EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement "), dated as of January
1, 2002, between US ENERGY SYSTEMS, INC., a Delaware corporation (the "Company")
, and Xxxxxx X. Xxxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company's business consists of (a) acquiring and
operating existing independent power plants ("IPPs") and cogeneration facilities
throughout the world, (b) developing, building and operating new IPPs and
cogeneration facilities throughout the world, (c) developing, building and
selling special energy efficient products using cogeneration technology
throughout the world, (d) developing, building, acquiring and/or operating
"inside the fence" energy facilities and operations for commercial and
industrial users throughout the world, and (e) developing, building, acquiring
and/or operating district heating and cooling systems throughout the world.
WHEREAS, the Company and the Executive now desire to enter
into this Agreement in its entirety.
NOW, THEREFORE, in consideration of the mutual promises,
representations and warranties set forth herein. and for other good and valuable
consideration, it is hereby agreed as follows:
1. Position and Duties.
a) Employment and Position -The Company hereby
agrees to employ the Executive as set forth in the next succeeding sentence, and
the Executive hereby accepts such employment, upon the terms and conditions set
forth herein. The Executive shall serve as Senior Vice President - Corporate
Finance of the Company and shall report to the President and Chief Executive
Officer and shall have such other duties consistent with such office, as from
time to time may be prescribed by the President and Chief Executive Officer.
(b) Duties - During the Term (as defined in
Section 5(f) below), the Executive shall perform and discharge the duties that
may be assigned to him by the President and Chief Executive Officer from time to
time as provided in this Agreement, and the Executive shall devote his
reasonable best talents, efforts and abilities to the performance of his duties
hereunder. During the Term, the Executive shall perform such duties on a full-
time basis, and the Executive shall have no other employment whatsoever.
(c) Excluded Duties - Notwithstanding the
foregoing, duties including accounting financial reporting and related
compliance and the supervision of those functions, shall not be assigned to
Executive without Executive's consent and agreement.
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2. Compensation.. During the Term of this Agreement the
Executive shall receive the following Compensation.
(a) Base Salary - The Company shall pay the
Executive for his services hereunder a salary (as the same may be increased from
time to time, the "Base Salary") at the annual rate of $140,000.00 which shall
be payable in accordance with the customary payroll practices of the Company
but not less frequently than on a monthly basis. The Base Salary shall be
reviewed periodically by the Board and shall be subject to such increases as the
Board, in its sole discretion, from time to time may determine.
(b) Incentive Bonus - In addition to the Base
Salary, the Executive shall at the end of each fiscal year (or unless otherwise
specified) for the Company be awarded a bonus determined in accordance with the
2000 Corporate Incentive Plan, the 2000 Development Incentive Plan and the 2001
Finance Incentive Plan (collectively, the "Incentive Plans") which have been
established by the Board of Directors of the Company. In addition, for all
financings closed and research coverage initiated during the Term of this
Agreement, Executive shall receive 20% of the applicable award calculated in
accordance with the formulas in Section 6 of the 2001 Finance Incentive Plan
(the "FIP Payment") a copy of which has been provided to the Executive, except
that Executive shall receive 0% of any amount awarded under the 2001 Finance
Incentive Plan in respect of any financing respecting Scandanavian Energy
Financing Limited or otherwise related to the Swedish transaction. The Company
shall pay the FIP Payment to the Executive on financings and on research
coverage in accordance with the Plan, and such FIP payments shall be subject to
the vesting requirements included in the Plan. In the event that the Company
terminates or modifies the Finance Incentive Plan while this Agreement is in
effect, the Executive shall nonetheless be paid the full amount of any FIP
Payment and any other award due Executive under the Finance Incentive Plan with
respect to any Financing whose material terms have been agreed to in writing and
any Research Coverage agreed to but has yet to occur prior to said modification
or termination of the Finance Incentive Plan. The first $300,000 of aggregate
bonus awarded to Executive in any fiscal year shall be paid in cash. Any
aggregate bonus awarded to Executive in any fiscal year in excess of $300,000
shall be paid by the issuance of Restricted Shares (as defined below) which
Restricted Shares shall be valued at the Fair Market Value (as defined below).
