EMPLOYMENT AGREEMENT
Exhibit
10.1
This EMPLOYMENT AGREEMENT (the
“Agreement”)
is dated as of December 28, 2009 (the “Effective
Date”) between WINDTAMER
CORPORATION, a New York corporation (the “Company”),
and Xx. Xxxxx Xxxx (“Xx. Xxxx”
or “Executive”).
R
E C I T A L S:
WHEREAS, the Company is in the
business of developing, manufacturing, licensing and selling wind
turbines;
WHEREAS, the Company desires
to engage Xx. Xxxx as its Vice President of Operations on the terms and
conditions set forth herein;
WHEREAS, amounts paid pursuant
to this Agreement are intended to qualify as performance-based compensation
under Section 162(m) of the Internal Revenue Code (“Code”); and
WHEREAS, Saba desires to
accept such employment on the terms and conditions set forth
herein.
P
R O V I S I O N S:
NOW, THEREFORE, in
consideration of the mutual promises and covenants set forth herein, the parties
agree as follows:
1. Employment;
Duties.
(a) The
Company hereby agrees to employ Xx. Xxxx as its Vice President of
Operations. Xx. Xxxx hereby accepts such employment. Xx.
Xxxx will report to the Company’s President until April 15, 2010, after which
Xx. Xxxx shall report to the Company’s Chief Executive Officer. Xx.
Xxxx will perform those duties and have such authority and powers as are
customarily associated with his position of Vice President of Operations and
such other duties as the President of the Company may reasonably request from
time to time.
(b) Xx.
Xxxx shall be employed on a full time basis and shall devote substantially all
of his professional business time to the performance of his duties.
2. Term. The
term (the “Term”) of
this Agreement shall commence on December 28, 2009 (the “Start
Date”), and shall continue for three (3) years from the Start Date unless
otherwise terminated as provided herein (together with any Renewal Term, as
hereafter defined, shall be referred to as the “Term”). This
Agreement shall automatically be extended for successive one (1) year terms
pursuant to the terms and conditions of this Agreement (each, a “Renewal
Term”), unless otherwise terminated by written notice from one party to
the other no less than sixty (60) days prior to the end of the Term or any
subsequent Renewal Term.
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3. Compensation.
(a) Annual
Salary. In consideration for the services rendered by Xx. Xxxx
on behalf of the Company during the Term, the Company shall pay Xx. Xxxx,
commencing on the Start Date, an annual salary of $175,000 (the “Base
Salary”), payable in accordance with the Company’s regular payroll
practices. All forms of compensation referred to in this Agreement
are subject to withholding for applicable federal, state and local
taxes.
(b) Bonus. In
addition to his Base Salary, Xx. Xxxx shall be entitled to receive bonus
payments as follows: four percent (4%) of all sales of the Company up to $2.5
million and one percent (1%) of all sales of the Company between $2.5 million
and $10 million recorded during calendar year 2010. Bonus payments
shall be paid to Xx. Xxxx on a quarterly basis via the Company’s regular payroll
within two weeks after the Company releases its financial results on Form 10-Q
or Form 10-K for the applicable quarter. Notwithstanding anything to
the contrary contained herein, in no event shall any quarterly bonus payment
paid to Xx. Xxxx pursuant to this Section 3(b) be greater than $43,750;
provided, however, that any earned but unpaid bonus payable pursuant to this
Section 3(b) shall carry forward to the next calendar quarter subject to the
maximum bonus payable set forth in the first sentence of this Section
3(b). The bonus structure of Xx. Xxxx for calendar year 2011 and
beyond shall be mutually agreed to in writing by Xx. Xxxx and the Chief
Executive Officer of the Company.
(c) Stock Options. On the
Start Date, Xx. Xxxx shall be issued pursuant to the Company’s 2008 Equity
Incentive Plan stock options to purchase 400,000 shares of the Company’s Common
Stock with an exercise price equal to the last trade of the common stock on the
Effective Date, which shall vest 200,000 shares on the first anniversary of the
Start Date, 100,000 on the second anniversary of the Start Date and 100,000 on
the third anniversary of the Start Date
4. Benefits. In
addition to the compensation set forth above, the Company shall provide Xx. Xxxx
with the following benefits during the Term:
(a) Xx.
