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EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 22 nd
, 2006 (the " Effective Date") , by and between Integrated
Alarm Services Group, Inc., a Delaware corporation (the "
Company "), and Bruce Quay, an individual residing at 6
Shaker Bay Road, Latham, NY 12110 (the " Executive
").
WHEREAS, the Company has determined that it is in
the best interests of the Company and its shareholders to enter
into an employment agreement with the Executive, and the Executive
is willing to serve as an employee of the Company, subject to the
terms and conditions of this Agreement; and
WHEREAS, the Company and the Executive entered
into an employment agreement, dated as of March 2, 2005 (the "
Existing Employment Agreement "); and
WHEREAS, the Company and the Executive desire to
provide for the continued employment of the Executive and to
supersede the Existing Employment Agreement with this
Agreement;
NOW, THEREFORE, IT IS HEREBY AGREED AS
FOLLOWS:
1. Employment and
Duties.
(a) General . The Executive shall serve as Chief Operating
Officer of the Company, reporting to the Chief Executive Officer
(the " CEO ") of the Company. The Executive shall have such
duties and responsibilities, commensurate with the Executive's
position, as may be assigned to the Executive from time to time by
the Board of Directors (the " Board ") or the CEO of the
Company. The Executive shall perform any and all duties related to
his position with the Company and shall be available to confer and
consult with and advise the officers and directors of the Company
at such times as the Company may require. The Executive's principal
place of employment shall be the principal offices of the Company
currently located in Albany, New York, provided ,
however , that the Executive understands and agrees that he
will be required to travel from time to time for business
reasons.
(b) Exclusive
Services . For so long as the Executive is employed by the
Company, the Executive shall devote his full-time working time to
his duties hereunder, shall faithfully serve the Company, shall in
all respects conform to and comply with the lawful and good faith
directions and instructions given to him by the CEO and shall use
his best efforts to promote and serve the interests of the Company.
Further, the Executive shall not, directly or indirectly, render
services to any other person or organization without the consent of
the Company or otherwise engage in activities that would interfere
with the faithful performance of his duties hereunder.
2. Term of
Employment. The
Executive's employment under this Agreement shall commence as of
the Effective Date and shall terminate on the earlier of
(i) the date that is eighteen months after the Effective Date
and (ii) the termination of the Executive's employment under
this Agreement; provided, however, that the term of the Executive's
employment shall be automatically extended without further action
of either party for additional eighteen-month periods unless
written notice of either party's intention not to extend has been
given to the other party at least 90 days prior to the expiration
of the then effective Term. The period from the Effective Date
until the termination of the Executive's employment under this
Agreement is referred to as the "Term".
3. Compensation and
Other Benefits. Subject to the provisions of this Agreement, the
Company shall pay and provide the following compensation and other
benefits to the Executive during the Term as compensation for
services rendered hereunder:
(a) Base
Salary . The Company shall pay to the Executive a salary
(the " Base Salary ") at the rate of $360,000 per annum,
payable in substantially equal installments at such intervals as
may be determined by the Company in accordance with its ordinary
payroll practices as established from time to time.
(b) Bonus
. In addition to the Base Salary, the Executive shall be eligible
to earn for each calendar year ending during the Term an annual
incentive bonus (the " Bonus ") based on the achievement of one
or more performance goals, targets, measurements and other factors
(collectively, the " Performance Goals" ) established for
such year by the Compensation Committee of the Board (the "
Committee "). The Executive’s target annual bonus (the
" Target Bonus ") and the applicable Performance Goals will
be established by the Committee within 90 days of the first day of
the year to which such Bonus relates. Payment of the
Executive’s Bonus for any year will be based upon the
achievement of the Performance Goals established by the Committee
for that year (including, without limitation, the exercise of the
Committee’s negative discretion under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the " Code ")).
The actual bonus paid may be higher or lower than the Target Bonus
for over- or under-achievement of the Performance Goals (including,
without limitation, the exercise of the Committee’s negative
discretion under Section 162(m) of the Code), as determined by the
Committee. Subject to Section 4 hereof, a Bonus, if any, shall
be payable by March 15 th of the succeeding calendar
year or as soon thereafter as may be administratively
practicable.
(d) Savings and
Retirement Plans . The Executive shall be entitled to
participate in all savings and retirement plans applicable
generally to other senior executives of the Company, in accordance
with the terms of the plans, as may be amended from time to
time.
