EXHIBIT 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this "Agreement") is made effective as
of September 28, 2001 (the "Effective Date"), by and between American Energy
Power Systems Inc., a Nevada corporation (the "Company") and Xxxxxxx Xxxxxxxx
("Executive").
The parties agree as follows:
1. Employment. Company hereby employs Executive, and Executive hereby
accepts such employment, upon the terms and conditions set forth herein.
2. Duties.
2.1 Position. Executive is employed as President and shall have the
duties and responsibilities assigned by Company's Board of Directors ("Board of
Directors") both upon initial hire and as may be reasonably assigned from time
to time. Executive shall perform faithfully and diligently all duties assigned
to Executive. Company reserves the right to modify Executive's position and
duties at any time in its sole and absolute discretion, provided that the duties
assigned are consistent with the position of a senior executive and that
Executive continues to report to the Board of Directors.
2.2 Best Efforts/Full-time. Executive will expend Executive's best
efforts on behalf of Company, and will abide by all policies and decisions made
by Company, as well as all applicable federal, state and local laws, regulations
or ordinances. Executive will act in the best interest of Company at all times.
Executive shall devote Executive's full business time and efforts to the
performance of Executive's assigned duties for Company, unless Executive
notifies the Board of Directors in advance of Executive's intent to engage in
other paid work and receives the Board of Directors' express written consent to
do so.
2.3 Work Location. Executive's principal place of work shall be
located in Sacramento County, California, or such other location as the parties
may agree upon from time to time.
3. Term.
3.1 Initial Term. The employment relationship pursuant to this
Agreement shall be for an initial term commencing on the Effective Date set
forth above and continuing for a period of two (2) years following such date
("Initial Term"), unless sooner terminated in accordance with section 7 below.
3.2 Renewal. On completion of the Initial Term specified in subsection
3.1 above, this Agreement will automatically renew for subsequent one-year terms
unless either party provides ninety (90) days' advance written notice to the
other that Company/Executive does not wish to renew the Agreement for a
subsequent one-year term. In the event either party gives notice of non-renewal
pursuant to this subsection 3.2, this Agreement will expire at the end of the
current term.
4. Compensation.
4.1 Base Salary. As compensation for Executive's performance of
Executive's duties hereunder, Company shall pay to Executive an initial Base
Salary of $120,000 per year, payable in accordance with the normal payroll
practices of Company, less required deductions for state and federal withholding
tax, social security and all other employment taxes and payroll deductions.
Notwithstanding the foregoing, Executive and Company hereby agree that for the
period commencing on the Effective Date and ending on December 31, 2001 (the
"Deferral Period"), Executive shall receive a monthly salary equal to 50% of
Executive's Base Salary. Commencing on January 1, 2002, Company shall pay
Executive his Base Salary and shall pay Executive a lump sum payment equal to
the difference between the amount of salary received during the Deferral Period
and Executive's Base Salary. In the event either party, for any reason,
terminates Executive's employment under this Agreement, Executive will earn the
Base Salary prorated to the date of termination.
4.2 Incentive Compensation. Executive will be eligible to receive
incentive compensation, the terms, amount and payment of which shall be
determined by the Company's Board of Directors.
4.3 Stock Options. Subject to the Board of Directors' approval,
Executive will be granted an option to purchase [__________] shares of Company's
Common Stock under the Company's 2001 Incentive Stock Option Plan and 2001
Nonstatutory Stock Option Plan (the "Plan") at an exercise price equal to the
fair market value of that stock on the date of the grant (the "Option"). The
Option will be subject to the terms and conditions of the Plan and the standard
stock option agreement provided pursuant to the Plan, which Executive will be
required to sign as a condition of receiving the Option.
4.4 Performance and Salary Review. The Board of Directors will
periodically review Executive's performance on no less than an annual basis
during the Initial Term and annually thereafter. The Board of Directors will
make adjustments to salary or other compensation, if any, in its sole and
absolute discretion.
5. Customary Fringe Benefits. Executive will be eligible for all customary
and usual fringe benefits generally available to executives of Company subject
to the terms and conditions of Company's benefit plan documents.
6. Business Expenses. Executive will be reimbursed for all reasonable,
out-of-pocket business expenses incurred in the performance of Executive's
duties on behalf of Company. To obtain reimbursement, expenses must be submitted
promptly with appropriate supporting documentation in accordance with Company's
policies.
7. Termination of Executive's Employment. Nothing contained in this
Agreement shall alter the "at will" nature of this Agreement.
