EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 23 day of March, 1999
between EVERCEL, INC., a Delaware corporation (the "Company"), and XXXXXX X.
XXXXXX, an individual with a current mailing address at 00 Xxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxxxxx 00000, (the "the Employee"). Unless the context
otherwise requires, the term "Company", shall include the Company and each of
its subsidiaries.
W I T N E S E T H
WHEREAS, the Company desires to employ the Employee as its President and
Chief Executive Officer and the Employee desires to be employed in such
capacities in accordance with the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the covenants, conditions, undertakings
and premises contained herein, the sufficiency which is hereby acknowledged, the
Company and the Employee agree follows:
ARTICLE 1
EMPLOYMENT AND DUTIES
Employment; Duties
Subject to the terms and conditions set forth herein, commencing April 19,
1999 (the "Commencement Date") the Company agrees to employ the Employee and the
Employee agrees to be employed as President and Chief Executive Officer of the
Company. In such position, the Employee shall perform such duties as are or may
be assigned to the Employee by the Board of Directors of the Company (the "Board
of Directors") from time to time. In connection therewith, the Employee shall
report to and be subject to the supervision of the Executive Committee of the
Board of Directors.
1.2 Full Time
The Employee shall devote his full working time, attention, energies,
skills and best efforts exclusively to the performance of his duties hereunder.
The Employee shall not during the term of this Agreement engage in any other
business activity whether or not such activity is pursued for gain, profit or
other pecuniary advantage, except that the Employee, on his own time, (a) may
manage his own investments, and those of his immediate family, and (b) may serve
as a member of the board of directors of other corporations subject to the
restrictions set forth in Section 5.1, so long as such activity (as described in
either clause (a) or (b) above), does not, in the reasonable judgment of the
Company's Board of Directors, adversely affect the performance of his duties
hereunder.
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1.3 Board Membership
The Employee, effective upon the Commencement Date, shall become a member
of the Board of Directors and its Executive Committee. Thereafter, for so long
as the Employee is serving as Chief Executive Officer of the Company, the
Company will nominate the Employee for re-election as a management nominee of
the Board of Directors and use its reasonable best efforts to cause the Employee
to be so re-elected and, if so elected, to appoint the Employee as a member of
the Executive Committee of the Board of Directors. If at any time the Employee
ceases to serve as President and Chief Executive Officer of the Company, if the
Board of Directors so requests, the Employee shall immediately tender his
resignation from the Board of Directors and shall automatically be deemed to
have so resigned whether or not such resignation is tendered.
ARTICLE 2
2.1 Term
The term of the Employee's employment by the Company hereunder shall
commence on the Commencement Date and, except as otherwise provided in this
Agreement with respect to earlier termination, shall continue until terminated
by either party pursuant to Article 7.
ARTICLE 3
COMPENSATION
3.1 Base Salary
For all service to be rendered by the Employee under this Agreement,
including services as an officer, director and member of any committee, and such
other duties as the Board of Directors or the Executive Committee may assign to
him in accordance with Section 1.1 hereof, the Company agrees to pay the
Employee a base salary of $250,000 per annum. The Employee's base salary shall
be subject to periodic review and adjustment by the Board of Directors in its
sole discretion, provided that the base salary may not be reduced below $250,000
per year. The base salary shall be payable at such times as is customary for
employees of the Company and in accordance with the normal payroll practices of
the Company.
3.2 Incentive Compensation
The Employee shall be a participant in the Company's incentive compensation
plan generally made available to executive officers as it may be in effect and
revised from time to time. Employee's target bonus under such plan will be forty
percent (40%) of his base salary (prorata for part of the fiscal year). The
Employee understands and agrees that the
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implementation of an incentive compensation plan for the Employee and other
executive officers will be subject to the review and approval of the
Compensation Committee of the Board of Directors.
3.3 Expenses
(a) General. In addition to base salary and incentive compensation, the
Company shall reimburse the Employee for all reasonable and necessary business
expenses actually incurred by him in the performance of his duties, including,
without limitation, expenses for travel, meals, entertainment and other
miscellaneous business expenses, in accordance with the Company's policies and
practices as may be in effect from time to time.
