EXHIBIT 10.2
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "Agreement") is made and entered into as
of the 1st day of January, 2002, by and between Security Associates
International, Inc., on behalf of itself and its subsidiaries and affiliates
(collectively, the "Company"), and TJS Corporation ("Consultant"). Certain
capitalized terms used herein are set forth in Paragraph 20 below.
RECITALS
A. The Company desires that Consultant provide services for the benefit
of the Company, and Consultant desires to accept an engagement with the Company,
upon the terms and conditions set forth herein.
B. The Company and Consultant acknowledge that Consultant is, and will
continue in accordance with the terms of this Agreement to act as, a consultant
to the senior management team of the Company.
NOW, THEREFORE, in consideration of the above premises and the
following mutual covenants and conditions, the parties agree as follows:
1. Engagement. During the Engagement Period (as defined below), the
Company shall engage Consultant, and Consultant hereby accepts such engagement,
in each case on the terms and conditions set forth in this Agreement. The
parties understand that the Company is entering into this Agreement with
Consultant in reliance on Consultant procuring access to Xxxxxx X. Xxxxxxxxx
("Xxxxxxxxx") and his expertise and experience. As such, Consultant agrees that
Xxxxxxxxx shall be available to and shall render to the Company all of the
consulting and other services that are the subject of this Agreement.
2. Duties. Consultant shall, during the Engagement Period, provide such
consulting services (and perform such related activities) within the scope of
expertise and experience of Consultant and Xxxxxxxxx as are reasonably requested
from time to time by the Company's Board of Directors (the "Board"), and
Consultant shall report to, and follow the general directions of, the Board.
Consultant and Xxxxxxxxx shall diligently, competently and faithfully perform
all such services and activities and shall devote the necessary energy,
attention and skill to the performance of such services and activities. During
the Engagement Period, Consultant shall serve the Company on a part-time basis,
and the services and activities designated to Consultant from time to time in
accordance with this Agreement shall reasonably recognize the part-time extent
of its commitment hereunder. The Company acknowledges and understands that
Consultant and Xxxxxxxxx currently own or participate in certain other
businesses and activities (excluding other businesses engaged in the security
alarm and monitoring industry), and therefore expressly agrees that it shall not
be considered a violation of the foregoing for Consultant to serve as a
consultant to any such other business or enterprise or for Xxxxxxxxx to serve on
corporate, industry, religious, civic or charitable boards or committees, in
each case so long as such activities do not interfere in any material respect
with the performance of Consultant's duties and responsibilities reasonably
designated to Consultant from time to time in accordance with this Agreement or
violate any of the provisions of Paragraph 5 below.
3. Term of Engagement. The term of the Consultant's engagement with the
Company (the "Engagement Period") shall commence on the date first set forth
above and extend until December 31, 2003, unless earlier terminated as set forth
in Paragraph 6 below. In connection with the expiration or termination of the
Engagement Period for any reason, Consultant agrees that it shall execute and
deliver to the Company, and the Company agrees that it shall execute and deliver
to Consultant, a mutual release (in a form reasonably acceptable to Consultant
and the Company) of any and all claims that either then has or in the future may
have against the other with respect to events or occurrences prior to the date
of such expiration or termination (other than with respect to unsatisfied
obligations under this Agreement) (the "Mutual Release").
4. Compensation.
A. Base Remuneration. During the Engagement Period, the Company
shall pay Consultant remuneration of $240,000 annually (the "Base Amount"),
payable in equal monthly installments in advance. Subject to Paragraph 4F below,
the Base Amount 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, Consultant.
B. Earned Cash Incentive Bonus.
(i) Provided that Consultant is, on June 30, 2002, then engaged by
the Company (or no longer engaged by the Company solely as a result of
a termination of Consultant by the Company not for Cause or a
resignation by Consultant for Good Reason), the Company shall, on or
prior to September 30, 2002, pay to Consultant 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"), seventy-five percent (75%) of
which (the "Minimum First ECI Non-Cash Amount") shall be payable in
duly authorized shares of the Company's common stock, par value $0.001
per share ("Common Stock"), with the number of such shares to be issued
being determined by dividing the Minimum First ECI Non-Cash Amount by
$2.50 (subject to adjustment for any subdivision or combination of
Common Stock occurring after the date of this Agreement).
(ii) Provided that Consultant is, on December 31, 2002, then engaged
by the Company (or no longer employed by the Company solely as a result
of a termination of Consultant by the Company not for Cause or a
resignation by Consultant for Good Reason), the Company shall, on or
prior to March 31, 2003, pay to Consultant 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"), seventy-five percent (75%)
of which (the "Minimum Second ECI Non-Cash Amount") shall be payable in
duly authorized shares of Common Stock, with the number of such shares
to be issued being determined by dividing the Minimum Second ECI
Non-Cash Amount by $2.50 (subject to adjustment for any subdivision or
combination of Common Stock occurring after the date of this
Agreement).
