EXHIBIT 10.1
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EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT dated as of March 30, 2001 between COMVERGE
TECHNOLOGIES, INC., a Delaware corporation (the "Company"), and XXXXXX X.
XXXXXXX (the "Executive").
PREAMBLE:
The parties hereto desire to enter into this Agreement in order to set
forth the terms pursuant to which the Company will employ Executive and
Executive will serve as an employee of the Company. Accordingly, in
consideration of the mutual agreements set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is mutually
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT.
(a) The Company shall employ the Executive, and the Executive shall serve,
as Executive Vice President of the Company during the period
commencing March 30, 2001 through March 31, 2004 (the "Employment
Period"). During the Employment Period the Executive shall devote his
best efforts and services to his employment on a substantially
full-time basis. The place of employment shall be the headquarters of
the Company in Florham Park, New Jersey. The Employment Period may be
extended by agreement of the parties.
(b) The Executive shall report to the President and Chief Executive
Officer and the Board of Directors of the Company. Executive shall
perform such services consistent with his position as may be assigned
to him from time to time by the President and Chief Executive Officer
and the Board of Directors of the Company.
2. COMPENSATION; BONUS; BENEFITS.
(a) During the Employment Period the Company shall pay the Executive a
salary at the rate of $200,000 per annum commencing on March 30, 2001,
subject to performance related increases and increases due to cost of
living. The salary shall be paid to the Executive in appropriate
instalments in accordance with the Company's usual and customary
payroll practices for executive officers.
(b) During the Employment Period the Executive shall be entitled to
receive a bonus equal to 3% of the amount of equity or debt financing
(other than a public offering registered under the Securities Act of
1933) by the Company and/or any Key Affiliates of the Company (as
defined below) in which the Executive played a significant role (a
"Financing"); PROVIDED THAT such Financing is completed without the
use of a paid financial advisor or placement agent. In the event that
a Financing is completed with the assistance of a paid financial
advisor or placement agent, the Executive shall be entitled to receive
a bonus equal to 2% of the amount of the Financing. For purposes of
this Agreement, the term "Key Affiliates of the Company" shall mean
Company related businesses in which the Company owns at least a 50%
economic interest or, otherwise, maintains at least a 50% voting
interest.
(c) During the Employment Period the Executive shall be reimbursed by the
Company for reasonable business expenses actually incurred or paid by
him in connection with the performance of his duties hereunder in
accordance with the policies of the Company.
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(d) During the Employment Period the Company shall contribute and the
Executive shall participate in all of the employee benefit plans
provided to the Company's executive employees.
(e) The Executive shall be entitled to 15 workdays' vacation during 2001
and shall be entitled to 20 workday's vacation during any subsequent
years. Vacation shall be scheduled and taken in accordance with
Company policy.
(f) The Company shall reimburse the Executive for operating costs of an
automobile to be leased by Executive, including leasing and insurance
costs up to $484 per month, plus any repairs.
3. OPTIONS
(a) As an inducement to his entering into this Agreement, the Company
shall grant non-qualified stock options to purchase 53,000 shares of
common stock of the Company. These options shall have an exercise
price of $4.00 per share. Such options shall become exercisable as
follows: 29,150 shall become exercisable on January 1, 2002; and an
additional 4,770 shall become exercisable on April 1, 2002 and on the
first date of each of the subsequent four quarters (July 1, 2002,
October 1, 2002, January 1, 2003 and April 1, 2003). Such options
shall remain exercisable until the earlier to occur of (i) Xxxxx 00,
0000, (xx) the date on which the Executive's employment is terminated
by the Company for "Cause" (as hereinafter defined) and (iii) the date
which is 180 days following the date upon which the Executive's
employment is voluntarily terminated by the Executive.
(b) The Company shall grant additional options ("Incentive Options") to
the Executive in the aggregate amount of 79,500 shares, such options
to vest upon the occurrence of certain events as set forth below.
These options shall have an exercise price of $4.00 per share.
