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EXHIBIT 10.1
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FORM OF:
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the ___ day of August, 1997 by and between U.S. ENERGY SYSTEMS, INC., a
Delaware corporation (hereinafter referred to as "Company"), and XXXXXX X.
XXXXXX, a resident of the State of Indiana (hereinafter referred to as
"Executive").
W I T N E S S E T H:
Pursuant to that certain Merger Agreement dated as of __________, 1997
(the "Merger Agreement"), among the Company, American Enviro-Services, Inc.
("AES"), an entity owned and controlled, in part, by the Executive which
operates certain environmental and waste businesses in Indiana and the
shareholders of AES (including the Executive), the Company has agreed to
acquire all of the Executive's equity interests in AES on the terms set forth
in the Merger Agreement. As a condition to closing such transaction, the
Executive has agreed to enter into this Agreement and to serve as an executive
employee of the Company following consummation of the transaction.
NOW THEREFORE, in consideration of the premises and of the covenants
and agreements herein contained, the Company and the Executive covenant and
agree as follows:
1. EMPLOYMENT. The Company agrees to employ the Executive and
the Executive agrees to render services to the Company pursuant to the terms
and conditions of this Agreement. The Executive agrees to devote his efforts,
attention and ability on a full time basis to the business and affairs of the
Company in the discharge of his duties and responsibilities under this
Agreement. The Executive shall have such responsibilities, duties and title(s)
as may be set forth by the President and the Board of the Company or by such
other person as may be designated by the President. The Executive's initial
title shall be Executive Vice President of USE - Environmental Division and the
Executive shall report directly to the President or to such other person as
designated by the President. As an Executive of Company, Executive shall be
bound by a fiduciary duty to act exclusively for the benefit of Company, and
shall not engage in any transactions for his personal benefit at the expense of
Company, or which otherwise may present a conflict of interest, without the
prior consent of the Board of the Company. The Executive shall render such
services to the best of his ability, and use his best efforts to promote the
interests of the Company. The Company acknowledges the Executive's interests
and investments in Midwest Custom Chemicals, Inc., Quality Environmental Labs
and Trey Exploration, Inc., provided such interests and investments are not in
violation of Section 9 hereto.
2. TERM. The employment of the Executive hereunder shall
commence as of the date hereof and shall continue for a period of three (3)
years, or until the earlier termination of this Agreement by either of the
parties as provided herein, or unless extended by an additional two year
renewal period by the mutual written agreement of the parties at the end of the
initial three (3) year period (the "Term"). After expiration of the Term and
the termination of Executive's employment
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hereunder, the Executive shall continue to be subject to the provisions of
Section 9 and the other provisions of this Agreement related thereto.
3. COMPENSATION. During the period of employment, the Company
shall pay to the Executive as compensation for all services of the Executive on
behalf of the Company a salary of One Hundred Thousand Dollars ($100,000.00)
per annum, payable in installments on the Company's regular pay dates. The
Executive shall be eligible to receive annual upward adjustments to his annual
salary, to be determined at the sole discretion of the Company's Board of
Directors Compensation Committee, but not to be less than the annual increase
in the cost of living based on the Consumer Price Index. In addition to the
base salary set forth above, Executive shall receive upon the signing of this
Agreement options to purchase 100,000 shares of the common stock of the Company
(the "Options"), pursuant to the Company's 1996 Stock Option Plan (the "Plan").
The Options shall vest on the first anniversary of the date of this Agreement,
subject to the Executive's continuing employment, and which Options, the terms
and prices thereof, shall be evidenced by the Stock Option Agreement attached
to this Agreement as Exhibit A.
4. INCENTIVE COMPENSATION. In addition to the base salary and
Options granted pursuant to Section 3 hereof, the Executive may receive an
annual incentive performance bonus and stock options calculated in the manner
set forth on Exhibit B.
5. BENEFITS. During the Term, the Executive shall be entitled to
receive benefits comparable to those offered to other company senior
executives, which benefits shall not be less than those presently received by
Executive. The Executive shall be entitled to four (4) weeks paid vacation per
year. Unused vacation time shall not carry over to the following year and the
Executive shall not be compensated for unused vacation time.
