AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED
AND RESTATED
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT, effective as of October _____, 2006 (this
“Agreement”),
between Xxxxxx Xxxxxxx, an individual residing at _________ (the “CFO”),
and
Smart Energy Solutions, Inc., a Nevada corporation with an office currently
at
000 Xxxxxx Xxxxxx, Xxxxxxx, XX 00000 (the “Company”).
WITNESSETH:
WHEREAS,
the CFO serves as the Company’s Chief Financial Officer pursuant to an
Employment Agreement, dated May 24, 2005, between the CFO and the Company (the
“Original Employment Agreement”);
WHEREAS,
the Company and the CFO desire to amend and restate the Original Employment
Agreement as hereinafter set forth;
NOW,
THEREFORE, in consideration of the mutual agreements and covenants set forth
herein, the parties hereto agree as follows:
ARTICLE
I
POSITION;
DUTIES; TERM
1.1 Position.
The
Company hereby continues to employ the CFO as the Chief Financial Officer of
the
Company, which employment the CFO hereby accepts, all in the capacity and on
the
terms and conditions hereinafter set forth.
1.2 Duties.
(a)
During the Term (as defined below), the CFO shall be a full-time employee of
the
Company, all under and subject to the direction and control of the Chief
Executive Officer of the Company.
(b) In
his
capacity as Chief Financial Officer, the CFO shall be the senior financial
officer of the Company with principal responsibility for the Company’s
financial, financial reporting, and accounting functions, and he shall perform
such duties for the Company as are consistent with the foregoing.
(c)
The
services to be performed by the CFO shall be commensurate with the position
of
the CFO as the most senior financial officer of the Company. In this connection,
during the Term (i) the CFO shall not render services to or for any other
person, firm, corporation or business in this capacity and (ii) shall have
no
interest directly or indirectly in any other person, firm, corporation or
business whose business is related to or competitive with the business of the
Company; provided,
however,
the CFO
may own, directly or indirectly, solely as an investment, securities of any
entity which are traded on any national securities exchange or which are
admitted to quotation on The NASDAQ Stock Market Inc. if the CFO (a) is not
a
controlling person of, or a member of a group which controls, such entity and
(b) does not, directly or indirectly, own one percent or more of any class
of
securities of such entity. Notwithstanding the foregoing, so long as it does
not
interfere with his full time employment hereunder, the CFO may attend to outside
investments and serve as a director, trustee or officer of or otherwise
participate in charitable and civic organizations and serve as director of
corporations whose business is unrelated to the business of the Company and
continue to pursue his other business interests.
1.3 Term.
The
term of employment shall commence as of the date set forth above and shall
continue until this Agreement is terminated in accordance with the terms hereof
(the “Term”).
Notwithstanding anything contained herein to the contrary, the CFO can terminate
his employment hereunder at any time hereafter upon sending written notice
of
termination to the Company at least sixty (60) days prior to the
termination.
ARTICLE
II
SALARY;
BONUS; OPTIONS
2.1
Compensation
for Services Previously Rendered.
In
consideration for services rendered by the CFO prior to the date hereof, the
Company hereby issues to the CFO the following: (a) One Hundred Thousand
(100,000) shares of common stock of the Company pursuant to the Registration
Statement on Form S-8 filed by the Company with the Securities and Exchange
Commission on January 12, 2006; and (b) Fifty Thousand (50,000) stock options,
each of which shall give the CFO the right to purchase one (1) share of the
common stock of the Company for $0.30. Such stock options shall vest and be
exercisable as of the date hereof.
2.2 Base
Compensation.
(a)
Base
Salary.
The
base salary for each twelve month period of the Term (the “Base
Salary”)
to be
paid by the Company to the CFO shall be One Hundred Forty Five Thousand Dollars
($145,000), payable in equal bi-monthly installments, or in such other manner
as
the parties shall mutually agree, subject to withholding for applicable taxes.
The Base Salary shall be subject to an annual increase at the discretion of
the
Board.
(b)
Stock
Options.
Pursuant to the Original Employment Agreement, the Company had granted to the
CFO 1,000,000 stock options, each of which gives the CFO the right to purchase
one (1) share of the common stock of the Company for $0.05 (each, a “Stock
Option”), which Stock Options were to vest pro ratably every three (3) months
over a three (3) year period commencing on the effective date of the Original
Agreement. Such Stock Options shall continue to vest hereunder. The vested
options shall be exercisable until the earlier of 5 years after vesting or
365
days after termination of CFO’s employment with the Company. No additional
vesting of options shall occur after the CFO’s death, disability, or cessation
of employment with the Company for any reason or no reason.
