Exhibit 10.3
AGREEMENT OF EMPLOYMENT
THIS AGREEMENT is entered into as of the 1st day of May, 1999 by and
between Cogeneration Corporation of America ("Company"), a Delaware
corporation, and Xxxxx X. Xxxxxxxxx ("Employee").
WHEREAS:
A. Company desires to employ Employee, and Employee desires to be employed
by Company, as Company's "President and Chief Executive Officer."
B. Employee and Company recognize and acknowledge that Employee's executive
responsibilities will give Employee knowledge of all aspects of the Company's
operations, including its business plans and strategies, current and
contemplated generation projects and ventures, customers, and other
proprietary information, which information would seriously harm Company if
provided to a competitor. In addition, Employee's responsibilities will
allow Employee to develop business relationships with existing and potential
customers, suppliers and partners and with other Company employees that, if
used on behalf of a competitor, would seriously harm Company.
C. Employee and Company recognize and acknowledge Company's need to protect
its confidential and proprietary information as well as its business
relationships and goodwill.
NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement, Employee and Company, intending to be legally bound, agree as
follows:
1. EMPLOYMENT.
(a) POSITION AND DUTIES. Company agrees to employ Employee as its
"President and Chief Executive Officer," with such duties as may be
determined by Company from time to time. Employee shall perform these
duties subject to the direction and supervision of Company's Board of
Directors. Employee accepts such employment and agrees to devote her full
time skills to the conduct of Company's business, performing to the best of
Employee's abilities such duties as may be reasonably requested by Company.
Employee agrees to serve Company diligently and faithfully so as to advance
Company's best interests and agrees to not take any action in conflict with
Company's interests.
(b) TERM. This Agreement shall be effective May 1, 1999 and shall
continue for an initial term ending on the second anniversary of the
effective date. Thereafter, the term shall be automatically extended for
successive one year periods unless either party gives written notice to the
other in advance of any annual anniversary date of this
Agreement (beginning May 1, 2000) that the term shall expire one year from
such annual anniversary date.
(c) TERMINATION. This Agreement may be terminated by either Company
or Employee upon 30 days advance written notice. In addition, this
Agreement shall immediately terminate upon Employee's death or Disability
(as defined below). If Employee's employment is terminated due to
Employee's death or Disability or for Cause (as defined below) or if
Employee voluntarily resigns without Good Cause (as defined below), Company
shall pay Employee's Base Salary (as defined below) and employee benefits
(which shall not include any incentives such as stock option grants or
annual or other bonuses which were not earned in full as of the date of
termination or resignation) through the date of termination or resignation
and Company shall have no further obligations under this Agreement. If
Company terminates Employee's employment for any reason other than death,
Disability or Cause, or if Employee voluntarily resigns for Good Cause,
Company shall pay Employee a lump sum, as severance (the "Severance
Payment"), calculated as set forth below provided that Employee executes a
settlement and release agreement in a form acceptable to Company releasing
Company from any and all claims which Employee may have against Company,
whether relating to Employee's employment, termination or otherwise. The
Severance Payment shall be equal to two times the sum of Employee's then
current Base Salary plus an amount equal to the target amount for
Employee's annual bonus as provided in the Company's Short Term Incentive
Plan in effect on the date of Employee's termination or resignation;
provided, however, that if there has been a "Change in Control" (as such
term is defined in the Company's 1997 Stock Option Plan (the "1997 Plan"),
a copy of which is attached as Exhibit A) of the Company and the effective
date of such termination or resignation is on or before May 1, 2000, the
Severance Payment shall be equal to the sum of Employee's then current Base
Salary plus an amount equal to the target amount for Employee's annual
bonus as provided in the Company's Short Term Incentive Plan in effect on
the date of Employee's termination or resignation. For purposes of this
Agreement, (i) "Cause" means willful neglect or failure to render services
to be performed under this Agreement (not including any failure resulting
from any of the circumstances covered within the definition of
"Disability") or engaging in illegal conduct or gross misconduct either of
which results in material and demonstrable damage to the business of
Company, (ii) "Disability" means the date upon which Employee is qualified
to receive long term disability benefits under the Company's long term
disability policy or, if no such policy exists, the date upon which
Employee shall have been unable, due to illness, accident or any other
physical or mental incapacity, to perform her duties under this Agreement
for a period of six consecutive months and (iii) resign with "Good Cause"
means resigning (A) within three months of a material change or reduction
in Employee's title or job responsibilities with Company, unless such
action is remedied by Company promptly upon receipt of written notice
thereof from Employee, (B) within three months of a change of the Company's
headquarters to a location which is more than 25 miles from its current
location at 1 Xxxxxxx Parkway, Minnetonka, MN or (C) as a result of a
material breach by Company of the compensation or benefit terms of this
Agreement, provided that Employee has given Company written notice of, and
a reasonable opportunity to cure, such breach.
