EXHIBIT 10.21
EMPLOYMENT AGREEMENT
AGREEMENT made as of the Eighteenth day of September, 2001 by and among
Xxxxx-Xxxx (Xxxxxxx) Quah ("Employee") and Ocean Power Corporation, a Delaware
corporation (the "Company").
PREAMBLE
The Company recognizes Employee's potential contribution to the growth and
success of the Company and desires to assure the Company of Employee's
employment in the capacity of Chief Technology Officer/Senior Vice President -
Asia, for the Company and to therefore compensate him. Employee wants to be
employed by the Company and to commit himself to serve the Company on the terms
provided herein.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties, the parties agree as follows:
ARTICLE 1
TERM OF EMPLOYMENT
Section 1.01. SPECIFIED TERM. The Company hereby employs Employee and
Employee accepts employment with the Company for a period of five (5) years
beginning on October 15, 2001, and ending on October 14, 2006, on the terms and
conditions herein set forth.
Section 1.02. EARLIER TERMINATION. This Agreement may be terminated
earlier as provided in Article 4 below.
Section 1.03. "EMPLOYMENT TERM" DEFINED. As used herein, the phrase
"employment term" refers to the entire period of employment of Employee by the
Company hereunder, whether for the period provided above, or whether terminated
earlier as hereinafter provided, or extended by mutual agreement between the
Company and Employee.
ARTICLE 2
DUTIES AND OBLIGATIONS OF EMPLOYEE
Section 2.01. GENERAL DUTIES. Employee shall serve as Chief Technology
Officer/Senior Vice President - sdia for the Company In such capacity, Employee
shall do and perform all services, acts or things necessary or advisable and
fulfill the duties of the position and to manage and conduct the business of the
Company, including build up of a technology portfolio in support of the
Company's power and water projects, and the mapping out and execution of a
Business Plan for the growth of the Company in Asia, initially focused on
opportunities in the ASEAN region and East Asia. The plan will encompass
investment in, and/or joint ventures and partnerships with, local companies in
the regions to manufacture and/or market components or systems for power and
water projects, contracted by the Company (and/or its subsidiaries). The plan
also calls for securing equity investments in Ocean Power (and/or its Asian
subsidiaries) from companies or quasi-governmental agencies in Asia. Additional
duties shall include, but not be limited to: assist in defining the vision of
the Company, with the goal of establishing leadership in the field of integrated
water and power systems; provide initiative in creating the business plan, and
in setting the course for the company; help in defining the philosophy and
mission, with responsibility for turning goals into operational reality;
coordinate, or oversee coordination of the work of the sub-units and sister
subsidiaries; ensure that the President is informed of operations; represent the
Company dealing with customers and with other persons and entities; and
represent the Company in public as required by the President.
Section 2.02. BEST EFFORTS COVENANT. Employee will, to the best of his/her
ability, devote his/her full professional and business time and best efforts to
the performance of his/her duties for the Company and its subsidiaries and
affiliates.
Section 2.03 COMPETITIVE ACTIVITIES. During the employment term, Employee
shall not, directly or indirectly, either as an employee, employer, consultant,
agent, principal, partner, stockholder, corporate officer, director or in any
other individual or representative capacity, engage or participate in any
business that is in competition in any manner whatsoever with the business of
the Company. In furtherance, and not in limitation of the generality of the
preceding sentence, Employee shall not, for himself/herself or on behalf of any
person or organization, directly or indirectly, compete with the Company, in the
development, manufacture, sale, solicitation or servicing of any then existing
product or process of, or service or business engaged in, by the Company, or any
other product or process of, or service or business engaged in, or under
development by, the Company. The provisions of this Section 2.04 shall not be
construed as preventing Employee from (a) investing his/her personal assets in
businesses which do not compete with the Company in such form or manner as will
not require any services on the part of the Employee in the operation or the
affairs of the companies in which such investments are made and in which his/her
participation is solely that of an investor, (b) purchasing securities in any
corporation whose securities are regularly traded provided that such purchase
shall not result in him or her collectively owning beneficially at any time five
(5%) percent or more of the equity securities of any corporation engaged in a
business competitive to that of the Company, and (c) participating in
conferences, preparing or publishing papers or books or teaching so long as the
CEO approves of such activities prior to the Employee's engaging in them. Prior
to commencing any activity described in clause (c) above, the Employee shall
inform the CEO of the Company, in writing of any such activity.
