EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement"), dated as of the
19th day of November, 1999 (the "Effective Date"), is made by and among Xxxx
Xxxxxx ("Xxxxxx" or "Employee") and Electric City Corp., a Delaware corporation
(the "Company").
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Xxxxxx do hereby
agree as follows:
Section 1. EMPLOYMENT AND DUTIES. On the terms and subject to
the conditions set forth in this Agreement, and subject to the ratification of
the board of directors of the Company of this Agreement on or before the
Effective Date, and the execution of an employment agreement between Xxxxx
Xxxxxxxx and the Company, the Company agrees to employ Xxxxxx as its Chief
Executive Officer to render such services as would be customary for a chief
executive officer including hiring and termination of the employment of senior
management and to render such other services and discharge such other
responsibilities as the board of directors of the Company may, from time to
time, stipulate and which shall not be inconsistent with the position of Chief
Executive Officer (CEO) and consistent with the organizational chart attached as
Exhibit A hereto. The Company will elect Xxxxxx to the Board of Directors of the
Company and agrees to increase the number of its board of directors to at least
seven members. At each annual meeting of the stockholders at which Xxxxxx'x term
of office as a director expires, the Company and its Board of Directors shall
cause Xxxxxx to be nominated for reelection, unless he is not employed by the
Company at the time of any such election.
Section 2. PERFORMANCE. Xxxxxx accepts the employment
described in Section 1 of this Agreement and agrees to concentrate all of his
time and efforts to the performance of the services described therein, including
the performance of such other services and responsibilities as the board of
directors of the Company, may from time to time stipulate and which shall not be
inconsistent with the position of Chief Executive Officer.
Without limiting the generality of the foregoing Xxxxxx
ordinarily shall devote not less than five days per week (except for vacations
and regular business holidays observed by the Company) on a full time basis,
during normal business hours Monday through Friday. Xxxxxx further agrees that
when the performance of his duties reasonably requires, he shall be present on
the Company's premises (if necessary) or engaged in service to or on behalf of
the Company at such times except during vacations, regular business holidays or
weekends.
Notwithstanding the foregoing, the Company agrees that Xxxxxx
has the right to participate in outside activities, including but not limited to
serving on Boards of Directors for civic, charitable or business organizations,
in a paid or unpaid capacity, so long as such activities are not in direct
conflict with Xxxxxx'x obligations as outlined herein. Further, Xxxxxx will have
reasonable, limited use of Company resources and his own salaried time, to
pursue such activities so long as such activities do not unreasonably interfere
with his obligations as CEO. When
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reasonable and consistent with the objectives of the Company, the Company agrees
to provide modest financial support to those organizations in which Xx. Xxxxxx
becomes involved, subject to approval of the Chairman, CEO and President. Upon
request from the Company, Xxxxxx agrees to furnish the Company with a list of
outside organizations in which he is involved, an explanation of said
involvement and the amount of remuneration received or expected to be received
for said involvement.
Section 3. TERM. The term of employment under this Agreement
(the "Employment Period") shall commence on January 3, 2000, or earlier if
agreed to by the parties hereto and shall terminate on the 31st day of December,
2002, unless earlier terminated pursuant to the termination provisions set forth
herein. The parties hereby agree and acknowledge that between the Effective Date
and commencement of the Employment Period, Xxxxxx shall discharge certain
responsibilities on behalf of his current employer, and in so doing, Xxxxxx
shall not be in breach of any provision of this Agreement. Notwithstanding
anything to the contrary herein, the parties acknowledge and agree that Xxxxxx'x
employment may be terminated only for Due Cause as more fully set forth herein.
At the end of the Employment Period, the continuation of Xxxxxx'x employment
with the Company shall be at the will of the Company and Xxxxxx on terms and
conditions agreed to by the Company and Xxxxxx, and there shall be no obligation
on the part of the Company or Xxxxxx to continue such employment, provided;
however, that no later than June 30, 2002, the Company and Xxxxxx shall each
provide reasonably specific notice to the other party of their respective
intentions in regard to continuation of Xxxxxx'x employment subsequent to the
conclusion of the Employment Period.