6. REIMBURSEMENT OF EXPENSES. Upon submission of reasonable
documentation satisfactory to the Company, the Company shall reimburse the
Executive for his reasonable and ordinary expenses incurred in connection with
his employment hereunder that have been approved in advance by the President,
or his designee. The parties understand and agree that the reimbursable
expenses shall normally consist of reasonable lodging, per diem, transportation
expenses (other than to and from work) and other out of pocket expenses
incurred in the performance of the duties hereunder. Lodging expenses
including rates, locations and accommodations may be subject to the prior
approval of the Company. Airfare and other transportation expenses shall be
subject to the prior approval of the Company. Executive acknowledges that the
Company shall not approve first class airfare accommodations or other costly
modes of travel when less costly means are available.
7. POLICIES AND PROCEDURES. The Board of the Company shall have
the exclusive authority to establish from time to time policies, procedures and
regulations to be followed by the Executive in fulfilling and discharging his
duties under this Agreement. The Executive agrees to comply with such
policies, procedures and regulations as the Company may promulgate from time to
time.
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8. TERMINATION.
(a) Death, Disability and Cause. At any time during the
Term, the Company shall have the right to terminate the Term and to discharge
the Executive for "cause". Upon any such termination by the Company for cause,
the Executive or his legal representatives shall be entitled to that portion of
the Salary prorated through the date of termination, and the Company shall have
no further obligations hereunder from and after the end of the Term.
Termination for "cause" shall mean termination because of (i) the Executive's
breach of his covenants contained in this Agreement, (ii) the Executive's
willful misconduct, failure or refusal to perform the duties and
responsibilities required to be performed by the Executive under the terms of
this Agreement; (iii) the Executive's commission of an act of dishonesty
affecting the Company or the commission of an act constituting common law fraud
or a felony, (iv) the Executive's commission of an act (other than the good
faith exercise of his business judgment in the exercise of his
responsibilities) resulting in damages to the Company; or (v) the Executive's
inability to perform his duties and responsibilities as provided herein due to
his death, physical or mental disability or sickness extending for, or
reasonably expected to extend for, greater than 180 days. If the Executive
shall resign or otherwise terminate his employment with the Company, the
Executive shall be deemed for purposes of this Agreement to have been
terminated for "cause,"and the Company shall have no further obligations
hereunder from and after such resignation or termination.
(b) Without Cause. At any time during the Term, the
Company shall have the right to terminate the Term and to discharge the
Executive without cause effective upon delivery of written notice to the
Executive. The Executive shall be entitled to continue to receive the portion
of his salary when and as the same would have been due and payable hereunder
but for such termination, provided, however, that the Executive shall only be
entitled to such payments as long as he is in compliance with the provisions of
both Section 9.