Page 2
Section 2.04. EMPLOYEE NONSOLICITATION. During the Employment Term and for
12 months after Employees voluntary termination of employment the Employee will
not, either personally or by his agent or by letters, circulars or
advertisements, and whether for himself or on behalf of any other person,
company (other than Ocean Power Corporation), firm or other entity, (a) solicit
or employ any employee of the Company; or (b) seek to persuade any employee of
the Company to discontinue his or her status or employment with the Company or
to become employed in a business or activities likely to be competitive with the
business of the Company
Section 2.05. UNIQUENESS OF EMPLOYEE'S SERVICES: Equitable Relief.
Employee hereby represents and agrees that the services to be performed under
the terms of this contract are of a special, unique, unusual, extraordinary and
intellectual character that gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in an action at law.
Employee, therefore, expressly agrees that the Company, in addition to any other
rights or remedies that the Company may possess shall be entitled to injunctive
and other equitable relief to prevent or remedy a breach of this contract by
Employee.
Section 2.06. CONFIDENTIAL INFORMATION.
(a) Employee recognizes and acknowledges that the Company's trade secrets
and proprietary knowledge, information, processes and know-how and property
belonging to third parties which the Company shall be under obligation to
protect and keep confidential ("Customer Confidential Information"), as they may
exist from time to time ("Confidential Information"), are valuable, special and
unique assets of the Company's business, access to and knowledge of which are
essential to the performance of Employee's duties hereunder. Accordingly,
Employee agrees to execute and deliver concurrently with the execution and
delivery of this Agreement, an Employee's Agreement Re: Inventions and
Confidential Information, substantially in the form attached hereto as Exhibit
A.
(b) Employee shall assure that no Confidential Information is removed from
the premises of the Company, except as required in his/her normal course of
employment by the Company. Employee shall use his/her best efforts to cause all
persons or entities to whom any Confidential Information shall be disclosed by
him or her hereunder to observe the terms and conditions set forth herein as
though each such person or entity was bound hereby.
(c) Employee acknowledges and agrees that during the course of and in
connection with his/her employment with the Company, he/she will have access to
a third person's Customer Confidential Information. Employee agrees that if
requested by any such third person he/she will execute and deliver all documents
and agreements that may be reasonably requested by such third person, and
approved by the Company as necessary to protect such third person's rights in
Page 3
and to its Customer Confidential Information,
ARTICLE 3
COMPENSATION
Section 3.01. ANNUAL SALARY: ADJUSTMENT:
(a) For all services rendered under this Agreement, subject to any
adjustment as provided in this Section 3.01, the Company shall pay an annual
salary of two hundred and forty thousand dollars ($240,000.00) payable in equal
weekly installments.
(b) Commencing with January, 2003, and each January thereafter during the
term of this Agreement, the annual salary in effect on December 31 of the
immediately preceding year shall be adjusted for any change in the Consumer
Price Index from the then last preceding January through the then last preceding
December. As used in this Agreement, "Consumer Price Index" shall mean the
United States Department of Labor's Bureau of Labor Statistics' Consumer Price
Index, All Urban Consumers, All Items, San Francisco - Oakland - San Xxxx
(1982-1984 = 100), or the successor of such index. If such index is discontinued
or revised, the index designated as the successor or substitute index by the
government of the United States shall be substituted. If such index is changed
so that a year other than 1967 shall equal 100, then such index shall be
converted in accordance with the conversion factors published by the United
States Bureau of Labor Statistics.
(c) In addition to any adjustments to the annual salary pursuant to
sub-section 3.01(b), there shall be an annual review for merit by the Company's
Board of Directors or delegate thereof, at which time the employee will be
considered for an increase in the annual salary and/or bonus as may be deemed
appropriate to reflect the value of the services of the Employee. Employee's
salary increase and bonus shall be a combined minimum of twenty percent (20%)
and a maximum of forty percent (40%) of Employees base annual salary, and shall
be paid in a combination of cash and/or stock, as Employee and the Company shall
agree.
Section 3.02 EMPLOYEE'S BENEFITS.
