EMPLOYMENT AGREEMENT
Exhibit 10.1
This Employment Agreement (“Agreement”), dated as of January 23, 2006 (the “Effective
Date”), is made by and among Xxxxx X. Xxxxxxx (“Xx. Xxxxxxx”) and Electric City Corp., a
Delaware corporation (the “Company”).
WHEREAS, the Company desires to assure itself of the services of Xxxxxxx, and Xxxxxxx desires
to be employed by the Company; and
WHEREAS, the Company and Xxxxxxx desire to clearly define and clarify all material terms and
conditions of this employment relationship through a written agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and Xx. Xxxxxxx do hereby agree as follows:
Section 1. Employment and Duties. On the terms and subject to the conditions set
forth in this Agreement, the Company agrees to employ Xx. Xxxxxxx as its Chief Executive Officer to
render such services as would be customary for a chief executive officer and to render such other
services and discharge such other responsibilities as the Board of Directors of the Company may,
from time to time, stipulate and which shall not be inconsistent with the position of Chief
Executive Officer. Xx. Xxxxxxx’x employment pursuant to this Agreement shall commence on January
23, 2006 and terminate on January 22, 2009, unless earlier terminated pursuant to the termination
provisions of this Agreement. The period during which Xxxxxxx is employed by the Company under
this Agreement is herein called the “Employment Period”. The parties acknowledge and agree
that certain provisions hereof shall continue in effect following the termination of the Employment
Period, as set forth herein.
Section 2. Performance. (a) Xx. Xxxxxxx accepts the employment as set forth in
Section 1 herein and agrees to concentrate all of his professional time and efforts to the
performance of the services described therein, including the performance of such other services and
responsibilities as the Board of Directors of the Company may from time to time stipulate and which
shall not be inconsistent with the position of Chief Executive Officer.
(b) Without limiting the generality of the foregoing, Xx. Xxxxxxx ordinarily shall devote not
less than five (5) days per week (except for vacations and regular business holidays observed by
the Company) on a full-time basis, during normal business hours Monday through Friday. Xx. Xxxxxxx
further agrees that when the performance of his duties reasonably requires, he shall be present on
the Company’s premises or engaged in service to or on behalf of the Company at such times except
during vacations, regular business holidays or weekends.
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(c) Notwithstanding the foregoing, the Company agrees that Xx. Xxxxxxx has the right to
participate in outside activities, including but not limited to serving on boards of directors for
civic, charitable or business organizations, in a paid or unpaid capacity, so long as such
activities are not in direct conflict with Xx. Xxxxxxx’x obligations as outlined herein. Further,
Xx. Xxxxxxx will have reasonable, limited use of the Company’s resources and reasonable time during
the Company’s business hours to pursue such activities so long as such activities do not
unreasonably interfere with his obligations as Chief Executive Officer. Upon request by the
Company, Xx. Xxxxxxx agrees to furnish to the Company a list of organizations in which he is
involved, including a description of his involvement in such organizations and the amount of any
remuneration received or expected to be received from such involvement.
Section 3. Term/Termination.
3.1. Term. The term of employment under this Agreement (the “Employment Period”) shall
commence on January 23, 2006 and shall terminate on January 22, 2009 unless earlier terminated
pursuant to the termination provisions set forth herein. Notwithstanding anything to the contrary
herein, the parties acknowledge and agree that Xx. Xxxxxxx’x employment may be terminated for “Due
Cause” (as hereinafter defined), and subject to any consent or approval rights of the holders of
the Company’s Series E Convertible Preferred Stock. At the end of the Employment Period, the
continuation of Xxxxxxx’x employment with the Company shall be at the will of the Company and Xx.
Xxxxxxx on terms and conditions agreed to by the Company and Xx. Xxxxxxx and there shall be no
obligation on the part of the Company or Xx. Xxxxxxx to continue such employment.
