INTEGRATED ALARM SERVICES GROUP, INC.
INTEGRATED
ALARM SERVICES GROUP, INC.
December
29, 2006
Xxxxxxx
X. Xxxxxxxxx
00
Xxx
Xxx Xxxx Xxxx
Xxxxxxxxxx,
XX 00000
Transitional
Services Agreement (the “Agreement”)
Dear
Xxxx:
This
letter sets forth our agreement regarding the terms of your employment by
Integrated Alarm Services Group, Inc. (“IASG”) and certain other obligations of,
and undertakings by, IASG and you.
1.
Conditions
to Obligations.
IASG,
Protection One, Inc. (“P1”) and Xxxx Acquisition Corp. (“Xxxx”) propose to enter
into a transaction agreement (“Transaction Agreement”) on December 20, 2006 or
such other date as the parties thereto may agree, pursuant to which, among
other
things, IASG shall be merged with Xxxx and become a wholly owned subsidiary
of
P1. The transactions contemplated by the Transaction Agreement are scheduled
to
close prior to May 31, 2007 or such other date as may be agreed to by the
parties to the Transaction Agreement (the “Closing Date”). This Agreement shall
be effective only upon the completion on the Closing Date of the transactions
contemplated by the Transaction Agreement, and if such transactions are not
consummated, this Agreement shall be void ab
initio
and
without any force or effect. In consideration of IASG’s obligations under this
Agreement, in the event that this Agreement becomes effective as provided
hereunder, you hereby irrevocably waive any right of payment under the agreement
between you and IASG dated November 22, 2006 (“Existing Employment
Agreement”).
2.
Term
of Employment.
Your
employment with IASG pursuant to this Agreement shall commence on the Closing
Date and shall end on the date that is six months after the Closing Date, or
such earlier date as determined by IASG in its sole discretion (the “Transition
Period”).
3.
Duties.
During
the Transition Period, you shall continue to perform the functions you performed
for IASG prior to the Closing Date and such other duties as are consistent
with
the foregoing as may be reasonably and in good faith requested by IASG from
time
to time (collectively, the “Employment Obligations”).
4.
Compensation.
In
consideration of the performance by you of the Employment Obligations, IASG
will
pay to you during the Transition Period the monthly base compensation at the
monthly rate paid to you by IASG immediately prior to the Closing Date. In
addition, IASG shall pay to you a bonus in the amount of $450,000 six months
after the Closing Date.
5.
Benefits.
During
the Transition Period, IASG shall provide you with benefits on the same basis
as
benefits are generally made available to other senior executives of IASG,
including, without limitation, medical, dental, vision, disability and life
insurance and retirement benefits. You shall be entitled to four weeks of paid
vacation.. The extent to which unused paid time off from one year shall be
carried forward to any later year shall be governed by IASG's paid time off
policy in effect from time to time. Upon separation of employment, for any
reason, paid time off accrued and not used shall be paid in accordance with
IASG's paid time off policy then in effect, and the determination of the amount
of paid time off accrued and not used shall be made by IASG in its sole
discretion pursuant to such policy.
6.
Covenant
Not to Compete.
You
agree that you will not, at any time, during the Transition Period, and for
two
(2) years thereafter, either directly or indirectly, engage in, with or for
any
enterprise, institution, whether or not for profit, business, or company,
competitive with the business (as identified herein) of IASG or P1 as such
business may be conducted on the date thereof, as a creditor, guarantor, or
financial backer, stockholder, director, officer, consultant, advisor, employee,
member, or otherwise of or through any corporation, partnership, association,
sole proprietorship or other entity; provided, that an investment by you, your
spouse or your children is permitted if such investment is not more than four
percent (4%) of the total debt or equity capital of any such competitive
enterprise or business and further provided that said competitive enterprise
or
business is a publicly held entity whose stock is listed and traded on a
national securities exchange or the over-the-counter bulletin board or any
successor thereto. As used in this Agreement, the business of IASG and P1 shall
be deemed to include wholesale and retail monitoring and related support
services, and financing solutions and products, within the security alarm
industry. Furthermore, for a period of two (2) years from the date of expiration
of the Transition Period, you shall not contact for the purpose of solicitation,
or solicit any of IASG’s or P1’s dealers, customers, employees or
suppliers.
7.
Entire
Agreement; Supersedes Previous Agreements.
This
Agreement contains the entire agreement and understanding of the parties hereto
with respect to the matters covered herein and, effective as of the Closing
Date, shall supersede any and all previous contracts and understandings between
you and IASG, including, without limitation, the Existing Employment Agreement.
This Agreement may not be altered, modified or amended except by written
instrument signed by the parties hereto.
8.
Compliance
with Section 409A.
Anything in this Agreement notwithstanding, IASG shall, in its sole discretion,
amend this Agreement to the extent necessary or desirable to ensure that this
Agreement complies with Section 409A of the Internal Revenue Code of 1986,
as
amended (the “Code”) and that any payments or benefits under this Agreement are
not subject to interest and penalties under Section 409A of the Code.
9.
Excise
Tax.
Notwithstanding anything in this Agreement to the contrary, in the event it
shall be determined that any payment, award, benefit or distribution (or any
acceleration of any payment, award, benefit or distribution) by IASG (or any
of
its affiliated entities) to or for the benefit of you (whether pursuant to
the
terms of this Agreement or otherwise) (the “Payments”) would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”), or any interest or penalties are incurred by you with
respect to such excise tax (such excise tax, together with any such interest
and
penalties, are hereinafter collectively referred to as the “Excise Tax”), then
the amounts payable to you under this Agreement shall be reduced (but not below
zero) to the maximum amount that could be paid to you without giving rise to
the
Excise Tax (the “Safe Harbor Cap”). For purposes of reducing the Payments to the
Safe Harbor Cap, only amounts payable under this Agreement (and no other
Payments) shall be reduced.
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10.
Notices.
All
notices, requests, demands and other communications which are required or may
be
given under this Agreement shall be in writing and shall be deemed effective
(i)
when delivered personally, upon receipt, (ii) when sent by facsimile or
electronic mail, upon confirmation of receipt by the sender of such
transmission, (iii) one day after deposit with a commercial overnight courier
with written verification of receipt, or (iv) three days after deposit in the
United States mail by certified mail postage prepaid. All communications will
be
sent to the party to whom they are directed at the address set forth
below:
(a) If
to
IASG:
c/o
Protection One, Inc.
0000
X.
0xx Xx.
Xxxxx
000
Xxxxxxxx,
XX 00000
(b)
If
to
you:
Xxxxxxx
X. Xxxxxxxxx
00
Xxx
Xxx Xxxx Xxxx
Xxxxxxxxxx,
XX 00000
11.
Counterparts.
This
agreement may be signed in counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same
instrument.
12.
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York, applicable to contracts to be performed entirely within
such
State.
If
you
are in agreement with the foregoing, please indicate your acceptance by signing
below.
INTEGRATED
ALARM SERVICES GROUP, INC.
By: /s/
Xxxxxxx X. Xxxxx
Title:
Director and Compensation
Committee Chairman
/s/
Xxxxxxx X. Xxxxxxxxx
Signature
Xxxxxxx
X. Xxxxxxxxx
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