7.1 Termination for Cause by Company. Although Company anticipates a
mutually rewarding employment relationship with Executive, Company may terminate
Executive's employment immediately at any time for Cause. For purposes of this
Agreement, "Cause" is defined as: (a) acts or omissions constituting gross
negligence, recklessness or willful misconduct on the part of Executive with
respect to Executive's obligations or otherwise relating to the business of
Company; (b) Executive's material breach of this Agreement or Company's Employee
Innovations and Proprietary Rights Agreement; (c) Executive's conviction or
entry of a plea of nolo contendere for fraud, misappropriation or embezzlement,
or any felony or crime of moral turpitude; (d) Executive's willful neglect of
duties as determined in the sole and exclusive discretion of the Board of
Directors; (e) Executive's failure to perform the essential functions of
Executive's position, with or without reasonable accommodation, due to a mental
or physical disability; or (f) Executive's death. In the event Executive's
employment is terminated in accordance with this subsection 7.1, Executive shall
be entitled to receive only the Base Salary then in effect, prorated to the date
of termination and any benefits and expense reimbursements to which Executive is
entitled by virtue of his prior employment with Company ("Standard
Entitlements"). All other Company obligations to Executive pursuant to this
Agreement will become automatically terminated and completely extinguished.
Executive will not be entitled to receive the Severance Payment described in
subsection 7.2 below.
7.2 Termination Without Cause by Company/Severance. Company may
terminate Executive's employment under this Agreement without Cause at any time
on thirty (30) days' advance written notice to Executive. In the event of such
termination, the non-competition provision set forth as Section 1.4 of that
certain Stock Purchase Agreement, of even date herewith, by and among Executive,
American Energy Power Systems Inc., and Company (the "No-Compete Provision")
shall, with respect to Executive, immediately become null and void, and
Executive will receive the Standard Entitlements and a "Severance Package" that
includes: (1) a severance payment equivalent to one year of Executive's Base
Salary then in effect on the date of termination, payable in accordance with
Company's regular payroll cycle; and (2) continued group health coverage at the
Company's expense, for one year following the termination provided that
Executive: (a) complies with all surviving provisions of this Agreement as
specified in subsection 12.8 below; and (b) executes a full general release,
releasing all claims, known or unknown, that Executive may have against Company
arising out of or any way related to Executive's employment or termination of
employment with Company. All other Company obligations to Executive will be
automatically terminated and completely extinguished.
7.3 Voluntary Resignation by Executive for Good Reason/Severance.
Executive may voluntarily resign Executive's position with Company for Good
Reason, at any time, on thirty (30) days' advance written notice. In the event
of Executive's resignation for Good Reason, the No-Compete Provision shall
immediately become null and void, and Executive will be entitled to receive the
Standard Entitlements and the Severance Package described in subsection 7.2.
above, provided Executive complies with all of the conditions in subsection 7.2.
above. All other Company obligations to Executive pursuant to this Agreement
will become automatically terminated and completely extinguished. Executive will
be deemed to have resigned for Good Reason in the following circumstances: (a)
Company's material breach of this Agreement; (b) Executive's Base Salary is
reduced by more than 25% below Executive's salary in effect at any time during
the preceding twelve months, unless the reduction is made as part of, and is
generally consistent with, a general reduction of senior executive salaries; (c)
Executive's position and/or duties are modified so that Executive's duties are
no longer consistent with the position of a senior executive or Executive no
longer reports to the Board of Directors; or (d) Company relocates Executive's
principal place of work to a location more than sixty (60) miles from the
location specified in subsection 2.3, without Executive's prior written
approval.
7.4 Voluntary Resignation by Executive Without Good Reason. Executive
may voluntarily resign Executive's position with Company without Good Reason, at
any time on thirty (30) days' advance written notice. In the event of
Executive's resignation without Good Reason, Executive will be entitled to
receive only the Standard Entitlements and no other amount for the remaining
months of the subsequent one-year term, if any. All other Company obligations to
Executive pursuant to this Agreement will become automatically terminated and
completely extinguished. In addition, Executive will not be entitled to receive
the Severance Package described in subsection 7.2. above.
7.5 Termination Upon A Change In Control.
(a) Severance Payment. If within twelve (12) months after a
Change in Control (as that term is defined below) Executive's employment is
terminated by Company other than for Cause (as defined in subsection 7.1 above)
or by Executive for Good Reason (as defined in subsection 7.2 above), Executive
shall be entitled to receive the Severance Package described in subsection 7.2
above and the remaining unvested portion of the Option provided for in
subsection 4.3 above shall immediately vest and become fully exercisable by
Executive, provided Executive complies with all the conditions described in
subsection 7.2 above. All other Company obligations to Executive pursuant to
this Agreement will become automatically terminated and completely extinguished.