3.2. Termination for Due Cause. The Employment Period may be terminated for “Due
Cause” (as defined below) by the Company upon the affirmative vote of a majority of the Board of
Directors (a “Termination Vote”), provided that any required consent of the holders
of the Company’s Series E Convertible Preferred Stock to such termination is obtained before such
termination shall become effective. Upon a Termination Vote and obtaining any required consent of
the holders of the Company’s Series E Convertible Preferred Stock, a written notice of such
termination shall be given to Xx. Xxxxxxx in the manner required by Section 6 hereof. For purposes
hereof, “Due Cause” shall mean any of the following:
| (i) | a material breach by Xx. Xxxxxxx of his covenants under this Agreement if such material breach is not remedied within fifteen (15) calendar days following written notice thereof from the Company or any Director of the Company; | |
| (ii) | commission by Xx. Xxxxxxx of a felony, or of theft or embezzlement of property of the Company; | |
| (iii) | actions by Xx. Xxxxxxx (other than actions taken with the approval of the Board) which result in a material injury to the businesses, properties or reputation of the Company or any of its subsidiaries; |
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| (iv) | refusal to perform or substantial neglect of the duties assigned to Xx. Xxxxxxx pursuant to Section 1 of this Agreement if such refusal or neglect is not remedied within fifteen (15) calendar days following written notice thereof from the Company or any Director of the Company; or | |
| (v) | any material violation of any statutory or common law duty of loyalty to the Company. |
All compensation to Xx. Xxxxxxx under this Agreement shall immediately terminate upon the effective
date of any termination of the Employment Period for Due Cause hereunder (other than any earned but
unpaid salary, vacation and bonus compensation as set forth in Sections 4.1, 4.2 and 4.7,
respectively, herein for the period ending on the date of termination) and all vested and unvested
“Stock Options” (as defined in Section 4.3) as of such date shall immediately expire, terminate and
be of no further force or effect; provided, however, that if the Employment Period is
terminated for a reason stated in clause (ii) or clause (iii) (or both) and no other reason is
given, and it shall be subsequently determined by a final decision of a court or arbitrator having
jurisdiction that Xx. Xxxxxxx did not commit the alleged acts in question, or, in the case of
clause (iii) that the acts did not result in a material injury to the businesses, properties or
reputation of the Company or any of its subsidiaries, then such vested and unvested Stock Options
shall be restored to Xx. Xxxxxxx and he shall be treated as having been terminated pursuant to
Section 3.6 for the purposes of his rights with respect to such Stock Options, except that the
termination date shall be the date of such final determination of such court or arbitrator. Any
salary, bonus and accrued vacation shall be payable as follows: salary and accrued vacation shall
be paid at the next regularly scheduled payroll date, and any bonus shall be payable in accordance
with the applicable bonus plan.
3.3. Termination Due to Death. The Employment Period shall automatically terminate
upon the death of Xx. Xxxxxxx and all compensation to Xx. Xxxxxxx shall immediately cease, other
than any earned but unpaid salary, vacation and bonus compensation as set forth in Sections 4.1,
4.2 and 4.7, respectively, herein for the period ending on the date of termination. All unvested
Stock Options as of such date of death shall immediately vest. Stock Options which are vested
prior to the date of death or on the date of death pursuant to the preceding sentence may be
exercised by his estate or executor within one (1) year following the date of death. Any Stock
Options which are not exercised within such period of one (1) year thereafter shall thereupon
expire, terminate and be of no further force or effect. Any salary, bonus and accrued vacation
shall be payable as follows: salary and accrued vacation shall be paid at the next regularly
scheduled payroll date, and any bonus shall be payable in accordance with the applicable bonus
plan.
3.4. Termination Due to Permanent Total Disability. In the event that Xx. Xxxxxxx
becomes “Permanently Disabled” (as defined below), the Company, at its option, shall have the right
to terminate the Employment Period by written notice to Xx. Xxxxxxx given in the manner required by
Section 6 hereof. For purposes hereof, “Permanently Disabled” shall mean physical or
mental inability of Xx. Xxxxxxx to perform substantially all of the services required pursuant to
this Agreement for a
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continuous period of one-hundred eighty (180) days or for a period aggregating at least
one-hundred eighty (180) days in any consecutive twelve (12) month period. In the event that Xx.
Xxxxxxx disputes the Company’s determination that he is Permanently Disabled, the determination
shall be made by a qualified physician selected jointly by the Company and Xx. Xxxxxxx. In the
event of termination of the Employment Period pursuant to this Section 3.4, all compensation to Xx.
