EXHIBIT 10.21
STOCK FORFEITURE AGREEMENT
AGREEMENT made as of this ______ day of __________, 2003 by and between
Integrated Alarm Services Group, Inc., a Delaware corporations, located at One
Capital Center, 00 Xxxx Xxxxxx 0xx Xxxxx, Xxxxxx, Xxx Xxxx, 00000 (the
"Corporation"), and Xxxxxxx X. XxXxxx, Xxxxx X. Xxxxx, Xxxxxx X. Few, Sr.,
Xxxxxx X. Xxxxx, Xxxxx X. Xxxxxxx, Xxxx X. Xxxxx, Xxxx X. Xxxxxxx, Xxxxx X.
Speed, Xxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx, (collectively the
"Stockholders").
All capitalized terms in this Agreement shall have the meaning
assigned to them in this Agreement.
In consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which hereby is acknowledged, the parties hereto agree as
follows:
A. RESTRICTED SHARES
1. Shares. The Stockholders agree to subject that number of shares of
the Company's common stock opposite their names on Schedule 1 attached hereto,
of which they currently own, to the risk of forfeiture in favor of the Company
(the "Restricted Shares").
2. Stockholder Rights. Until such time as the Restricted
Shares are either forfeited pursuant to the terms herein, or are released from
the risk of forfeiture, the Stockholders (or any successor in interest) shall
have all stockholder rights (including voting, dividend and liquidation rights)
with respect to the Restricted Shares.
B. SECURITIES LAW COMPLIANCE
1. Restrictive Legends. The stock certificates for the
Restricted Shares shall be endorsed with the following restrictive legends:
"The shares represented by this certificate are
subject to certain forfeiture provisions in favor of the Corporation
and accordingly may not be sold, assigned, transferred, encumbered, or
in any manner disposed of except in conformity with the terms of a
written agreement dated ___________, 2003, between the Corporation and
the registered holder of the shares (or the predecessor in interest to
the shares). A copy of such agreement is maintained at the
Corporation's principal corporate offices."
C. TRANSFER RESTRICTIONS
1. Restriction on Transfer. Except for (i) a gratuitous
transfer of the Restricted Shares, provided and only if Stockholder obtains the
Corporation's prior written consent to such transfer, or (ii) a transfer of
title to the Restricted Shares effected pursuant to the Stockholders' will
or the laws of intestate succession following the Stockholder's death (each a
"Permitted Transfer"), Stockholder shall not transfer, assign, encumber or
otherwise dispose of any of the Restricted Shares which are subject to
forfeiture.
2. Transferee Obligations. Each person (other than the
Corporation) to whom the Restricted Shares are transferred by means of a
Permitted Transfer must, as a condition precedent to the validity of such
transfer, acknowledge in writing to the Corporation that such person is bound by
the provisions of this Agreement.
3. Termination of Forfeiture Requirements. The risk of
forfeiture shall terminate and cease with respect to the Restricted Shares (see
Schedule 1, hereto) pursuant to certain pre-determined Net Income hurdles. For
purposes of this paragraph 3, Net Income shall have the meaning ascribed to it
under GAAP, as further amended by adding back to Net Income any expenses
associated with the early termination of debt or other costs directly
attributable to the Corporation's IPO. The risk of forfeiture as to the
Restricted Shares shall be determined as follows:
(i) 2003:
a. Should the Corporation earn $10 million in
Net Income, then the risk of forfeiture
shall terminate completely as to 30% of the
Restricted Shares (the "2003 Shares").
b. Should the Corporation earn $9 million in
Net Income, then the risk of forfeiture
shall terminate completely as to 75% of the
2003 Shares.
c. Should the Corporation earn $8 million in
Net Income, then the risk of forfeiture
shall terminate completely as to 50% of the
2003 Shares.
(ii) 2004:
a. Should the Corporation earn $20 million in
Net Income, then the risk of forfeiture
shall terminate completely as to 30% of the
Restricted Shares (the "2004 Shares").
b. Should the Corporation earn $18 million in
Net Income, then the risk of forfeiture
shall terminate completely as to 75% of the
2004 Shares.
c. Should the Corporation earn $16 million in
Net Income, then the risk of forfeiture
shall terminate completely as to 50% of the
2004 Shares.
(iii) 2005:
a. Should the corporation earn $26 million in
Net Income, then the risk of forfeiture
shall terminate completely as to 40% of the
Restricted Shares (the "2005 Shares").
b. Should the Corporation earn $23 million in
Net Income, then the risk of forfeiture
shall terminate completely as to 75% of the
2005 Shares.
c. Should the Corporation earn $10.8 million in
Net Income, then the risk of forfeiture
shall terminate completely as to 50% of the
2005 Shares.
(iv) Any Restricted Shares not released from the
risk of forfeiture in each of 2003, 2004 or
2005, will not be forfeited until, or
shortly after, December 31, 2005 since the
Net Income hurdles set forth in this
paragraph 3 will be viewed as cumulative. By
way of example, if cumulative Net Income for
2003 and 2004 is greater than $30 million,
then the risk of forfeiture shall terminate
completely as to 60% of the Restricted
Shares. Likewise, if cumulative Net Income
for 2005 exceeds $56 million, then the risk
of forfeiture shall completely terminate as
to 100% of the Restricted Shares.
