EXHIBIT 10.55
EXECUTIVE AGREEMENT
This EXECUTIVE AGREEMENT (the "Agreement") is made and entered into as
of the 15th day of August, 2001, by and between Security Associates
International, Inc., on behalf of itself and its subsidiaries and affiliates
(collectively, the "Company"), and Xxxxxxx X. Xxxxxx ("Executive"), and (solely
for purposes of Paragraph 8 below) TJS Partners, L.P. ("TJS"). Certain
capitalized terms used herein are set forth in Paragraph 20 below.
RECITALS
A. The Company desires that Executive provide services for the benefit
of the Company, and Executive desires to accept such employment with the
Company, upon the terms and conditions set forth herein.
B. The Company and Executive acknowledge that Executive 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 Executive (with Executive having the title of Vice
Chairman), and Executive hereby accepts such engagement, in each case on the
terms and conditions set forth in this Agreement.
2. Duties. Executive shall, during the Engagement Period, have the
duties, responsibilities, powers and authority as designated from time to time
by the Company's Board of Directors (the "Board") and (absent Board direction)
the Company's Chief Executive Officer, and Executive shall report to, and follow
the direction of, the Board and (absent Board direction) the Chief Executive
Officer. Executive shall diligently, competently and faithfully perform all such
duties and responsibilities and shall devote the necessary 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 Company. During
the Engagement Period, Executive shall work for the Company in a part-time
capacity, and the duties and responsibilities designated to him from time to
time in accordance with this Agreement shall reasonably recognize the part-time
extent of his commitment hereunder. The Company acknowledges and understands
that Executive currently owns or participates in the management of certain other
businesses (including, but not limited to, other businesses engaged to varying
degrees in the security alarm and monitoring industry), and therefore expressly
agrees that it shall not be considered a violation of the foregoing for
Executive to serve as an employee of, or consultant to, any other business or
enterprise or 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 Executive's duties and
responsibilities reasonably designated to him 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 Executive's engagement with the
Company (the "Engagement 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
Paragraph 6 below. Provided that no termination as set forth in Paragraph 6
below (or any notice thereof) has been made prior to such time, the Engagement
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 Engagement Period
for any reason, Executive agrees that he shall execute and deliver to the
Company, and the Company agrees that it shall execute and deliver to Executive,
a mutual release (in a form reasonably acceptable to Executive and the Company)
of any and all claims that either then has or in the future may have against the
other (other than with respect to post-Engagement Period obligations under this
Agreement) (the "Mutual Release").
4. Compensation.
A. Base Remuneration. During the Engagement Period, the
Company shall pay Executive remuneration of $200,000 annually (the "Base
Amount"), payable in substantially equal periodic installments in accordance
with the Company's payroll policy from time to time in effect. Subject to
Paragraph 4G 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, Executive.
B. Earned Cash Incentive Bonus.
(i) Provided that Executive 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 Executive by the Company not for Cause or a
resignation by Executive for Good Reason), the Company 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
engaged by the Company (or no longer employed by the Company solely as
a result of a termination of Executive by the Company not for Cause or
a resignation by Executive for Good Reason), the Company 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
Company 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 Company of the
Company's operating results for the First ECI Period or the Second ECI
Period, as the case may be, the Company shall, in lieu of all or any
portion of the cash payments described
-2-
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 Company'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.
C. 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 Company'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.
D. No Other Benefits. Executive shall not be entitled to any
life insurance, disability insurance, medical, prescription, dental or health
insurance or dependent coverage, 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.
E. Additional Consideration for Entry Into this Agreement. As
additional consideration for the Executive's execution and delivery of this
Agreement, the Company shall grant to Executive as of the date of this
Agreement, pursuant to the Company's Stock Option Plan adopted April 1, 1999, as
amended effective May 23, 2000 (the "Existing Option Plan"), a nonstatutory
stock option to purchase 750,000 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., 250,000) 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 engaged by the
Company or no longer engaged by the Company solely as a result of a termination
of Executive by the Company not for Cause or a resignation by Executive for Good
Reason).
F. Expenses. The Company shall reimburse Executive for all
reasonable and necessary business expenses, provided Executive submits paid
receipts or other documentation acceptable to the Company.
G. Taxes and Tax Returns. Executive shall file all tax
returns and reports required to be filed by him on the basis that he is an
independent contractor, rather than an employee, as defined in Treasury
Regulation ss.31.3121(d)-1(c)(2), and Executive 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 Executive hereunder.
