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EXHIBIT 10.3
PROTECTION ONE, INC.
AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of May 24,
1996, between James M. Mackenzie, Jr. (the "Employee") and Protection One, Inc.
(previously known as P1 Acquisition Corporation), a Delaware corporation
(including any and all subsidiaries, the "Company").
The Employee and the Company are parties to an Employment
Agreement dated as of September 16, 1991, as amended by Amendment No. 1 to
Employment Agreement dated as of June 29, 1994 (as so amended, the "Employment
Agreement").
The Employee and the Company desire to further amend and to
restate the Employment Agreement as provided herein.
Accordingly, the Company and the Employee agree that effective
as of the date hereof, the Employment Agreement shall be amended and restated
to read is full as follows:
1. The Company hereby employs and continues to engage
the Employee as President and Chief Executive Officer. The Employee's duties,
responsibilities and title shall be determined by the Company's Board of
Directors (the "Board") and may change from time to time, provided that the
Employee shall at all times be employed in an executive capacity with the
Employee's office in Southern California.
2. The term of this Agreement commenced on September
16, 1991 and shall be continually extended such that at all times the remaining
term hereof is three years; provided, however, that this Agreement shall be
subject to termination as provided in Section 13 hereof.
3. Subject to the supervision and direction of the Board
or its designees, the Employee agrees that he shall, at all times, faithfully,
industriously and to the best of his ability and experience, perform all the
duties that may be required of him pursuant to the terms hereof to the
satisfaction of the Company. The Employee shall devote his full time and
attention to the duties assigned to him and shall serve the Company diligently
and honestly in its business and use his best endeavors to promote the interest
of the Company.
4. As long as the Employee remains employed by the
Company, in consideration of the services to be performed by the Employee
during the term of this Agreement, the Company shall pay or cause to be paid
the Employee, and the Employee shall accept in full payment for such services,
a base salary (the "Base Salary") of $280,714 per year, payable monthly,
subject to increase in accordance with the Company's policy with respect to
executive salaries as in effect from time to time. Employee recognizes and
agrees that all compensation, benefits, and common stock performance warrants
hereunder shall be good consideration for this Employment Agreement, and any
and all agreements required to be executed hereunder.
5. During the term of this Agreement, the Employee shall
be entitled to participate in the Company's Common Stock Performance Warrant
Plan and all other benefit plans and programs available to the Company's key
employees in accordance with the terms and conditions thereof.
6. [Intentionally omitted]
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7. [Intentionally omitted]
8. The Company shall provide, at no cost to the Employee, insurance
and health care benefits from time to time (and subject to modification)
generally offered by the Company to its key employees.
9. In the event that the Employee is required to travel in
connection with his employment, the Company shall advance funds to the Employee
or reimburse him, for reasonable and documented travel, subsistence and other
out-of-pocket expenses, as well as non- travel business entertainment expenses
incurred by him, in accordance with the then prevailing policies of the Company.
10. The Employee shall receive a monthly automobile usage allowance
of $500 in lieu of any other allowances for automobile expenses other than
reimbursement for gas, tolls and parking away from the office when on Company
business.
11. The Employee shall be entitled to vacation in accordance with
vacation policies adopted from time to time by the Board for the Company's key
employees. The Employee's initial vacation entitlement is three (3) weeks per
year.
12. (a) If this Agreement is terminated, whether with or without
cause, except as otherwise provided in this Section 12 the Company shall have no
further obligation to pay or cause to be paid to the Employee any further
compensation or benefits; provided, however, that the Company shall pay or cause
to be paid to the Employee all accrued but unpaid Base Salary and all vacation
and other employee benefits and all unreimbursed expenses incurred prior to the
termination date and owing to the Employee pursuant to Sections 9, 10 and 11
hereof.