(b) Relocation. It is understood that no relocation by Employee is
required or offered.
(c) Signing Bonus. To assist employee in covering expenses relating to his
employment (e.g., an automobile), the Company will provide employee
with a one-time payment of $20,000, half payable on his first day of
employment at the Company and half 30 days later.
ARTICLE 4
COMPANY BENEFITS
4.1 Vacation
The Employee shall be entitled to receive four weeks of paid vacation per
calendar year (pro rated for any partial year), which shall be taken at such
time or times as will not unreasonably hinder or interfere with the Company's
business or operations.
4.2 Severance Benefit
If during the Employee's employment pursuant to this Agreement, the
Employee ceases to be employed by the Company as a result of the Company's
termination of the Employee without cause pursuant to Section 7.4 (which shall
not include any termination that is otherwise within Article 6) or the
Employee's termination of his employment for good reason pursuant to Section
7.1, the Company shall pay the Employee as a severance benefit, (a) his then
base salary plus (b) an amount equal to the Employee's bonus from the Company,
if any, for the immediately preceding year. This severance benefit shall be
payable by the Company through (i) the continuation of the Employee's base
salary for a period of one year and (ii) the payment of the balance in four
equal quarterly installments, with the first such payment due three months after
the termination and the final payment due one year after the termination. The
severance obligation set forth in this Section 4.2 shall be in lieu of and not
in addition to any other severance benefits made available to other employees of
the Company.
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4.3 Stock Options
Effective on the execution of this Agreement, the Company shall issue to
the Employee an option to purchase 100,000 shares of the Company's Common Stock
with an exercise price equal to $6.00, pursuant to the Company's standard form
of Option Agreement, subject to the following provisions. The option shall vest
over a four year period at 25% per year (25,000 shares) on each anniversary date
of the Commencement Date; provided however, if the Employee's employment
hereunder is terminated without cause by the Company or for good reason by the
Employee prior to the first anniversary date of the Commencement Date, the
options to purchase the first 25,000 shares of the Company's Common Stock will
automatically vest. The options will also fully vest upon a change of control of
the Company.
4.4 Other Benefit Plans
The Employee shall further be entitled to participate in and receive
benefits under any retirement, life insurance, accident, disability, health and
dental insurance, profit sharing, or similar plans generally made available to
its employees.
4.5 Indemnification
The Company agrees to defend and shall indemnify and hold the Employee
harmless to the fullest extent permitted by law from any and all liability,
costs, and expenses which may be assessed against the Employee by reason of the
performance of his responsibilities and duties under the terms of this
Agreement, provided such liability does not result from willful misconduct or
gross negligence of the Employee.
ARTICLE 5
RESTRICTIONS
5.1 Non-Competition
(a) So long as the Employee is employed by the Company, serving as a
Director or is receiving payments hereunder (whether in connection with the
Employee's employment or as a result of the termination of the Employee's
employment hereunder) and for a period of two years thereafter (the
"Noncompetition Period"), the Employee shall not, directly or indirectly,
whether as owner, partner, shareholder, director, consultant, agent, employee,
guarantor, surety or otherwise, or through any person, consult with or in any
way aid or assist any competitor of the Company or engage or attempt to engage
in any employment, consulting or other activity which directly or indirectly
competes with the Business of the Company. For purposes of this Agreement, the
term "employment" shall include the performance of services by Employee as an
employee, consultant, agent, independent contractor or otherwise and the term
"Business" shall mean the research, development, manufacture, sale or
distribution of fuel cells, batteries or related products and any other business
engaged in, planned or under development by the
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Company with respect to which the Employee has had access to Company
confidential information during the Noncompetition Period. The Employee
acknowledges that his participation in the conduct of any such Business alone or
with any person other than the Company will materially impair the Business and
prospects of the Company.