If
the
company has a Change of Control (as defined below), all remaining Options will
automatically vest on the effective date of the Change.
2
2.3 Bonus.
(a)
In
addition to the base compensation described in Section 2.2 hereof, in the sole
discretion of the Company, the CFO will be eligible for a bonus (the
“Bonus”)
of up
to Fifty Thousand Dollars ($50,000) for each twelve month period of the Term,
payable in the sole discretion of the Company in cash and/ or by the issuance
of
shares of the Company’s common stock based on the market value of such shares at
the time of their issuance. Subject to the limitations set forth in Section
2.3(c) hereof, the Bonus will be based on and be conditional upon meeting
certain performance criteria which will be developed by the Company’s Chief
Executive Officer and approved by the Company’s Board of Directors and/ or the
Company’s compensation committee, as follows: (i) up to $35,000 of the Bonus
will be based on the same performance criteria applicable to the determination
of the bonus to be received by Xxxxxx X. Xxxxxxx (the Company’s Chief Technology
Officer), and Xxxx Xxxxxx (the Company’s Chief Executive Officer) under their
respective employment agreements; and (ii) up to $15,000 of the Bonus will
be
based on performance criteria developed specifically for the CFO.
(b)
In
addition to the Base Salary and the Bonus, the CFO shall be entitled to an
additional bonus (the “Additional Bonus”) as follows: for each $1,000,000 in
revenues above $1,200,000 earned by the Company during the fiscal year ended
December 31, 2006, the Company shall pay to the CFO the following: (a) Fifty
Thousand (50,000) stock options, each of which shall give the CFO the right
to
purchase one (1) share of the common stock of the Company for $0.45; (b) a
cash
payment equal to Ten Thousand and 00/100 ($10,000) Dollars; and (c) a cash
payment equal to Two and a Half (2.5%) Percent of the Company’s EBIT for the
fiscal year ending December 31, 2006. The Additional Bonus is applicable only
for the fiscal year ended December 31, 2006 and shall not be paid with respect
to any subsequent fiscal years, unless the Company’s Board of Directors
expressly provides otherwise in writing. The Additional Bonus shall be subject
to the limitations set forth in Section 2.3(c) hereof.
(c) Notwithstanding
Sections 2.3(a) and 2.3(b) hereof:
(i)
No
cash payments contemplated to be paid as Bonus or Additional Bonus hereunder
will be paid if the Company is not profitable during the applicable fiscal
year
with respect to which the Bonus or Additional Bonus is to be paid.
(iii)
In
lieu of any cash payment payable as Bonus or Additional Bonus hereunder, the
CFO
will be granted stock options entitling the CFO to purchase shares of the
Company’s common stock at $0.30 per share if and to the extent that the sum of
the value of the Bonus and Additional Bonus payable hereunder and all
compensation paid to the CFO, Xxxxxx X. Xxxxxxx (the Company’s Chief Technology
Officer), and Xxxx Xxxxxx (the Company’s Chief Executive Officer) exceeds fifty
percent (50%) of the Company’s EBIT for the applicable fiscal year with respect
to which the Bonus or Additional Bonus is to be paid.
(d)
Any
Bonus
or Additional Bonus due hereunder will be paid promptly after audited financial
statements for the applicable fiscal year have been prepared by the Company’s
auditors. All financial terms used in this Section 2.3, including without
limitation revenues, gross sales, profit, and EBIT shall have the meaning given
to such terms in such audited financial statements. The financial figures and
other information provided in the Company’s audited financial statements shall
be conclusive and binding upon the parties hereto.
3
ARTICLE
III
BENEFITS
3.1 Business
Expenses The
Company, upon presentation by the CFO of appropriate documentation, shall
reimburse the CFO for all reasonable and necessary business expenses incurred
by
the CFO in connection with the performance of his duties under this Agreement,
including reasonable accommodation expenses during travel required in connection
with the performance of the CFO’s duties. Such reimbursement shall be paid to
the CFO within five (5) business days thereafter.
3.2 Directors’
and Officers’ Liability Insurance.
The CFO
shall be covered by the directors’ and officers’ insurance policy to be obtained
by the Company. The Company agrees to defend the CFO from and against any and
all lawsuits initiated against the Company and/or the CFO
3.3 Additional
Benefits.
The CFO
shall be entitled to participate in any pension or profit sharing plans, group
health, accident or life insurance plans, group medical and hospitalization
plan, and other similar benefits as may be available to the executive officers
of the Company. The CFO shall assist the Company in adopting the proper plans
for the Company.
ARTICLE
IV
TERMINATION
4.1
Termination
without Cause.