(a) The Employee shall be entitled to participate in or receive benefits
under any employee benefit plan or arrangement made available by the Company in
the future to its officers and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements, as such may be adopted, amended, superseded or
terminated from time to time. Without in any way limiting the foregoing, such
benefits presently include the following:
Page 4
(i) The Company, in order to retain its valued employees, will
establish an Internal Revenue Code Section 401(k) plan. Contributions of the
participating employees, including Employee, may be matched by contributions
from the Company at the discretion of the Board of Directors of the Company,
provided, however, that the Company does not intend to make any such
contributions until its operations become profitable.
(ii) Employee shall be entitled to all paid legal holidays made
available by the Company such holidays to include, without limitation, New Years
Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day.
(iii) In addition to such paid holidays, Employee shall be entitled
to twenty (20) days of personal time off each calendar year to be used by the
Employee for vacation or sickness, during which time Employee's compensation
shall be paid in full. Vacation time not taken in the calendar year will be
accumulated and added to the vacation time for subsequent years; provided,
however, Employee shall not take vacations in excess of ten (10) consecutive
business days without at least four (4) weeks' prior notice to the Chairman and
the President of the Company, and provided further that employee shall be
permitted to accrue more than 20 unused vacation days.
(iv) The Company shall provide Employee fully-paid insurance benefits
as described in Exhibit B hereto.
(b) Nothing paid to the Employee under any plan or arrangement presently
in effect or made available in the future shall be deemed to be in lieu of the
annual salary payable to Employee pursuant to Section 3.01 hereinabove. Any
payments or benefits payable to the Employee hereunder in respect of any
calendar year during which the Employee is employed by the Company for less than
the entire such year shall, unless otherwise provided in the applicable plan or
arrangement, be prorated in accordance with the number of days in such calendar
year during which he/she is so employed.
(c) In recognition of the necessity of the use of an automobile to the
efficient and expeditious performance of Employee's services, duties and
obligations to and on behalf of the Company, the Company shall bear the expense
of fuel and maintenance of the Employee's car in the form of reimbursement of
$0.31 per mile for miles driven for and documented to the Company
Section 3.03 REIMBURSEMENT OF BUSINESS EXPENSES. The Company shall
promptly reimburse Employee for all reasonable business expenses incurred by
Employee in promoting the business of the Company, including expenditures for
entertainment, gifts and travel. Each such expenditure shall be reimbursable
only if it is of a nature qualifying it as a proper deduction on the federal and
state income tax return of the Company. Each such expenditure shall be
reimbursable only if Employee furnishes to the Company adequate records and
Page 5
other documentary evidence required by federal and state statutes and
regulations issued by the appropriate taxing authorities for the substantiation
of that expenditure as an income tax deduction.
ARTICLE 4
TERMINATION OF EMPLOYMENT
Section 4.01. TERMINATION FOR CAUSE. The Company reserves the right to
terminate this Agreement and Employee's employment if Employee (1) willfully
breaches or habitually neglects the duties which he/she is required to perform
under the terms of this Agreement; or (2) commits such acts of dishonesty,
fraud, misrepresentation, abuse of alcohol or controlled substances, or other
acts of moral turpitude, as would prevent the effective performance of his/her
duties. The Company may in its opinion terminate this Agreement for the reasons
stated in this section by giving written notice of termination to Employee
without prejudice to any other remedy to which the Company may be entitled,
either at law, in equity or under this Agreement. The notice of termination
required by this section shall specify the ground for the termination and shall
be supported by a statement of relevant facts. Termination under this section
shall be considered "for cause" for the purposes of this Agreement.