4. Recapitalization. Any new, substituted or additional
securities or other property (including cash paid other than as a regular cash
dividend) which is by reason of any Recapitalization distributed with respect to
the Restricted Shares shall be immediately subject to forfeiture hereunder, but
only to the extent the Restricted Shares are at the time covered by such
provisions. Appropriate adjustments to reflect such distribution shall be made
to the number of Restricted Shares subject to this Agreement.
5. Corporate Transaction.
(a) The risk of forfeiture hereunder shall
automatically terminate in its entirety, and all the Restricted Shares
shall be free from restriction hereunder immediately prior to the
consummation of:
(i) a merger or consolidation in which
securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities are
transferred to a person or persons different from the persons holding
those securities immediately prior to such transaction, or
(ii) the sale, transfer or other disposition
of all or substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation any Corporate Transaction
except to the extent the forfeiture provisions hereunder are to be
assigned to the successor entity in such transaction (either (i) or
(ii) a "Corporate Transaction").
(b) To the extent the forfeiture provisions remains
in effect following a Corporate Transaction, such right shall apply to
any new securities or other property (including any cash payments)
received in exchange for the Restricted Shares in consummation of the
Corporate Transaction, but only to the extent the Restricted Shares are
at the time covered by such right. The new securities or other property
(including any cash payments) issued or distributed with respect to the
Restricted Shares in consummation of the Corporate Transaction.
D. GENERAL PROVISIONS
1. Notices. Any notice required to be given under this
Agreement shall be in writing and shall be deemed effective upon personal
delivery or upon deposit in the U.S. mail, registered or certified, postage
prepaid and properly addressed to the party entitled to such notice at the
address indicated below such party's signature line on this Agreement or at such
other address as such party may designate by ten (10) days advance written
notice under this paragraph to all other parties to this Agreement.
2. No Waiver. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
3. Cancellation of Shares. If any of the Restricted Shares are
forfeited in accordance with the provisions of this Agreement, then from and
after such time, the Stockholder shall no longer have any rights as a holder of
such shares and the Corporation shall be deemed the owner and holder of such
shares, whether or not the applicable certificates are delivered as required by
this Agreement.
E. MISCELLANEOUS PROVISIONS
1. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without resort
to that State's conflict-of-laws rules.
2. Stockholder Undertaking. Stockholder hereby agrees to take
whatever additional action and execute whatever additional documents the
Corporation may deem necessary or advisable in order to carry out or effect one
or more of the obligations or restrictions imposed on either the Stockholder or
the Restricted Shares pursuant to the provisions of this Agreement.
3. Agreement is Entire Contract. This Agreement constitutes
the entire contract between the parties hereto with regard to the subject matter
hereof.
4. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument
5. Successors and Assigns. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Corporation and its
successors and assigns and upon the Stockholder, Stockholder's assigns and the
legal representatives, heirs and legatees of Stockholder's estate, whether or
not any such person shall have become a party to this Agreement and have agreed
in writing to join herein and be bound by the terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
INTEGRATED ALARM SERVICES GROUP, INC.
By: _____________________________________
Title: __________________________________
____________________________
Xxxxxxx X. XxXxxx
____________________________
Address
____________________________
Xxxxx X. Xxxxx
____________________________
Address
____________________________
Xxxxxx X. Few, Sr.
____________________________
Address
____________________________
Xxxxxx X. Xxxxx
____________________________
Address
____________________________
Xxxxx X. Xxxxxxx
____________________________
Address
____________________________
Xxxx X. Xxxxx
____________________________
Address
____________________________
Xxxx X. Xxxxxxx
____________________________
Address
____________________________
Xxxxx X. Speed
____________________________
Address
____________________________
Xxxxxxx X. Xxxxxxxx
____________________________
Address
____________________________
Xxxxxxx X. Xxxxxx
____________________________
Address
Schedule 1
----------
Restricted Shares
Name Number of Restricted Shares
---- ---------------------------
Xxxxxxx X. XxXxxx 159,037
Xxxxx X. Xxxxx 159,036
Xxxxxx X. Few, Sr. 114,199
Xxxxxx X. Xxxxx 11,663
Xxxxx X. Xxxxxxx 3,202
Xxxx X. Xxxxx 2,228
Xxxx X. Xxxxxxx 2,228
Xxx Xxxxxx 1,623
Xxxxx X. Speed 1,113
Xxxxxxx X. Xxxxxxxx 216
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED _____________ hereby sell(s), assign(s) and
transfer(s) unto Integrated Alarm Services Group, Inc. (the "Corporation"),
_____________ (_______) shares of the common stock of the Corporation standing
in his or her name on the books of the Corporation represented by Certificate
No. ____________ herewith and do(es) hereby irrevocably constitute and appoint
____________________ Attorney to transfer the said stock on the books of the
Corporation with full power of substitution in the premises.
Dated:____________
_______________________________
Signature
Instruction: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Corporation to
exercise its right to foreclose on Restricted Shares that become subject to
forfeiture without requiring additional signatures by the part of the
Stockholder.