C. No Other Benefits. Consultant shall not be entitled to any life
insurance, disability insurance, medical, prescription, dental or health
insurance or dependent coverage,
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vacation, sick leave, savings, pension or retirement plans or other benefit
plans or programs maintained by the Company at any time for the benefit of all
or any portion of its employees or other consultants.
D. Additional Consideration for Entry Into this Agreement. As
additional consideration for the Consultant's execution and delivery of this
Agreement (and performance of services hereunder), the Company shall grant to
Consultant effective as of the date of approval of the Company's Stock Option
Plan to be adopted at the Company's annual meeting of stockholders scheduled to
occur on July 10, 2002 (the "New Option Plan"), a nonstatutory stock option to
purchase 600,000 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 August
15, 2011 (subject to earlier termination as required by the New Option Plan
and/or the form attached hereto as Exhibit A), with such option being vested
(i.e., having become exercisable) with respect to one-third (i.e., 200,000) of
the applicable shares of Common Stock on the effective date of such grant and
further vesting (i.e., becoming exercisable) with respect to one-third (i.e.,
200,000) of the applicable shares of Common Stock on each of December 31, 2002
and December 31, 2003 (provided, in each case, that Consultant is, on such
applicable date, then engaged by the Company or no longer engaged by the Company
solely as a result of a termination of Consultant by the Company not for Cause
or a termination by Consultant for Good Reason).
E. Expenses. The Company shall reimburse Consultant for all
reasonable and necessary business expenses incurred by it in performance of its
duties hereunder, provided Consultant submits paid receipts or other
documentation acceptable to the Company.
F. Taxes and Tax Returns. Consultant shall file all tax returns and
reports required to be filed by it on the basis that Consultant is an
independent contractor (and Xxxxxxxxx is an employee of Consultant), rather than
an employee of the Company, as defined in Treasury Regulation
ss.31.3121(d)-1(c)(2), and Consultant shall indemnify the Company for the amount
of any employment taxes paid by the Company as the result of the Company not
withholding employment taxes from any amount paid or otherwise provided to
Consultant hereunder.
5. Protective Agreements.
A. Confidential Information. Consultant agrees on behalf of itself
and Xxxxxxxxx that neither Consultant nor Xxxxxxxxx will, for any reason
whatsoever, whether voluntarily or involuntarily, use for itself or himself or
for any other person or entity (including, but not limited to, any competitor of
the Company) or disclose to any person or entity any "Confidential Information"
specifically related to the Company acquired by Consultant or Xxxxxxxxx from the
Company during its or his relationship with the Company or any of its
predecessors. Confidential Information includes but is not limited to: (i) 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 specifically related to it; (ii) any papers,
data, records, processes, methods, techniques, systems, models, samples,
devices, equipment, compilations, invoices, customer lists or documents of the
Company; (iii) 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; (iv) the terms of any
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agreement between the Company and any employee, subscriber, customer, dealer or
supplier, (v) pricing strategy, (vi) financial results, (vii) strategic systems
software; and (viii) 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 (x)
information that has properly entered the public domain (through no fault or
action of Consultant or Xxxxxxxxx), or (y) information that Consultant is able
to demonstrate was in its possession prior to the date of origination of his
relationship with the Company and its predecessors, except to the extent that
such information is or has become a trade secret of the Company or is or
otherwise has become the property of the Company. Consultant agrees and
acknowledges that as of the end of the Engagement Period, it shall return to the
Company any and all of its property, tangible or intangible, relating to its
business, which Consultant or Xxxxxxxxx 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. Consultant further acknowledges and agrees that each of it and
Xxxxxxxxx is estopped from and will not dispute in any proceeding the
enforceability of this Paragraph 5.
B. Additional Restrictions. Except on behalf of the Company,
Consultant agrees that neither it nor Xxxxxxxxx will directly (and nor will
either cause any person or entity to):
(1) during the Engagement Period (except in the performance of his
services and activities hereunder) or at any time prior to the third
anniversary of the date of the expiration or termination thereof, use
Company information related to its customers to contact or solicit, or
direct any person or entity to contact or solicit, any of the Company's
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 Engagement Period, or
for the purpose of otherwise interfering with the business
relationships between the Company and its customers; or
(2) without the prior express written consent of the Company, during
the Engagement 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, 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 independent contractor of the Company into
employment with him or any other person or entity; 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 Company's suppliers to provide services or
products that are the same as or similar to the services or products
sold to the Company; or
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(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 Company; provided, however, that Consultant
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 Company, include any
type of recommendation or endorsement of any product or service offered
by any competitor of the Company.