(d) COMPENSATION AND BENEFITS.
(I) BASE SALARY. Company shall pay Employee an annual base salary
("Base Salary") of $200,000, payable in 24 equal bi-monthly
installments on the Company's regular payroll dates. The Base
Salary shall be subject to review and adjustment by the Board of
Directors as of May of each year but shall not be less than the
Base Salary initially in effect on the date of this Agreement.
(II) ONE-TIME BONUS. Upon execution of this Agreement, Company shall
pay Employee a one-time signing bonus of $20,000. If Employee
resigns her employment with Company for any reason other than
Good Cause or if Employee's employment with Company is
terminated for Cause on or before May 1, 2000, Employee shall be
obligated to refund to Company all amounts paid to Employee
under this subparagraph (II);
(III) ANNUAL BONUS PROGRAM. Employee will be eligible to participate
in the Company's Short-Term Incentive Plan which provides for
annual bonuses based on the performance of Employee and Company.
The guidelines used to determine awards under the Company's
existing Short-Term Incentive Plan are set forth on Exhibit B.
(IV) OTHER BENEFITS. Employee shall be entitled to fully paid
parking (if necessary), 4 weeks of paid vacation annually and a
leased automobile pursuant to the Company's program administered
by GE Credit (which is the same as the program in place for
officers of NRG Energy, Inc.). In addition, Company shall
provide such medical and other benefits as are approved by
Company's Board of Directors for the benefit of all Company
executives; provided, however, that the benefits provided by
Company to its executives (including Employee) and other
employees are subject to change from time to time at the
discretion of Company with or without prior notice. Finally,
Employee acknowledges that Company does not currently have, and
it is not contemplated that Company will have, a defined benefit
pension plan.
(V) CLUB MEMBERSHIP. Employee shall be entitled to reimbursement
for monthly membership dues (but not initiation fees or dues),
up to a maximum of $450 per month (subject to upward adjustment
by the Board of Directors), at a club of her choice located near
the Company's headquarters.
(VI) STOCK OPTIONS. Employee shall be entitled to receive
performance based incentive stock options (the "Options") to
purchase 233,000
shares of Company common stock under the 1997 Plan and 17,000
shares of Company common stock under the Company's 1998 Stock
Option Plan (the "1998 Plan"), a copy of which is attached as
Exhibit C. The exercise price of the Options shall be equal
to the closing price of Company common stock on the date the
Options are granted, and the Options shall vest as follows:
a) 50,000 shares under the 1997 Plan (the "First Block") when
either (i) the price of Company common stock is greater than
or equal to $15 per share for at least 15 of 20 consecutive
trading days or (ii) a "Corporate Transaction" shall be
deemed to occur under the 1997 Plan which will result in at
least $15 per share in cash (or an equivalent amount in
other consideration) to be paid to the holders of Company
common stock, provided that if the First Block has not
vested on or before December 31, 2004 it shall expire;
b) 50,000 shares under the 1997 Plan (the "Second Block") when
either (i) the price of Company common stock is greater than
or equal to $20 per share for at least 15 of 20 consecutive
trading days or (ii) a "Corporate Transaction" shall be
deemed to occur under the 1997 Plan which will result in at
least $20 per share (or an equivalent amount in other
consideration) to be paid to the holders of Company common
stock, provided that if the Second Block has not vested on
or before December 31, 2004 it shall expire;
c) 100,000 shares under the 1997 Plan (the "Third Block") when
either (i) the price of Company common stock is greater than
or equal to $25 per share for at least 15 of 20 consecutive
trading days or (ii) a "Corporate Transaction" shall be
deemed to occur under the 1997 Plan which will result in at
least $25 per share (or an equivalent amount in other
consideration) to be paid to the holders of Company common
stock, provided that if the Third Block has not vested on or
before December 31, 2006 it shall expire;
d) 33,000 shares under the 1997 Plan (the "Fourth Block") when
either (i) the price of Company common stock is greater than
or equal to $35 per share for at least 15 of 20 consecutive
trading days or (ii) a "Corporate Transaction" shall be