Xxxxxxx shall immediately cease, other than any earned but unpaid salary, vacation and bonus
compensation as set forth in Sections 4.1, 4.2 and 4.7, respectively, herein for the period ending
on the date of termination, and any vested Stock Options as of the date of termination shall be
exercisable for up to 90 days following such termination. Any Stock Options which are vested on
the date of termination may be exercised by Xx. Xxxxxxx within one hundred eighty (180) days
following the date of termination. Any Stock Options which are vested on the date of termination
and are not exercised within such period of one hundred eighty (180) and are not exercised by Xx.
Xxxxxxx within one hundred eighty (180) days following the termination date shall thereupon expire,
terminate and be of no further force or effect. All unvested Stock Options as of such date of
termination shall immediately terminate. Any salary, bonus and accrued vacation shall be payable
as follows: salary and accrued vacation shall be paid at the next regularly scheduled payroll date,
and any bonus shall be payable in accordance with the applicable bonus plan.
3.5. Termination by Xx. Xxxxxxx. (a) Xx. Xxxxxxx may terminate the Employment Period
and his employment hereunder (i) in the event the Company has breached a material term or condition
of this Agreement which is not cured or remedied within fifteen (15) days following Xx. Xxxxxxx’x
giving written notice of such breach to the Chairman of the Board of Directors of the Company, or
(ii) at Xx. Xxxxxxx’x convenience pursuant to Section 3.5(b), or (iii) as provided in Section
4.3(e). In the event that Xx. Xxxxxxx terminates the Employment Period due to an uncured breach by
the Company, such action shall be deemed to be a termination of the Employment Period by the
Company without Due Cause for purposes hereof. Any salary, bonus and accrued vacation payable with
respect to such termination shall be in accordance with Section 3.6 below.
(b) In the event that the Employment Period is terminated by Xx. Xxxxxxx at his convenience,
then Xx. Xxxxxxx will be due any earned but unpaid salary, vacation and bonus compensation as set
forth in Sections 4.1, 4.2 and 4.7, respectively, herein, and any vested Stock Options as of the
date of termination shall be exercisable for up to ninety (90) days following such termination.
Any Stock Options which are vested on the date of termination and are not exercised by Xx. Xxxxxxx
within ninety (90) days following the termination date shall thereupon expire, terminate and be of
no further force or effect. Except as otherwise set forth in Section 4.3(e), any unvested Stock
Options as of the date of termination shall immediately terminate. Any salary, bonus and accrued
vacation payable under this Section 3.5(b) shall be payable as follows: salary and accrued vacation
shall be paid at the next regularly scheduled payroll date, and any bonus shall be payable in
accordance with the applicable bonus plan.
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(e) In the event that the Employment Period is terminated by Xx. Xxxxxxx in accordance with
Section 4.3(e), then Xx. Xxxxxxx will be due the amounts provided for thereunder.
3.6. Termination Other Than Due Cause, Death, Disability or Resignation. In the event
that the Employment Period is terminated for reasons other than Due Cause, death, becoming
Permanently Disabled or resignation or pursuant to Section 4.3(e), then all Stock Options then held
by Xx. Xxxxxxx and scheduled to vest within one (1) year of the date of such termination shall vest
immediately and be exercisable at any time within one (1) year after the date of such termination.
Any Stock Options which are not exercised within one (1) year following such termination date shall
thereupon expire, terminate and be of no further force or effect. Upon any termination under this
Section 3.6, the Company shall pay as severance compensation to Xx. Xxxxxxx (i) six (6) months’
salary compensation at his then annual salary compensation rate, plus (ii) any bonus earned as of
the termination date, and (iii) any accrued vacation. Such severance compensation shall be paid to
Xx. Xxxxxxx as follows: (x) the six (6) months’ salary compensation shall be payable in
installments in accordance with the Company’s regular payroll; (y) any bonus shall be payable in
accordance with the applicable terms governing such bonus; and (z) accrued vacation shall be paid
at the next regularly scheduled payroll date. No termination pursuant to Section 4.3(e) shall be
deemed to be a termination under this Section 3.6.
3.7. Surrender of Properties. Upon any termination of Xx. Xxxxxxx’x employment with
the Company, regardless of the cause therefore, Xx. Xxxxxxx shall be deemed to have resigned from
the Company’s Board of Directors and as an officer and director of any of the Company’s
subsidiaries, if serving as such at that time, and shall promptly deliver to the Company all
property provided to him by the Company or its subsidiaries for use in relation to his employment
and any and all sales materials, lists of customers and prospective customers, price lists, files,
patent applications, records, models or other materials and information of or pertaining to the
Company or its subsidiaries or their customers or prospective customers or the products, businesses
and operations of the Company or its subsidiaries.