C. Special Acknowledgment of Consultant. Consultant 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 Consultant or
Xxxxxxxxx becomes employed or engaged by another person or entity in a manner
that does or would reasonably be considered to conflict with this Paragraph 5,
Consultant will be required to disclose the existence of this Paragraph 5 to
such person or entity and Consultant consents to and the Company is given
permission to disclose the existence of this Paragraph 5 to such person or
entity.
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 Company or is or was doing business with the
Company or Consultant (including, but not limited to, any security alarm dealer
and any subscriber of any of the products or services of the Company or any of
its affiliates) within the twelve (12) month period immediately preceding
termination of Consultant's engagement; 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 Company or to the
Company's dealers within the twelve (12) month period immediately preceding
termination of Consultant's engagement.
E. Special Remedies. It is agreed that breach of this Paragraph 5
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 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 Engagement Period shall terminate upon the first
to occur of the following events:
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A. On December 31, 2003.
B. Upon Death or Disability. Upon Salvatore's death or the date
Consultant is given written notice that Xxxxxxxxx has been determined to be
disabled by the Company. For purposes of this Agreement, Xxxxxxxxx shall be
deemed to be disabled if Xxxxxxxxx, as a result of illness or incapacity, shall
be unable to perform substantially reasonably requested services or activities
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
Consultant's engagement by the Company for disability shall be communicated to
Consultant by written notice and shall be effective on the thirtieth (30th) day
after receipt of such notice by Consultant, unless Xxxxxxxxx ceases to be
disabled and returns to full performance of duties before such thirtieth (30th)
day.
C. For Cause. On the date the Company provides Consultant with
written notice that it is being terminated for "Cause". For purposes of this
Agreement, "Cause" shall mean Consultant's or Salvatore's (i) willful and
continued failure to perform substantially such reasonable services and
activities as are designated from time to time by the Board, which failure shall
continue for thirty (30) days, after notice for such substantial performance
failure is provided to Consultant specifying the manner in which the Company
believes Consultant has not substantially performed, (ii) engaging in willful
misconduct that is materially injurious to the Company, 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 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
Consultant shall be considered "willful" unless it is done, or omitted to be
done, by Consultant in bad faith or without reasonable belief that his action or
omission was in the best interests of the Company).
D. For Good Reason. On the date Consultant terminates its engagement
for "Good Reason." For purposes of this Agreement, "Good Reason" means:
(1) any breach of this Agreement by the Company that is not remedied
by the Company within 30 days after receipt of notice thereof from
Consultant; or
(2) any failure by the Company 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 Company within 15 days after receipt of notice thereof from
Consultant.
A termination of engagement by Consultant for Good Reason shall be
effectuated by giving the Company written notice ("Notice of Termination for
Good Reason") of the termination within three (3) months of the event
constituting Good Reason, setting forth in reasonable detail the specific
conduct of the Company that constitutes Good Reason and the specific provisions
of this Agreement on which Consultant relies. A termination of engagement by
Consultant 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. By Consultant for Any Other Reason. On the date Consultant
terminates its engagement for any reason, other than a reason set forth in
Paragraph 6D, provided that Consultant shall give the Company three (3) months
written notice prior to such date of his intention to terminate this Agreement.
F. By the Company for Any Other Reason. On the date the Company
terminates Consultant's engagement for any reason, other than a reason set forth
in Paragraph 6C, provided that the Company shall give Consultant three (3)
months written notice prior to such date of its intention to terminate this
Agreement.
7. Compensation Upon Termination. If the Engagement Period is
terminated pursuant to Paragraph 6, Consultant shall be entitled to his Base
Amount through the final date of the Engagement Period. Additionally, if
Consultant's services are terminated pursuant to Paragraphs 6D or 6F, Consultant
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
Consultant has executed and delivered to the Company prior thereto the Mutual
Release, that such Mutual Release has not prior thereto been revoked or
rescinded in any way by Consultant and that no violation of any of the
provisions thereof shall have occurred) an amount equal to Base Amount until the
earlier to occur of (i) the one-year anniversary of the date of such termination
or (ii) December 31, 2003, payable in equal monthly installments in advance
(i.e., at the same times such Base Amount would have been paid absent a
termination of the Engagement Period).
8. [Reserved.]