(b) 280G. If, due to the benefits provided under subsection
7.5(a) above, Executive is subject to any excise tax due to characterization of
any amounts payable under subsection 7.5(a) as excess parachute payments
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), Executive may elect, in Executive's sole discretion, to reduce the
amounts payable under subsection 7.5(a) in order to avoid any "excess parachute
payment" under Section 280G(b)(1) of the Code.
(c) Change of Control. A Change of Control is defined as any one
of the following occurrences:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")), other than a
trustee or other fiduciary holding securities of Whistler and/or Company under
an employee benefit plan of Whistler and/or Company, becomes the "beneficial
owner" (as defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of the securities of Whistler and/or Company representing more
than 50% of (A) the outstanding shares of common stock of Whistler and/or
Company or (B) the combined voting power of Whistler and/or Company's
then-outstanding securities; or
(ii) The sale or disposition of all or substantially all of
Whistler and/or Company's assets (or any transaction having similar effect is
consummated); or
(iii) Whistler and/or Company is party to a merger or
consolidation that results in the holders of voting securities of Whistler
and/or Company outstanding immediately prior thereto failing to continue to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power
of the voting securities of Whistler and/or Company or such surviving entity
outstanding immediately after such merger or consolidation.
7.6 Termination of Employment Upon Non-renewal. In the event either
party decides not to renew this Agreement for a subsequent one-year term in
accordance with subsection 3.2 above, the Agreement will expire, Executive's
employment with Company will terminate and Executive will be entitled to the
Standard Entitlements for the balance of the current term. In addition, if
Company is the party that gives notice of nonrenewal then Executive shall
receive a severance payment equivalent to six (6) months of Executive's Base
Salary then in effect on the date of termination, payable in accordance with the
Company's regular payroll cycle, provided that Executive complies with all of
the conditions in subsection 7.2 above. All other Company obligations to
Executive pursuant to this Agreement will become automatically terminated and
completely extinguished. Executive will not be entitled to the Severance Package
described in subsection 7.2 above.
8. No Conflict of Interest. During the term of Executive's employment with
Company and during any period Executive is receiving payments from Company,
Executive must not engage in any work, paid or unpaid, that creates an actual or
potential conflict of interest with Company. Such work shall include, but is not
limited to, directly or indirectly competing with Company in any way, or acting
as an officer, director, employee, consultant, stockholder, volunteer, lender,
or agent of any business enterprise of the same nature as, or which is in direct
competition with, the business in which Company is now engaged or in which
Company becomes engaged during the term of Executive's employment with Company,
as may be determined by the Board of Directors in its sole discretion. If the
Board of Directors believes such a conflict exists during the term of this
Agreement, the Board of Directors may ask Executive to choose to discontinue the
other work or resign employment with Company. If the Board of Directors believes
such a conflict exists during any period in which Executive is receiving
payments pursuant to this Agreement, the Board of Directors may ask Executive to
choose to discontinue the other work or forfeit the remaining severance
payments. In addition, Executive agrees not to refer any client or potential
client of Company to competitors of Company, without obtaining Company's prior
written consent, during the term of Executive's employment and during any period
in which Executive is receiving payments from Company pursuant to this
Agreement.
9. Confidentiality and Proprietary Rights. Executive agrees to read, sign
and abide by Company's Employee Innovations and Proprietary Rights Assignment
Agreement, which is attached as Exhibit A to this Agreement and incorporated
herein by reference.
10. Non-Solicitation.
10.1 Nonsolicitation of Customers. Executive acknowledges that
information about Company's customers is confidential and constitutes trade
secrets. Accordingly, Executive agrees that during the term of this Agreement
and for a period of one (1) year after the termination of this Agreement,
Executive will not, either directly or indirectly, separately or in association
with others, interfere with, impair, disrupt or damage Company's relationship
with any of its customers by soliciting or encouraging others to solicit any of
them for the purpose of diverting or taking away business from Company.
10.2 Nonsolicitation of Company's Employees. Executive agrees that
during the term of this Agreement and for a period of one (1) year after the
termination of this Agreement, Executive will not, either directly or
indirectly, separately or in association with others, interfere with, impair,
disrupt or damage Company's business by soliciting, encouraging or attempting to
hire any of Company's employees or causing others to solicit or encourage any of
Company's employees to discontinue their employment with Company.
