, March 1,
2003 and June 1, 2003; and (iii) the sum of $175,000, in installments of $43,750
on each of September 1, 2003, December 1, 2003, March 1, 2004 and June 1, 2004.
(b) To the extent Xxxxxxx is subject to any lockups or other
restrictions on the transfer of his shares of the Company's common stock (other
than any restrictions imposed by law), the Company shall seek to remove such
lockups and other restrictions as soon as practicable after this Release becomes
effective in accordance with Paragraph 10(c) hereof.
(c) The Company shall issue Xxxxxxx a nonstatutory stock option to
purchase 150,000 shares of the Company's common stock in the form as attached
hereto as Exhibit A, with an exercise price of $2.50 per share and an expiration
date three years from the date of issuance.
(d) The Company also shall pay Xxxxxxx the sum of $60,000, payable
in a single sum on the date this Release become effective in accordance with
Paragraph 10(c) hereof.
(e) All payments made hereunder shall be considered "wages" subject
to FICA, FUTA and income tax withholding. Twenty-five thousand dollars ($25,000)
of the settlement payments hereunder shall be in consideration of the release of
any claim under the Age Discrimination in Employment Act of 1967, as amended,
and as described in Paragraph 3(a) hereof, and Xxxxxxx agrees that such
consideration is in addition to anything of value to which he is already
entitled. The remainder of the settlement payments, and the release described
below in Paragraph 3(b), shall be in consideration of both the release of all
other claims described below in Paragraph 3(a) and the Protective Agreement
described in Paragraph 7.
2
Xxxxxxx agrees that he has been paid the full amount of earned but unused
vacation pay to which he is entitled and that he is not owed any amounts as
reimbursement for expenses incurred during the course of his employment.
(f) No other sums (contingent or otherwise) shall be paid to Brannen
in respect of his employment by the Company, and any such sums (whether or not
owed) are hereby expressly waived by Brannen. The foregoing notwithstanding,
Brannen may elect to continue his health and dental insurance coverage, which
shall continue until Xxxxxxx (i) attains the age of 65, or (ii) becomes eligible
for coverage under another group health plan that does not impose preexisting
condition limitations on Xxxxxxx'x coverage, whichever is earlier. Such coverage
shall be provided through the Company's group health plans under COBRA, and, if
the Company is unable to extend COBRA continuation coverage until the earlier of
(i) or (ii) above, the Company shall pay the full cost of the premiums for the
most comparable health and dental insurance coverage that Xxxxxxx may be able to
purchase through the individual or group insurance market. In addition, Xxxxxxx
shall be entitled to receive his account balance, if any, under the Company's
Section 401(k) Plan in accordance with the terms of such Plan.
3. General Release.
(a) As a material inducement to the Company to enter into this
Release and in consideration of the payments to be made by the Company to
Xxxxxxx in Paragraph 2 above and the release contained in Paragraph 3(b) below,
Xxxxxxx, with full understanding of the contents and legal effect of this
Release and having the right and opportunity to consult with his counsel,
releases and discharges the Company, its shareholders, officers, directors,
supervisors, members, managers, employees, agents, representatives, attorneys,
parent companies, divisions, subsidiaries and affiliates, and all related
entities of any kind or nature, and its and their predecessors, successors,
heirs, executors, administrators, and assigns (collectively, the "COMPANY
RELEASED PARTIES") from any and all claims, actions, causes of action,
grievances, suits, charges, or complaints of any kind or nature whatsoever, that
he ever had or now has, whether fixed or contingent, liquidated or unliquidated,
known or unknown, suspected or unsuspected, and whether arising in tort,
contract, statute, or equity, before any federal, state, local, or private
court, agency, arbitrator, mediator, or other entity, regardless of the relief
or remedy. Without limiting the generality of the foregoing, it being the
intention of the parties to make this Release as broad and as general as the law
permits, this Release specifically includes any and all subject matter and
claims arising from any alleged violation by the Company Released Parties under
the Age Discrimination in Employment Act of 1967, as amended; Title VII of the
Civil Rights Act of 1964, as amended; the Civil Rights Act of 1866, as amended