(b) In addition to and without limiting the foregoing, during the
Noncompetition Period, Employee shall not knowingly do, attempt to or assist any
other person in doing or attempting to do any of the following: (i) hire any
director, officer, employee, or agent of the Company (a "Company Employee") or
encourage any such person to terminate such relationship with the Company, as
the case may be (for purposes hereof, the Employee shall be deemed to have so
encouraged a Company Employee to terminate such relationship with the Company if
the Employee hires or otherwise assists any person in hiring any such Company
Employee within six months after the Company Employee terminates his or her
relationship with the Company), (ii) encourage any customer, client, supplier or
other business relationship of the Company to terminate or alter such
relationship, whether contractual or otherwise, to the disadvantage of the
Company; (iii) encourage any prospective customer or supplier not to enter into
a business relationship with the Company; (iv) impair or attempt to impair any
relationship, contractual or otherwise, written or oral, between the Company and
any customer, supplier or other business relationship of the Company; or (v)
sell or offer to sell or assist in or in connection with the sale to any
customer or prospective customer of the Company any products of the type sold or
rendered by the Company.
(c) Nothing in this Agreement shall preclude Employee from making passive
investments of not more than 2% of a class of securities of any business
enterprise registered under the Securities Exchange Act of 1934.
5.2 Intellectual Property
Upon execution of this Agreement, the Employee shall execute the Evercel,
Inc. Agreement for Assignment, Confidentiality and Nonsolicitation, which
agreement is hereby incorporated herein by reference.
5.3 Injunctive Relief
The Employee acknowledges that the restrictions contained in this Article
are reasonable in view of the nature of the business in which the Company is
engaged and his position with the Company which will provide him with extensive
knowledge of the business.
The Company and the Employee mutually agree that the Employee's obligations
under this Article are of a special and unique character which gives them a
peculiar value, and the Company cannot be reasonably or adequately be
compensated in damages in an action at law in the event the Employee breaches
such obligations. The Employee therefore expressly agrees that, in addition to
any other rights or remedies which the Company may possess, the Company shall be
entitled to injunctive and other equitable relief to prevent a breach of this
Article by the Employee, including a temporary restraining order or temporary
injunction from any court of
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competent jurisdiction restraining any threatened or actual violation, and each
party hereby consents to the entry of such order and injunctive relief and
waives the making of a bond as a condition for obtaining such relief. Such
rights shall be cumulative and in addition to any other legal or equitable
rights and remedies the Company may have.
5.4 Survival Enforceability
It is expressly agreed by the parties hereto that the provisions of this
Article shall survive the termination of this Agreement.
If any one or more of the provisions contained in this Article shall for
any reason in any jurisdiction be held to be excessively broad as to the time,
duration, geographical scope, activity or subject, it shall be construed with
respect to such jurisdiction, by limiting or reducing it, so as to be
enforceable to the extent compatible with the applicable law of such
jurisdiction as it shall then appear.
ARTICLE 6
DEATH; DISABILITY
6.1 Death
If the Employee dies while employed under this Agreement, this Agreement
shall terminate immediately. The Company will pay to the Employee's estate his
base salary under Section 3.1 through the last day of the calendar month in
which he dies, plus any incentive compensation awarded to the Employee under the
Incentive Compensation Plan, but not yet paid, and such death benefits as may be
provided pursuant to Section 4.4.
6.2 Disability
If the Employee fails to perform his duties under this Agreement due to
"Disability", as defined below, the Company may terminate this Agreement upon 30
days written notice to him. In that event, the Company shall pay the Employee
his base salary under Section 3.1 through the date of termination; provided,
however, that to the extent the Employee is receiving disability benefits
pursuant to the Company's disability insurance policy, the amount of such
benefits shall be credited against the Employee's base salary during the period
prior to the date of termination. In addition, upon any termination based upon
Disability, the Company shall pay to the Employee any incentive compensation
awarded to the Employee under the Incentive Compensation Plan but not yet paid.