Xxxx shall be entitled to four (4) weeks of vacation during each
calendar year (pro-rated for any partial calendar year) that he is employed
hereunder during which vacation his annual salary shall be paid in
full. Any vacation not taken by Xx. Xxxx shall not carryover into the
succeeding year. All unused and accrued vacation shall be paid to Xx.
Xxxx (or his estate) upon Xx. Xxxx’ termination of employment. Such
vacation may only be taken at such time or times as are not inconsistent with
the reasonable business needs of the Company.
(b) The
Company shall provide Xx. Xxxx with up to 5 days of paid sick leave each
calendar year (pro-rated for any partial calendar year); unused sick days shall
not carryover into the succeeding year. The Company also shall
provide Xx. Xxxx with holiday pay as provided by the Company to its other
executives.
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(c)
The Company shall make available family medical insurance for Xx. Xxxx under the
medical insurance plan provided to other executives of the Company or a
substantially similar plan. In addition, Xx. Xxxx and his dependents shall be
entitled to participate in such other benefits as may be extended to active
employees of the Company and their dependents including retirement,
profit-sharing, 401(k), group insurance, hospitalization, medical or other
benefits made available by the Company to its employees
generally. Further, in the event that the Company desires to obtain
“key man” life insurance on the life of Xx. Xxxx during the Term, Xx. Xxxx shall
cooperate with the Company in obtaining such insurance.
5. Expenses. Xx.
Xxxx will be entitled to be paid or reimbursed according to Internal Revenue
Service ("IRS") guidelines for all expenses reasonably incurred by him in
connection with Xx. Xxxx'x responsibilities to the Company, including, without
limitation, for travel, lodging, food, and entertainment.
6. Confidential
Information. Xx. Xxxx shall not, during the Term or at anytime during the
five (5) years after termination of his employment, disclose, except as required
or necessary in the course of his employment by the Company or as otherwise
authorized by the Company, any Confidential Information (as defined
herein). “Confidential
Information” shall mean any information existing as of the date of this
Agreement, or thereafter developed, in which the Company has a proprietary
interest, including, but not limited to, information relating to its patents,
technology, research and development, technical data, trade secrets, know-how,
products, services, finances, operations, sales and marketing, customers and
customer information, licenses, orders for the purchase or sale of products,
personnel matters and/or other information relating to the Company, whether
communicated orally, electronically or in writing, or otherwise obtained by Xx. Xxxx as a result of
his employment, or through observation or examination of the Company’s
business.
7. Non-Competition
Covenant; Non Solicitation Covenant.
(a) During
the Term and for a period of one year thereafter, Xx. Xxxx agrees that he will
not, directly or indirectly (including, without limitation, whether as
consultant, an officer, employee or director), engage in any business that
manufactures, sells, designs, develops or distributes wind turbines capable of
generating a maximum of 100 kilowatts or less per unit or any business competing
directly with the business in which the Company or those businesses operated or
provided by the Company at such time.
(b) Notwithstanding
anything herein to the contrary, Xx. Xxxx shall not be prevented or limited from
(i) investing in the stock or other securities of any corporation whose stock or
securities are publicly owned and regularly traded on any public exchange, (ii)
serving as a director, officer or member of professional, trade, charitable and
civic organizations, or (iii) passively investing (not to exceed being a
beneficial owner of more than 1% of the outstanding Common Stock) his assets in
such a form and manner as will not conflict with the terms of this Agreement and
will not require services (whether as consultant, an officer, employee or
director) on the part of Xx. Xxxx in the operation of the business of the
entities in which such investments are made.
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(c) In
furtherance of the foregoing, Xx. Xxxx shall not, during the aforesaid period of
non-competition as provided in Section 7(a), directly or indirectly, in
connection with any business involved in the manufacture, sale, design,
development or distribution of wind turbines capable of generating a maximum of
100 kilowatts or less per unit, or any business competing directly with the
business in which the Company was engaged, or in the process of developing
during Xx. Xxxx’x tenure with the Company, or solicit any customer or employee
of the Company who was a customer or employee of the Company during the tenure
of his employment.
(d) Xx.