(a) In the event that during the term of this Agreement the
Employee dies, the Employee is terminated because of a Disability pursuant to
subsection 13(b) hereof, or the Company terminates the Employee's employment
without cause as provided in subsection 13(d) hereof, the Company shall pay the
Employee (or his estate or personal representative, as applicable), during each
of the three years following the date of the Employee's death or termination of
employment and in full satisfaction of the Company's obligations hereunder or
otherwise in connection with the Employee's employment with the Company (other
than the obligations set forth in subsection 12(a)), the following amounts:
(i) If the Employee dies, an amount (the
"Termination Amount") each year equal to (x) the Base Salary at
the time of death plus (y) the last annual bonus paid or
payable to the Employee by the Company, if any, which
Termination Amount shall be paid to the Employee in equal
monthly installments on the first day of each calendar month;
and
(ii) If the Employee's employment is terminated
by the Company as a result of a Disability or without cause, an
amount each year equal to the excess, if any, of the
Termination Amount over the total annual compensation for such
year, if any, earned by the Employee from any new place of
employment. If the Employee earns for any such year from any
such new employment more than the Termination Amount, the
Employee shall not be entitled to any payment from the Company
with respect to such period, but the Employee shall not be
obligated to pay the amount of the excess to the Company;
provided, however, that the Employee shall be obligated to
return to the Company any payment or payments previously made
to the Employee for such year in excess of the amounts due
under this paragraph (ii). The Employee acknowledges that the
amounts provided for in this paragraph (ii) shall be subject
to reduction as provided below and
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shall not be paid to the Employee if he is terminated for
cause or he voluntarily ceases to be an employee of the
Company. The payments provided for in this paragraph (ii)
shall be made to the Employee in equal monthly installments on
the 10th day of each calendar month, subject to the Company's
receipt from the Employee of such statement or statements as
the Company may reasonably request setting forth the
compensation, if any, earned by the Employee from any new
place of employment during the immediately preceding calendar
month.
Notwithstanding the provisions of paragraph (ii) immediately
above, in the event that the Employee breaches any of the covenants set forth
in Section 17 hereof, then the "Termination Amount" shall consist solely of the
Base Salary at the time of the Employee's termination of employment and shall
not include any bonus.
13. This Agreement and Employee's employment by the
Company shall terminate upon the happening of any of the following events:
(a) The death of the Employee.
(b) At the Company's option, the inability of the
Employee to render for a period of 180 consecutive days, full and
effective service hereunder because of incapacity, whether resulting
from illness, accident or otherwise (such inability a "Disability").
(c) Receipt by the Employee of notice from the
Company of termination for cause. The term "cause" as used herein
shall mean:
(i) prolonged or repeated absence from
duty without the consent of the Company (for reasons other
than the Employee's health);
(ii) habitual neglect of the Employee's
duties as an employee of the Company;
(iii) engaging in any activity which is in
conflict with or adverse to the business interests of the
Company;
(iv) violation in any material respect by
the Employee of any provision of this Agreement;
(v) willful or serious misconduct on the
part of the Employee relating to the performance of his duties
hereunder or otherwise injurious to the Company; or
(vi) a felony or conviction of a crime
involving moral turpitude of the Employee.
(d) Thirty (30) days after receipt by Employee of
written notice from the Company that this Agreement is terminated
without cause, or thirty (30) days after receipt of written notice to
the Company from Employee of termination as a result of the Company's
violation in any material respect of any provision of this Agreement;
provided, however, that any such notice given by Employee shall
specify the violation or violations
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claimed and that this Agreement shall not terminate as a result of any
such notice given by the Employee if the violation or violations set
forth in the notice are cured within 30 days after the notice is
given.
(e) Six (6) months after receipt by the Company
of written notice from Employee that this Agreement is terminated
without breach by the Company; provided, however, that this Agreement
may not be so terminated by Employee prior to May 24, 1999.
