EXHIBIT 10.12
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement"), made this
23 day of October 2003 (the "Effective Date"), is entered into by Ocean Power
Technologies, Inc., a New Jersey corporation with a principal place of business
at 0000 Xxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 (the "Company"), and Xxxxxx X.
Xxxxxx, an individual with his primary residence at 000 Xxxxx Xxxx., Xxxxxxxxx,
Xxx Xxxxxx (the "Employee").
WHEREAS, the Company and the Employee entered into an Employment Agreement
on May 25, 2001 (the "Original Agreement"); and
WHEREAS, the Company and the Employee desire to amend and restate and
supersede the Original Agreement in its entirety; and
WHEREAS, the Company desires to continue the employment of the Employee,
and the Employee desires to be employed by the Company pursuant to the terms of
this Agreement.
NOW THEREFORE, in consideration of the promises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Term of Employment. The Company hereby agrees to employ the Employee,
and the Employee hereby agrees to accept employment with the Company pursuant to
the terms and conditions of this Agreement, for the period commencing on the
Effective Date and expiring on the day before the first anniversary thereof,
unless sooner terminated (the "Initial Term"). On the expiration of the Initial
Term and on each anniversary thereof, the Agreement shall renew automatically
for additional one-year periods (the "Renewal Term"), unless sooner terminated
or unless either party notifies the other party in writing of his or its
intentions not to renew this Agreement not less than sixty (60) days prior to
the expiration of the then current term ("Notice
of Nonrenewal"). A Notice of Nonrenewal by the Company of its intent not to
renew this Agreement shall constitute "Good Reason" for termination of this
Agreement by the Employee, pursuant to Section 4(d) hereof. Upon a termination
by either party for any reason and at any time, the payments or other benefits
stated in Section 5 hereof shall be the exclusive remedy available to the
Employee under this Agreement.
2. Position and Duties. The Employee shall serve as President and Chief
Executive Officer of the Company. The Employee acknowledges that the Company,
with the approval of a majority of the Board of Directors, may hire a new
President and such hiring shall not constitute a breach of this Agreement by the
Company or constitute Good Reason. The Employee shall be subject to the
supervision of, and shall have such authority and duties to the Company or its
subsidiaries or affiliates, as are reasonably delegated to him, by the Board of
Directors of the Company (the "Board") and such duties and responsibilities
shall include those duties and responsibilities common to Presidents and Chief
Executive Officers of companies of like size and purpose. The Employee shall
devote his full working time, energy and skill (reasonable absences for
vacations and illness excepted) to the business of the Company during the term
of this Agreement as is necessary to perform the Employee's duties faithfully,
competently and diligently. The Employee agrees to abide by the rules,
regulations, instructions, personnel practices and policies of the Company and
any Company affiliate or subsidiary for or with which the Employee conducts any
business, as they may be changed, amended or adopted from time to time. Upon
approval by the Board, which approval shall not be unreasonably withheld, the
Employee may devote reasonable periods of time to serving on the Boards of
Directors of other companies or organizations, so long as such service does not
unreasonably interfere with his duties to the Company and does not constitute a
conflict of the Company's interests.
3. Compensation. During the term of this Agreement, the Employee shall
receive, for all services rendered to the Company hereunder, the following
salary, compensation and benefits (hereinafter referred to as "Compensation"):
(a) Base Salary. Commencing on the Effective Date, the Employee shall
be paid a base salary at the annualized rate of Two Hundred Fifty Thousand
Dollars ($250,000.00). Base salary will be payable in accordance with the
Company's normal payroll procedures. The Employee's base salary shall be
reviewed on an annual basis, and positive adjustments may be made by the
Compensation Committee of the Board (the "Compensation Committee") in its sole
discretion. The base salary shall not be subject to decrease without the written
consent of the Employee.
(b) Bonuses. The Employee may be eligible for bonuses pursuant to any
bonus program designed for employees of the Company. Such bonuses, if any, shall
be at the sole discretion of the Compensation Committee.