Xxxx agrees that the prohibitions contained herein are reasonable and valuable
to the Company, and are express conditions of the Company’s decision to employ
him. If any court shall hold that the duration, scope or any other provision of
non-competition or any other restriction contained in this Section 7 is
unenforceable, it is our intention that same shall not thereby be terminated but
shall be deemed amended to delete therefrom such provision or portion
adjudicated to be invalid or unenforceable or, in the alternative, such
judicially substituted term may be substituted therefore.
8. Termination
of Agreement. This Agreement shall terminate upon the occurrence of
the following events:
(a) This
Agreement shall terminate upon Executive’s death.
(b) The
Company may terminate this Agreement upon Executive’s “total disability” (“Disability”),
which shall mean incapacity due to physical or mental illness or disability,
which renders him absent, or unable to perform his duties hereunder on a full
time basis for a period of six (6) months, whether consecutive or cumulative,
within any twelve (12) month period.
(c) The
Company may terminate this Agreement for “Good Cause” (as defined below) upon
thirty (30) days prior written notice to Executive, subject to any applicable
time to cure, which notice shall specify the reason(s) for
termination. For purposes of this Agreement, “Good
Cause” means (i) willful disobedience by the Executive of a material and
lawful instruction of the Board of Directors or the Chief Executive Officer of
the Company; (ii) conviction of the Executive of any misdemeanor involving fraud
or embezzlement or similar crime or any felony; (iii) an order is entered by the
Securities and Exchange Commission, a state regulatory agency or an exchange on
which the Company’s securities are traded finding that Executive has violated
the securities laws; (iv) breach by the Employee of any material term, condition
or covenant of this Agreement; (v) excessive absences from work, other than for
illness or Disability. In the case of any breach of Sections 8 (c)
(i), (iv) or (v) which is capable of being cured, termination will not occur
unless the breach is not cured within thirty (30) days after Company has
provided Executive with written notice thereof.
(d) Executive
may terminate this Agreement upon thirty (30) days prior written notice to the
Company.
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(e) This
Agreement may be terminated upon the mutual agreement of Company and
Executive.
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9.
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Obligations
Following Termination of
Agreement.
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(a) If this
Agreement is terminated pursuant to Section 8, the Company shall have no
obligation to pay any Severance Payments (as defined below) or benefits to
Executive; provided, however, Company shall be obligated to pay Executive (or in
the case of his death, his spouse, estate or representative) all unpaid salary,
earned bonuses, vacation and other benefits accrued through the date of
termination of this Agreement and shall provide such other benefits, such as
health insurance continuation in the manner required by Section 4980B of
the Code or other applicable law (“COBRA
Coverage”).
(b) If this
Agreement is terminated by Company without “Good Cause” as defined in Section
8:
(i) Executive
shall be paid all unpaid salary, earned bonuses, vacation and other benefits
accrued through the date of termination and shall receive such other benefits,
as may be required by statute, such as health insurance continuation coverage
under COBRA;
(ii) Executive
shall receive as severance payment an amount equal to the Executive’s annual
salary at the rate in effect as of the date of Executive’s termination for the
remainder of the Term; provided, however, the aggregate amount of such severance
payments shall not be less than two times the Executive’s annual
salary. Any severance payments are payable on normal pay dates during
the remainder of the Term in accordance with the Company’s pay policies in
effect prior to termination date. In addition, for the twelve (12)
month period immediately after the termination of this Agreement, Company shall
continue to provide and pay the premium for the health insurance provided to
Executive (and his family, if applicable) immediately prior to the termination
of this Agreement and the Company shall take such actions as are necessary to
cause such COBRA Coverage not to be offset by the provision of benefits under
this Section 9(b)(ii) and to cause the period of COBRA Coverage under the
Company’s health insurance to commence at the end of the twelve (12) month
period. The Executive shall be responsible for the payment of any COBRA premium
during the subsequent continuation period (collectively, the payments under this
clause (ii) are referred to as “Severance
Payments”);
(iii) Executive
shall not be required to mitigate damages of the amount of any salary
continuation payments provided for under this Section by seeking other
employment or otherwise, nor shall the amount of any payments provided for under
this Section be reduced by any compensation earned by Executive as a result of
employment by another employer or by any self employment after the date of
termination;
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(iv) All
options for Company capital stock and restricted stock granted to Executive
pursuant to the Company’s 2008 Equity Incentive Plan including, without
limitation, those granted pursuant to Section 3(c) hereof, or otherwise, that
remain unvested shall immediately vest, and Executive shall have a period of 120
days following termination to exercise his vested options, subject to the
provisions of the Company’s 2008 Equity Incentive Plan and applicable IRS
regulations (provided that any delays in payment or settlement set forth in such
grant or award agreements that are required under Section 409A of the Code
shall remain effective).