The Employee shall be entitled to written notice and a hearing
before the Board prior to termination pursuant to subsection 13(c) and, in
the case of paragraphs (iii) and (iv) of that subsection, a 30-day opportunity
to cure, during which time the Employee may be excluded from the Company's
premises.
In the event of the termination of this Agreement, whether for
cause or otherwise, all further obligations of the Company hereunder shall
terminate, except that the Employee shall continue to be eligible for payments
in accordance with the provisions of Section 12 above and 14 below, and the
Employee shall continue to observe the provisions set forth in Sections 14, 16
and 17 hereof, regardless of the termination of this Agreement for any reason
except termination pursuant to subsection 13(a).
14. The Employee agrees that in the event Employee ceases to be
an employee of the Company between the date hereof and September 16, 1996,
Employee shall have the obligation to transfer and deliver to the Company, in
consideration for the Company's loss of Employee's services, 54,186 shares of
Common Stock of the Company; provided, however, that in the event that, while
Employee is an employee of the Company, there is a merger, consolidation,
purchase of assets or other business combination by the Company with another
person in which the other person is the survivor or purchaser and cash or
non-cash consideration is distributed to the holders of the Company's Common
Stock, the Employee shall be released from this covenant in its entirety.
Upon such transfer and delivery of such shares, the Company
shall pay the Employee, in cash, the lesser of (i) Employee's cost for such
shares, and (ii) $.167 per share. In lieu of the transfer and delivery of such
shares, Employee may satisfy such obligation by assigning and transferring to
the Company "Share Contract rights." "Share Contract rights" shall mean any
contractual rights Employee then has to purchase from any person or entity, for
a price of not more than $.167 per share, a number of shares of Common Stock
that is not less than the number otherwise required to be transferred and
delivered to the Company pursuant to this Section. Share Contract rights shall
not be subject to any conditions other than those which, by their terms, could
be waived by the Company. All share and share price numbers set forth herein
shall be appropriately adjusted for any stock splits, reverse stock splits and
recapitalizations of the Company occurring after the date hereof.
15. The Company shall be entitled to all of the benefits
and profits arising from or incident to all work, service, and advice of the
Employee provided to the Company by the Employee.
16. (a) Trade Secrets of the Company. The Employee
during the term of employment under this Agreement will have access to and
become acquainted with various trade secrets, consisting of technical data,
plans and specifications, research and test results, feasibility studies,
business plans, financial records, customer lists, and other business
documents, which are owned by the Company, or its shareholders, and which are
regularly used in the operation of the business of the Company. The Employee
shall not disclose any of the aforesaid trade secrets, directly or indirectly,
or use them in any way, either during the term of this Agreement or at any time
thereafter, except as required in the course of his
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employment. All files, records, documents, plans, and similar items relating
to the business of the Employee or otherwise coming into his possession, shall
remain the exclusive property of the Company and shall not be removed under any
circumstances from the premises where the work of the Company is being carried
on without the prior written consent of the Company.
(a) Confidential Data of Customers and the Company. The
Employee in the course of his duties will or may be handling technical,
statistical, and planning data on the future plans and requirements for
customers and/or potential customers of the Company, and similar material
pertaining to the Company's shareholders. All such data is confidential and
shall not be disclosed, directly or indirectly, or used by the Employee in any
way, either during the term of this Agreement or at any time thereafter, except
as required in the course of Employee's employment.
(b) Inventions by Employee. All concepts, designs, ideas,
inventions, knowhow, and industrial property rights (hereinafter called
"Inventions") created, devised or improved by the Employee during the term of
employment relating to the business of the Company shall be the sole and
exclusive property of the Company and shall be treated in a confidential manner
pursuant to subsection 16(a) above. The Employee shall fully disclose all such
Inventions to the Company. The handling of any Inventions made by the Employee
during the employment term shall be governed by the provisions set forth below:
(i) The Employee agrees that any Inventions made by the
Employee, solely or jointly with others, during the term of this
Agreement, that are made with the Company's equipment, supplies,
facilities, trade secrets, or time; or that relate, at the time of
conception or of reduction to practice, to the business of the Company
or to the Company or the Company's actual or demonstrably anticipated
research or development; or that result from any work performed by the
Employee for the Company, shall belong to the Company, and promises to
assign all such Inventions to the Company.