In addition, the Executive is eligible for such other bonuses which may be
awarded by the Board in its sole discretion under such other plans that the
Board may establish in its sole discretion from time to time. "Fair Market
Value" shall be the average of the closing prices of a share of the Company's
common stock as of the five business days immediately prior to the date of the
issuance of the Restricted Shares, as reported with respect to the principal
market or quotation system in which such shares are then traded or quoted, or,
if no such closing prices are reported, on the basis of the closing bid price as
of the date of exercise on the principal market or quotation system on which
such shares are then traded or quoted, or, if not so traded or quoted, as
furnished by a professional securities dealer making a market in such stock
selected by the Board. "Restricted Shares" are shares of common stock of the
Company that are subject to the following terms and conditions:
(i) Grant and Restrictions. Each award of Restricted
Shares shall vest and cease to be restricted as follows: 1/3
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of the Restricted Shares upon the grant, 1/3 of the Restricted
Shares upon the first anniversary of the grant and the balance
upon the second anniversary of the grant. Restricted Shares
shall be subject to the terms and conditions of the Company's
2000 Incentive Compensation Plan, a copy of which has been
provided to Executive and which has been filed with the United
States Securities and Exchange Commission. Except to the
extent restricted under the terms of any agreement relating to
the Restricted Shares, the Executive shall have all of the
rights of a stockholder, including the right to vote the
Restricted Shares and the right to receive dividends thereon
(subject to any mandatory reinvestment or other requirement
imposed by the Board). During the restricted period applicable
to the Restricted Shares, the Restricted Shares may not be
sold, transferred, pledged, hypothecated, margined or
otherwise encumbered by the Executive.
(ii) Forfeiture. Except as set forth in Section 6
hereof, upon termination of the Executive's employment during
the applicable restriction period, the Restricted Shares that
are at that time subject to restrictions shall be forfeited
and reacquired by the Company.
(iii) Certificate for Stock. Restricted Shares may be
evidenced in such manner as the Board shall determine. If
certificates representing Restricted Shares are registered in
the name of the Executive, the Board may require that such
certificates bear an appropriate legend referring to the
terms, conditions and restrictions applicable to such
Restricted Shares, that the Company retain physical possession
of the certificates, and that the Executive deliver a stock
power to the Company, endorsed in blank, relating to the
Restricted Shares.
(iv) Dividends and Splits. As a condition to the
grant of an award of Restricted Share, the Board may require
that any cash dividends paid on a Restricted Share be
automatically reinvested in additional Restricted Shares.
Unless otherwise determined by the Board, stock distributed in
connection with a stock split or stock dividend, and other
property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as
the Restricted Shares with respect to which such stock or
other property has been distributed.
(c) Stock Options - Simultaneous herewith, the
Company and the Executive are executing a Stock Option Agreement respecting
100,000 common shares annexed hereto as Exhibit A and incorporated herein as if
fully set forth.
(d) Withholding. All payments required to be
made by the Company to the Executive under this Agreement (whether under this
Section 2 or otherwise) shall be subject to withholding of employment and income
taxes and other payroll deductions in accordance with applicable tax
requirements, the Company's policies applicable to Executives of the Company at
the Executive's level and the provisions of the Benefit Plans (as defined in
Section 3 below).
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3. Benefits. (a) Benefit Plans - During the Term, the Company
shall provide to the Executive benefits provided under the Company's pension and
profit-sharing plans (if any), health benefit plans (such as medical and
hospitalization coverage), and insurance plans such as life and disability
(collectively, the "Benefit Plans"). Such plans shall during the term provide
for a level of benefits in accord with the Company's general policy for benefits
for senior executives from time to time. Such Benefit Plans shall generally
provide the following benefits:
o Medical and Dental Insurance
o 401K plan with Company matching or equal
o Life Insurance
o Disability Insurance (60% of base salary for life)
(b) Automobiles - During the Term, the Company
shall provide the Executive with a car allowance of $500 per month.
(c) Vacations, sick leave and holidays. The
Executive shall be entitled to no less than four [4] weeks of paid vacation
during each year of the Term (and a pro rata portion thereof for any portion of
the Term that is less than a fiscal year). In addition, the Executive shall be
entitled to paid sick leave and holidays in accordance with the Company's usual
policies for its senior executives.
4. Reimbursement of Expenses. During the Term, the Company
shall pay or reimburse the Executive for all reasonable travel, entertainment
and other business expenses actually incurred or paid by the Executive in the
performance of his duties hereunder upon presentation of expense statements or
vouchers or such other supporting information as the Company may reasonably
require of the Executive.