The
CFO's employment hereunder may be terminated by the Company without Cause at
any
time and without notice if the Company pays the CFO under normal payroll
practices for a one (1) year period.
4.2
Termination
with Cause.
The
CFO's employment hereunder may be terminated by the Company for Cause (hereafter
defined) at any time upon notice from the Company to the CFO. For purposes
hereof, “Cause” shall mean any one of the following: (i) willful and continuing
disregard of his job responsibilities or material breach by the CFO of this
Agreement, which continues for 20 days after delivery to the CFO of notice
thereof or (ii) fraud, embezzlement, conviction of a felony or serious crime,
ethical violation, or other serious misconduct. If the CFO’s employment is
terminated by the Company for Cause or by the CFO for any reason, including
without limitation, the CFO’s death or disability, the Company shall pay the CFO
or his heirs or personal representatives the Base Salary accrued through the
date of termination.
4
4.3
Termination
by the CFO following a Change in Control.
(a)
The
CFO
may voluntarily and immediately terminate his employment with the Company if
after a Change of Control (hereafter defined), (i) the CFO suffers a material
reduction in his authority or areas of responsibility, and (ii) the CFO’s annual
base salary is reduced by an amount greater than five percent (5%) of his annual
base salary prior to such reduction.
(b)
“Change
of Control” shall mean the occurrence of any of the following
events:
(i) The
acquisition, other than from the Company (which term for purposes of this
Subsection (i) includes any successor corporation), or any subsidiary thereof
by
any person or group (as such terms are used for the purposes of Sections 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
0000 Xxx) of securities with voting power equal to fifty percent (50%) or more
of the combined voting power of the Company’s then outstanding voting
securities;
(ii) Approval
by the Company’s stockholders of (a) a merger or consolidation of the
Company with or into another corporation if the stockholders of the Company,
immediately before such merger or consolidation do not, immediately after such
merger or consolidation, own, directly or indirectly, more than fifty percent
(50%) of the combined voting power of the then outstanding voting securities
of
the corporation resulting from such merger or consolidation in substantially
the
same proportion as their ownership of the combined voting power of the voting
securities of the Company outstanding immediately before such merger or
consolidation or (b) dissolution of the Company or an agreement for the
sale or other disposition of all or substantially all of the assets of the
Company.
(iii)
Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur solely because
fifty percent (50%) or more of the combined voting power of the Company’s then
outstanding securities is acquired by (A) a trustee or other fiduciary
holding securities under one or more employee benefit plans maintained by the
Company or any of its subsidiaries or (B) any corporation which,
immediately prior to such acquisition, is owned directly or indirectly by the
stockholders of the Company in the same proportion as their ownership of stock
in the Company immediately prior to such acquisition.
(iv)
For
purposes of the foregoing definition, the Company’s stockholders are deemed to
be the indirect owners of any assets, including stock interests, held by the
Company or any subsidiary thereof.
5
ARTICLE
V
REPRESENTATION;
NON-COMPETITION; CONFIDENTIALITY
5.1 CFO
Representation.
The CFO
represents that the CFO’s execution of this Agreement and the performance of his
duties required hereunder will neither be a breach of any other employment
or
other agreement nor a breach of any non-competition or similar
agreement.
5.2 Non-Competition.
(a) The
CFO agrees that during the Term and for the period of one (1) year thereafter,
he will not engage, directly or directly, either as principal, agent,
consultant, proprietor, creditor, stockholder, director, officer or employee,
or
participate in the ownership, management, operation or control of any business
which directly or indirectly competes with the business of the Company. The
CFO
acknowledges and agrees that the current market for the Company's business
extends throughout the world and that it is therefore reasonable to prohibit
the
CFO from competing with the Company anywhere in such territory. This Section
shall not apply to the CFO’s ownership of less than five percent (5%) of the
capital stock of a company having a class of capital stock which is traded
on
any national stock exchange or on the over-the-counter market.
(b) During
the Term and for the period of one (1) year thereafter, the CFO agrees that
he
will not, directly or indirectly, (i) solicit, divert or recruit or encourage
any of the employees of the Company, or any person who was an employee of the
Company during the Term, to leave the employ of the Company or terminate or
alter their contractual relationship in a way that is adverse to the Company's
interests, (ii) solicit or divert business from the Company, or assist any
person or entity in doing so or attempting to do so or (iii) cause or seek
to
cause any person or entity to refrain from dealing or doing business with the
Company or assist any person or entity in doing so or attempting to do
so.
5.3 Confidential
Information.