(ii) The Employee also agrees that the Company shall have the
right to keep any such Inventions as trade secrets, if the Company so
chooses.
(iii) The Employee agrees to assign to the Company
all rights in any other inventions.
(iv) In order to permit the Company to claim rights to which
it may be entitled, the Employee agrees to disclose to the Company in
confidence all Inventions that Employee makes during the course of his
employment and all patent applications filed by the Employee within a
year after termination of his employment.
(v) The Employee shall assist the Company in obtaining
patents on all Inventions, designs, improvements, and discoveries
deemed patentable by the Company in the United States and in all
foreign countries, and shall execute all documents and do all things
necessary to obtain letters patent, to vest the Company with full and
exclusive title thereto, and to protect the same against infringement
by others.
(vi) For the purposes of this Agreement, an Invention is
deemed to have been made during the period of the Employee's employment
if the Invention was conceived or first actually reduced to practice
during that period, and the Employee agrees that any patent application
filed within one year after termination of his employment
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hereunder shall be presumed to relate to an invention made during the
term of the Employee's employment unless the Employee can provide
conclusive written evidence to the contrary.
17. During the term of this Agreement, the Employee
agrees that he will not, directly or indirectly, be interested in any manner as
partner, officer, director, stockholder (other than a passive investor, which
shall be defined as ownership of less than 1% of the equity of a publicly
traded corporation or association), consultant, advisor, employee or in any
other capacity in or with respect to any other firm, corporation, partnership,
trust, association or organization which is engaged in any line of business in
any geographical area in which the Company is engaged or has under development.
After the date of the termination of Employee's employment,
whether pursuant to Section 13 hereof or otherwise, Employee agrees that he
will not, during the period commencing on the date of termination and ending on
the later of (i) May 24, 1999 or (ii) 365 days after termination, directly or
indirectly, be interested in any manner as partner, officer, director,
stockholder (other than a passive investor, which shall be defined as ownership
of less than 1% of the equity of a publicly traded corporation or association),
consultant, advisor, employee or in any other capacity in or with respect to
any other firm, corporation, partnership, trust, association or organization
which is engaged in any line of business in which the Company is engaged or has
under development in any county of any state in which the Company is doing
business.
After the date of the termination of Employee's employment,
whether pursuant to Section 13 hereof or otherwise, Employee agrees that he
will not, during the period commencing on the date of termination and ending on
the later of (a) May 24, 2000, and (b) 365 days after termination, directly or
indirectly, (i) entice, induce, solicit, or encourage any employee to leave the
employ of the Company to engage in any line of business in which the Company is
engaged or has under development as of the date of termination of Employee's
employment with the Company or (ii) hire any other employee of the Company to
engage in any line of business if such employee's base salary and any fixed or
guaranteed bonus per year will be more than $50,000.
18. In the event that any court or tribunal of proper
jurisdiction and venue shall find that the restrictions contained in Section 17
above are unreasonable, the parties agree that such court shall determine a
reasonable time and/or geographical area for such restrictions. To the extent
that any other obligations set forth in this Agreement shall be declared
invalid or unenforceable, said clause of obligation shall be deemed to be
severable, and the remaining obligations imposed by the provisions of this
Agreement shall be fully enforceable as if such invalid or unenforceable
provisions had not been included herein.
19. The Employee agrees that the remedy at law for any
breach or threatened breach of the restrictions contained in Section 17 above
will be inadequate, and that any breach or threatened breach would cause
immediate and permanent damages as would be impossible to ascertain.