(c) Incentive Compensation. The Employee may be eligible for incentive
compensation, including stock options, pursuant to any incentive compensation
program designed for employees of the Company. Such incentive compensation, if
any, shall be determined by the Compensation Committee in the exercise of its
sole discretion.
(d) Benefits. The Employee shall be eligible to participate in all
benefits programs, if any, that the Company establishes and makes available to
its employees and executives, in accordance with and subject to the terms and
conditions of such benefits programs. Such programs may include health and
dental insurance plans, long-term disability insurance plans, life insurance
plans, and other benefits made available to the Company's employees from time to
time.
(e) Reimbursement of Expenses. The Company shall reimburse the
Employee for all reasonable and necessary business-related expenses incurred or
paid by the Employee in the performance of the Employee's duties,
responsibilities or services under this Agreement, provided that the Employee
provides documentation, receipts, vouchers, and/or such other supporting
information as the Company may request.
(f) Deductions. The Company shall deduct and withhold from the
Employee's compensation all necessary or required taxes, including, but not
limited to, social security, withholding and otherwise, and any other applicable
amounts required by law or any taxing authority, as well as such other
deductions properly authorized in writing by the Employee.
(g) Absences. The Employee shall be entitled to a minimum of 20 days
of paid vacation time per calendar year, as well as sick leave, and such other
absences in accordance with and subject to the Company's current policies and
procedures regarding such paid absences. Such policies may be amended, modified,
or rescinded in the Company's sole discretion.
4. Termination. The employment of the Employee by the Company shall
terminate upon the occurrence of any of the following:
(a) The Company may terminate the Employee's employment hereunder for
Cause immediately and with prompt notice to the Employee, which Cause shall be
determined in good faith by the Board. The Employee shall be provided a
reasonable opportunity to be heard by the Board, before his employment is
terminated for Cause hereunder. "Cause" for termination shall include the
following conduct of the Employee:
(i) Material breach of any provision of this Agreement by the Employee
causing a material detrimental effect on the Company;
(ii) Material misconduct as an employee which has a material
detrimental effect on the Company, including: misappropriating any
funds or property of the Company, or attempting to willfully obtain
any substantial personal profit from any transaction in which the
Employee has an interest which is adverse to the interests of the
Company;
(iii) Gross negligence or knowing refusal to perform the reasonable
duties assigned to the Employee under or pursuant to this Agreement;
(iv) Conviction of a felony or plea of no lo contendre to a felony;
(v) Acts of dishonesty or moral turpitude by the Employee that are
materially detrimental to the Company; or
(vi) Alcohol or drug use which impairs the Employee's ability to
perform his duties hereunder.
(b) Immediately upon the death of the Employee;
(c) Thirty days after the Disability of the Employee. As used in this
Agreement, the term "Disability" shall mean the inability of the Employee with
reasonable accommodation as may be required by State or Federal law, due to a
physical or mental disability, for a period of ninety (90) days, whether or not
consecutive, during any 360-day period to perform the services contemplated
under this Agreement. A determination of Disability shall be made by a physician
satisfactory to both the Employee and the Company, provided that if the Employee
and the Company do not agree on a physician, the Employee and
the Company shall each select a physician and these two together shall select a
third physician, whose determination as to Disability shall be binding on all
parties;
(d) The Employee may terminate his employment hereunder for "Good
Reason" if, after thirty (30) days written notice, the Company fails to cure the
following conduct:
(i) Material breach of any provision of this Agreement by the Company;
(ii) Failure to maintain the Employee in a position commensurate with
that referred to in Section 2 of this Agreement, except that the
Company's hiring of a President other than the Employee shall not
constitute Good Reason hereunder; or
(iii) The assignment to the Employee of any duties inconsistent with
the Employee's position, authority, duties or responsibilities as
contemplated by Section 2 of this Agreement;
(iv) Relocation of the Employee's main office more than 50 miles from
Pennington, New Jersey;
(v) Material reduction in the Employee's base salary; or
(vi) A Notice of Nonrenewal from the Company, informing the employee
of the Company's intent not to renew the Initial Term or any Renewal
Term.