(a) The
CFO agrees that he shall hold in strict confidence and shall not at any time
during or after his employment with the Company, directly or indirectly, (i)
reveal, report, publicize, disclose, or transfer any Confidential Information
(as described below) or any part thereof to any person or entity, (ii) use
any
of the Confidential Information or any part thereof for any purpose other than
in the course of his duties on behalf of the Company, or (iii) assist any person
or entity other than the Company to secure any benefit from the Confidential
Information or any part thereof. All Confidential Information (regardless of
the
medium retained) and all abstracts, summaries or writings based upon or
reflecting any Confidential Information in the CFO's possession shall be
delivered by the CFO to the Company upon request therefor by the Company or
automatically upon the expiration of the Term or termination of this
Agreement.
(b) For
purposes of this Agreement, "Confidential
Information"
shall
mean any information relating to the business, operations, affairs, assets
or
condition (financial or otherwise) of the Company which is not generally known
by non-company personnel, or is proprietary or in any way constitutes a trade
secret (regardless of the medium in which information is maintained) which
the
CFO develops or which the CFO obtains knowledge of or access to through or
as a
result of the CFO’s relationship with the Company. Confidential Information
specifically includes, without limitation, business and marketing plans,
financings, cost and pricing information, supplier information, all source
code,
system and user documentation, and other technical documentation pertaining
to
the hardware and software programs of the Company, including any proposed design
and specifications for future products and products in development, and all
other technical and business information considered confidential by the Company.
Confidential Information shall not include any information that is generally
publicly available or otherwise in the public domain other than as a result
of a
breach by the CFO of his obligations hereunder. For purposes of this Agreement,
information shall not be deemed Confidential Information if (i) such information
is available from public sources, (ii) such information is received from a
third
party not under an obligation to keep such information confidential, or (iii)
the CFO can conclusively demonstrate that such information had been
independently developed by the CFO.
6
5.4 Remedies. The
CFO
agrees and acknowledges that the foregoing restrictions and the duration and
the
territorial scope thereof as set forth in this Sections 5.2 and 5.3 are under
all of the circumstances reasonable and necessary for the protection of the
Company and its business. In the event that the CFO shall breach any of the
provisions of Sections 5.2 or 5.3, in addition to and without limiting or
waiving any other remedies available to the Company, at law or in equity, the
Company shall be entitled to immediate injunctive relief in any court, domestic
or foreign, having the capacity to grant such relief, to restrain any such
breach or threatened breach and to enforce the provision of this Agreement.
ARTICLE
VI
MISCELLANEOUS
6.1 Entire
Agreement.
This
Agreement constitutes the entire understanding between the Company and the
CFO
with respect to the subject matter hereof and supersedes any and all previous
agreements or understandings between the CFO and the Company concerning the
subject matter hereof, including without limitation the Original Employment
Agreement, all of which are merged herein. The CFO hereby acknowledges and
agrees that he has received all compensation and benefits whatsoever owed to
him
by the Company under the Original Employment Agreement for all services rendered
prior to the date hereof.
6.2 Successors.
This
Agreement shall be binding upon and inure to the benefit of the CFO and his
heirs and personal representatives, and the Company and its successors and
assigns.
6.3 Notices.
All
notices and other communications required or permitted hereunder shall be
delivered personally, sent via facsimile, certified or registered mail, return
receipt requested, or next day express mail or overnight, nationally recognized
courier, postage prepaid with proof of receipt, to the address or telephone
number (in the case of facsimile) set forth above. Such addresses and/or
telephone numbers may be changed by notice given in the manner provided herein.
Any such notice shall be deemed given (i) when delivered if delivered
personally, (ii) the day after deposit with the express or courier service
when
sent by next day express mail or courier, (iii) five (5) days after deposit
with
the postal service when sent by certified or registered mail, or (iv) when
sent
over a facsimile system with answer back response set forth on the sender's
copy
of the document.
7
6.4 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New Jersey, without regard to choice of law principles.
6.5 Amendment
and Modification.
This
Agreement may be amended, modified or supplemented only by written agreement
executed by the Company and the CFO.
6.6 Headings.
The
section headings herein are inserted for the convenience of the parties only
and
are not to be construed as part of the terms of this Agreement or to be taken
into account in the construction or interpretation of this
Agreement.
6.7 Counterparts.
This
Agreement may be executed in counterparts and by facsimile, each of which shall
be deemed to be an original but both of which together will constitute one
and
the same instrument.
IN
WITNESS WHEREOF, the parties have entered into this Agreement as of the day
and
year first above written.
| |
|
|
| By: | /s/ Xxxx Xxxxxx | |
|
|
Name: Xxxx Xxxxxx |
|
| Title: Chief Executive Officer | ||
| /s/ Xxxxxx Xxxxxxx | ||
|
Xxxxxx Xxxxxxx |
||
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