3.8. Survival of Covenants. The covenants of Xx. Xxxxxxx set forth in Sections 3.7, 4
and 5 herein shall survive the termination of the Employment Period or termination of this
Agreement.
Section 4. Compensation/Expenses.
4.1 Base Salary. In exchange for the services to be rendered by Xx. Xxxxxxx
hereunder, the Company agrees to pay, during the Employment Period, a base annual salary (the
“Base Salary”) of Two Hundred Eighty Five Thousand dollars ($285,000), which shall be
payable in equal installments in accordance with the Company’s regular payroll.
4.2 Bonuses.
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(a) For the period commencing on the Effective Date and ending on December 31, 2006, Xx.
Xxxxxxx shall be eligible for a bonus determined based on the Company’s consolidated gross revenue
for the fiscal year ending December 31, 2006 (as reflected in the Company’s reported financial
statements) in accordance with the following table:
| Consolidated Gross Revenue | Bonus Amount | |
More than $10,000,000
|
$15,000 | |
More than $12,500,000
|
Additional $15,000 | |
More than $16,000,000
|
Additional $15,000 | |
More than $18,000,000
|
Additional $20,000 |
Any such bonus shall be paid promptly (and in any event on the next regular payroll date) following
determination of the Company’s consolidated gross revenue for fiscal year 2006.
(b) For the period commencing on January 1, 2007 and ending on December 31, 2007, Xx. Xxxxxxx
shall be eligible for a bonus, not to exceed $65,000, determined based on the Company’s
consolidated net income for such period on such terms as shall be agreed upon by Xx. Xxxxxxx and
the Compensation Committee of the Board of Directors, as approved by the Board of Directors. Any
such bonus shall be paid promptly (and in any event on the next regular payroll date) following
determination of the Company’s consolidated net income for fiscal year 2007.
(c) For the period commencing on January 1, 2008 and ending on December 31, 2008, Xx. Xxxxxxx
shall be eligible for a bonus, not to exceed $65,000, determined based on the Company’s
consolidated net income for such period on such terms as shall be agreed upon by Xx. Xxxxxxx and
the Compensation Committee of the Board of Directors, as approved by the Board of Directors. Any
such bonus shall be paid promptly (and in any event on the next regular payroll date) following
determination of the Company’s consolidated net income for fiscal year 2008.
4.3. Stock Options.
(a) Subject to obtaining the approval of the Company’s shareholders at the 2006 annual meeting
of shareholders as described below, the Company grants to Xx. Xxxxxxx stock options (the “Stock
Options”) to purchase up to Four Million Five Hundred Thousand (4,500,000) shares of the
Company’s common stock at the following prices per share:
(i) options with respect to One Million Five Hundred Thousand (1,500,000) shares shall
be at a price per share of $0.62 and such options shall become vested and exercisable on
January 22, 2007, so long as Xx. Xxxxxxx is employed by the Company as its Chief Executive
Officer on such date;
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(ii) options with respect to One Million Five Hundred Thousand (1,500,000) shares
shall be at a price per share equal to the higher of (x) the average closing price of the
Company’s common stock as measured over the thirty (30) trading day period prior to January
22, 2007, or (y) the closing price of the Company’s common stock on January 22, 2007. Such
options shall become vested and exercisable on January 22, 2008, so long as Xx. Xxxxxxx is
employed by the Company as its Chief Executive Officer on such date; and
(iii) options with respect to One Million Five Hundred Thousand (1,500,000) shares
shall be at a price per share equal to the higher of (x) the average closing price of the
Company’s common stock as measured over the thirty (30) trading day period prior to January
22, 2008, or (y) the closing price of the Company’s common stock on January 22, 2008. Such
options shall become vested and exercisable on January 22, 2009, so long as Xx. Xxxxxxx is
employed by the Company as its Chief Executive Officer on such date.