11. Injunctive Relief. Executive acknowledges that Executive's breach of
the covenants contained in sections 8-10 (collectively "Covenants") would cause
irreparable injury to Company and agrees that in the event of any such breach,
Company shall be entitled to seek temporary, preliminary and permanent
injunctive relief without the necessity of proving actual damages or posting any
bond or other security.
12. General Provisions.
12.1 Guarantee. After securing and delivering to Company the minimum
of an aggregate of $500,000 in outside equity financing within the 90 day period
set forth in Section 5.1 of that certain Stock Purchase Agreement, of even date
herewith, by and among Whistler, Inc., a Delaware corporation ("Whistler"),
Company and all of Company's stockholders, Whistler shall, for the Initial Term,
cause its wholly owned subsidiary, Company, to fulfill and honor in all respects
the payment obligations of Company under this Agreement.
12.2 Successors and Assigns. The rights and obligations of Company
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of Company. Executive shall not be entitled to assign any
of Executive's rights or obligations under this Agreement.
12.3 Waiver. Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
or prevent that party thereafter from enforcing each and every other provision
of this Agreement.
12.4 Attorneys' Fees. Each side will bear its own attorneys' fees in
any dispute unless a statutory section at issue, if any, authorizes the award of
attorneys' fees to the prevailing party.
12.5 Severability. In the event any provision of this Agreement is
found to be unenforceable by an arbitrator or court of competent jurisdiction,
such provision shall be deemed modified to the extent necessary to allow
enforceability of the provision as so limited, it being intended that the
parties shall receive the benefit contemplated herein to the fullest extent
permitted by law. If a deemed modification is not satisfactory in the judgment
of such arbitrator or court, the unenforceable provision shall be deemed
deleted, and the validity and enforceability of the remaining provisions shall
not be affected thereby.
12.6 Interpretation; Construction. The headings set forth in this
Agreement are for convenience only and shall not be used in interpreting this
Agreement. This Agreement has been drafted by legal counsel representing
Company, but Executive has participated in the negotiation of its terms.
Furthermore, Executive acknowledges that Executive has had an opportunity to
review and revise the Agreement and have it reviewed by legal counsel, if
desired, and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement.
12.7 Governing Law. This Agreement will be governed by and construed
in accordance with the laws of the United States and the State of California.
Each party consents to the jurisdiction and venue of the state or federal courts
in Sacramento County, California, if applicable, in any action, suit, or
proceeding arising out of or relating to this Agreement.
12.8 Notices. Any notice required or permitted by this Agreement shall
be in writing and shall be delivered as follows with notice deemed given as
indicated: (a) by personal delivery when delivered personally; (b) by overnight
courier upon written verification of receipt; (c ) by telecopy or facsimile
transmission upon acknowledgment of receipt of electronic transmission; or (d)
by certified or registered mail, return receipt requested, upon verification of
receipt. Notice shall be sent to the addresses set forth below, or such other
address as either party may specify in writing.
12.9 Survival. Sections 8 ("No Conflict of Interest"), 9
("Confidentiality and Proprietary Rights"), 10 ("Non-Solicitation"), 11
("Injunctive Relief"), 12 ("General Provisions") and 13 ("Entire Agreement") of
this Agreement shall survive Executive's employment by Company.
13. Entire Agreement. This Agreement, including the Company Employee
Innovations and Proprietary Rights Assignment Agreement incorporated herein by
reference, constitutes the entire agreement between the parties relating to this
subject matter and supersedes all prior or simultaneous representations,
discussions, negotiations, and agreements, whether written or oral. This
Agreement may be amended or modified only with the written consent of Executive
and the Board of Directors of Company. No oral waiver, amendment or modification
will be effective under any circumstances whatsoever.
[SIGNATURE PAGES FOLLOW]
THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY
UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES
HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.
XXXXXXX XXXXXXXX
Dated:
----------------------------- ------------------------------------
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
AMERICAN ENERGY POWER SYSTEMS INC.
Dated: By:
----------------------------- ------------------------------------
Xxxxxxx Xxxxxx
Chief Executive Officer
00000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
***SIGNATURE PAGE TO EXECUTIVE EMPLOYMENT AGREEMENT***
EXHIBIT A
EMPLOYEE INNOVATIONS AND PROPRIETARY RIGHTS ASSIGNMENT AGREEMENT
[attached]