(e) At the election of the Employee, without Good Reason, upon not
less than thirty (30) days prior written notice of termination to the Company;
(f) At the election of the Company, without Cause, immediately upon
thirty (30) days prior written notice of termination to the Employee.
5. Effect of Termination. Upon termination of this Agreement at any time,
the payments and remedies stated in this Section 5 shall be exclusive and
Employee shall not be eligible for any further payment or other benefits from
the Company.
(a) Termination for Cause or at Election of the Employee without Good
Reason. In the event the Employee's employment is terminated for Cause pursuant
to Section 4(a), or at the election of the Employee pursuant to Section 4(e),
the Company shall pay to the Employee the base salary and benefits due and owing
to him under Section 3 through the last day of the Employee's actual employment
by the Company.
(b) Termination for Death or Disability. If the Employee's employment
is terminated by death or because of disability pursuant to Section 4(b) or
4(c), the Company shall pay to the estate of the Employee or to the Employee, as
the case may be, the base salary and benefits which would otherwise be payable
to the Employee through the end of the month in which the termination of
employment because of death or disability occurs. In addition, the Company will
make a one-time payment of $10,000.00 to the estate of the Employee or to the
Employee, as the case may be. If the payment is made due to disability, the
Employee will be required to sign a release of claims as in Section 5(c) prior
to receiving the payment under this section.
(c) Termination by the Company Without Cause; Termination by the
Employee for Good Reason. If the Employee's employment is terminated without
Cause pursuant to Section 4(f) or if the Employee terminates his own employment
for Good Reason pursuant to Section 4(d), and if, and only if, the Employee
first executes a general release drafted by and satisfactory to counsel for the
Company releasing the Company, along with its directors, officers, employees,
agents and affiliate company's from any and all liability to the Employee (the
"Release Agreement"), the Company shall pay and provide to the Employee, or to
his estate if he were to die after termination and prior to such payment: (i)
the Employee's then current base salary, as severance pay, for a period equal to
the Severance Period, as defined below, to be
paid, at the Employee's sole discretion, either in one lump sum payment within
thirty (30) days of termination or monthly for the entire Severance Period, in
accordance with the Company's regular payroll practices: and (ii) continuation
of the Employee's health, medical and long term disability insurance during the
Severance Period, as defined below, at the Company's expense, until such time as
the Employee becomes eligible for such coverage through a subsequent employer
and only to the extent permitted pursuant to the Company's applicable benefit
insurance policies. The payments pursuant to Section 5(c)(i) shall be paid
regardless of whether the Employee seeks or obtains any employment subsequent to
his employment with the Company. In addition, regardless of whether the Employee
signs the Release Agreement, the Company shall pay to the Employee the salary
and benefits due and owing to him under Section 3 through the last day of the
Employee's actual employment by the Company. The term "Severance Period" as used
herein shall mean the following: (i) during the first year of this agreement,
the balance of time remaining in the Initial Term plus an additional twelve (12)
months; and (ii) after the first year of this agreement, twelve (12) months.
(d) Survival. The provisions of Sections 6, 7 and 8 of this Agreement
shall survive the termination of this Agreement.
6. Restrictive Covenants.
(a) During the term of this Agreement and for a period of one (1) year
after the termination or expiration thereof, the Employee will not directly or
indirectly:
(i) as an individual proprietor, partner, stockholder, officer,
employee, director, joint venturer, investor, lender, or in any other
capacity whatsoever (other than as the holder of not more than one
percent (1%) of the total outstanding stock of a publicly held
company), engage in the business of
developing, producing, marketing or selling services of the kind or
type developed or being developed, produced, marketed or sold by the
Company while the Employee was employed by the Company; or
(ii) hire, engage, recruit, solicit or induce, or attempt to induce,
any current or prospective employee, officer, director, contractor or
other business associate of the Company to terminate their employment
with, or otherwise cease their business relationship with, the
Company; or
(iii) solicit, divert or take away, or attempt to divert or to take
away, the business or patronage of any of the clients, customers or
accounts, or prospective clients, customers or accounts, of the
Company which were contacted, solicited or served by the Employee
while employed by the Company.
