EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement "), dated as of May 10, 2005,
between US ENERGY SYSTEMS, INC., a Delaware corporation (the "Company"), and
Xxxxxxxx X. Xxxxxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive has been employed by the Company pursuant to an
employment agreement dated as of May 10, 2000 (the "Prior Agreement") which
expires May 10, 2005.
WHEREAS, the Company desires to retain the Executive as an employee and
the Executive, to induce the Company to employ him, has agreed to forego certain
benefits afforded to him under the Prior Agreement including without limitation,
eliminating the Executive's right to payments equal to 2.9 times his base salary
in connection with, among other things, a Change of Control of the Company (as
defined in the Prior Agreement).
WHEREAS, the Company and the Executive now desire to enter into this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises, representations
and warranties set forth herein and for other good and valuable consideration,
it is hereby agreed as follows:
1. Position and Duties.
(a) Employment and Position. The Company hereby agrees to employ the
Executive as set forth in the next succeeding sentence, and the Executive hereby
accepts such employment, upon the terms and conditions set forth herein. The
Executive shall serve as Chief Executive Officer of the Company and shall have
such other duties consistent with such office, as from time to time may be
prescribed by the Board of Directors of the Company or a committee thereof
(collectively, the "Board").
(b) Duties. During the Term (as defined), the Executive shall
perform and discharge the duties that may be assigned to him by the Board from
time to time as provided in this Agreement, and the Executive shall devote his
reasonable best talents, efforts and abilities to the performance of his duties
hereunder. During the Term, the Executive shall devote such time as is necessary
to perform his duties and the Executive shall have no other employment
whatsoever that would prevent him from fulfilling his obligations hereunder.
2. Compensation.
(a) Base Salary. The Company shall pay the Executive for his
services hereunder a salary (the "Base Salary") at the annual rate of $180,000
which shall be payable in accordance with the customary payroll practices of the
Company but not less frequently than on a bi-weekly basis. The Base Salary shall
be reviewed periodically by the Board and shall be subject to such adjustments
as the Board, in its sole discretion, from time to time may determine.
(b) Withholding. All payments required to be made by the Company to
the Executive under this Agreement (whether under this Section 2 or otherwise)
shall be subject to withholding of employment and income taxes and other payroll
deductions in accordance with applicable tax requirements, the Company's
policies applicable to employees of the Company at the Executive's level and the
provisions of the Benefit Plans (as defined).
3. Benefits. (a) Benefit Plans. During the Term, the Company shall provide
to the Executive all fringe benefits currently provided, as well as those which
the Company may generally make available to its senior executives, including,
without limitation, benefits provided under the Company's pension and
profit-sharing plans (if any), health benefit plans (such as medical and
hospitalization coverage), and insurance plans (such as life, supplemental life,
disability, business travel, accident and accidental death and dismemberment)
(collectively, the "Benefit Plans"). Such plans shall during the Term provide
for at least the same level of benefits as the Benefit Plans provide at the date
of this Agreement.
(b) Automobiles. During the Term, the Company shall provide the
Executive with a Company-owned or leased automobile of a type to be agreed upon
by the Executive and the Company, or at the Executive's option, a car allowance
of $600 per month in lieu thereof. The Company will bear all insurance,
gasoline, registration, maintenance and repair costs incident to the Executive's
use of such Company-owned or leased or Executive-owned or leased automobile in
the performance of his duties hereunder.
(c) Vacations, sick leave and holidays. The Executive shall be
entitled to no less than four (4) weeks of paid vacation during each twelve
month period commencing with the beginning of the Term. In addition, the
Executive shall be entitled to paid sick leave and holidays in accordance with
the Company's usual policies for its senior executives.
(d) Company Life Insurance. The Company may obtain, at its sole cost
and expense, a policy on the Executive's life for which the Company shall be the
beneficiary and the Executive agrees to cooperate with the Company in obtaining
such insurance.
4. Reimbursement of Expenses. During the Term, the Company shall pay or
reimburse the Executive for all reasonable travel, entertainment and other
business expenses actually incurred or paid by the Executive in the performance
of his duties hereunder upon presentation to the chief accounting officer (or
such other person as may be designated by the Board) of expense statements or
vouchers or such other supporting information as the Company may reasonably
require of the Executive.
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5. Term: Termination. (a) Term. Subject to the provisions of this Section
5, the term of the Executive's employment under this Agreement shall commence on
the date hereof and shall end on the second anniversary hereof, provided that
the term of this Agreement shall automatically be renewed for successive
additional one-year periods at the end of such two-year period and of each such
one-year renewal period, unless either party elects not to renew by giving
written notice to the other at least 90 days before an annual renewal date. The
initial two -year term referred to herein, together with any renewal thereof, is
referred to in this Agreement as the "Term". The employment of the Executive may
be terminated prior to the expiration of the Term in the manner described in
this Section 5 solely on the following grounds:
(b) Termination by the Company for Cause. The Company shall have the
right to terminate the employment of the Executive prior to expiration of the
Term for Cause (as defined) by written notice to the Executive specifying the
particulars of the conduct of the Executive forming the basis for such
termination, as provided in this Agreement.
