EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement"), dated as of the
19th day of November, 1999 (the "Effective Date"), is made by and among Xxxxx
Xxxxxxxx ("Xxxxxxxx" 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 Kawamura 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 Xxxx Xxxxxx
and the Company, the Company agrees to employ Kawamura as its President and
Chief Operating Officer to render such services as would be customary for a
president and chief operating officer including hiring 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 President and Chief Operating
Officer and consistent with the organizational chart attached as Exhibit A
hereto. The Company will elect Kawamura 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 Kawamura's term of
office as a director expires, the Company and its Board of Directors shall cause
Kawamura to be nominated for reelection, unless he is not employed by the
Company at the time of any such election.
Section 2. PERFORMANCE. Kawamura 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 President and Chief Operating Officer.
Without limiting the generality of the foregoing Kawamura
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. Kawamura 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
Kawamura 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 Kawamura's obligations as outlined herein. Further,
Kawamura will have reasonable, limited use of Company resources and his own
salaried time, to pursue
1
such activities so long as such activities do not unreasonably interfere with
his obligations as President and Chief Operation Officer. When reasonable and
consistent with the objectives of the Company, the Company agrees to provide
modest financial support to those organizations in which Xx. Xxxxxxxx becomes
involved, subject to approval of the Chairman, CEO and President. Upon request
from the Company, Kawamura 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, Kawamura shall
discharge certain responsibilities on behalf of his current employer, and in so
doing, Kawamura shall not be in breach of any provision of this Agreement.
Notwithstanding anything to the contrary herein, the parties acknowledge and
agree that Kawamura's employment may be terminated only for Due Cause as more
fully set forth herein. At the end of the Employment Period, the continuation of
Kawamura's employment with the Company shall be at the will of the Company and
Kawamura on terms and conditions agreed to by the Company and Kawamura, and
there shall be no obligation on the part of the Company or Kawamura to continue
such employment, provided; however, that no later than June 30, 2002, the
Company and Kawamura shall each provide reasonably specific notice to the other
party of their respective intentions in regard to continuation of Kawamura's
employment subsequent to the conclusion of the Employment Period.
Section 4. COMPENSATION.
4.1. SALARY. For all the services to be rendered by Kawamura
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. Kawamura's 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. Kawamura 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 the 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
Kawamura an option to purchase shares of the common stock of the Company subject
to and in accordance with the following ( the "Option"):
2
(a) OPTIONS. The Company hereby grants options to
Kawamura to purchase 1,500,000 shares of the
Company's common stock, subject to the vesting
provisions described below:
(i) On December 31, 2000, unless Kawamura has
been terminated for Due Cause prior thereto,
Kawamura shall become immediately vested in
options to purchase 500,000 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 Kawamura has
been terminated for Due Cause prior thereto,
Kawamura shall become immediately vested in
options to purchase 500,000 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 Kawamura has
been terminated for Due Cause prior thereto,
Kawamura shall become immediately vested in
options to purchase 500,000 of the issued
and outstanding shares of common stock of
the Company for Seven dollars ($7.00) per
share.
(b) REGISTRATION RIGHTS. Kawamura 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 in Control, the options described in
Section 4.3(a) above shall be automatically and immediately vested
and be exercisable by Kawamura 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
3
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 Kawamura 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 and procure in Kawamura's name and for Kawamura's benefit, if
Kawamura 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 Kawamura and Kawamura's 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 Kawamura 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. Kawamura will be entitled to an automobile
allowance of $550.00 per month.
4.6. CELLULAR PHONE. The Company agrees to reimburse Kawamura
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, Kawamura 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 Kawamura 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 Chief Executive Officer and the Chief Financial Officer.
5.2. ACCOUNTING. Kawamura shall provide the Company with an
accounting of his expenses, which accounting shall clearly reflect which
expenses are reimbursable by the Company, Kawamura 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.
Section 6. COVENANTS OF KAWAMURA.
6.1. CONFIDENTIALITY. During the Employment Period and
following the termination thereof for any reason, Kawamura shall not disclose or
make any use of, for his own
4
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, Kawamura: (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 Kawamura 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 Kawamura) 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 Kawamura's employment with the
Company for any reason, Kawamura 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 Kawamura's employment with the
Company or its Subsidiaries; or (c) solicit any person then or previously
employed by the Company or its Subsidiaries to join Kawamura, whether as a
partner, agent, employee, or
5
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. Kawamura 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 Kawamura, in the event of Kawamura's 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 Kawamura 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
Kawamura 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 Kawamura,
in the event of: (a) Intentionally Deleted; (b) material breach by
Kawamura of his covenants under this Agreement if unremedied within 15
days after written notice by the Company; (c) commission by Kawamura of
theft or embezzlement of property of the Company or other acts of
dishonesty; (d) commission by Kawamura 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 Kawamura in
the performance of his duties hereunder reasonably determined
6
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 Kawamura 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 Kawamura. 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), Kawamura's
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
Kawamura 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.
Kawamura's employment shall be deemed terminated for a reason other than Due
Cause by the Board of Directors if a Change of Control occurs. If Kawamura's
employment is terminated for a reason other than Due Cause, then the Company
shall pay as severance compensation to Kawamura 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 Kawamura's termination without Due Cause as the case may
be.
7.3 TERMINATION BY KAWAMURA. Kawamura 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 Kawamura's 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 Kawamura terminates the Employment Period for any other
reason any Options not vested shall immediately terminate.
7.4 SURRENDER OF PROPERTIES. Upon termination of Kawamura's
employment with the Company, regardless of the cause therefor, Kawamura 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, Kawamura 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.
7
7.5 SURVIVAL OF COVENANTS. The covenants of Kawamura 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 President:
Xxxxx Xxxxxxxx
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) Kawamura unless made in writing and signed by
him. The waiver by the Company or Kawamura 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.
8
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. Kawamura 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). Kawamura, 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, Kawamura 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.
9
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/ Xxxx Xxxxxx
-------------------------------------
Its: Xxxx Xxxxxx, Chief Executive Officer
/ss/ Xxxxx Xxxxxxxx
-----------------------------------------
XXXXX XXXXXXXX
10