Therefore, the Employee agrees that in the event of any breach or threatened
breach of any provisions of Section 17 above by him, in addition to any and all
legal, equitable and arbitral remedies available to the Company for such breach
or threatened breach, including a recovery of damages, the Company shall be
entitled to obtain in any court or tribunal having jurisdiction preliminary or
permanent injunctive relief without the necessity of proving actual damage by
reason of such breach, and to the extent permissible under the application
statutes and rules of procedure, a temporary restraining order may be granted
immediately upon commencement of such action.
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20. The Employee represents and warrants that (a) he is
not a party to or bound by any agreement or subject to any restriction or
limitation, whether written, oral or arising out of any prior or current
relationship, which would be violated or impaired by his entering into, and
performing for the Company his obligations under this Agreement and (b) he does
not possess confidential information arising out of any such relationship which
would be utilized in connection with his employment by the Company.
21. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the employment and
understandings between the parties with respect to the employment contemplated
herein and sets forth a complete agreement and understanding of the parties.
No change, termination or attempted waiver of any of the provisions of this
Agreement shall be of any force or effect unless the same is set forth in
writing, duly adopted by written resolution of the Board, and duly executed by
the party against which it is sought to be enforced.
22. The failure of either party to insist in one or more
instances upon the terms and conditions of this Agreement, or to exercise any
right hereunder, shall not be construed as a waiver of the future performance
of any such term or the future exercise of such right, and the obligation of
each party with respect to such future performance shall continue in full force
and effect.
23. It is the intention of the Company and the Employee
that this Agreement and the performance hereunder and all suits and special
proceedings that might be brought pursuant hereto be construed in accordance
with the laws of the State of California, and that in any action, special
proceeding, or other proceeding that may be brought arising out of, or in
connection with, or by reason of this Agreement, the laws of the State of
California shall be applicable and shall govern to the exclusion of the law of
any other forum, without regard to the jurisdiction in which any action or
special proceeding may be instituted.
24. Any controversy or claim arising out of or relating
to this Agreement or its interpretation or the breach thereof shall be
determined by arbitration before the American Arbitration Association, which
arbitration shall be held in Los Angeles, California in accordance with the
Commercial Arbitration Rules of said American Arbitration Association. The
award of the arbitrator shall be final and binding on the parties and may be
entered as a judgement or decree in any court having jurisdiction of such
proceedings. The costs and legal fees of all parties to any arbitration
proceeding shall be borne by the party against whom the award is made.
25. This Agreement is not assignable by the Employee, but
is assignable by the Company to any subsidiary, parent, affiliated or
associated company or any company which purchases the assets of the Company.
As used herein, the term "the Company" shall include any company to which this
Agreement shall have been assigned.
26. Any and all notices, requests, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally or sent by certified mail or registered mail, postage
prepaid to each of the parties at the following addresses:
Employee: James M. Mackenzie, Jr.
3229 Leticia Drive
Hacienda Heights, CA 91745
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The Company: Protection One, Inc.
3900 S.W. Murray Boulevard
Beaverton, OR 97005
Attn: John W. Hesse
Tel.: 503-520-6010
Fax.: 503-520-6099
with a copy to: Patricof & Co. Ventures, Inc.
545 Madison Avenue
New York, NY 10022
Attn: Robert M. Chefitz
Tel.: 212-753-6300
Fax.: 212-319-6155
Mitchell, Silberberg & Knupp LLP
1377 West Olympic Boulevard
Los Angeles, CA 90064-1683
Attn: Lessing E. Gold, Esq.
Tel.: 310-312-3228
Fax.: 310-312-3798
Any party may change his address for the purposes of this paragraph by
giving written notice of such change to the other party in the manner herein
provided for giving notice.
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IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Employment Agreement as of the day and year first written above.
PROTECTION ONE, INC.
By: John E. Mack, III /s/ James M. Mackenzie, Jr.
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John E. Mack, III JAMES M. MACKENZIE, JR.
Vice President -
Business Development