Section 4.02. TERMINATION WITHOUT CAUSE. The employment of Employee under
this Agreement shall cease and this Agreement, other than the provisions of
Section 2.06, shall terminate:
(a) Upon the death of Employee;
(b) If during the term of this Agreement, Employee shall sustain a
Disability, as hereinafter defined, Employee shall be entitled to receive only
the benefits, if any, as may be provided by any insurance to which he/she may
become entitled to pursuant to Section 3.02. "Disability" as used herein means
the complete and total disability of Employee resulting from, injury, sickness,
disease or infirmity, whereby Employee, for a period of sixty (60) consecutive
days, is unable to perform his/her usual services for the Company;
(c) The Company may terminate the Employee's employment hereunder at any
time without breaching this agreement. If the Company shall terminate Employee's
employment without cause (other than for the reasons set forth in Sections
4.02(a) or 4.02(b) hereof), the Company shall continue to pay to the Employee,
in accordance with its regular payroll practice, his Annual Salary (as set forth
in Section 3.01(a), as such may have been adjusted from time to time) for a
period of three months from the termination date or until the scheduled
expiration of this Agreement, whichever may occur first (the "Severance
Page 6
Payments"); provided however, that as a condition precedent to his receipt of
the Severance Payments, Employee shall be required to provide a binding general
release in a form suitable to the Company of any and all claims which the
Employee has, had or may have against the Company. Notwithstanding the
provisions above, the Company shall not terminate Employee without cause during
the first twelve (12) months of his employment.
Section 4.03. TERMINATION FOR GOOD REASON. The Employee may terminate this
Agreement for Good Reason in the event that the Company fails to grant the
Option as provided in Section 5.01 below. In the event that the Employee
terminates this Agreement for Good Reason, the Company's sole obligation shall
be to pay to the Employee his regular salary through the termination date.
ARTICLE 5
MISCELLANEOUS
Section 5.01. OPTION GRANT. Effective as of the effective date of the
Company's 2001 Equity Incentive Plan, the Company shall grant to the Eexecutive
a non-qualified stock option (the "Option") to purchase 500,000 shares
("Shares") of the Company's common stock, par value $0.01 per share. The Option
shall be granted subject to the following terms and conditions.
(a) The Option shall be granted under and shall be subject to the
Company's 2001 Equity Incentive Plan;
(b) The exercise price per Share shall be $1.50;
(c) Unless Executive is terminated for cause pursuant to Section 4.01 or
voluntarily terminates his employment with the Company, the Option shall become
vested and exercisable in three cumulative annual installments as follows:
(i) The Option shall become vested and exercisable with respect to
100,000 Shares on October 15, 2002;
(ii) The Option shall become vested and exercisable with respect to
200,000 Shares on October 15, 2003;
(iii) The Option shall become vested and exercisable with respect to
200,000 Shares on October 15, 2004;
(d) The Option shall remain exercisable until January 1, 2112, subject to
the Company's 2001 Equity Incentive Plan in the event of termination of
employment prior to January 1, 2112; and
Page 7
(e) The Option shall be evidenced by a written Stock Option Agreement
containing the terms set forth in this Section 5.01 and containing additional
terms substantially comparable to those provided to other senior executives of
the Company.
Section 5.02. ASSIGNMENT. This Agreement may not be assigned by any party
hereto, provided that the Company may assign this Agreement: (a) to an affiliate
so long as such affiliate assumes the Company's obligations hereunder, provided
that no such assignment shall discharge the Company of its obligations herein,
or (b) in connection with a merger or consolidation involving the Company or a
sale of substantially all its assets to the surviving corporation or purchaser
as the case may be, so long as such assignee assumes the Company's obligations
thereunder.
Section 5.03. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of California.
Section 5.04. INTERPRETATION. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions in this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
Section 5.05. NOTICE. Any notice required or permitted to be given
hereunder shall be effective when received and shall be sufficient if in writing
and if personally delivered or sent by certified mail, return receipt requested,
to the party to receive such notice at its address set forth at the end of this
Agreement or at such other address as a party may by notice specify to the
other.
Section 5.06. AMENDMENT AND WAIVER. This Agreement may not be amended,
supplemented or waived except in writing, signed by the party against which
amendment or waiver is to be enforced. The waiver by any party of a breach of
any provision of this Agreement shall not operate to, or be construed as a
waiver of, any breach of that provision nor as a waiver of any breach of another
provision.
Section 5.07. SURVIVAL OF RIGHTS AND OBLIGATIONS. All rights and
obligations of the Employee or the Company arising during the term of this
Agreement shall continue to have full force and effect after the termination of
this Agreement unless otherwise provided herein.
Page 8
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as
of the date first above written.
OCEAN POWER CORPORATION EMPLOYEE:
BY:______________________________ BY:__________________________
XXXXXX X. XXXXXX, PRESIDENT XXXXX-XXXX (XXXXXXX) QUAH
__________________________
(Address)
__________________________
__________________________
Page 9