(b) Registration Rights. Xx. Xxxxxxx shall have piggy-back registration rights for all
shares of the Company’s common stock obtained through the exercise of any Stock Options granted
pursuant to this Section 4.3 with respect to any registration statement filed by the Company with
the Securities and Exchange Commission covering shares of common stock (other than on Form S-4 or
S-8), except that Xx. Xxxxxxx agrees to waive his registration rights for any registration
undertaken at the request of, or registration that includes, the holders of the Company’s Series E
Convertible Preferred Stock and/or the rights of any other holders of the Company’s preferred stock
to the extent that such waiver is requested by such holders. In addition, Xx. Xxxxxxx agrees that
his registration rights shall be subject to underwriter cutbacks as may be requested by an
underwriter with respect to a registration of the Company’s common stock. The Company shall bear
the cost of registering the shares pursuant to this Section 4.3.1, other than any underwriters’
discounts or commissions.
(c) Sale of Assets: Change in Control. For all purposes of this Agreement, a
“Change in Control” shall be deemed to have occurred when (i) the Company is merged or
consolidated with another entity which is not then controlled by the Company and, as a result of
such merger or consolidation, an unrelated entity acquires the ability to elect a majority of the
Company’s Board of Directors, or (ii) substantially all of the Company’s assets are sold or
otherwise transferred to another entity that is not then controlled by or affiliated with the
Company. Upon the occurrence of a Change in Control, the Stock Options granted to Xx. Xxxxxxx
pursuant to this Section 4.3 shall be automatically and immediately vested and become exercisable
by Xx. Xxxxxxx, subject to the other applicable terms of this Agreement.
(d) Shareholder Approval; Terms Governing Stock Options. Five Hundred Thousand
(500,000) of the Stock Options granted hereunder, which shall vest on January 22, 2007, shall be
granted immediately and governed in accordance with the provisions of the Company’s 2001 Employee
Stock Incentive Plan. The Company’s grant of the remaining Four Million (4,000,000) Stock Options
hereunder shall not become effective until such time as the grant thereof shall have been approved
by the Company’s
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shareholders. The Company hereby agrees to submit such grant for shareholder approval at the
2006 annual meeting of shareholders of the Company. Except as otherwise provided herein, all such
Stock Options shall be governed by the terms of the 2001 Employee Stock Incentive Plan.
(e) Termination if Shareholders Do Not Approve Grant of Options. In the event that
the Company’s shareholders do not approve the grant of such additional Four Million (4,000,000)
Stock Options at the Company’s 2006 annual meeting of shareholders, then (i) such additional Stock
Options shall be null and void and treated as if never granted, and (ii) for a period of thirty
(30) days thereafter, Xx. Xxxxxxx, at his sole discretion, may elect to terminate his employment
and the Employment Period hereunder and receive the benefits described in the next sentence.
Provided that Xx. Xxxxxxx remains employed as President of the Company on the date of the Company’s
2006 annual meeting, if, within the thirty (30) day period specified, Xx. Xxxxxxx elects to
terminate his employment and the Employment Period pursuant to the first sentence of this Section
4(e) because the additional Stock Options are not approved by the stockholders, then (x) the
500,000 Stock Options granted pursuant to the 2001 Employee Stock Incentive Plan shall immediately
vest and be exercisable at any time for a period of ninety (90) days, with any unexercised options
terminating at the end of such ninety (90) day period, and (y) the Company shall pay to Xx.
Xxxxxxx, as a lump sum, an amount equal to his base salary from the date of such termination
through January 22, 2007 plus $65,000, plus any accrued unused vacation as of the date of
termination, and such amount shall be paid to Xx. Xxxxxxx on the date of the Company’s next regular
payroll.
4.4. Insurance. During the Employment Period, the Company shall continue to provide,
at its expense and if Xx. Xxxxxxx continues to be eligible and qualifies for such benefits, (i)
long-term disability insurance providing for disability benefits equal to 60% of his base salary to
age 65, (ii) term life insurance with death benefits equal to three times his base salary, (iii)
medical and dental insurance for Xx. Xxxxxxx and his family substantially equivalent to any such
benefits provided to other senior executives of the Company, (iv) directors’ and officers’
liability insurance, in such amount as may be determined by the board of directors of the Company,
(v) vacation in accordance with Section 4.7 hereof, and (vi) any other benefits offered from
time-to-time to other senior executives of the Company. Xx. Xxxxxxx agrees to submit to any
medical or other examination and to execute and deliver any application or other instrument in
writing, reasonably necessary to effectuate such long-term disability and life insurance.
4.5. Automobile Allowance. Xx. Xxxxxxx shall be entitled to an automobile allowance
of $550.00 per month.