9. RESTRICTIVE COVENANTS. The Executive agrees with the Company
that he will not:
(a) commencing on the date hereof, and ending on the
later to occur of (i) five years from the date hereof or (ii) two years
following the end of the Term for any reason, directly or indirectly, alone or
as a partner, joint venturer, officer, director, employee, consultant, agent,
independent contractor or stockholder of any company or business, engage in the
business of waste oil or water oil or water waste collection, disposal or
recycling, environmental remediation or emergency response waste clean-up (the
"Environmental Services Business") in any county in any state in the United
States in which the Company or any of its subsidiaries conducts business at the
time such Shareholder commences to engage in such activity; provided, however,
that, the beneficial ownership of less than five percent (5%) of the shares of
stock of any corporation having a class of equity securities actively traded on
a national securities exchange or over-the-counter market shall not be deemed,
in and of itself, to violate the prohibitions of this Section;
(b) commencing on the date hereof and ending on the later
to occur of (i) five years from the date hereof or (ii) two years following the
end of the Term for any reason, directly or indirectly (i) induce any Person
which is a customer of the Company or any of its affiliates to
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patronize any business directly or indirectly in competition with the
Environmental Services Business conducted by the Company or any of its
affiliates; (ii) canvass, solicit or accept from any Person which is a customer
of the Company or any of its affiliates, any such competitive business; or
(iii) request or advise any Person which is a customer or supplier of the
Company or any of its affiliates to withdraw, curtail or cancel any such
customer's or supplier's business with such entity;
(c) commencing on the date hereof and ending on the later
to occur of (i) five years from the date hereof or (ii) two years following the
end of the Term for any reason, directly or indirectly employ, or knowingly
permit any company or business directly or indirectly controlled by him, to
employ, any person who was employed by the Company or any of its affiliates at
or within the then prior six months, or in any manner seek to induce any such
person to leave his or her employment, provided; however, that the Executive's
affiliate, Midwest Custom Chemicals, Inc. ("MCC") shall be permitted to engage
such of AES' employees who are currently providing services to MCC so long as
the scope of, and the time devoted to, such activities for MCC are not more
than what such employees provided to MCC historically, and provided further
that AES is indemnified in full for any costs associated with MMC's engagement
of such employees; and
(d) at any time following the date hereof, use for his
own account, or release or divulge or make known for any unauthorized reason or
purpose, any information not otherwise publicly available whatsoever relating
to the Company, to any other person or persons whomsoever without the prior
express written consent of the Company. The Executive is aware and
acknowledges that the Executive shall have access to confidential information
by virtue of his employment and he agrees to keep such information confidential
at all times. The type of confidential information covered by this paragraph
shall include, but is not limited to, customer, contractor or supplier lists,
trade secrets, proprietary services, processes, software, hardware and other
services and projects performed by the Company. This provision does not
preclude the Executive from discussing such confidential matters with properly
authorized representatives of clients and customers of the Company in order to
carry out his assigned responsibilities and duties during the term of
employment.
The Executive agrees and acknowledges that the restrictions contained in this
Section are reasonable in scope and duration and are necessary to protect the
Company's legitimate business interests. The parties agree and acknowledge
that the breach of this Section will cause the Company irreparable damage and
upon breach of any provision of this Section, the Company shall be entitled to
injunctive relief, specific performance or other equitable relief; provided,
however, that, this shall in no way limit any other remedies which the Company
may have (including, without limitation, the right to seek monetary damages).
Notwithstanding the restrictions set forth in this Section 9, in the
event the Company's business and assets are liquidated pursuant to Chapter 7 of
the U.S. Bankruptcy Code, then the restrictions contained in this Section 9
shall be without further force and effect.
10. DOCUMENTS AND INFORMATION. The Executive will, at all times
upon request, fully advise and inform the Board of the Company with respect to
all matters which the Executive may
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be developing or working on while employed by the Company. The Executive
further agrees that, upon the expiration or earlier termination of his
employment for any reason whatsoever, he will immediately deliver and surrender
to the Company all materials of any nature relating to the Company in his
possession or under his control including, but not limited to, all client,
customer, supplier or contractor lists, processes, analyses, manuals, software
programs, technical and operating data, financial statements, records, files,
and all other material whatsoever furnished to him by the Company or produced
or obtained by him during his employment with the Company.
11. NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage pre-paid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery to the following addresses and telecopy numbers (or to such other
addresses or telecopy numbers which such party shall designate in writing to
the other party):
(a) IF TO ANY OF THE COMPANY TO:
U.S. Energy Systems, Inc.
000 Xxxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
WITH A COPY TO:
Akerman, Senterfitt & Xxxxxx, P.A.
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
(b) IF TO THE EXECUTIVE TO:
American Enviro-Systems, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
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IF BY U.S. MAIL, TO:
American Enviro-Services, Inc.
X.X. Xxx 000
Xxxxxxxx, XX 00000
WITH A COPY TO:
Statham Xxxxxxx & XxXxxx
000 XX Xxxxxx Xxxxxx Xxxx, Xx. Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Rounder, Esq.
Telecopy: (000) 000-0000
IF BY U.S. MAIL, TO:
Xxxxxxx Xxxxxxx & XxXxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Notice shall be deemed given on the date sent if sent by facsimile
transmission and on the date delivered (or the date of refusal of delivery) if
sent by overnight delivery, or certified or registered mail.