(iv) For the purposes of these restrictions, the word "prospective"
shall apply to any individual or entity with which the Company has had
substantive contact within the twelve month period prior to any
potential hiring, solicitation, recruiting, diversion or otherwise. In
addition a "current" employee shall include any employee who was
employed by the Company within the three (3) months preceding any
potential solicitation or hiring.
(b) If any restriction set forth in this Section 6 is found by any
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
(c) The restrictions contained in Sections 6, 7 and 8 are necessary
for the protection of the business and goodwill of the Company and are
considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of Sections 6, 7 or 8 will cause the Company substantial
and irrevocable damage and therefore, in the event of any such breach, in
addition to such other remedies which may be available, the Company shall have
the right to seek specific performance and injunctive relief in any court of
competent jurisdiction, regardless of any statement to the contrary herein.
7. Proprietary Information.
(a) The Employee agrees that all information and know-how, whether or
not in writing, of a private, secret or confidential nature concerning the
Company's business or financial affairs (collectively, "Proprietary
Information") is and shall be the exclusive property of the Company. By way of
illustration, but not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques, formulas, compositions,
compounds, projects, developments, plans, research data, clinical data,
financial data, personnel data, computer programs, and customer and supplier
lists. The Employee will not disclose any Proprietary Information to others
outside the Company or use the same for any unauthorized purposes without
written approval by an officer of the Company, either during or after his
employment, unless and until such Proprietary Information has become public
knowledge without fault by the Employee.
(b) The Employee agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, laboratory notebooks, program listings, or
other written, photographic, or other tangible material containing Proprietary
Information, whether created by the Employee or others, which shall come into
his custody or possession, shall be and are the exclusive
property of the Company to be used by the Employee only in the performance of
his duties for the Company.
(c) The Employee agrees that his obligation not to disclose or use
information, know-how and records of the types set forth in paragraphs (a) and
(b) above, also extends to such types of information, know-how, records and
tangible property of customers of the Company or suppliers to the Company or
other third parties who may have disclosed or entrusted the same to the Company
or to the Employee in the course of the Company's business.
(d) The Employee agrees that, immediately upon the termination of his
employment with the Company for any reason, he shall return all Proprietary
Information and other property of the Company that is in his possession or
control.
8. Developments.
(a) The Employee will make full and prompt disclosure to the Company
of all inventions, improvements, discoveries, methods, developments, software,
and works of authorship, whether patentable or not, which are created, made,
conceived or reduced to practice by the Employee or under his direction or
jointly with others during his employment by the Company, whether or not during
normal working hours or on the premises of the Company (all of which are
collectively referred to as "Developments").
(b) The Employee agrees to assign and does hereby assign to the
Company (or any person or entity designated by the Company) all his right, title
and interest in and to all Developments and all related patents, patent
applications, copyrights, copyright applications, design rights (registered or
unregistered) and all rights of a similar or equivalent nature in any
jurisdiction. However, this Section 8(b) shall not apply to Developments which
do not relate to the present or planned business or research and development of
the Company and which are
made and conceived by the Employee not during normal working hours, not on the
Company's premises and not using the Company's tools, devices, equipment or
Proprietary Information.
(c) The Employee agrees to cooperate fully with the Company, both
during and after his employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments. The Employee
shall sign all papers, including, without limitation, copyright applications,
patent applications, declarations, oaths, formal assignments, assignment of
priority rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Development. The
Employee unconditionally and irrevocably waives all moral rights he may have in
relation to the Developments.