(c) Termination upon Death. The employment of the Executive
hereunder shall terminate immediately upon his death.
(d) The Company's Option upon Disability. If the Executive becomes
physically or mentally disabled ("Disability") during the Term so that he is
unable to perform the services required of him pursuant to this Agreement for a
period of six successive months, or an aggregate of six months in any
consecutive twelve-month period (the "Disability Period"), the Company shall
have the option, in its discretion, by giving written notice thereof, to
terminate the Executive's employment hereunder prior to expiration of the Term.
If the Company exercises such option, during the balance of the Term (but in no
event for more than 18 months from the date of the commencement of the
Disability Period), the Executive shall continue to receive his full
compensation and other benefits provided for herein net of any payments received
or to be received at any time under any disability policy or program provided or
paid for by the Company of which the Executive or his designee is a beneficiary
or recipient.
(e) Termination by the Executive by Voluntary Resignation. The
Executive shall have the right to terminate his employment hereunder prior to
expiration of the Term (a "Voluntary Resignation") by written notice given at
least 90 days prior to the Termination Date (as defined).
(f) Termination Date. Any notice of termination given by the Company
or the Executive pursuant to the provisions of this Agreement shall specify
therein the effective date of such termination (the "Termination Date").
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(g) Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(i) The "Affiliate" of any Person means any other Person
directly or indirectly through one or more intermediary Persons, controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" shall mean the power to direct the management and policies
of such Person, directly or indirectly, by or through equity ownership, agency
or otherwise, or pursuant to or in connection with an agreement, arrangement or
understanding (written or oral) with one or more other Persons by or through
equity ownership, agency or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
(ii) "Business Day" shall mean any day other than Saturday,
Sunday or any other day in which banking institutions in New York City are
authorized or obligated to close.
(iii) "Cause" shall mean (A) failure of the Executive to
perform the duties contemplated hereunder ("Non-Performance"), which failure
continues after a written demand for performance is given to the Executive by
the Board which identifies the manner in which the Board believes that the
Executive has not performed, provided that "Non-Performance" shall not include a
failure by the Executive to perform resulting from the Executive's incapacity
due to death or Disability (as defined), (B) the Executive is charged with or
indicted for or pleads guilty to (including a plea of nolo contendre) or is
convicted of a (x) felony or (y) misdemeanor involving moral turpitude,
financial misconduct, fraud or misrepresentation, (C) the Executive having
engaged in or engaging in, illegal or fraudulent conduct with respect to the
Company, its Affiliates, customers or other Person with which the Company or its
Affiliates have a business relationship that is material to the Company and its
subsidiaries, taken as a whole, (D) any act of disloyalty or breach of
responsibilities to the Company by the Executive which results in significant
harm to the Company or its Affiliates, (E) the Executive's violation of any one
or more of the covenants set forth in Sections 7 or 8 hereof, or (F) in
connection with any report, document, press release or other communication
(whether formal, informal, written, oral, electronic or in any other format
whatsoever) regarding the Company, its subsidiaries and Affiliates
(collectively, a "Communication") filed, furnished or otherwise made available
directly or indirectly to any governmental or quasi-governmental authority
(including without limitation, the Securities and Exchange Commission, the
National Association of Securities Dealers and any Affiliate thereof), the
Board, the stockholders of the Company or the general public, the Executive
makes, or allows to be made, a false or misleading statement or the Executive
omits or allows the omission in such Communication of a statement or other
information required to make the statements or other information in the
Communication not false or misleading.
(iv) "Person" means any individual, corporation, partnership,
limited liability company, association, joint-stock company, trust,
unincorporated organization, joint venture, court or government (or political
subdivision or agency thereof).
6. Obligations on Termination.
(a) Payment Obligations of the Company in case of Termination for
Death. Upon termination of the Executive's employment upon death, the Company
shall have no payment obligations to the Executive hereunder, except for any
unreimbursed expenses and unpaid accrued benefits.
(b) Payment Obligations of the Company in case of Termination for
Disability. Upon termination of the Executive's employment upon Disability, the
Executive shall receive the compensation provided for in Section 5(d) hereof
plus any unreimbursed expenses and unpaid accrued benefits.