12. ENTIRE AGREEMENT. This Agreement (including the Exhibits
attached hereto), contains the entire understanding of the parties in respect
of its subject matter and supersedes all prior agreements and understandings
(oral or written) between or among the parties with respect to such subject
matter. The Exhibits constitute a part hereof as though set forth in full
herein.
13. AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising,
any right, power or privilege under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude the exercise of any other right, power or privilege. No
waiver of any breach of any provision shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision, nor shall
any waiver be implied from any course of dealing between the parties. No
extension of time for performance of any obligations or other acts hereunder or
under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts. The rights and
remedies of the parties under this Agreement are in addition to all other
rights and remedies, at law or equity, that they may have against each other.
14. BINDING EFFECT; ASSIGNMENT. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall
be construed to give any other person any legal or equitable rights
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hereunder. The rights and obligations of this Agreement may not be assigned or
delegated by the Executive without the prior written consent of the Company.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
16. GOVERNING LAW; SEVERABILITY. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Florida applicable to contracts executed and to be wholly performed
within such State. If any provision of this Agreement, or any part thereof, is
held to be unenforceable because of the duration of such provision or the area
covered thereby or otherwise, the parties agree that the court making such
determination shall have the power to reduce the duration and/or area of such
provision, and/or to delete specific words or phrases, and in its reduced form,
such provision shall then be enforceable and shall be enforced.
17. JURISDICTION. The parties to this Agreement agree that any
suit, action or proceeding arising out of, or with respect to, this Agreement
or any judgment entered by any court in respect thereof shall be brought in the
courts of Palm Beach County, Florida or in the U.S. District Court for the
Southern District of Florida. The Company and the Executive hereby irrevocably
accepts the exclusive personal jurisdiction of those courts for the purpose of
any suit, action or proceeding. In addition, the Company and the Executive
each hereby irrevocably waive, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
judgment entered by any court in respect thereof brought in Palm Beach County,
Florida or in the U.S. District Court for the Southern District of Florida, and
hereby further irrevocably waives any claim that any suit, action or
proceedings brought in any such court has been brought in an inconvenient
forum.
18. ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party
has had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
U.S. ENERGY SYSTEMS, INC.,
a Delaware corporation
By:
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Xxxxxxx X. Xxxxxx, President
EXECUTIVE:
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XXXXXX X. XXXXXX
Address:
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EXHIBIT A:
STOCK OPTION AGREEMENT
This AGREEMENT, made as of this __th day of _________, 1997, by and
between U.S. Energy Systems, Inc. (the "Company") and _________________ (the
"Optionee").
WHEREAS, the Company instituted its 1996 Stock Option Plan (the "Stock
Option Plan"), effective as of December 16, 1996, pursuant to which it is
authorized to grant options to employees, directors, independent contractors
and consultants of the Company (a copy of the Stock Option Plan is attached
hereto);
WHEREAS, the Optionee has aided and assisted the Company in furthering
the development of the Company's business; and
WHEREAS, the Company is desirous of granting the Optionee certain
options (the "Options") pursuant to the Stock Option Plan, to purchase shares
of common stock, par value $.01 per share (the "Common Stock") of the Company
from the Company upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual premises contained
herein, the Company hereby grants the Optionee an option to purchase shares of
Common Stock upon the following terms and conditions:
1. Option. As of the date hereof, the Company hereby grants to
the Optionee an option (the "Option") to acquire 100,000 shares (the "Shares")
of Common Stock pursuant to the Stock Option Plan, which is incorporated
herein for all purposes. The Optionee hereby acknowledges receipt of the Stock
Option Plan and agrees to be bound by all of the terms and conditions hereof
and thereof.
2. Definitions. Unless otherwise provided herein, terms used
herein that are defined in the Stock Option Plan and not defined herein shall
have the meanings attributed thereto in the Stock Option Plan.