4.6. Business Expenses. Xx. Xxxxxxx shall be reimbursed for reasonable
business-related expenses that he incurs pursuant to his employment with the Company, subject to
review and approval by the Audit Committee of the Board of Directors (the “Audit
Committee”). Xx. Xxxxxxx shall provide the Company with expense reports detailing
business-related expenses and supporting documentation and other substantiation of such expenses
that conform to the reporting requirements of the Company and requirements of the Internal Revenue
Service. Xx. Xxxxxxx may request
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reimbursement advances equal to the amounts of business-related expenses submitted but such
advances shall be subject to subsequent adjustment following review and approval by the Audit
Committee.
4.7. Vacation. Xx. Xxxxxxx shall be entitled to twenty (20) paid vacation days per
calendar year which will accrue ratably over each twelve (12) month period; provided that
he may take his vacation days for each contract year at any time during such year. Up to five (5)
vacation days may be accumulated and carried over to the next calendar year.
Section 5. Covenants of Xx. Xxxxxxx.
5.1. Confidentiality. During the Employment Period and following the termination
thereof for any reason, Xx. Xxxxxxx shall not disclose or make any use of, for his own benefit or
for the benefit of a business or entity other than the Company or its subsidiaries, any secret or
confidential information, lists of customers and prospective customers or any other information of
or pertaining to the Company or its subsidiaries that is not publicly available.
5.2. Inventions and Secrecy. Except as otherwise provided in this Section 5.2, Xx.
Xxxxxxx (i) shall hold in a fiduciary capacity for the benefit of the Company and its subsidiaries,
all secret and confidential information, knowledge, or data of the Company and its subsidiaries
obtained by Xx. Xxxxxxx during his employment by the Company, which is not generally know to the
public or recognized as standard industry practice (whether or not developed by Xx. Xxxxxxx) and
shall not, during his employment by the Company and following the termination of such employment
for any reason, communicate or divulge any such information, knowledge or data to any person or
entity other than the Company, its subsidiaries or persons or entities designated by the Company;
(ii) shall promptly disclose to the Company all inventions, ideas, devices and processes made or
conceived by him, alone or jointly with others, from the time of entering the Company’s employ and
until such employment is terminated and for a one (1) year period following such termination, which
pertain, whether directly or indirectly, to the business of the Company or its subsidiaries or
resulting from or suggested by any work which he may have done for or at the request of the Company
or its subsidiaries; (iii) shall at all times during his employment with the Company, assist the
Company and its subsidiaries in every proper way (at the expense of the Company) to obtain and
develop for the benefit of the Company patents on such inventions, ideas, devices and processes;
and (iv) shall doe all such acts and execute, acknowledge and deliver all such instruments as may
be necessary or desirable to vest in the Company the entire interest in such inventions, ideas,
devices and processes referred to in this Section 5.2.
5.3. Competition Following Termination. Within the two (2) year period following
termination, for any reason, of Xx. Xxxxxxx’x employment with the Company, Xx. Xxxxxxx shall not,
without the prior written consent of the Company, which consent may be withheld at the sole
discretion of the Company, (i) engage directly or indirectly, whether as an officer, director,
stockholder (of 5% or more of such entity), partner, majority owner, managerial employee, creditor,
or otherwise, in the operation,
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management or conduct of any business that competes with the businesses of the Company or its
subsidiaries being conducted at the time of such termination; (ii) solicit, contact, interfere
with, or divert any customer served by the Company or its subsidiaries, or any prospective customer
identified by or on behalf of the Company or its subsidiaries as of the date of Xx. Xxxxxxx’x
termination to divert business from or compete with the Company; or (iii) solicit any person
employed by the Company or any of its subsidiaries at the time of such termination to leave such
employment. Notwithstanding the foregoing, a response by a Company employee (or an employee of a
subsidiary of the Company) to a non-directed general solicitation shall not be deemed a violation
of clause (iii) preceding.
5.4. Acknowledgement. Xx. Xxxxxxx acknowledges that the restrictions set forth in
this Section 5 are reasonable in scope and essential to the preservation of the businesses and
proprietary properties of the Company and its subsidiaries at the time of such termination and that
the enforcement thereof will not in any manner preclude Xx. Xxxxxxx, in the event of termination of
his employment with the Company, from becoming gainfully employed to provide a reasonable standard
of living for himself, the members of his family and those dependent upon him.