deemed to occur under the 1997 Plan which will result in at
least $35 per share (or an equivalent amount in other
consideration) to be paid to the holders of Company common
stock, provided that if the Fourth Block has not vested on
or before December 31,
2006 it shall expire; and
e) 17,000 shares under the 1998 Plan (the "Fifth Block") when
either (i) the price of Company common stock is greater than
or equal to $35 per share for at least 15 of 20 consecutive
trading days or (ii) a "Corporate Transaction" shall be
deemed to occur under the 1998 Plan which will result in at
least $35 per share (or an equivalent amount in other
consideration) to be paid to the holders of Company common
stock, provided that if the Fifth Block has not vested on or
before December 31, 2006 it shall expire.
Except as specifically provided above, none of the Options shall
vest or otherwise become exercisable upon a "Change in Control"
or "Corporate Transaction" (as such terms are defined in the
applicable Stock Option Plan). If any of the Options vest in
accordance with their terms, such Options shall remain
exercisable until ten years from the date of grant.
(VII) TRANSACTION BONUS. If Employee's employment is terminated by
Company without Cause on or before May 1, 2001 and if within six
months of the effective date of such termination a Corporate
Transaction shall be deemed to occur under the applicable Stock
Option Plan, then Company shall pay to Employee a bonus equal to
the number of shares of Company common stock covered by
Qualifying Options (as defined below) multiplied by the
difference (calculated for each Qualifying Option) between the
value of the consideration paid per share in the Corporate
Transaction to holders of Company common stock and the exercise
price per share of any Options which were not vested as of the
effective date of such termination but which would have vested
had Employee been employed by Company on the date the Corporate
Transaction is deemed to occur ("Qualifying Options"). If the
consideration paid in the Corporate Transaction is stock or
other securities which would have allowed Employee to be
eligible for long-term capital gains treatment with respect to
any gain to be recognized on the disposition of the stock or
other securities received, the amount calculated in the
preceding sentence shall be increased by 50%.
2. NON-COMPETITION.
(a) Employee understands and agrees that, in addition to
Employee's below-described exposure to Company's Confidential
Information or Trade Secrets, Employee may, in his or her capacity as an
employee, at times meet with Company's customers and
suppliers, and that as a consequence of using and associating with
Company's name, goodwill, and professional reputation, Employee will be
in a position to develop personal and professional relationships with
Company's past, current, and prospective customers and suppliers.
Employee further acknowledges that during the course and as a result of
employment by Company, Employee may be provided certain specialized
training or know-how. Employee understands and agrees that this
goodwill and reputation, as well as Employee's knowledge of Confidential
Information or Trade Secrets and specialized training and know-how,
could be used unfairly in competition against Company.
(b) Accordingly, Employee agrees that, during the course of
Employee's employment with Company and for one year from the date of
Employee's voluntary or involuntary resignation from, or termination of
employment with, Company, Employee shall not:
(i) Directly or indirectly own, manage, consult, associate
with, operate, join, work for, control or participate in the
ownership, management, operation or control of, or be connected in any
manner with, any business (whether in corporate, proprietorship, or
partnership form or otherwise), as more than a 10% owner in such
business or member of a group controlling such business, which is
engaged in the development, ownership or operation of cogeneration
energy facilities or which will compete with any proposed business
activity of Company in the planning stage on the date of her
resignation or termination. Employee and Company agree that this
provision is reasonably enforced as to the United States.
(ii) Directly or indirectly solicit, service, contract with
or otherwise engage any past (one year prior) or existing customer,
client, or account who then has a relationship with Company for
current or prospective business on behalf of a competitor of the
Company, or on Employee's own behalf for a competing business.