The term "Disability" shall mean the inability of the Employee to perform for
the Company the duties specified in Section 1.1 by reason of any medically
determinable physical or mental impairment for (i) a period of four consecutive
months, (ii) for shorter periods aggregating five months in any 12-month period
or (iii) if the Board of Directors determines that it is probable that the
Disability will continue for a length of time so as to constitute a Disability
under clauses (i) or (ii) above. The determination of whether the Employee is
Disabled shall be made
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by the Board of Directors on the basis of written medical evidence reasonably
satisfactory to it. Notwithstanding anything to the contrary in the foregoing,
in the event of a termination of the Employee pursuant to clause (iii), the
Company will pay the Employee a minimum of four months base salary following
such termination; provided, however, that to the extent the Employee is
receiving disability benefits pursuant to the Company's disability insurance
policy, the amount of such benefits shall be credited against the Employee's
base salary.
ARTICLE 7
TERMINATION
7.1 Termination by the Employee for Good Reason
The Employee may terminate this Agreement for good reason upon ninety (90)
days written notice to the Company setting forth with specificity the grounds
for termination upon the occurrence of any of the following: (a) the failure of
the Company to observe or comply with any of its material obligations under this
Agreement, if such failure has not been cured within 30 days after written
notice thereof has been given by the Employee to the Company; (b) the
dissolution of the Company; or (c) any merger in which the Company is not the
surviving corporation and in which the stockholders of the Company own less than
50% of the voting securities of the merged entity upon the effectiveness of the
merger, or any consolidation, sale of substantially all of the assets of the
Company or change of control of the Company, provided the Employee has not
approved the transaction by voting for it either as a director or shareholder.
For purposes of clause (a) a material breach by the Company shall include a
material change in the reporting responsibilities of the Employee such that the
Employee is no longer effectively serving as the President and Chief Executive
Officer of the Company, a material reduction in benefits or other perquisites of
office such that the Employee is not receiving the benefits set forth herein or
the benefits and other perquisites generally granted for executive positions
within the Company. For purposes of clause (c) above, a "change of control"
shall be presumed to have occurred if within any 12-month period a single person
or entity, or related group of persons or entities, acquires 50% or more of the
outstanding voting stock of the Company. In the event of a termination for good
reason under this Section, the Company shall pay the Employee (i) his base
salary as then in effect under Section 3.1 through the date of termination, (ii)
any incentive compensation awarded to the Employee under the Incentive
Compensation Plan, but not yet paid, and (iii) the severance benefit set forth
in Section 4.2.
7.2 Termination by the Company for Cause
The Company may terminate this Agreement for cause in the manner set forth
below. For purposes of this Section, "cause" shall mean (a) a material breach by
the Employee of the terms of this Agreement, including without limitation
failure by the Employee to perform a material portion of his duties hereunder
(not otherwise excused by the disability of the Employee) (b) criminal
misconduct or unethical conduct, whether or not in relation to the Company's
affairs or business, which reflects adversely upon Employee's honesty or
integrity in the performance of his duties as an employee of the Company, or
which otherwise is materially
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detrimental to the interests of the Company; (c) if the Employee is found guilty
or pleads nolo contendere to the commission of a crime classified as a felony
under any Federal, state or local law; and (d) commission by the Employee of an
act of gross incompetence in the course of his employment hereunder. The term
"cause" as used in the preceding sentence does not include the Employee's
erroneous judgment or judgments of a technical, scientific, financial, legal
and/or environmental nature which were, although erroneous, nevertheless
reasonable at the time and under the circumstances in which they were made. In
the event of termination under this Section, the Company shall pay to the
Employee his base salary under Section 3.1 through the date of termination
stated in the notice plus any incentive compensation awarded to the Employee
under the Incentive Compensation Plan but not yet paid, and the Employee shall,
if so requested by the Board of Directors, perform his duties under Article 1
through the date of termination stated in the notice.
7.3 Termination by the Company for Cause-Procedure
Notwithstanding anything to the contrary set forth herein, the Employee
shall not be deemed to have been terminated for cause without (i) delivery to
the Employee of written notice setting forth the reasons for the Company's
intention to terminate for cause, (ii) an opportunity for the Employee, together
with his counsel, to be heard before the Board of Directors and (iii) delivery
to the Employee of a notice of termination from the Board of Directors stating
that a majority of the members of the Board have determined in good faith that
the Employee was guilty of conduct that supports the termination for cause,
specifying the conduct which gave rise to such termination.