Section 4. COMPENSATION.
4.1. SALARY. For all the services to be rendered by Xxxxxx
hereunder, the Company agrees to pay, during the Employment Period, a salary
at the annual rate of Three Hundred Fifty Thousand ($350,000) payable in
equal monthly installments at the end of each month during the term of this
Agreement, beginning no later than the 1st day of January, 2000, or at such
other intervals, not less frequently than once per month, as may be
consistent with the Company's normal compensation schedule. Xxxxxx'x salary
may be subject to annual review by the board of directors, which may not be
reduced from the prior year's salary.
4.2. BONUS. Xxxxxx shall be entitled to a bonus on December
31 of each year, payable by February 15th the year after, up to forty percent
(40%) of his annual salary, provided the Company meets or exceeds the terms
of an annual business plan, with bonus parameters to be established as part
of the plan, to be mutually agreed upon between CEO, the President of the
Company and the Board of Directors of the Company.
4.3. STOCK OPTIONS. The Company hereby agrees to grant to
Xxxxxx an option to purchase shares of the common stock of the Company
subject to and in accordance with the following ( the "Option"):
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(a) OPTIONS. The Company hereby grants options to Xxxxxx
to purchase 1,000,000 shares of the Company's common
stock, subject to the vesting provisions described
below:
(i) On December 31, 2000, unless Xxxxxx has been
terminated for Due Cause prior thereto,
Xxxxxx shall become immediately vested in
options to purchase 333,334 of the issued
and outstanding shares of common stock of
the Company for Seven dollars ($7.00) per
share.
(ii) On December 31, 2001, unless Xxxxxx has been
terminated for Due Cause prior thereto,
Xxxxxx shall become immediately vested in
options to purchase 333,333 of the issued
and outstanding shares of common stock of
the Company for Seven dollars ($7.00) per
share.
(iii) On December 31, 2002, unless Xxxxxx has been
terminated for Due Cause prior thereto,
Xxxxxx shall become immediately vested in
options to purchase 333,333 of the issued
and outstanding shares of common stock of
the Company for Seven dollars ($7.00) per
share.
(b) REGISTRATION RIGHTS. Xxxxxx shall have piggy-back
registration rights for all shares of stock obtained through the
exercise of any options described in Section 4.3(a) above for any
registration statement the Company files with the Securities and
Exchange Commission registering shares of the Company's common stock
that are similar to the shares to be issued hereunder. The Company will
use its best efforts to file an S-8 registration statement covering the
shares underlying the Options when Company becomes eligible to file an
S-8 Registration Statement. The Company will bear the cost of
registering the shares pursuant to this section.
(c) SALE OF ASSETS: CHANGE IN CONTROL. For all purposes
of this Agreement, a Change of Control shall be deemed to have
occurred when (i) the Company is merged or consolidated with another
corporation which is not then controlled by the Company, or (ii) a
majority of the Company's assets are sold or otherwise transferred
to another such corporation or to a partnership, firm or one or more
individuals not so controlled, or (iii) a majority of the members of
the Company's Board of Directors consists of persons who were not
nominated for election as directors by or on behalf of the Board of
Directors, or (iv) a single person, or a group of persons acting in
concert, obtains the power to cause the nominees of such person or
group to be elected as a majority of the directors of the Company.
Upon the occurrence of a Change of Control the options described in
Section 4.3(a) above shall be automatically and immediately vested
and be exercisable by Xxxxxx subject to the terms of this Agreement.
(d) TERMINATION OPTIONS. The term of the Option hereunder
shall be until December 31, 2009. Notwithstanding any other provision
of this Agreement, upon any of
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the Options described above being fully vested, such fully vested
Options may not be terminated unless Options terminate at December 31,
2009 without being exercised. If Xxxxxx is terminated without Due
Cause or for death or disability, the vested Options shall survive
under the terms of this Agreement and the balance of the Options shall
vest in accordance with Section 4.3(a) of this Agreement.