Employee and Company agree that this provision is reasonably enforced
as to the United States.
(iii) Cause or attempt to cause any existing customer,
client, or account, who then has a relationship with the Company for
current or prospective business, to divert, terminate, limit or in any
manner modify, or fail to enter into any actual or potential business
relationship with Company. Employee and Company agree that this
provision is reasonably enforced as to the United States.
(iv) Directly or indirectly solicit, employ or conspire with
others to employ any of Company's employees. The term "employ" for
purposes of this paragraph means to enter into an arrangement for
services as a full-time or part-time employee, independent contractor,
consultant, agent or otherwise. Employee and Company agree that this
provision is reasonably enforced as to the United States.
(c) Employee further agrees to inform any new employer or other
person or entity with whom Employee enters into a business relationship
during the one year non-
competition period, before accepting such employment or entering into
such a business relationship, of the existence of this Agreement and
give such employer, person or other entity a copy of this paragraph 2.
(d) Company agrees that the terms "activity which will compete with
the business of the Company," "competitor of the Company," "competing
business," and "relationship with the Company" as used in this Agreement
shall be narrowly applied and that it is not the belief of Company that all
companies in the energy business are competitors of Company. Company
further agrees that this Agreement shall not be so broadly construed that
Employee is prevented during the non-compete period from obtaining all
other employment in the energy industry.
3. RETURN OF PROPERTY. Employee agrees that upon the termination of
employment with Company the originals and all copies of any and all documents
(including computer data, disks, programs, or printouts) that contain any
customer information, financial information, product information, or other
information that in any way relates to Company, its products or services, its
clients, its suppliers, or other aspects of its business shall be immediately
returned to Company. Employee further agrees to not retain any summary of
such information.
4. CONFIDENTIAL INFORMATION/TRADE SECRETS.
(a) Employee acknowledges that during the course and as a result of
his or her employment, Employee may receive or otherwise have access to, or
contribute to the production of, Confidential Information or Trade Secrets.
"Confidential Information" or "Trade Secrets" means information that is
proprietary to or in the unique knowledge of Company (including information
discovered or developed in whole or in part by Employee); the Company's
business methods and practices; or information that derives independent
economic value, actual or potential, from not being generally known to, and
not being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use, and is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy. It includes, among other things, strategies, procedures, manuals,
confidential reports, lists of clients, customers, suppliers, past, current
or possible future products or services, and information concerning
research, development, accounting, marketing, selling or leases and the
prices or charges paid by the Company's customers to the Company, or by the
Company to its suppliers.
(b) Employee further acknowledges and appreciates that any
Confidential Information or Trade Secret constitutes a valuable asset of
Company and that Company intends any such information to remain secret and
confidential. Employee therefore specifically agrees that except to the
extent required by Employee's duties to Company or as permitted by the
express written consent of the Board of Directors, Employee shall never,
either during employment with Company or at any time thereafter, directly
or indirectly use, discuss or disclose any Confidential Information or
Trade Secrets of Company or otherwise use such information to his or her
own or a third party's benefit.
5. CONSIDERATION. Employee and Company agree that the provisions of
this Agreement are reasonable and necessary for the protection of Company and
its business. In exchange for Employee's agreement to be bound by the terms
of this Agreement, Company has provided Employee the consideration provided
in paragraph 1. Employee accepts and acknowledges the adequacy of such
consideration for this Agreement.
6. REMEDIES FOR BREACH. Employee and Company acknowledge that a
breach of the provisions of this Agreement may cause irreparable harm that
may not be fully remedied by monetary damages. Accordingly, Employee and
Company shall, in addition to any relief afforded by law, be entitled to
injunctive or other equitable relief from the other for breach. Employee and
Company agree that both damages at law and injunctive or other equitable
relief shall be proper modes of relief and are not to be considered
alternative remedies.
7. EMPLOYEE'S ACKNOWLEDGEMENT OF REVIEW. Employee represents that
Employee has carefully read and fully understands all provisions of this
Agreement and that Employee has had a full opportunity to review this
Agreement before signing and to have all the terms of this Agreement
explained to her by counsel.