(c) Upon the
termination of this Agreement for any reason, any and all restrictions (other
than restrictions which are the result of applicable Federal securities laws and
regulations and those restrictions which Executive has entered into with a third
party on a contractual basis) on the transfer of shares of Company’s capital
stock then owned by Executive (which shall include any and all option shares
unvested at the time of the termination) shall be terminated as of the date of
termination of this Agreement.
(d) All of
the obligations of the Company set forth in this Section 9 are contingent upon
the Executive complying with the provisions of section 6 (Confidential
Information) and Section 7 (Non-Competition Covenant; Non Solicitation
Covenant). In the event that Executive does not comply with the
aforementioned sections of this Agreement, then Company shall not be obligated
to provide Executive with any of the benefits set forth in this Section
9. In the case of any breach of Sections 6 or 7 which is capable of
being cured, termination of Severance Payments will not occur unless the breach
is not cured within thirty (30) days after Company has provided Executive with
written notice specifying the breach.
(e) Notwithstanding
the foregoing provisions of this Section 9 or anything in this Agreement to
the contrary, the Medical Benefits that are not non-taxable medical benefits,
“disability pay” or “death benefit” plans within the meaning of Treasury
Regulation Section 1.409A-1(a)(5) shall be provided and administered in a
manner that complies with Treasury Regulation Section 1.409A-3(i)(1)(iv),
which requires that (i) the amount of such benefits provided during one
taxable year shall not affect the amount of such benefits provided in any other
taxable year, except that to the extent such benefits consist of the
reimbursement of expenses referred to in Section 105(b) of the Code, a
maximum, if provided under the terms of the plan providing such Medical Benefit,
may be imposed on the amount of such reimbursements over some or all of the
period in which such benefit is to be provided to the Executive, as described in
Treasury Regulation Section 1.409A-3(i)(iv)(B), (ii) to the extent
that any such benefits consist of reimbursement of eligible expenses, such
reimbursement must be made on or before the last day of the Executive’s taxable
year following the taxable year in which the expense was incurred and
(iii) no such benefit may be liquidated or exchanged for another
benefit.
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10. Indemnification.
The Company shall, to the maximum extent permitted by law, indemnify and hold
harmless Xx. Xxxx against any and all damages, liabilities and expenses,
including, without limitation, reasonable attorneys’ fees, judgments, fines,
expenses, fees, losses, claims, settlements, and other amounts actually and
reasonably incurred in connection with any actual or threatened action, suit or
proceeding, whether civil, criminal, arbitrational, administrative or
investigative, arising by reason of Xx. Xxxx’x employment by, or provision of
services to, the Company other than the willful violation of law by Xx.
Xxxx. The Company agrees to obtain Directors and Officers Liability
insurance, and to include Xx. Xxxx in the coverage of this policy during the
term of this Agreement and for a period of two (2) years
thereafter. The Company shall promptly advance, prior to the final
disposition of any proceeding, promptly following request therefor, all fees and
expenses incurred by Executive in connection with such action, suit or
proceeding upon receipt of an undertaking by or on behalf of Executive to repay
said amounts if it shall be determined ultimately that Executive is not entitled
to be indemnified under the provisions of this Agreement.
11. Work-for
Hire. Except as otherwise may be agreed by the Company in
writing, in consideration of the employment of Xx. Xxxx by the Company, and free
of any additional obligations of the Company to make additional payment to him,
Xx. Xxxx agrees to irrevocably assign to the Company any and all inventions,
software, manuscripts, documentation, improvements or other intellectual
property whether or not protected by any state or federal laws relating to the
protection of intellectual property, relating to the present or future business
of the Company that are developed by Xx. Xxxx prior to the termination of his
employment with the Company, either alone or jointly with others, and whether or
not developed during normal business hours or arising within the scope of
his/her duties of employment. Xx. Xxxx agrees that all such
inventions, software, manuscripts, documentation, improvement, trade secrets or
other intellectual property shall be and remain the sole and exclusive property
of the Company and shall be deemed the product of work for hire. Xx.