7.4 Termination by the Company or the Employee Without Cause
Either the Company or the Employee may terminate this Agreement for reasons
other than as set forth above in Section 7.1 or Section 7.2 and which are not
otherwise within Article 6 upon 30 days written notice by the Company or 90 days
written notice by the Employee. Upon such termination, the Company shall pay the
Employee his base salary under Section 3.1 through the date of termination
(provided, however, that the Employee continues to be available to perform the
services required under Section 1.1 through the date of termination), plus any
incentive compensation awarded to the Employee under the Incentive Compensation
Plan, but not yet paid, and any accrued vacation. In addition, upon the
Company's termination of the Employee without cause, the Company shall be
required to pay the Employee the severance benefit set forth in Section 4.2.
Nothing herein shall prohibit the Company from relieving the Employee of any or
all of his duties hereunder pending the expiration of the 30-day notice period.
7.5 Termination of Duties
Notwithstanding anything to the contrary set forth herein, at any time on
or after delivery of written notice to the Employee, the Company may relieve the
Employee of all of his duties and responsibilities hereunder and may relieve the
Employee of authority to act on behalf of, or legally bind, the Company;
provided, however, that any such action by the Company shall not
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relieve the Company of its obligation to pay to the Employee all compensation
and benefits otherwise provided for in this Agreement.
ARTICLE 8
MISCELLANEOUS
8.1 No Conflicting Agreements.
The Employee represents and warrants to the Company, that the Employee is
not under any obligation to any person or entity which is inconsistent with or
in conflict with any of the terms of this Agreement or which would prevent,
limit or impair in any way the Employee's performance of all the terms of this
Agreement and the Employee agrees not to enter into any agreement, either
written or oral, in conflict herewith.
8.2 Entire Agreement
This Agreement contains the entire understanding and agreement between the
Company and the Employee and cannot be amended, modified, or supplemented in any
respect except by subsequent written agreement entered into by both parties.
8.3 Successors of the Company
This Agreement shall inure to the benefit of and be binding upon the
Company, its successors and assigns, including, without limitation, any person,
firm, corporation or other entity which may acquire all or substantially all of
the Company's assets and business, or with or into which the Company may be
consolidated or merged, and this provision shall apply in the event of any
subsequent merger, consolidation or transfer. In every respect, this Agreement
shall inure to the benefit of and be binding upon the Employee, his heirs,
executors and personal representatives and, being personal in nature, shall not
be assignable by the Employee.
8.4 Effect of Waiver
The waiver by either party of a breach of any provision of this Agreement
shall not operate as or be construed as a waiver of any subsequent breach.
8.5 Notices
Any notice, request, demand or other communication in connection with this
Agreement must be in writing and shall be deemed to have been given and received
three days after a certified or registered letter containing such notice,
properly addressed, with postage prepaid, is deposited in the United States
mail; and, if given otherwise than by registered or certified mail, it shall not
be deemed to have been given until actually delivered to and received by the
party to whom it is addressed.
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A. Notice to the Company shall be given at its principal mailing
address, which at the time of execution of this Agreement is 0
Xxxxx Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx, 00000, Attention:
Chairman of the Board of Directors, or at such other address as
it may designate.
B. Notice to the Employee shall be given at his home address, which
at the time of execution of this Agreement is the address set
forth in the heading of this Agreement, or at such other address
as he may designate.
8.6 Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
8.7 Severability
If, in any jurisdiction, any provision of this Agreement or its application
to any party or circumstances is restricted, prohibited or unenforceable, such
provision shall, as to such jurisdiction, be ineffective only to the extent of
such restriction, prohibition or unenforceability without invalidating the
remaining provisions hereof and without affecting the validity or enforceability
of such provision in any other jurisdiction or its application to other parties
or circumstances.
8.8 Survival
Each of the terms and provision of this Agreement which are expressly or
impliedly so intended shall survive the termination of this Agreement.
8.9 Applicable Law
This Agreement shall be governed by and construed according to the laws of
the State of Connecticut.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first stated above.
EVERCEL, INC.
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
Chairman of the Board
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
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