(e) Welfare
Benefit Plans . The Executive and/or his family shall be
eligible to participate in and shall receive all benefits under the
Company's welfare benefit plans and programs applicable generally
to other senior executives of the Company, in accordance with the
terms of the plans, as may be amended from time to time. The
Company shall include the Executive in its health insurance program
available to the Company's executive officers and shall pay 100% of
the premiums for such program.
(f) Expenses . The Company shall reimburse the Executive for
reasonable travel and other business-related expenses incurred by
the Executive in the fulfillment of his duties hereunder upon
presentation of written documentation thereof, in accordance with
the applicable expense reimbursement policies and procedures of the
Company as in effect from time to time.
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(g) Paid Time
Off . The Executive shall be entitled to 22 vacation
days and 4 sick/personal days each year during the Term, which
shall be referred to together as "paid time off." The extent to
which unused paid time off from one year shall be carried forward
to any later year shall be governed by the Company'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 the Company'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 the Company in its sole discretion
pursuant to such policy.
4. Termination of
Employment .
(a) Termination
for Cause; Resignation . (i) If, prior to the expiration of
the Term, the Company terminates the Executive's employment for
Cause, as defined in Section 4(a)(ii) hereof, or if the
Executive resigns from his employment hereunder, the Executive
shall only be entitled to payment of unpaid Base Salary through and
including the date of termination or resignation and any other
amounts or benefits required to be paid or provided by law or under
any plan, program, policy or practice of the Company (" Other
Accrued Compensation and Benefits "). The Company shall have no
further obligation to compensate the Executive under any other
provision of this Agreement or any other severance or salary
continuation arrangement of the Company.
(ii)Termination for " Cause " shall mean
termination of the Executive's employment because of:
(A) any act or
omission that constitutes a material breach by the Executive of any
of his obligations under this Agreement;
(B) the willful and
continued failure or refusal of the Executive to satisfactorily
perform the duties reasonably required of him as an employee of the
Company;
(C) the Executive's
conviction of, or plea of nolo contendere
to, (1) any felony or (2) another crime
involving dishonesty or moral turpitude or which could reflect
negatively upon the Company or any of its subsidiaries or
affiliates (the " Company Group") or otherwise impair or
impede its operations;
(D) the Executive's
willful engaging in any misconduct, negligence, act of dishonesty,
violence or threat of violence (including any violation of federal
securities laws) that is injurious to the Company Group;
(E) the Executive's
material breach of a written policy of the Company, the Company's
Code of Ethics, or the rules of any governmental or regulatory body
applicable to the Company;
(F) the Executive's
willful refusal to follow the lawful and good faith directions of
the Board;
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(G) the Executive's
engaging in conduct that constitutes activity in competition with
the Company Group; or
(I) any other
willful misconduct by the Executive which is materially injurious
to the financial condition, business, or reputation of the Company
Group.
(b) Termination
without Cause . (i) If, prior to the expiration of the Term,
the Executive's employment is terminated by the Company without
Cause, the Company (A) shall pay (x) the Other Accrued Compensation
and Benefits and (y) declared and unpaid Bonus, if any, and (B)
shall continue to pay the Executive the Base Salary at the rate in
effect on the date the Executive's employment is terminated, for
the period remaining in the Term on the day prior to the date the
Executive's employment is terminated, in accordance with the
Company's ordinary payroll practices. The Company shall have no
further obligation to compensate the Executive under Section 4(c)
or any other provision of this Agreement or any other severance or
salary continuation arrangement of the Company.
(ii)The Company shall not be required to make the
payments and provide the benefits provided for under
Section 4(b)(i) unless the Executive executes and delivers to
the Company a release substantially in the form attached as
Exhibit A and the release has become effective and irrevocable
in its entirety.
(iii) The obligation
of the Company to make the payments and provide the benefits
provided for under Section 4(b)(i) shall not be affected by any
compensation or other payments made to the Executive by any
subsequent employer or other person.
(iv)If, following a termination of employment
without Cause, the Executive breaches the provisions of
Sections 5 through 8 hereof, the Executive shall not be
eligible, as of the date of such breach, for the payments described
in Section 4(b)(i), and any and all obligations and agreements
of the Company with respect to such payments shall thereupon
cease.
(c) Termination
upon Change in Control .
(i) Upon a Change in
Control during the Term, the Term shall automatically be extended
for 18 months following the Change in Control.