Incentive Options to purchase 39,750 shares shall vest upon the
occurrence of each of the first two of following three events to occur
(each a "Vesting Event"):
(i) the completion of equity financing for the Company, or Key
Affiliates of the Company, of at least $10 million by June
30, 2002;
(ii) the execution by the Company, or Key Affiliates of the
Company, of a power purchase agreement (or similar sales
agreement) ("PPA") with an electric utility (or
intermediary) relating to a minimum capacity of 50
megawatts;
(iii) the formation of a joint venture with third parties in which
such parties commit capital of at least $5 million to pursue
business opportunities.
For each of the first two Vesting Events, 21,864 options shall vest
immediately; an additional 2,981 shall vest on the first date of each
of the next six quarters subsequent to the Vesting Event. The
Incentive Options shall remain exercisable for a period terminating on
the earlier of (i) Xxxxx 00, 0000, (xx) the date on which the
Executive's employment is terminated for Cause, and (iii) the date
which is one year following the date upon which the Executive's
employment is voluntarily terminated by the Executive.
(c) As an additional inducement to his entering into this Agreement, the
Company agrees to recommend to the Compensation and Stock Option
Committee of the Board of Directors of Data Systems & Software Inc.
(the "Committee") that the Company grant the Executive options to
purchase 10,000 shares of Common Stock at an exercise price of
$4.6875. Such options shall become exercisable as follows: 5,500 shall
become exercisable on January 1, 2002; and an additional 900 shall
become exercisable on April 1, 2002 and on the first day of each of
the subsequent four quarters. Such options shall remain exercisable
until the earliest
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to occur of (i) Xxxxx 00, 0000, (xx) the date which is 90 days
following the date of the termination of the Executive's employment
either voluntarily by the Executive or by the Company other than for
Cause, and (iii) the date on which the Executive's employment is
terminated for Cause.
(d) All options granted to the Executive under Sections 3(a) and
3(c), and all options granted to the Executive under Section 3(b)
for which a Vesting Event has occurred, shall vest and become
exercisable immediately upon (i) the occurrence of a Change In
Control (as hereinafter defined), (ii) the termination of the
Executive's employment by the Company other than for Cause, (iii)
the completion of an initial public offering of shares of the
Company, (iv) the termination (voluntary or involuntary) of
Xxxxxx Xxxxxxxxxxx'x active employment as Chief Executive Officer
of Data Systems & Software Inc., or (v) the termination of the
Executive's employment by the Executive due to the Company's
breach of material obligations under this Agreement.
4. OTHER ACTIVITIES; NON-COMPETITION.
(a) The Executive expressly agrees, as a condition to the performance by
the Company of its obligations hereunder, that at all times during the
Employment Period, the Executive shall devote all of his business
time, attention and energies on a full-time basis to the performance
of his duties hereunder and shall not engage in any other remunerative
employment or consulting service nor serve on outside boards of
directors without the consent of the board of directors of the
Company.
(b) The Executive shall not, during the Employment Period and for a period
of twelve months immediately following the termination of this
Agreement (other than a termination by the Company other than for
Cause), by or for himself or on behalf or in conjunction with any
other person, persons, company, partnership, corporation or business
of whatever nature, establish, enter into, be employed by or for, or
become part of, any company, partnership, corporation or other
business entity or venture, a material portion of which competes
directly with the Company.
5. TERMINATION.
(a) Either party may terminate this Agreement upon notice to the other
party. In the event that the Company terminates the Executive's
employment other than for Cause, (i) the Executive's options shall
vest as provided in Section 3(d), (ii) the Executive shall be entitled
to receive a cash payment equal to three month's salary for every year
(or part thereof) of employment with the Company, up to a maximum of
one year's salary, and (iii) the Company shall have no other
obligation or liability to the Executive, other than for salary, bonus
or other compensation or benefits accrued prior to such termination.