8. GENERAL PROVISIONS. Employee and Company acknowledge and agree as
follows:
(a) This Agreement contains the entire understanding of the parties
with regard to all matters contained herein. There are no other
agreements, conditions, or representations, oral or written, express or
implied, with regard to such matters. This Agreement supersedes and
replaces any prior agreement between the parties generally relating to the
same subject matter.
(b) This Agreement may be amended or modified only by a writing
signed by both parties.
(c) Waiver by either Company or Employee of a breach of any
provision, term or condition hereof shall not be deemed or construed as a
further or continuing waiver thereof or a waiver of any breach of any other
provision, term or condition of this Agreement.
(d) This Agreement shall inure to the benefit of and be binding upon
Company and its successors and assigns. Company shall require any
successor (whether direct or indirect, by asset or stock purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of Company expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that Company would have
been required to perform it if no such succession had taken place. As used
in this Agreement, "Company" shall mean include any such successor that
assumes and agrees to
perform this Agreement, by operation of law or otherwise. No assignment
of this Agreement shall be made by Employee, and any purported
assignment shall be null and void.
(e) No provision of this Agreement shall be construed as denying
Company or Employee the right to terminate this Agreement consistent with
the terms hereof.
(f) Employee's obligations under paragraphs 2, 3, and 4 of this
Agreement and Company's obligations under paragraph 1(c) and (d) shall
survive any changes in Employee's employment status with Company, by
promotion or otherwise, or Employee's resignation from, or termination of
employment with, Company.
(g) If any court finds any provision or part of this Agreement to be
unreasonable, in whole or in part, such provision shall be deemed and
construed to be reduced to the maximum duration, scope or subject matter
allowable under applicable law. Any invalidation of any provision or part
of this Agreement will not invalidate any other provision or part of this
Agreement.
(h) This Agreement will be construed and enforced in accordance with
the laws and legal principles of the State of Minnesota. The Employee
consents to the jurisdiction of the Minnesota courts for the enforcement of
this Agreement.
(i) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which together will
constitute one and the same instrument.
9. ARBITRATION. Any claim, controversy or dispute arising between
the parties under this Agreement ("Dispute"), to the maximum extent allowed
by law, shall be submitted to and finally resolved by, binding arbitration.
Any party may file a written demand for arbitration with the American
Arbitration Association, and shall send a copy of the demand for arbitration
to the other party. The arbitration shall be conducted pursuant to the then
current terms of the Federal Arbitration Act and the Rules of the American
Arbitration Association. To the extent such rules are not inconsistent with
the terms and conditions of this paragraph 9, the venue for the arbitration
shall be Minneapolis, Minnesota. The arbitration shall be conducted before
one arbitrator selected as follows: within ten business days after the
filing of the demand for arbitration, each party shall designate a
representative and, within ten business days after the end of such ten day
period, such representatives shall select an arbitrator who will serve as the
sole arbitrator of the Dispute. If the representatives of the parties are in
good faith unable to agree upon an arbitrator during the latter ten day
period, the arbitrator shall be selected through the American Arbitration
Association's arbitrator selection procedures. The arbitrator shall promptly
fix the time, date and place of the hearing and notify the parties
accordingly. The arbitration shall be held and the decision of the
arbitrator shall be provided as quickly as is reasonably possible and the
arbitrator's decision may include an award of legal fees, costs of
arbitration and interest. The arbitrator shall promptly transmit an executed
copy of its decision to the parties, stating the reasons for the decision.
The decision of the arbitrator shall be final, binding and conclusive upon
the parties. Each Party shall
have the right to have the decision enforced by any court of competent
jurisdiction. Notwithstanding any other provision of this paragraph 9, any
dispute in which a party seeks equitable relief may be brought in any court
having competent jurisdiction.
THIS AGREEMENT IS INTENDED TO BE A LEGALLY BINDING DOCUMENT FULLY ENFORCEABLE
IN ACCORDANCE WITH ITS TERMS. IF IN DOUBT, SEEK COMPETENT LEGAL ADVICE
BEFORE SIGNING.
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(Employee) Date
COGENERATION CORPORATION OF AMERICA
By
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Its Chairman of the Board Date
Employee acknowledges that she has received a copy of this Agreement.