by the Civil Rights Act of 1991 (42 U.S.C. ss. 1981); the Rehabilitation Act of
1973, as amended; the Employee Retirement Income Security Act of 1974, as
amended; the Illinois Wage Payment and Collection Act; the Illinois Human Rights
Act, the Xxxx County Human Rights Ordinance, and other similar state or local
laws; the Americans with Disabilities Act; the Family and Medical Leave Act; the
Equal Pay Act; Executive Order 11246; Executive Order 11141; and any other
statutory claim, employment or other contract or implied contract claim
(including, but not limited to, any claims arising under that certain Employment
Agreement dated August 29, 1996 by and between the Company and Xxxxxxx, as
amended on July 15, 1999 (the "EMPLOYMENT AGREEMENT")), or common law claim for
wrongful discharge, breach of an implied covenant of
2
3
good faith and fair dealing, defamation, or invasion of privacy arising out of
or involving his employment with the Company, the termination of his employment
with the Company, or involving any continuing effects of his employment with the
Company or termination of employment with the Company. Xxxxxxx further
acknowledges that he is aware that statutes exist that render null and void
releases and discharges of any claims, rights, demands, liabilities, action and
causes of action which are unknown to the releasing or discharging party at the
time of execution of the release and discharge. Xxxxxxx hereby expressly waives,
surrenders and agrees to forego any protection to which he would otherwise be
entitled by virtue of the existence of any such statute in any jurisdiction
including, but not limited to, the State of Illinois.
(b) As a material inducement to Xxxxxxx to enter into this Release
and in consideration of his releases and other items of value provided by him
hereunder, the Company, with full understanding of the contents and legal effect
of this Release, and having the right and opportunity to consult with its
counsel, releases and discharges Xxxxxxx and his successors, heirs, executors,
administrators, representatives and assigns (collectively, the "XXXXXXX RELEASED
PARTIES") from any and all claims, actions, causes of action, grievances, suits,
charges, or complaints of any kind or nature whatsoever, that it ever had or now
has or have, whether fixed or contingent, liquidated or unliquidated, known or
unknown, suspected or unsuspected, and whether arising in tort, contract,
statute, or equity, before any federal, state, local, or private court, agency,
arbitrator, mediator, or other entity, regardless of the relief or remedy.
Without limiting the generality of the foregoing, it being the intention of the
parties to make this Release as broad and as general as the law permits, this
Release specifically includes any and all claims arising from any alleged
violation by the Xxxxxxx Released Parties under any statute, law, ordinance,
regulation, or contract, and any other statutory claim, employment or other
contract claim or implied contract claim (including, but not limited to, claims
arising under the Employment Agreement), or common law claim for defamation, or
invasion of privacy, or arising out of or involving his employment with the
Company, the termination of his employment with the Company, or involving any
continuing effects of his employment with the Company or termination of his
employment with the Company. The Company further acknowledges that it is aware
that statutes exist that render null and void releases and discharges of any
claims, rights, demands, liabilities, action and causes of action which are
unknown to the releasing or discharging party at the time of execution of the
release and discharge. The Company hereby expressly waives, surrenders and
agrees to forego any protection to which it otherwise would be entitled by
virtue of the existence of any such statute in any jurisdiction including, but
not limited to, the State of Illinois.
4. Covenant Not to Xxx.
(a) Xxxxxxx, for himself, his heirs, executors, administrators,
successors and assigns agrees not to bring, file, charge, claim, xxx or cause,
assist, or permit to be brought, filed, charged or claimed any action, cause of
action, or proceeding regarding or in any way related to any of the claims
described in Paragraph 3(a) hereof, and further agrees that this Release is,
will constitute and may be pleaded as, a bar to any such claim, action, cause of
action or proceeding. If any government agency or court assumes jurisdiction of
any charge, complaint, or cause of action covered by this Release, Xxxxxxx will
not seek and will not accept any personal equitable or monetary relief in
connection with such investigation, civil action, suit or legal proceeding.