(b) Notwithstanding anything to the contrary herein, if at any time during
the Employment Period, the Company breaches any of its obligations
hereunder or there shall occur a "Change in Control of the Company"
(as hereinafter defined), the Executive shall have the option, upon
written notice to the Company that such breach or a Change in Control
of the Company has occurred and that the Executive intends to exercise
such option, to terminate his employment with the Company. For
purposes of this Agreement, a "Change in Control of the Company" shall
be deemed to have occurred if (i) there shall be consummated (A) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the
Company's Common Stock would be converted in whole or in part into
cash, securities or other property, other than a merger of
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the Company in which the holders of the Company's Common Stock
immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (B) any sale, lease, exchange or
transfer (in one transaction or a series of related transactions) of
all or substantially all the assets of the Company, or (ii) the
stockholders of the company shall approve any plan or proposal for the
liquidation or dissolution of the Company, or (iii) Data Systems &
Software Inc. ("DSSI"), its affiliates, and parties with whom DSSI has
entered into a voting agreement such that DSSI has the ability to
select a majority of the directors of the Company, shall cease to be
the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing in excess of
50% of the combined voting power of the Company's then outstanding
securities.
(c) The Company may at any time terminate Executive's employment hereunder
for Cause by delivering notice of termination to Executive (such
termination to be effective upon delivery of such notice). For
purposes of this Agreement, "Cause" means the occurrence in fact of
any of the following:
i. Executive is convicted of a felony or other crime involving
moral turpitude;
ii. Executive performs his duties hereunder with gross negligence;
iii. Executive engages in gross wilful misconduct that materially
injures the Company; or
iv. Executive materially breaches any of his material obligations
under this Agreement.
6. COMPANY LOAN.
In the event that the Executive wishes to purchase shares of Common Stock
of the Company, the Company agrees to make available to the Executive a
loan (the "Loan") of up to 66.67% of the purchase price of the shares, up
to a maximum loan of $33,333. The Loan shall bear interest at 6.5% per
annum, payable upon the maturity date, which shall be three years from the
date of the Loan. The Loan shall be secured only by the related shares,
and in the event of non-payment of the Loan and any interest thereon when
due, the Executive shall have no personal obligation beyond such shares.
The Company agrees that it will in no event report nonpayment or default
on the Loan to any credit reporting agency.
7. CONFIDENTIALITY.
The Executive shall keep confidential all non-public information
concerning the business, clients or affairs of the Company ("Confidential
Information") that he may acquire in the course of, or as an incident to,
his employment by the Company. The Executive shall not during the term of
this Agreement or thereafter disclose to any person, firm or corporation,
except as otherwise required by law, any Confidential Information for his
own benefit or that of any such person, firm or corporation, or to the
detriment or intended or probable detriment of the Company.
8. INDEMNIFICATION.
The Executive shall be entitled throughout the term of this Agreement and
thereafter to indemnification in respect of any claim, suit, action, loss
or damages arising out of or relating to his acts or omissions as an
employee, officer or director of the Company, and/or any of its
subsidiaries, (or any successor pursuant to Section14 hereof) to the
fullest extent permitted by the Delaware General Corporation Law or other
applicable law, provided, however, that in the event of a suit by the
Company against the Executive, the Company shall have no obligation to
advance any costs of counsel. In the event that the Executive institutes
any legal action to enforce his rights under, or to recover damages for
the breach of this Agreement by the Company, the Executive, if he is the
prevailing party, shall be entitled to recover from the Company any
reasonable expenses of such
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action incurred by him, including, attorneys' fees and disbursements of
such attorneys and his travel expenses related thereto.
9. REMEDIES.
The Company hereby waives, and will not assert, any right to set off the
amount of any claims, liabilities, damages or losses the Company may have
against any amounts payable by the Company to the Executive hereunder, and
any amounts payable to or otherwise accrued for the account of the
Executive in respect of any period prior to the effective termination of
this Agreement shall be paid as provided in this Agreement without any
such set-off.
10. ARBITRATION.
Any controversy or claim arising out of or relating to this Agreement, or
any breach thereof, shall be settled by arbitration in accordance with the
rules of the American Arbitration Association, and judgement upon such
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitration shall be held in New York, or such
other place as may be agreed upon at the time by the parties to the
arbitration. The Company will pay for all travel and related expenses as
may be reasonably required by the Executive so as to afford his presence
at all such proceedings.
11. GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without giving effect
to the conflicts of law principles thereof.
12. EMPLOYMENT AGREEMENT WITH SUBSIDIARY.
The Executive may have an employment agreement with a subsidiary or
subsidiaries of the Company. Any payments made in accordance with such
agreements are to be deducted from the Company's similar obligations in
this agreement.
13. ENTIRE AGREEMENT.
This Agreement constitutes the whole agreement of the parties hereto in
reference to any employment of the Executive by the Company and in
reference to any of the matters or things herein provided for or discussed
or mentioned in reference to such employment, all prior agreements,
promises, representations and understandings relative thereto being herein
merged.
14. ASSIGNABILITY.
(a) In the event that the Company shall merge or consolidate with any
other corporation or all or substantially all the Company's business
or assets shall be transferred in any manner to any other person, such
successor shall thereupon succeed to, and be subject to, all rights,
interests, duties and obligations of, and, subject to the provisions
of Section 5(b) relating to Change in Control, shall thereafter be
deemed for all purposes hereto to be the Company hereunder. This
Agreement shall be binding upon and inure to the benefit of any such
successor and the legal representatives of the Executive.
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(b) This Agreement is personal in nature and neither of the parties hereto
shall assign or transfer this Agreement or any rights or obligations
hereunder, except by operation of law or pursuant to the terms of this
Section 14.
(c) Except as otherwise provided in this Section 14, nothing expressed or
implied herein is intended or shall be construed to confer upon or
give to any person, other than the parties hereto any right, remedy or
claim under or by reason of this Agreement or of any term, covenant or
condition hereof.
15. AMENDMENTS; WAIVERS.
This Agreement may be amended, modified, superseded or cancelled and the
terms or covenants hereof may be waived only by a written instrument
executed by both of the parties hereto, or in the case of a waiver, by the
party waiving compliance. The failure of either party at any time or times
to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such breach, or
a waiver of the breach of any other term or covenant contained in this
Agreement.
16. EQUITABLE MEASURES.
Because of the difficulty of measuring economic losses to the Company as a
result of breach by the Executive of the covenants contained in Sections
4(b) and 7, and because of the immediate and irreparable damage that might
be caused to the Company for which it would have no other adequate remedy,
Executive agrees that, without limiting the remedies available to the
Company, these covenants may be enforced by the Company by injunctions and
restraining orders. The parties agree that such covenants impose a
reasonable restraint on Executive in light of the activities and business
of the Company on the date of this Agreement, and intend that such
covenants shall subsequently be construed and enforced in light of the
activities and business of the Company on the date of the termination of
the employment of the Executive.
17. NOTICES.
All notices and other communications given pursuant to this Agreement
shall be in writing and shall be deemed given if (i) delivered by hand,
(ii) mailed by registered or certified mail (return receipt requested),
postage prepaid, or (iii) deposited with Federal Express or other
recognized over-night courier service, to any party addressed as follows
(or to such other address as shall be specified by a party by like
notice).
If to the Company: If to the Executive:
Comverge Technologies, Inc. Xxxxxx X. Xxxxxxx
00 Xxxxxxxx Xxxx 0 Xxxxx Xxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000 Riverdale , New York 10463
Attn: Xxxxx Xxxxxxxx
18. SEVERABILITY.
If for any reason any provision of this Agreement shall be determined to
be illegal and unenforceable by any court of law, the validity and effect
of all other provisions hereof shall not be affected thereby.
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19. HEADINGS.
Section headings are for convenience only and shall not be considered a
part of the terms and provisions of this Agreement.
20. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall
constitute an original and which together shall constitute one and the
same agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement, as
of the day and year first above written.
COMVERGE TECHNOLOGIES, INC.
/s/ XXXXXX X. XXXXXXX By: /s/ XXXXX XXXXXXXX
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Xxxxxx X. Xxxxxxx Xxxxx Xxxxxxxx, President
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