3. Exercise Price. The exercise price per share of the Shares
subject to this Option is $____.
4. Exercise Schedule. Except as otherwise provided in the Stock
Option Plan, this Option shall be exercisable in whole or in part and
cumulatively according to the following schedule:
_______________________
In no event shall this Option be exercisable after _______________.
5. Non-Assignability of the Option. The Optionee may not give,
grant, sell, exchange, transfer legal title, pledge, assign or otherwise
encumber or dispose of the Option herein granted or any interest therein,
otherwise than by will or the laws of descent and distribution, and the Option
shall be exercisable during the Optionee's lifetime only by the Optionee.
6. Withholding of Taxes. At the time of the exercise of the
Option, the Company may require the Optionee (i) to pay the Company an amount
equal to the amount of tax the Company may be required to withhold to obtain a
deduction for federal income tax purposes as a result of the exercise of such
Option by the Optionee, or (ii) to make such other arrangements with the
Company which would enable the Company to pay such withholding tax, including,
without limitation, holding back a number of shares issuable upon exercise of
the Option equal to the amount of such withholding tax, or permitting the
Optionee to deliver a promissory note in a form specified by the Company or
withhold taxes from other compensation payable to the Optionee by the Company,
or (iii) a combination of the foregoing.
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7. Termination of Option. Any unexercised portion of this Option
shall automatically and without notice terminate and become null and void as
provided in Section 8 of the Stock Option Plan.
8. No Rights in Option Stock. The Optionee shall have no rights
as a shareholder in respect of shares of Common Stock as to which the Option
granted hereunder shall not have been exercised and payment made as provided in
the Stock Option Plan.
9. No Right to Employment. This Agreement does not give the
Optionee any right to employment by the Company.
10. Binding Effect. Except as herein otherwise expressly provided,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto, their successors, legal representatives and assigns.
11. Interpretation. The Optionee accepts this Option subject to all
the terms and provisions of the Stock Option Plan and this Agreement. The
undersigned Optionee hereby accepts as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
the Stock Option Plan and the Agreement.
12. Governing Law. This Agreement shall be construed under the
laws of the State of Florida, without application to the principles of
conflicts of laws.
13. Notices. Any notice under this Agreement shall be in writing
and shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and
addressed, in the case of the Company, to Xxxxxxx X. Xxxxx, Secretary of the
Company at 000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxxx, Xxxxxxx 00000,
or if the Company should move its principal office, to such principal office,
and, in the case of the Optionee, to his last permanent address as shown on the
Company's records, subject to the right of either party to designate some other
address at any time thereafter in a notice satisfying the requirements of this
Section.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
U.S. ENERGY SYSTEMS, INC.
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Xxxxxxxx Xxxxx, Chairman of the Board of Directors
AGREED AND ACCEPTED
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EXHIBIT B - INCENTIVE COMPENSATION
1. Cash Bonus.
During the Term, the Company shall pay to the Executive a cash
bonus on the terms described below. The cash bonus shall be equal to (a) 5%,
multiplied by (b) the difference between (a) the pretax earnings after bonus
(calculated in accordance with GAAP, except as modified below) of the
USE-Environmental Division for the subject fiscal year (or shorter fiscal
period, as applicable), minus (b) the Base Earnings for the subject fiscal
period, such difference being referred to herein as the "Incremental Earnings."