(ii) In the event of
the Executive's Involuntary Termination within 18 months after a
Change in Control, provided such Change in Control occurs during
the Term, (A) the Company shall pay the Executive a one-time cash
bonus in the amount of $540,000, such bonus to be paid within 30
days of such Involuntary Termination, and (B) all stock options and
warrants granted by the Company to the Executive under any plan
prior to such termination shall vest, accelerate, and become
immediately exercisable. The Company shall have no further
obligation to compensate the Executive under Section 4(b)(i) or any
other provision of this Agreement or any other severance or salary
continuation arrangement of the Company. The Company shall not be
required to make the payments and provide the benefits provided for
under this Section 4(c)(ii) unless the Executive executes and
delivers to the Company a release substantially in the form
attached as Exhibit A and the release has become effective and
irrevocable in its entirety.
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(iii) "
Involuntary Termination " shall mean termination of the
Executive's employment by the Company and its subsidiaries other
than for Cause. The Executive shall be deemed to have incurred an
Involuntary Termination if: (A) there is a Change in Control during
the Term; and (B) within 18 months after such Change in Control,
(1) the location of his principal place of employment is moved to a
location that is more than 50 miles from the location of his
principal place of employment immediately prior to such Change in
Control, or (2) the Executive's Base Salary as in effect
immediately prior to such Change in Control is reduced by more than
10%, or (3) the Executive is not retained in a management position
at the Company; and (C) he thereafter resigns from employment
within 30 days of such change of location of principal place of
employment, reduction in Base Salary or non-retention in a
management position. Except as provided in this Section 4(c),
resignation from employment for any reason shall not be considered
an Involuntary Termination.
(iv) A " Change
in Control " shall occur if:
(A) any "person"
within the meaning of Section 14(d) of the Securities Exchange Act
of 1934, as amended, and any successor provisions thereto is or
becomes the "beneficial owner" (as defined in Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more
of the combined voting power of the Company's then outstanding
securities entitled to vote in the election of directors of the
Company;
(B) during any
twelve-month period (not including any period prior to the
consummation of a Change in Control), individuals who at the
beginning of such period constituted the Board and any new
directors, whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
one-half of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof;
(C) there occurs a
reorganization, merger, consolidation or other corporate
transaction involving the Company (a " Transaction "), in
each case with respect to which the stockholders of the Company
immediately prior to such Transaction do not, immediately after the
Transaction, own more than 50% of the combined voting power of the
Company or another corporation resulting from such Transaction, in
substantially the same proportion of ownership as prior to such
Transaction; or
(D) all or
substantially all of the assets of the Company are sold, liquidated
or distributed.
(d) Termination
Due to Death or Disability . The Executive's employment with
the Company shall terminate automatically on the Executive's death.
In the event of the Executive's disability, the Company shall be
entitled to terminate his employment. In the event of termination
of the Executive's employment by reason of Executive's death or
disability, the Company shall pay to the Executive (or his estate,
as applicable) the Executive's Base Salary through and including
the date of termination. For purposes of this Agreement, "
disability " shall have the meaning set forth in the Company's
long-term disability plan.
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(e) Notice of
Termination . Any termination of employment by the Company
or the Executive shall be communicated by a written " Notice of
Termination " to the other party hereto given in accordance with
Section 22 of this Agreement. In the event of a termination by
the Company for Cause, the Notice of Termination shall
(i) indicate the specific termination provision in this
Agreement relied upon, (ii) set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination
of the Executive's employment under the provision so indicated and
(iii) specify the date of termination, which date shall not be
more than 30 days after the giving of such notice. The failure
by the Company to set forth in the Notice of Termination any fact
or circumstance which contributes to a showing of Cause shall not
waive any right of the Company hereunder or preclude the Company
from asserting such fact or circumstance in enforcing the Company's
rights hereunder.
(f) Resignation
from Directorships and Officerships . The termination of the
Executive's employment for any reason will constitute the
Executive's resignation from (i) any director, officer or
employee position the Executive has with the Company and
(ii) all fiduciary positions (including as a trustee) the
Executive holds with respect to any employee benefit plans or
trusts established by the Company. The Executive agrees that this
Agreement shall serve as written notice of resignation in this
circumstance; provided , however , that the Executive
shall execute such other documents as may be required by the
Company in connection with such resignation.
5. Confidentiality.
(a) Confidential
Information . (i) The Executive agrees that he will not at
any time, except with the prior written consent of the Company
Group or, to the extent permitted pursuant to subsection 5(a)(ii),
as required by law, directly or indirectly, reveal to any person,
entity or other organization (other than any member of the Company
Group or its respective employees, officers, directors,
shareholde
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