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(d) Payment Obligations of the Company in case of Termination for
Voluntary Resignation. Upon termination of the Executive's employment as a
result of Voluntary Resignation, the Company shall have no payment obligations
to the Executive hereunder, except that (i) to the extent permitted by
applicable law, the Company shall continue to provide the Executive, at the
Company's cost with medical, dental and hospitalization insurance coverage for
the longest of (A) the 18-month period from the Termination Date; (B) the period
prescribed by applicable law; and (C) the period set forth in the applicable
Benefit Plans for the payment of any accrued and unpaid benefit, and (iii)
reimbursement of any unreimbursed expenses.
(e) Payment Obligations of the Company in case of Termination for
Cause. Upon termination of the Executive's employment as a result of Cause, the
Company shall have no payment obligations to the Executive hereunder, except for
the payment of any accrued and unpaid benefit, and reimbursement of any
unreimbursed expenses.
7. Trade Secrets; Confidentiality. The Executive recognizes and
acknowledges that, in connection with his employment with the Company, he has
had and will continue to have access to valuable trade secrets and confidential
information of the Company and its Affiliates including, but not limited to,
customer lists, business methods and processes, marketing, promotional, pricing,
financial information, technical information and data relating to clients,
employees and consultants (collectively, "Confidential Information") and that
such Confidential Information is being made available to the Executive only in
connection with the furtherance of his employment with the Company. The
Executive agrees that during the Term (and for the purposes of this Xxxxxxx 0,
Xxxx includes the period encompassed by the Prior Agreement) and for two years
thereafter, the Executive shall not disclose any Confidential Information to any
Person, except that disclosure of Confidential Information will be permitted:
(a) to the Company and its respective Affiliates and advisors; (b) if such
Confidential Information has previously become available to the public through
no fault of the Executive; (c) if required by law or any court or governmental
agency or body, provided that in any such case covered by this clause (c) the
Executive shall provide the Company, in advance of any such disclosure, with
prompt notice of such requirement(s) and shall cooperate fully with the Company
to the extent it may seek to limit such disclosure; (d) if necessary to
establish or assert the rights of the Executive hereunder; or (e) if expressly
consented to in writing by the Company.
8. Noncompetition and Nonsolicitation.
(a) Prohibited Activities. The Executive hereby covenants and agrees
that during the Term and for the respective periods set forth below immediately
following the termination by the Company or the Executive, as applicable, of his
employment under the respective circumstances set forth below he shall not,
without the prior written consent of the Board, at any time, directly or
indirectly, on his own behalf or on behalf of any Person:
(i) own, manage, operate, control, be employed by, participate
in, provide consulting services to, or be connected or associated in any manner
with the ownership, management, operation or control of any business which is in
competition with the Company (in the business in which the Company is
substantially engaged during the Term in the case of acts committed during the
Term or in the business in which the Company is substantially engaged at the
time of termination of Executive's Employment in the case of acts committed
after the Term) or any of its Affiliates in any state of the United States or in
any foreign country in which any of them are engaged in business during the Term
in the case of acts committed during the Term or in any state of the United
States or in any foreign country in which any of them are engaged in business at
the time of termination of Executive's employment in the case of acts committed
after the Term for as long as the Company continues to conduct such business.
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(ii) solicit or take any action to cause the solicitation of,
or recommend that, any supplier, client, customer, contractor, vendor, agent or
consultant of the Company or any of its Affiliates or other Person having
business relations with the Company, discontinue business or cease such
relationship, in whole or in part, with the Company or any of its Affiliates.
(iii) employ any Person employed by the Company or any of its
Affiliates at the time of, or during the 12 months preceding, such termination
of the Executive's employment with the Company.
(iv) solicit for employment (other than through unaffiliated
employment recruiting or placement firms or services who are not specifically
directed to solicit employees of the Company or provided with the names of any
such employees) any Person employed by the Company or any of its Affiliates at
the time of, or during the 12 months preceding such termination of the
Executive's employment with the Company, or otherwise encourage or entice any
such Person to leave such employment, provided, however, that nothing in this
Agreement shall preclude the executive from owning less than five percent of any
class of publicly traded equity of any entity
(b) Savings Provision. The Employee acknowledges and agrees that
(i) the restrictive covenants set forth in this Section 8 (the
"Restrictive Covenants") are reasonable and valid in geographical and temporal
scope and in all other respects, and
(ii) it is the intention of the parties hereto that the
Restrictive Covenants be enforceable to the fullest extent permitted by
applicable law. Therefore, if any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the remainder of
the Restrictive Covenants shall not thereby be affected and shall be given full
force and effect, without regard to the invalid or unenforceable parts and such
court shall have the power to modify such Restrictive Covenant, or any part
thereof, and, in its modified form, such Restrictive Covenants shall then be
valid and enforceable.
9. Equitable Relief. In the event of a breach or threatened breach by the
Executive of any of the covenants contained in this Agreement, the Company shall
be entitled to a temporary restraining order, a preliminary injunction and/or a
permanent injunction restraining the Executive from breaching or continuing to
breach any of said covenants. Nothing herein contained shall be construed as
prohibiting the Company from pursuing any other remedies that may be available
to it under this Agreement for such breach or threatened breach.