4.4. INSURANCE. During the Employment Period, the Company
shall apply for, procure in Xxxxxx'x name and for Xxxxxx'x benefit, at the
Company's expense, if Xxxxxx is eligible and qualifies, and subject to the
terms and conditions of the applicable insurance plan, (a) short-term and
permanent disability insurance providing for disability benefits and life
insurance substantially equivalent to the benefit of other executives of the
Company, (b) medical and dental insurance for Xxxxxx and Xxxxxx'x family
substantially equivalent to the benefits of other executives of the Company
and (c) officer and director liability insurance, in such amount as may be
determined by the board of directors of the Company or as may be required by
law, and Xxxxxx shall submit to any medical or other examination and execute
and deliver any application or other instrument in writing, reasonably
necessary to effectuate such insurance.
4.5. AUTOMOBILE. Xxxxxx will be entitled to an automobile
allowance of $550.00 per month.
4.6. CELLULAR PHONE. The Company agrees to reimburse Xxxxxx
for all business-related cellular phone calls, subject to the provisions of
Section 5.2.
4.7. OTHER BENEFITS. Except as otherwise specifically provided
herein, during the Employment Period, Xxxxxx shall be eligible for all vacation
and non-wage benefits the Company provides generally for its other executives,
including four weeks paid vacation.
Section 5. BUSINESS EXPENSES.
5.1. REIMBURSEMENT. The Company shall reimburse Xxxxxx for the
reasonable, ordinary, and necessary expenses incurred by him in connection with
the performance of his duties hereunder, including but not limited to, ordinary
and necessary travel expense and entertainment expenses, approved by the
President and the Chief Financial Officer.
5.2. ACCOUNTING. Xxxxxx shall provide the Company with an
accounting of his expenses, which accounting shall clearly reflect which
expenses are reimbursable by the Company, Xxxxxx will provide the Company with
such other supporting documentation and other substantiation of reimbursable
expenses as will conform to Internal Revenue Service or other requirements.
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Section 6. COVENANTS OF XXXXXX.
6.1. CONFIDENTIALITY. During the Employment Period and
following the termination thereof for any reason, Xxxxxx shall not disclose or
make any use of, for his own benefit or for the benefit of a business or entity
other than the Company or any corporation partnership, limited liability company
or other entity, more than 50% of the equity securities or partnership or
membership interests of which are owned directly or indirectly by the Company,
("Subsidiaries") any secret or confidential information, customer lists, and
lists of prospective customers, or any other information of or pertaining to the
Company, its Subsidiaries or their businesses, products, financial affairs,
customers or prospective customers, or services not generally known within the
trade of the Company or its Subsidiaries and which was acquired by him during
his affiliation with the Company or its Subsidiaries unless required by law or
pursuant to a mutual release.
6.2. INVENTIONS AND SECRECY. Except as otherwise provided in
this Section 6.2, Xxxxxx: (a) shall hold in a fiduciary capacity for the benefit
of the Company and its Subsidiaries, all secret or confidential information,
knowledge, or data of the Company, its Subsidiaries or their businesses or
production operations obtained by Xxxxxx during his employment by the Company,
which shall not be generally known to the public or recognized as standard
practice (whether or not developed by Xxxxxx) and shall not, during his
employment by the Company and after the termination of such employment for any
reason, communicate or divulge, any such information, knowledge or data to any
person, firm, or corporation other than the Company or its Subsidiaries, or
persons, firms or corporations designated by the Company; (b) shall promptly
disclose to the Company all inventions ideas, devices, and processes made or
conceived by him alone or jointly with others, from the time of entering the
Company's employ until such employment is terminated and within the one (1) year
period immediately following such termination, relevant or pertinent in any way,
whether directly or indirectly, to the businesses or production operations of
the Company or its Subsidiaries or resulting from or suggested by any work which
he may have done for or at the request of the Company or its Subsidiaries, (c)
shall, at all times during his employment with the Company, assist the Company
and its Subsidiaries in every proper way (entirely at the expense of the
Company) to obtain and develop for the benefit of the Company patents on such
inventions, ideas, devices, and processes, whether or not patented; and (d)
shall do all such acts and execute, acknowledge and deliver all such instruments
as may be necessary or desirable in the opinion of the Company to vest in the
Company, the entire interest in such inventions, ideas, devices, and processes
referred to above.