-3-
5. Protective Agreements.
A. Confidential Information. Executive agrees that he will
not, for any reason whatsoever, whether voluntarily or involuntarily, use for
himself or for any other person or entity (including any competitor of the
Company) or disclose to any person or entity any "Confidential Information"
specifically related to the Company acquired by Executive from the Company in
his capacity as a consultant to the Company during 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
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 Executive), or (y) information that Executive is able to demonstrate
was in his 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 Company or is or otherwise has become the
property of the Company. Executive agrees and acknowledges that as of the end of
the Engagement Period, he shall return to the Company any and all of its
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. Except on behalf of the Company,
Executive agrees that he will not directly (and will not cause any person or
entity to):
(1) during the Engagement Period (except in the performance of
his duties 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
-4-
(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 (provided, in each
case, that the foregoing shall not apply with respect to Xxxx Xxxxxxx
or Xxx Xxxxx).
C. Special Acknowledgment of Executive. Executive 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 or engaged by another person or entity, he will be required to disclose
the existence of this Paragraph 5 to such person or entity and he 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
Executive (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 Executive'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 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
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:
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.
-5-
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 Company. 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
Company 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 performance of his duties before
such thirtieth (30th) day.
C. For Cause. On the date the Company 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 Company believes
Executive 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 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 Company).
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 Company 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 Company within 30
days after receipt of notice thereof from Executive;
(2) any requirement by the Company 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 Company that is not
remedied by the Company within 30 days after receipt of notice thereof
from Executive;
(4) 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
-6-
taken in bad faith and is remedied by the Company 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 Company entitled to vote for the
election of directors ("Voting Stock"); (b) the commencement by any
entity, person or "group" (other than the Company or a subsidiary of
the Company) of a tender offer or an exchange offer for more than 20%
of the outstanding Voting Stock of the Company; (c) the effective time
of (1) a merger or consolidation of the Company with one or more
corporations as a result of which the holders of the outstanding Voting
Stock of the Company 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
Company other than to an entity of which the Company owns at least 80%
of the Voting Stock; and (d) the election to the Board, without the
recommendation or approval of the incumbent Board, of the lesser of (1)
three directors, or (2) directors constituting a majority of the number
of directors of the Company then in office).
A termination of employment by Executive 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 (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 Company 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 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 Executive's employment for any reason, other than a reason
set forth in Paragraph 6C, provided that the Company shall give Executive three
(3) months written notice prior to such date of its intention to terminate this
Agreement.
-7-
7. Compensation Upon Termination. If the Engagement Period is
terminated pursuant to Paragraph 6, Executive shall be entitled to his Base
Amount through the final date of the Engagement Period. 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 Company 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 Amount for the one-year period from the final date of the Engagement
Period through the first anniversary thereof, payable in accordance with the
Company's payroll policy from time to time in effect (and at the same times such
Base Amount would have been paid absent a termination of the Engagement Period).
8. Reasonable Best Efforts to Cause Election to the Board of Directors.
During the Engagement Period, the Company and TJS shall nominate Executive for
election to the Board and shall use reasonable best efforts (including, in the
case of TJS, by voting all of its voting shares of the Company's capital stock)
to cause Executive to be elected to the Board and also to cause Executive to
continue to serve on the Board until the expiration or termination of the
Engagement Period. Upon expiration or termination of the Engagement Period,
Executive shall, at the request of the Company, immediately resign from the
Board.
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), 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 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
-8-
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, Xxxx Xxxxxxx and Xxxxxxx Xxxxx). 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 Company.
C. Manner of Election. The election of Executive 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 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 Company again complying with the terms
and conditions of this Paragraph 9.
D. 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 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 Executive, 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.
-9-
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 (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 Company 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.
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 personal to
Executive and, without the prior written consent of the Company, 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 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.
-10-
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.
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 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.
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 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 percent
(20%) of the EBITA Improvement with respect to such period.
* * * * *
-11-
IN WITNESS WHEREOF, the parties have set their signatures on the date
first written above.
SECURITY ASSOCIATES
INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxxx
---------------------------------------
Its: CEO
---------------------------------------
/s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxx
Solely for purposes of Paragraph 8 above,
TJS PARTNERS, L.P.
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxxx
Its Authorized Representative
-12-