As used herein, (a) "USE-Environmental Division" shall mean American
Enviro-Services, Inc. ("AES") and any Environmental Services Businesses
acquired (whether by merger, share exchange or asset acquisition) by the
Company and operated under the control and supervision of the Executive, (b)
"Base Earnings" shall mean (i) $450,000 (plus, if applicable, the pre-tax
earnings of any Environmental Services Business acquired by the Company) for
the fiscal period commencing August 1, 1997 and ending January 31, 1998, (ii)
$800,000 (plus, if applicable, the pre-tax earnings of any Environmental
Services Business acquired by the Company) for the fiscal year ending January
31, 1998 and (iii) for all other fiscal periods, the pre-tax earnings of the
USE-Environmental Division (including, if applicable, the pre-tax earnings of
any Environmental Services Business acquired by the Company) for the
immediately preceding completed comparable fiscal period but in no event less
than $800,000 (for example: for purposes of calculating the cash bonus payable
for the fiscal year ending January 31, 2000, the Base Earnings would be the
pre-tax earnings for the fiscal year commencing February 1, 1998 , and ending
January 31, 1999, and for purposes of calculating the cash bonus for the
six-month fiscal period ending July 31, 2001 (presuming the Term expires August
15, 2001), the Base Earnings would be the pre-tax earnings for the fiscal
period commencing February 1, 2000 and ending July 31, 2000).
For purposes of calculating pre-tax earnings, and whether or not in
accordance with GAAP, (a) any increase in the earnings of any Environmental
Services Business acquired by AES shall be included in calculating the bonus
payable hereunder only if such earnings are directly attributable to the
management efforts of the Executive, as reasonably determined by the Company,
and (b) such earnings shall be reduced by (i) the amount of any depreciation
allowance for any capital expenditures incurred by the Company (or any of its
affiliates) on behalf of the USE-Environmental Division and which expenditures
contributed to the increase in such earnings, (ii) a reasonable allocation of
overhead expenses incurred by the Company (or its affiliates) on behalf of the
USE - Environmental Division, not to exceed 5% of the USE - Environmental
Division revenues for such period, (iii) actual expenses incurred by the
Company (or its affiliates) on behalf of the USE - Environmental Division, (iv)
an interest factor for all advances by the Company (or its affiliates) to, or
for the benefit of the USE - Environmental Division, at a rate equal to the
Company's borrowing rate, (v) amortization of the Company's (or its
affiliates') intangibles for the AES acquisition (based on a 15-year
amortization), and (vi) to the extent mutually agreed upon by the Company and
the Executive, amortization of the Company's (or its affiliates') intangibles
for future acquisitions (and
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with respect to future acquisitions accounted for using the pooling method of
accounting, such pooling acquisition shall be recalculated using the purchase
method of accounting for purposes of determining the bonus hereunder).
2. Stock Bonus.
During the Term, and in addition to the cash bonus described
above, the Company shall grant stock options to the Executive on the terms
described below. The number of stock options granted shall equal to the
greater of (a) the number of options granted to other executives of the Company
similarly situated to the Executive by the Compensation Committee of the
Company's Board of Directors, or (b) an amount of options equal to (i) the
Incremental Earnings for the subject fiscal period, divided by (ii) $10.00 (for
example: if the Incremental Earnings for the period are $1 million, then the
Executive shall be granted options to acquire 100,000 shares). All
calculations and definitions shall be the same as set forth above for
calculation of the cash bonus set forth above. The options granted hereunder
shall be issued pursuant to and shall be in accordance with the terms and
conditions of the Company's 1996 Stock Option Plan, as may be amended from time
to time. The exercise price shall be the closing bid price of a share of USE
common stock on The NASDAQ Stock Market on the date the options are granted and
not on the date such options are earned.
3. Payment.
The cash bonus and the stock option grant, if earned, shall be
paid within 30 calendar days following the earlier of (i) April 30 following
the end of the subject fiscal period, or (ii) completion of the audited
financial statements covering the fiscal period for which such bonus and/or
stock option grant is being paid.
4. Termination of Employment.
In the event the Company terminates the Term for cause or if
the Executive resigns or otherwise terminates his employment, then the
Executive shall not be entitled to any cash bonus or stock option grant for all
or any portion of the fiscal year during which such termination took place. If
the Company terminates the Term without cause, the Executive shall be entitled
to receive the cash bonus and stock option grant, if otherwise earned, for the
portion of the current fiscal year prior to the date on which such termination
took place.
5. Calculation.
All calculations hereunder shall be performed by the Company's
certified public accountants, and shall be binding upon the Company and the
Executive.
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