6.3. COMPETITION FOLLOWING TERMINATION. Within the two (2)
year period immediately following termination of Xxxxxx'x employment with the
Company for any reason, Xxxxxx shall not, without the prior written consent of
the Company, which consent may be withheld at the sole discretion of the
Company: (a) engage directly or indirectly, whether as an officer, director,
stockholder (of 10% or more of such entity), partner, majority owner, managerial
employee, creditor, or otherwise with the operation, management, or conduct of
any business which competes with the businesses of the Company or its
Subsidiaries being conducted at the time of such termination within the United
States; (b) solicit, contact, interfere with, or divert any customer served by
the Company or its Subsidiaries, or any prospective customer identified by or on
behalf of the Company or its Subsidiaries if such intention is to divert
business from or compete with the Company, during Xxxxxx'x employment with the
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Company or its Subsidiaries; or (c) solicit any person then or previously
employed by the Company or its Subsidiaries to join Xxxxxx, whether as a
partner, agent, employee, or otherwise, in any enterprise engaged in a business
similar to the businesses of the Company or its Subsidiaries being conducted at
the time of such termination.
6.4. ACKNOWLEDGEMENT. Xxxxxx acknowledges that the
restrictions set forth in this Section 6 are reasonable in scope and essential
to the preservation of the businesses and proprietary properties of the Company
and its Subsidiaries and that the enforcement thereof will not in any manner
preclude Xxxxxx, in the event of Xxxxxx'x termination of employment with the
Company, from becoming gainfully employed in such manner and to such extent as
to provide a standard of living for himself, the members of his family, and
those dependent upon him of at least the sort and fashion to which he and they
have become accustomed and may expect.
6.5. SEVERABILITY. The covenants of Xxxxxx contained in this
Section 6 shall each be construed as an agreement independent of any other
provision in this Agreement and the existence of any claim or cause of action of
Xxxxxx against the Company or its Subsidiaries, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company or its Subsidiaries of such covenants. The parties hereto expressly
agree and contract that it is not the intention of any party to violate any
public policy, statutory or common law, and that if any sentence, paragraph,
clause, or combination of the same of this Agreement is in violation of the law
of any state where applicable, such sentence, paragraph, clause or combination
of the same shall be void in the jurisdictions where it is unlawful, and the
remainder of such paragraph and this Agreement shall remain binding on the
parties to make the covenants of this Agreement binding only to the extent that
it may be lawfully done under existing applicable laws. In the event that any
part of any covenant of this Agreement is determined by a court of law to be
overly broad thereby making the covenant unenforceable, the parties hereto
agree, and it is their desire, that such court shall substitute a judicially
enforceable limitation in its place, and that as so modified the covenant shall
be binding upon the parties as if originally set forth herein.
Section 7. TERMINATION.