5.5. Severability — Covenants. The covenants of Xx. Xxxxxxx contained in this Section
5 shall each be construed as any agreement independent of any other provision in this Agreement and
the existence of any claim or cause of action of Xx. Xxxxxxx against the Company or its
subsidiaries, whether predicated on this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company or its subsidiaries of such covenants. The parties hereto expressly
agree and contract that it is not the intention of any party to violate any public policy,
statutory or common law, and that if any sentence, paragraph, clause or combination of the same of
this Agreement is in violation of the law of any state where applicable, such sentence, paragraph,
clause or combination of the same shall be void in the jurisdictions where it is unlawful and the
remainder of such provision and this Agreement shall remain binding on the parties to make the
covenants of this Agreement binding only to the extent that it may be lawfully done under existing
applicable laws. In the event that any part of any covenant of this Agreement is determined by a
court of law to be overly broad, thereby making the covenant unenforceable, the parties hereto
agree, and it is their desire, that such court shall substitute a judicially enforceable limitation
in lieu of the overly broad covenant, and that as so modified the covenant shall be binding upon
the parties as if originally set forth herein.
5.6. Remedies for Breach. Xx. Xxxxxxx acknowledges that his services pursuant to this
Agreement are unique and extraordinary and that irreparable injury will result to the Company and
its businesses and properties in the event of a material breach of the terms and conditions of this
Section 5 to be performed by him, the Company shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, either at law or in equity, to enjoin
him from performing services for any other person or entity or otherwise acting in violation of any
of the terms of this Section 5, and to obtain damages for any breach of this Section 5.
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Section 6. Indemnification. In addition to any rights Xx. Xxxxxxx may have under the
Company’s charter or by-laws, the Company agrees to indemnify Xx. Xxxxxxx and hold Xx. Xxxxxxx
harmless, both during the Term and thereafter, against all costs, expenses (including, without
limitation, attorneys’ and accountants’ fees) and liabilities (other than settlements to which the
Company does not consent, such consent not to be unreasonably withheld) (collectively,
“Losses”) reasonably incurred by Xx. Xxxxxxx in connection with any claim, action,
proceeding or investigation brought against or involving Xx. Xxxxxxx with respect to, arising out
of or in any way relating to Xx. Xxxxxxx’x employment with the Company. Xx. Xxxxxxx shall promptly
notify the Company of any claim, action, proceeding or investigation under this paragraph and the
Company shall be entitled to participate in the defense of any such claim, action, proceeding or
investigation and, if it so chooses, to assume the defense with counsel selected by the Company and
approved by Xx. Xxxxxxx; provided that Xx. Xxxxxxx shall have the right to employ counsel
to represent him (at the Company’s expense) if Company counsel would have a “conflict of interest”
in representing both the Company and Xx. Xxxxxxx. The Company shall not settle or compromise any
claim, action, proceeding or investigation without Xx. Xxxxxxx’x consent, which consent shall not
be unreasonably withheld or delayed; provided, however, that such consent shall not be
required if the settlement entails only the payment of money and the Company fully indemnifies Xx.
Xxxxxxx in connection therewith. To the fullest extent permitted by law and the Company’s
certificate of incorporation and by-laws, the Company further agrees to advance any and all
expenses (including, without limitation, the fees and expenses of counsel) reasonably incurred by
the Xx. Xxxxxxx in connection with any such claim, action, proceeding or investigation. The
provisions of this paragraph shall survive the termination of this Agreement for any reason.
Section 7. Notice. Any notice required or permitted hereunder shall be in writing and
given (i) either by actual delivery of the notice into the hands of the party hereunder entitled,
or (ii) by the mailing of the notice in the United States mail, certified mail, return receipt
requested, all postage prepaid and addressed to the party to whom the notice is to be given at the
party’s respective address set forth below, or such other address as either party may from time to
time designate to the other by written notice as provided herein.
If to the Company:
|
Electric City Corp. | |
| 0000 Xxxxxxxxx Xxxx | ||
| Xxx Xxxxx Xxxxxxx, XX 00000 | ||
| Attention: Chairman of the Board of Directors | ||
With a copy to:
|
Electric City Corp. | |
| 0000 Xxxxxxxxx Xxxx | ||
| Xxx Xxxxx Xxxxxxx, XX 00000 | ||
| Attention: Chief Financial Officer | ||
If to Xx. Xxxxxxx:
|
Xx. Xxxxx Xxxxxxx | |
| 0000 Xxxxxxxx Xxxx | ||
| Xxxxxxxx, XX 00000 |
Page 11 of 14
The notice shall be deemed to be received in case (i) on the date of actual receipt by the party
and in case (ii) three days following the date of the mailing.