3
4
(b) The Company, for itself, its successors and it assigns, agrees
not to bring, file, charge, claim, xxx or cause, assist, or permit to be
brought, filed, charged or claimed any action, cause of action, or proceeding
regarding or in any way related to any of the claims released under Paragraph
3(b) hereof, and further agrees that this Release is, will constitute and may be
pleaded as, a bar to any such claim, action, cause of action or proceeding. If
any government agency or court assumes jurisdiction of any charge, complaint, or
cause of action covered by this Release, the Company will not seek and will not
accept any personal equitable or monetary relief in connection with such
investigation, civil action, suit or legal proceeding.
5. Indemnification. Xxxxxxx will fully indemnify the Company and its
shareholders, members, managers, officers, directors, employees and independent
contractors against and will hold its shareholders, members, managers, officers,
directors, employees and independent contractors harmless from any and all
claims, costs, damages, demands, expenses (including without limitation
attorneys' fees), judgments, losses or other liabilities of any kind or nature
whatsoever arising from or directly or indirectly related to any or all of this
Release and the conduct of Xxxxxxx hereunder, including without limitation any
material breach or failure to comply with any or all of the provisions of this
Release.
6. No Disparaging, Untrue Or Misleading Statements. From and after
July 25, 2001, Xxxxxxx represents that he has not made, and agrees that he will
not make, to any third party any disparaging, untrue, or misleading written or
oral statements about or relating to the Company or its products or services (or
about or relating to any officer, director, agent, employee, or other person
acting on the Company's behalf). Xxxxxxx acknowledges that his continuing
entitlement to payments under Paragraph 2 of the Release shall be conditioned
upon his continuing compliance with Paragraphs 6, 7 and 10(a) of the Release and
any violation of Paragraphs 6, 7 or 10(a) by Xxxxxxx shall terminate the
Company's obligation to continue to make payments under Paragraph 2.
7. Protective Agreement.
(a) Xxxxxxx 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 Company acquired by Xxxxxxx during his
relationship with the Company. 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 Company; (b) any papers,
data, records, processes, methods, techniques, systems, models, samples,
devices, equipment, compilations, invoices, customer lists or documents of the
Company; (c) any confidential information or trade secrets of any third party
provided to the Company in confidence or subject to other use or disclosure
restrictions or limitations; and (d) any other information, written, oral or
electronic, whether existing now or at some time in the future, which pertains
to the Company's affairs or interests or with whom or how the Company does
business. The Company acknowledges and agrees that Confidential Information does
not include (i) information properly in the public domain, or (ii) information
in Xxxxxxx'x possession prior to the date of his original employment with the
Company and its predecessors, except to the extent that such information is or
has become a trade secret of the
4
5
Company or is or otherwise has become the property of the Company. Xxxxxxx
further acknowledges and agrees that he is estopped from and will not dispute in
any proceeding the enforceability of this Paragraph 7.
(b) Xxxxxxx agrees that, through August 31, 2004, he will not,
directly or indirectly, except on behalf of the Company:
(i) contact, solicit or direct any person or entity to contact
or solicit, any of the Company's customers or prospective customers for the
purpose of providing any products and/or services that are the same as or
similar to the products and services provided by the Company to its customers
both during the term of his employment, and through August 31, 2004, or for the
purpose of otherwise interfering with the business relationships between the
Company and its customers or prospective customers; or
(ii) solicit or accept if offered to him, with or without
solicitation, on his own behalf or on behalf of any other person or entity, the
services of any person who is a current employee of the Company (or was an
employee of the Company during the year preceding such solicitation), nor
solicit any of the Company's current employees (or any individual who was an
employee of the Company during the year preceding such solicitation) to
terminate employment or an engagement with the Company, nor agree to hire any
current employee (or any individual who was an employee of the Company during
the year preceding such hire) of the Company into employment with him or any
other person or entity; or
(iii) enter into any agreement with any of the Company's
customers, prospective customers or suppliers to provide services or products
that are the same as or similar to the services or products sold or made
available by the Company; or
(iv) become associated with 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, agent or in any other capacity, involved in the marketing or providing
of services or products then constituting ten percent (10%) or more of the
current year's (or most recent completed year's) annual revenues of the Company.