7.1 TERMINATION FOR DUE CAUSE, DEATH OR DISABILITY.
7.1.1 The Employment Period may be terminated only
for the following reasons and upon the terms and conditions set forth
below ("Due Cause"). Company, by a vote, requiring at least 3/4 of the
board of directors ("Termination Vote") may terminate the Employment
Period, effective upon written notice of such termination to Xxxxxx, in
the event of: (a) Intentionally Deleted; (b) material breach by Xxxxxx
of his covenants under this Agreement if unremedied within 15 days
after written notice by the Company; (c) commission by Xxxxxx of theft
or embezzlement of property of the Company or other acts of dishonesty;
(d) commission by Xxxxxx of a crime resulting in material injury to the
businesses, properties or reputations of the Company or its
Subsidiaries or commission of other significant activities materially
harmful to the businesses, properties or reputations of the Company or
its Subsidiaries; (e) commission of an act by Xxxxxx in the
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performance of his duties hereunder reasonably determined by a majority
of the board of directors of the Company to amount to gross, willful,
or wanton negligence; (f) willful refusal to perform or substantial
neglect of the duties assigned to Xxxxxx pursuant to Section 1 hereof
if unremedied within 15 days after written notice by the Company; (g)
any significant violation of any statutory or common law duty of
loyalty to the Company or its Subsidiaries. All compensation shall
cease immediately upon termination for Due Cause hereunder except for
accrued and unpaid compensation.
7.1.2 The Employment Period will be terminated upon
the death of Xxxxxx. All compensation shall cease immediately upon
termination for death hereunder except for accrued and unpaid
compensation.
7.1.3 For purposes of Paragraph 7.1(a), Xxxxxx'x
employment hereunder will be terminated for Permanent Total Disability,
immediately upon written notice from the Company, if an independent
physician selected jointly by the parties shall have determined that
Xxxxxx has been unable due to illness or a physical or mental
disability, to perform substantially all of the services required
hereunder for a continuous period of 180 days, or for a period
aggregating 180 days in any twelve month period. All compensation shall
cease immediately upon termination for Permanent Total Disability
hereunder except for accrued and unpaid compensation.
7.2 CHANGE OF CONTROL AND TERMINATION OTHER THAN DUE CAUSE.
Xxxxxx'x employment shall be deemed terminated for a reason other than Due Cause
by the Board of Directors if a Change of Control occurs. If Xxxxxx'x employment
is terminated for a reason other than Due Cause, then the Company shall pay as
severance compensation to Xxxxxx the balance due under the terms of this
Agreement or twelve months compensation, including bonus, whatever is greater,
payable over a twelve month period commencing after the date of the Change of
Control or Xxxxxx'x termination without Due Cause as the case may be.
7.3 TERMINATION BY XXXXXX. Xxxxxx may terminate the Employment
Period if the Company has breached a material term or condition of this
Agreement which is not cured or remedied within 15 days after the breach,
provided that Xxxxxx'x resignation for such breach shall be deemed a termination
by the Company without Due Cause for purposes of the Options vesting schedule in
Section 4.3(a) and the Termination provisions in Section 7.2 of this Agreement.
In the event Xxxxxx terminates the Employment Period for any other reason any
Options not vested shall immediately terminate.
7.4 SURRENDER OF PROPERTIES. Upon termination of Xxxxxx'x
employment with the Company, regardless of the cause therefor, Xxxxxx shall
promptly be deemed to have resigned from the Company's Board of Directors and
surrender to the Company or its Subsidiaries all property provided him by the
Company or its Subsidiaries, as applicable, for use in relation to his
employment and in addition, Xxxxxx shall surrender to the Company or its
Subsidiaries, as applicable, any and all sales materials, lists of customers and
prospective customers, price lists, files, patent applications, records, models,
or other materials and information of or pertaining to the Company or its
Subsidiaries or their customers or prospective customers or the products,
businesses, and operations of the Company or its Subsidiaries.
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7.5 SURVIVAL OF COVENANTS. The covenants of Xxxxxx set forth
in Section 6 of this Agreement shall survive the termination of the Employment
Period or termination of this Agreement for Due Cause.
Section 8. GENERAL PROVISIONS.
8.1. NOTICE. Any notice required or permitted hereunder shall
be made in writing (a) either by actual delivery of the notice into the hands of
the party thereunder entitled, or (b) by the mailing of the notice in the United
States mail, certified or registered mail, return receipt requested, all postage
prepaid and addressed to the party to whom the notice is to be given at the
party's respective address set forth below, or such other address as the parties
may from time to time designate by written notice as herein provided.
If to the Company:
Electric City Corp.