Section 8. Amendment and Waiver. No amendment or modification of this Agreement shall
be valid or binding upon: (i) the Company unless made in writing and signed by an officer of the
Company, duly authorized by the Board of Directors of the Company or; (ii) Xx. Xxxxxxx unless made
in writing and signed by him. The waiver by the Company or Xx. Xxxxxxx of the breach of any
provision of this Agreement by the other party shall not operate or be construed as a waiver of any
subsequent breach of such party. No other course of dealing between the parties or any delay in
exercising any rights hereunder will operate as a waiver of any rights of either party under this
Agreement.
Section 9. Governing Law/Arbitration. (a) The validity and effect of this Agreement
and the rights and obligations of the parties hereto shall be governed by, and construed in
accordance with, the laws and decisions of the State of Illinois, without giving effect to the
principles of conflicts of laws thereof.
(b) The parties hereto agree that in the event of any disagreements or controversies arising
from this Agreement, such disagreements and controversies shall be subject to binding arbitration
as arbitrated in accordance with the then current Commercial Arbitration Rules of the American
Arbitration Association (the “AAA”) in Chicago, Illinois before one neutral arbitrator. Such
arbitrator shall be selected by mutual agreement of the parties within thirty (30) days of written
notice of said disagreement or controversy. If the parties cannot mutually agree to an arbitrator
within thirty (30) days, then the AAA shall designate the arbitrator. Either party may apply to
the arbitrator seeking injunctive relief until the arbitration award is rendered or the controversy
is otherwise resolved. Without waiving any remedy under this Agreement, either party may also seek
from any court having jurisdiction any interim or provisional relief that is necessary to protect
the rights or property of that party, pending the establishment of the arbitral tribunal (or
pending the arbitral tribunal’s determination of the merits of the controversy). In the event of
any such disagreement or controversy, neither party shall directly or indirectly reveal, report,
publish or disclose any information relating to such disagreement or controversy to any person,
firm or corporation not expressly authorized by the other party to receive such information or use
such information or assist any other person in doing so, except to comply with actual legal
obligations of such party or unless such disclosure is directly related to an arbitration
proceeding as provided herein, including, but not limited to, the prosecution or defense of any
claim in such arbitration. The costs and expenses of the arbitration (excluding attorneys’ fees)
shall be paid as determined by the arbitrator. This paragraph shall survive the termination of
this Agreement.
Section 10. Entire Agreement. This Agreement contains all of the terms agreed upon by
the parties with respect to the subject matter hereof and supersedes all prior agreements,
arrangements and communications between the parties dealing with such subject matter, whether oral
or written.
Page 12 of 14
Section 11. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the transferees, successors and assigns of the Company, including any company or
entity with which the Company may merge or consolidate.
Section 12. Remedies Cumulative. The remedies provided herein shall be cumulative and
in addition to any and all other remedies which either party may have at law or in equity.
Section 13. Costs of Enforcement. In the event of any suit or proceeding seeking to
enforce the terms, covenants or conditions of this Agreement, the prevailing party shall, in
addition to all other remedies and relief that may be available pursuant to this Agreement or
applicable law, recover his or its reasonable attorneys’ fees and costs as shall be determined and
awarded by an arbitrator or court, as the case may be.
Section 14. Headings. Numbers and titles to paragraphs hereof are for information
purposes only and, where inconsistent with the text, are to be disregarded.
Section 15. Severability — General. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
Section 16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be an original and
all of which together shall be deemed to be one and the same agreement.
[Balance of page intentionally left blank; signature page follows.]
Page 13 of 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date
first set forth above.
| ELECTRIC CITY CORP. | XXXXX X. XXXXXXX | |||||||
By:
|
/s/ Xxxxxxx Xxxxxxx | /s/ Xxxxx X. Xxxxxxx | ||||||
| Printed: Xxxxxxx Xxxxxxx | ||||||||
| Title: Chairman of the Board | ||||||||
Page 14 of 14