Xxxx hereby agrees to execute such assignments and other documents as the
Company may consider appropriate to vest all right, title and interest therein
to the Company and hereby appoints the Company as Xx. Xxxx’x attorney-in-fact
with full powers to execute such document itself in the event Xx. Xxxx fails or
is unable to provide the Company with such signed documents. This
provision does not apply to an invention for which no equipment, supplies,
facility, or intellectual property or trade secret information of the Company
was used and which was developed entirely on Xx. Xxxx’ own time, unless (a) the
invention relates (i) to the business of the Company, or (ii) to the Company’s
actual or demonstrably anticipated research or development, or (b) the invention
results from any work performed by Xx. Xxxx for the Company.
12. Miscellaneous.
(a) This
Agreement:
(i) shall
constitute the entire agreement between the parties hereto and supersedes all
prior agreements, written or oral, concerning the subject matter herein between
the Company and the Xx. Xxxx and there are no oral understandings, statements or
stipulations bearing upon the effect of this Agreement which have not been
incorporated herein;
(ii) may
be modified or amended only by a written instrument signed by each of the
parties hereto;
(iii) shall
bind and inure to the benefit of the parties hereto and their respective heirs,
successors and assigns;
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(iv) may
not be assigned by either party without a written agreement signed by all
parties hereto. Any assignment not signed by all parties is null and
void; and
(b) If
any provision of this Agreement shall be held invalid or unenforceable by
competent authority, such provision shall be construed so as to be limited or
reduced to be enforceable to the maximum extent compatible with the law as it
shall then appear. The total invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
(c) This
Agreement shall be construed in accordance with and governed by the laws of the
State of New York without reference to conflict of laws
principles. Any litigation involving this Agreement shall be
adjudicated in a court with jurisdiction located in Monroe County, New York and
the parties irrevocably consent to the personal jurisdiction and venue of such
court.
(d) All
notices and other communications under this Agreement must be in writing and
must be given by personal delivery or first class mail, certified or registered
with return receipt requested, or by overnight xxxxxxx service and will be
deemed to have been duly given upon receipt if personally delivered, five (5)
days after mailing, if mailed, or upon delivery if sent by overnight courier
service, to the respective persons named below:
If to the Company:
WindTamer
Corporation
Attn: Chief
Executive Officer
000 Xxxxx
Xxxxxx
Xxxxxxx,
XX 00000
If to Xx. Xxxx:
0000
Xxxxxxxxx Xxxxxxx
Xxxxxxx,
XX 00000
Any party
may change such party’s address for notices by notice duly given pursuant to
this Section.
(e) This
Agreement may be executed simultaneously in one or more counterparts, each one
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. The parties may execute this Agreement
by facsimile signature.
(f) Failure
of either party at any time to require performance of any provision of this
Agreement shall not limit the party’s right to enforce the provision, nor shall
any waiver of any breach of any provision be a waiver of any succeeding breach
of any provision or a waiver of the provision itself for any other
provision.
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(g) If
any provision of this Agreement, or the application of such provision to any
person or circumstance, shall be held invalid, the remainder of this Agreement,
or the application of such provision to persons or circumstances other than
those as to which it is held invalid, shall not be affected
thereby.
(h) THE
PARTIES ACKNOWLEDGE THAT XX. XXXX AND THE COMPANY HAVE EACH BEEN ADVISED THAT IT
IS IMPORTANT FOR EACH OF THEM TO SEEK SEPARATE LEGAL ADVISE AND REPRESENTATION
IN THIS MATTER.
[Signature
Page Follows]
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IN WITNESS WHEREOF, the
parties have executed this Agreement on the day and year first above
written.
WINDTAMER
CORPORATION
By: /s/ Xxxxxx
Xxxxx
Name: Xxxxxx Xxxxx
Title: Chief
Executive Officer
/s/ Xxxxx Xxxx
Xxxxx
Xxxx
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