9. Other Agreements. The Employee hereby represents that he is not bound by
the terms of any agreement with any previous employer or other party to refrain
from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. The Employee further represents that his performance of all
the terms of this Agreement and as an employee of the Company does not and will
not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by him in confidence or in trust prior to his
employment with the Company or otherwise violate any agreement or other
obligation that the Employee may have to any other party.
10. Indemnification Agreement and Invention Assignment Confidentiality
Agreement. Nothing in this Agreement is intended to supercede: (i) the
Indemnification Agreement signed by the Employee on March 24, 1995; or (ii) any
stock option agreement
between the Employee and the Company. The parties intend to provide the Employee
with the greatest level of protection under each of the agreements. To the
extent that the Employee is eligible for severance pay or other post termination
benefits pursuant to more than one agreement, the provisions of this agreement
shall supercede all other agreements (post termination treatment of equity
positions shall not be considered "severance" for the purpose of this Section).
Nothing herein is intended to supercede any rights the Company may have pursuant
to any invention assignment, confidentiality, non-competition or
non-solicitation agreement between the Employee and the Company and it is
intended that the Company shall receive the greatest protection provided
pursuant to any such agreement, this agreement or common law.
11. Resolution of Disputes. Any disputes arising under or in connection
with this Agreement or otherwise arising pursuant to the Employee's employment
with the Company shall be resolved by binding arbitration to be held in the
State of New Jersey, in accordance with the applicable arbitration rules of the
American Arbitration Association before a panel of three arbitrators. Judgment
upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Each party shall bear his or its own costs of the
arbitration or, if applicable, litigation; however, the prevailing party shall
be reimbursed for his or its costs and expenses, including attorneys' fees to
the extent the dispute involves rights arising under a statute providing costs
and fees to a prevailing party and to the extent such prevailing party has
proven a material breach of this Agreement by the other party. Nothing in this
Section shall in any way limit the Company's right to seek injunctive or other
equitable relief in any court of competent jurisdiction, to enforce the
provisions of Sections 6, 7 and 8 hereof. Each party agrees to waive his or its
right to a trial by jury on any claims arising out of their relationship and
agree
that the arbitrators shall be empowered to award damages to the same extent a
court of competent jurisdiction would have had.
12. Notices. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 12.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement,
including but not limited to the Original Agreement and the Change in Control
Severance Pay Agreement signed by the Employee on or about January 12, 2000,
except as stated to the contrary in Section 10.
14. Amendment. This Agreement may be amended or modified only by a writing
executed by both the Employee and a representative of the Company acting on
express authority from the Board.
15. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of New Jersey.
16. Successors and Assigns; Binding Agreement.
(a) This Agreement shall be binding upon and inure to the benefit of
both parties and their respective successors and assigns, including any
corporation with which or into which the Company may be merged or which may
succeed to its assets or business, provided however, that the obligations of the
Employee are personal and shall not be assigned by him.
The Company specifically reserves the right to assign its rights under this
Agreement, including but limited to, any covenants by the Employee contained in
Sections 6, 7 and 8 hereof.
(b) The Employer will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Employer, to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Employer would be required to perform it if no such succession had
taken place, unless such assumption occurs automatically by operation of law.
17. Acknowledgement. The Employee states and represents that he has had an
opportunity to fully discuss and review the terms of this Agreement with an
attorney. The Employee further states and represents that he has carefully read
this Agreement, understands the contents herein, freely and voluntarily assents
to all of the terms and conditions hereof, and signs his name as his own free
act.
18. No Waiver. No delay or omission by the Company in exercising any right
under this Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
19. Captions. The captions of the Sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any Section of this Agreement.
20. Severability. In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
XXXXXX X. XXXXXX OCEAN POWER TECHNOLOGIES, INC.
/s/ Xxxxxx X Xxxxxx By: /s/ Enc A. Ash
------------------------------------- ------------------------------------
Title: Chairman
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