9. Pre-emptive Rights.
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 Company or any of its
subsidiaries, (iv) upon the conversion or exercise of any securities of the
Company or options or rights to acquire securities of the Company, or (v) to
individual directors, officers, managers and employees of the Company or its
subsidiaries (other than to any person who is an officer or employee of TJS
Partners, L.P.), if the Company intends to issue any shares of capital stock of
the Company (or any securities convertible into or exercisable or exchangeable
for shares of capital stock of the Company) at any time during the Engagement
Period (a "Subsequent Issuance"), the Company will, at least 10 days prior to
the Subsequent Issuance, notify Consultant in writing (the "Issuance Notice") of
the price of and any material terms and conditions relating to the proposed
Subsequent Issuance.
B. Election by Consultant. Consultant 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
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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 Consultant) that are held by Consultant and Xxxxxxxxx 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 Consultant, Xxxxx Xxxxxx, Xxxx
Xxxxxxx and Xxxxxxx Xxxxx). If Consultant exercises the preemptive right
hereunder and the Subsequent Issuance includes more than one class of stock or
securities, Consultant 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 Company.
C. Manner of Election. The election of Consultant must be made in
writing and delivered to the Company within 10 days after receipt by the Company
of the Issuance Notice. If after notifying the Stockholders of a Subsequent
Issuance, the Company elects not to proceed with the Subsequent Issuance, any
elections made by Consultant 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 Company again complying with the terms and
conditions of this Paragraph 9.
D. Exclusions. A Subsequent Issuance shall not include (and
therefore Consultant 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 Company) 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.
10. Notices. Any and all notices required in connection with this
Agreement shall be deemed adequately given only if in writing and (i) personally
delivered, or sent by first class, registered or certified mail, postage
prepaid, return receipt requested, or by recognized overnight courier, (ii) sent
by facsimile, provided a hard copy is mailed on that date to the party for whom
such notices are intended, or (iii) 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 Consultant, or to its principal office in the
case of the Company.
11. 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.
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12. 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 and/or any one or more of their respective
affiliates, with respect to the provision of consulting, advisory or similar
services. No change or modification of this Agreement shall be valid unless in
writing and signed by the Company and Consultant. 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.
13. Headings. The headings in this Agreement are inserted for
convenience only and are not to be considered a construction of the provisions
hereof.
14. 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.
15. Attorneys' Fees. The Company shall pay for all legal fees and
expenses associated with the preparation of this Agreement.
16. Successors.
A. Personal Services Contract. This Agreement is premised on that
basis that Salvatore's personal services shall be used to satisfy Consultant's
obligations hereunder. As such, although this Agreement may be assigned by
Consultant without the prior written consent of the Company so long as
Salvatore's services, expertise and experience shall continue in all respects to
be made available to the Company at all times following such assignment (and
Consultant and Xxxxxxxxx have provided the Company with written assurances of
such continuing availability), this Agreement shall not otherwise be assignable
by Consultant. This Agreement shall inure to the benefit of and be enforceable
by Consultant.
B. Successors and Assigns of the Company. This Agreement shall
inure to the benefit of and be binding upon the Company and its successors and
assigns.
C. Additional Obligation of the Company. The Company 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
Company expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would have been required to
perform it if no such succession had taken place. As used in this Agreement,
"Company" shall mean both the Company as defined above and any such successor
that assumes and agrees to perform this Agreement, by operation of law or
otherwise.
17. Recitals. The recitals to this Agreement are incorporated herein as
an integral part hereof and shall be considered as substantive and not precatory
language.
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18. Due Authorization. The Company hereby warrants and represents that
(i) the execution, delivery, and performance of this Agreement has been duly
authorized by all necessary corporate action on the part of the Company, (ii)
the Company has the requisite power and authority to execute, deliver, and
perform this Agreement, and (iii) this Agreement is a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms. Consultant hereby warrants and represents that (i) the execution,
delivery, and performance of this Agreement has been duly authorized by all
necessary corporate action on the part of the Consultant, (ii) the Consultant
has the requisite power and authority to execute, deliver, and perform this
Agreement, (iii) this Agreement is a valid and legally binding obligation of the
Consultant, enforceable against the Consultant in accordance with its terms, and
(iv) it has requisite power and authority to bind Xxxxxxxxx with respect to the
provisions hereof that impose duties, obligations and restrictions upon him.
19. 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 Company and Consultant 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.
20. 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
Company'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 Company'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 Company's financial statements for any period
prepared in accordance with the Company's past practice.
"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 EBITDA, and (ii) in the case of the Second
ECI Period, four (4) times the increase, if any, in Adjusted EBITDA 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 percent (20%)
of the EBITDA Improvement with respect to such period.
* * * * *
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IN WITNESS WHEREOF, the parties have set their signatures hereon on the
date first written above.
SECURITY ASSOCIATES
INTERNATIONAL, INC.
By:
Its:
TJS CORPORATION
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