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10. Severability. Should any provision of this Agreement be held, by a
court of competent jurisdiction, to be invalid or unenforceable, such invalidity
or unenforceability shall not render the entire Agreement invalid or
unenforceable, and this Agreement and each individual provision hereof shall be
enforceable and valid to the fullest extent permitted by law.
11. Successors and Assigns.
(a) Executive's Successors and Assigns. This Agreement and all
rights under this Agreement are personal to the Executive and shall not be
assignable other than by will or the laws of descent. All of the Executive's
rights under the Agreement shall inure to the benefit of his heirs, personal
representatives, designees or other legal representatives, as the case may be.
(b) Company's Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Company and its successors and assigns.
Any Person succeeding to the business of the Company by merger, purchase,
consolidation or otherwise shall assume by contract or operation of law the
obligations of the Company under this Agreement.
12. Governing Law: Jurisdiction. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York. The parties
hereby agree to submit any and all disputes arising out of or in connection with
this Agreement to binding arbitration in accordance with the rules of the
American Arbitration Association. Such arbitration shall be held in New York
City. Each party shall select one arbitrator and the two such selected
arbitrators shall select a third arbitrator. Notwithstanding anything to the
contrary in this Section 12, such parties may seek in any court of competent
jurisdiction any injunctive relief pursuant to Section 9 of this Agreement.
Provided that Executive's position in such dispute has a reasonable basis, any
and all reasonable out of pocket costs incurred by the Executive in connection
with any dispute arising out of this Agreement shall be promptly paid to the
Executive by the Company upon presentation of appropriate documentation, up to
an aggregate amount equal to $180,000.
13. Notices. All notices, requests and demands given to or made upon the
respective parties hereto shall be deemed to have been given when received or
refused if mailed by registered or certified mail, postage prepaid, if delivered
by hand, or if delivered by Federal Express or similar overnight delivery
service, addressed to the parties at their addresses set forth below or to such
other addresses furnished by notice given in accordance with this Section 13:
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(a) if to the Company, to
Company Headquarters
Attention Chairman of the Nominating & Governance Committee
(b) if to the Executive, to
Xxxxxxxx Xxxxxxxxx
(most recent residential address
according to Company records)
14. Complete Understanding; Waiver of Rights and Claims. (a) Integration.
Other than any stock option agreements or restricted stock unit award agreements
between the Company and the Executive, this Agreement supersedes any prior
contracts, understandings, discussions and agreements relating to employment
between the Executive and the Company and constitutes the complete understanding
between the parties with respect to the subject matter hereof.
(b) Waiver of Rights and Claims under Prior Agreement. The Executive
hereby waives any and all claims or rights he has or may have had under or in
connection with the Prior Agreement, including without limitation, bonus or
similar plans referred to or contemplated therein, other than currently
outstanding stock option agreements and restricted stock unit award agreements.
15. Modification. This Agreement may be amended or waived if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company and the Executive or in the case of a waiver, by the party
against whom the waiver is to be effective. Any such waiver shall be effective
only to the extent specifically set forth in such writing. No failure or delay
by any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege.
16. Mutual Representations.
(a) Executive's Representations. The Executive represents and
warrants to the Company that the execution and delivery of this Agreement and
the fulfillment of the terms hereof
(i) will not constitute a default under or conflict with any
agreement or other instrument to which he is a party or by which he is bound,
and
(ii) do not require the consent of any Person.
(b) Company's Representations. The Company represents and warrants
to the Executive that this Agreement has been duly authorized, executed and
delivered by the Company and that the fulfillment of the terms hereof
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(i) will not constitute a default under or conflict with any
agreement or other instrument to which it is a party or by which it is bound and
(ii) do not require the consent of any Person.
(c) Joint Representations. Each party hereto warrants and represents
to the other that this Agreement constitutes the valid and binding obligation of
such party enforceable against such party in accordance with its terms.
(d) Indemnification. The parties agree to indemnify, defend and hold
the each other harmless for any claim, loss, damage, cost, expense including
without limitation, reasonable attorney fees arising out of or relating to a
breach of the foregoing representations in Section 16 (a), (b), and (c). The
Executive's obligation under this Section 16 shall be limited to an aggregate
amount of $180,000.
17. Headings. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
this Agreement.
18. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by the other party hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed in its corporate name by one of its officers duly authorized to enter
into and execute this Agreement, and the Executive has manually signed his name
hereto, all as of the day and year first above written.
US ENERGY SYSTEMS, INC.
By: ____________________________________
Name:
Title:
____________________________________
Xxxxxxxx X. Xxxxxxxxx
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