0000 Xxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
With a copy (which shall not
constitute notice) to:
Xxxxxx & Xxxxx, Ltd.
000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn.: Xxxxxx X. Xxxxx
If to CEO:
Xxxx Xxxxxx
The notice shall be deemed to be received in case (a) on the date of its actual
receipt by the party entitled thereto and in case (b) on the date of its
mailing.
8.2. AMENDMENT AND WAIVER. No amendment or modification of
this Agreement shall be valid or binding upon: a) the Company unless made in
writing and signed by an officer of the Company, duly authorized by the board of
directors of the Company or; b) Xxxxxx unless made in writing and signed by him.
The waiver by the Company or Xxxxxx of the breach of any Provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach by such party.
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8.3. GOVERNING LAW. The validity and effect of this Agreement
and the rights and obligations of the parties hereto shall be construed and
determined in accordance with the internal law, and not the conflicts law, of
the State of Illinois.
8.4. ENTIRE AGREEMENT. This Agreement contains all of the
terms agreed upon by the parties with respect to the subject matter hereof and
supersedes all prior agreements, arrangements and communications between the
parties dealing with such subject matter, whether oral or written.
8.5. BINDING EFFECT. This Agreement shall be binding upon and
shall inure to the benefit of the transferees, successors and assigns of the
Company, including any company or corporation with which the Company may merge
or consolidate.
8.6. REMEDIES FOR BREACH. Xxxxxx specifically acknowledges
that his services under this Agreement are unique and extraordinary and that
irreparable injury will result to the Company and its businesses and properties
in the event of a material breach of the terms and conditions of this Agreement
to be performed by him (including, but not limited to, leaving the employment
provided for hereunder except for a termination due to a Change of Control or a
material breach by the Company of this Agreement which is not cured or remedied
within 15 days after the breach). Xxxxxx, therefore, agrees that in the event of
his material breach of any of the terms and conditions of this Agreement to be
performed by him (including, but not limited to leaving the employment provided
for hereunder except for a termination due to a Change of Control or a material
breach by the Company of this Agreement which is not cured or remedied within 15
days after the breach), the Company shall be entitled, if it so elects, to
institute and prosecute proceedings in any court of competent jurisdiction,
either at law or in equity, to enjoin him from performing services for any other
person, firm or corporation in violation of any of the terms of this Agreement,
and to obtain damages for any breach of this Agreement. In the event of the
material breach by the Company of any of the terms and conditions of this
Agreement to be performed by it, Xxxxxx shall have all remedies, legal or
equitable, available to him under the laws of the State of Illinois. The
remedies provided herein shall be cumulative and in addition to any and all
other remedies which either party may have at law or in equity.
8.7. COSTS OF ENFORCEMENT. In the event of any suit or
proceeding seeking to enforce the terms, covenants, or conditions of this
Agreement, the prevailing party shall, in addition to all other remedies and
relief that may be available under this Agreement or applicable law, recover his
or its reasonable attorneys' fees and costs as shall be determined and awarded
by the court.
8.8. HEADINGS. Numbers and titles to paragraphs hereof are for
information purposes only and, where inconsistent with the text, are to be
disregarded.
8.9. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
when taken together, shall be and constitute one and the same instrument.
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8.10. PUBLIC ANNOUNCEMENTS. The parties hereto agree no
announcement shall be made, unless required by law and with legal counsel's
advice, as it relates to this Agreement or the employment of Xxxxxx with the
Company without the joint written approval of Xxxxxx and the Company.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date first set forth above.
ELECTRIC CITY CORP.
By: /ss/ Xxxxxx Xxxxxx
-------------------------------------
Its: Xxxxxx Xxxxxx, Chairman of the Board
By: /ss/ Xxxxx Xxxxxxxx
-------------------------------------
Its: Xxxxx Xxxxxxxx, President and Chief Operating
Officer
/ss/ Xxxx Xxxxxx
------------------------------------
XXXX XXXXXX
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