(c) Xxxxxxx acknowledges and agrees that the scope described above
is necessary and reasonable in order to protect the Company 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 7 to such employer and he
consents to and the Company is given permission to disclose the existence of
this Paragraph 7 to such employer.
(d) For purposes of this Paragraph 7: (i) "CUSTOMER" is defined as
any person or entity that purchased any type of product and/or service from the
Company or is or was doing business with the Company or Xxxxxxx within the
twelve (12) month period immediately preceding termination of Xxxxxxx'x
employment; (ii) "PROSPECTIVE CUSTOMER" is defined as any person or entity
contacted or solicited by the Company or Xxxxxxx (whether directly or
indirectly) or who contacted the Company or Xxxxxxx (whether directly or
indirectly) within the twelve (12) month period immediately preceding
termination of Xxxxxxx'x employment for the purpose of having such persons or
entities become a customer of the Company; and (iii) "SUPPLIER" is defined
5
6
as any person or entity who is or was supplying products or services to the
Company within the twelve (12) month period immediately preceding termination of
Xxxxxxx'x employment.
(e) It is agreed that breach of this Paragraph 7 will result in
irreparable harm and continuing damages to the Company and its business and that
the Company'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 Company 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 Company posting bond and without proving special damages or
irreparable injury, enjoining and restricting the breach, or threatened breach,
of this Paragraph 7, including, but not limited to, any injunction restraining
the breaching party from disclosing, in whole or part, any Confidential
Information. Xxxxxxx will pay all of the Company's costs and expenses, including
reasonable attorneys' and accountants' fees, incurred in successfully enforcing
this Paragraph 7.
8. Severability. If any provision of this Release shall be found by a
court to be invalid or unenforceable, in whole or in part, then such provision
shall be construed and/or modified or restricted to the extent and in the manner
necessary to render the same valid and enforceable, or shall be deemed excised
from this Release, as the case may require, and this Release shall be construed
and enforced to the maximum extent permitted by law, as if such provision had
been originally incorporated herein as so modified or restricted, or as if such
provision had not been originally incorporated herein, as the case may be. The
parties further agree to seek a lawful substitute for any provision found to be
unlawful; provided, that, if the parties are unable to agree upon a lawful
substitute, the parties desire and request that a court or other authority
called upon to decide the enforceability of this Release modify the Release so
that, once modified, the Release will be enforceable to the maximum extent
permitted by the law in existence at the time of the requested enforcement.
9. Waiver. A waiver by the Company of a breach of any provision of this
Release by Brannen shall not operate or be construed as a waiver or estoppel of
any subsequent breach by Xxxxxxx. No waiver shall be valid unless in writing and
signed by an authorized officer of the Company.
10. Miscellaneous Provisions.
(a) Xxxxxxx agrees that he will keep the terms and amounts set forth
in this Release completely confidential and will not disclose any information
concerning this Release's terms and amounts to any person other than his
attorney, accountant, tax advisor, or immediate family.
(b) Xxxxxxx represents and certifies that he has carefully read and
fully understands all of the provisions and effects of this Release, has
knowingly and voluntarily entered into this Release freely and without coercion,
and acknowledges that on July 25, 2001, the Company advised him to consult with
an attorney prior to executing this Release and further advised him that he had
twenty-one (21) days (until August 15, 2001) within which to consider this
Release. Xxxxxxx is voluntarily entering into this Release and neither the
Company nor its
6
7
agents, representatives, or attorneys made any representations concerning the
terms or effects of this Release other than those contained in the Release
itself.
(c) Xxxxxxx acknowledges that he has seven (7) days from the date
this Release is executed in which to revoke his acceptance of this Release, and
this Release will not be effective or enforceable until such seven (7)-day
period has expired.
11. Complete Agreement. This Release sets forth the entire agreement
between the parties, and fully supersedes any and all prior agreements or
understandings between the parties pertaining to actual or potential claims
arising from Xxxxxxx'x employment with the Company or the termination of
Xxxxxxx'x employment with the Company.
12. Reimbursement. If Xxxxxxx or his heirs, executors, administrators,
successors or assigns (a) breaches Paragraphs 6, 7 or 10(a) of this Release, or
(b) attempts to challenge the enforceability of this Release, or (c) files a
charge of discrimination, a lawsuit, or a claim of any kind for any matter
released herein, Xxxxxxx or his heirs, executors, administrators, successors or
assigns shall be obligated to tender back to the Company all payments made to
him or them under this Release (except for $25,000, which represents the
consideration received by Xxxxxxx in exchange for the release and waiver of
rights or claims under the Age Discrimination in Employment Act of 1967, as
amended), and to indemnify and hold harmless the Company from and against all
liability, costs and expenses, including attorneys' fees, arising out of said
breach, challenge or action by Xxxxxxx, his heirs, executors, administrators,
successors or assigns.
13. Future Cooperation. Xxxxxxx agrees that, during a period following
the termination of his employment as agreed upon by Xxxxxxx and the Company (but
in any event not to exceed twenty-six (26) weeks and not to exceed ten (10)
hours in any one week), he shall reasonably cooperate with the Company to ensure
an orderly transition of all projects and related business matters. In addition,
in connection with any and all claims, disputes, negotiations, investigations,
lawsuits or administrative proceedings involving the Company, Xxxxxxx agrees to
make himself available, upon reasonable notice from the Company and without the
necessity of subpoena, to provide information or documents, provide declarations
or statements to the Company, meet with attorneys or other representatives of
the Company, prepare for and give depositions or testimony, and/or otherwise
cooperate in the investigation, defense or prosecution of any or all such
matters.
14. Survivor Benefits. In the event of Xxxxxxx'x death prior to June 1,
2004, the Company shall continue to pay the settlement payments as set forth in
Paragraph 2(a) hereof to Xxxxxxx'x surviving spouse, if his spouse survives him.
If his spouse pre-deceases him, no further payments shall be made hereunder. In
addition, in the event of Xxxxxxx'x death prior to the date he (i) attains the
age 65, or (ii) becomes eligible for coverage under another group health plan
that does not impose preexisting condition limitations on his coverage,
whichever is earlier, Xxxxxxx'x surviving spouse shall be entitled to receive
health and dental insurance benefits as set forth in Paragraph 2(f) hereof until
such date as Xxxxxxx would have attained age 65.
15. Amendment. This Release may not be altered, amended, or modified
except in writing signed by both Xxxxxxx and the Company.
7
8
16. Joint Participation. The parties hereto participated jointly in the
negotiation and preparation of this Release, and each party has had the
opportunity to obtain the advice of legal counsel and to review and comment upon
the Release. Accordingly, it is agreed that no rule of construction shall apply
against any party or in favor of any party. This Release shall be construed as
if the parties jointly prepared this Release, and any uncertainty or ambiguity
shall not be interpreted against one party and in favor of the other.
17. Applicable Law. This Release shall be governed by, and construed in
accordance with, the laws of the State of Illinois, and any court action
commenced to enforce this Release shall have as its sole and exclusive venue the
County of Xxxx, Illinois.
18. Execution of Release. This Release may be executed in several
counterparts, each of which shall be considered an original, but which when
taken together, shall constitute one Release.
PLEASE READ THIS AGREEMENT AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS
BEFORE SIGNING IT. THIS AGREEMENT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS, INCLUDING THOSE UNDER THE FEDERAL AGE DISCRIMINATION IN EMPLOYMENT ACT,
AND OTHER FEDERAL, STATE AND LOCAL LAWS PROHIBITING DISCRIMINATION IN
EMPLOYMENT.
IN WITNESS WHEREOF, Xxxxxxx and the Company have voluntarily signed
this Settlement Agreement and General Release consisting of eight (8) pages on
the date set forth above.
Security Associates International, Inc. Xxxxx X. Xxxxxxx
By: /s/ Xxxxxx X. Xxxxxxxxx /s/ Xxxxx X. Xxxxxxx
----------------------------------------- -------------------------
Its: Chairman of Compensation Committee
---------------------------------------
8