5. Term: Termination. Subject to the provisions of this
Section 5, the term of the Executive's employment under this Agreement shall
commence on January 1, 2002 and shall end on December 31, 2002, provided that
the term of this Agreement shall automatically be renewed for each successive
one-year period on every December 31st, unless either party elects not to renew
by giving written notice to the other at least 90 days before an annual renewal
date or unless this Agreement is terminated earlier in accordance with the terms
herein. The initial one-year term referred to herein, together with any renewal
thereof, is referred to in this Agreement as the "Term". The employment of the
Executive may be terminated prior to the expiration of the Term in the manner
described in this Section 5 solely on the following grounds.
(a) Termination by the Company for Cause - The
Company shall have the right to terminate the employment of the Executive prior
to expiration of the Term for Cause (as defined in Section 5(i)(iii) below) by
written notice to the Executive specifying the particulars of the conduct of the
Executive forming the basis for such termination, as provided in this Agreement.
(b) Termination by the Executive for Good Reason
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- The Executive shall have the right to terminate his employment hereunder prior
to expiration of the Term for Good Reason (as such term is defined in Section
5(i)(iv) below) by written notice to the Company specifying the grounds
constituting such Good Reason, provided such written notice is given within six
months of the date the Executive reasonably became aware of such an event
constituting such Good Reason.
(c) Termination upon Death - The employment of
the Executive hereunder shall terminate immediately upon his death.
(d) The Company's Option upon Disability. If the
Executive becomes physically or mentally disabled during the Term so that he is
unable to perform the services required of him pursuant to this Agreement for a
period of six successive months, or an aggregate of six months in any
consecutive twelve-month period (the "Disability Period"), the Company shall
have the option, in its discretion, by giving written notice thereof, to
terminate the Executive's employment hereunder prior to expiration of the Term.
Regardless of whether the Company exercises such option, during a period of 18
month's from the date of the commencement of the Disability Period, the
Executive shall continue to receive his full compensation and other benefits
provided herein net of any salary continuation payments received under any
disability policy or program provided by the Company of which the Executive is a
beneficiary or recipient.
(e) Termination by the Company for other reason
than under 5(a), 5(c), 5(d) ("Without Cause") - The Company shall have the right
to terminate the employment of the Executive prior to expiration of the Term for
other reasons than defined in 5(a), 5(c) and 5(d) above ("Without Cause") by
written notice to the Executive as provided in this Agreement.
(f) Termination by the Executive for other
reason than under 5(b) The Executive shall have the right to terminate his
employment hereunder prior to expiration of the Term for other reasons than
under 5(b) by written notice given at least 60 days prior to the "Termination
Date" as defined in section 5(h) below.
(g) [Reserved]
(h) Termination Date - Any notice of termination
given by the Company or the Executive pursuant to the provisions of this
Agreement shall specify therein the effective date of such termination (the
"Termination Date").
(i) Certain Definitions - For purposes of this
Agreement, the following terms shall have the following meanings:
(i) The "Affiliate" of any Person means
any other Person directly or indirectly through one or more intermediary Persons
, controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" shall mean the power to direct the
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management and policies of such Person, directly or indirectly, by or through
equity ownership, agency or otherwise, or pursuant to or in connection with an
agreement, arrangement or understanding (written or oral) with one or more other
Persons by or through equity ownership, agency or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the foregoing.
(ii) "Change of Control" with respect to
the Company, means the occurrence of any of the following:
(A) the acquisition, with or without the
approval of the Board, directly or indirectly (in one or more
related transactions), by any Person (other than (i) the
Executive or an Affiliate of the Executive (ii) Cinergy
Solutions Inc. or any of its Affiliates (iii) the Xxxxxx
Group or any of its Affiliates or (iv) Xxxxx Xxxxxxxxx
or an Affiliate of Xxxxx Xxxxxxxxx (collectively the "Excluded
Group")) or two or more Persons acting as a group, of
beneficial ownership (as that term is defined in Rule 13d-3
under the Securities Exchange Act of 1934) of more than 30% of
the outstanding voting stock of the Company ("Voting Stock");
(B) the merger or consolidation of the
Company with one or more other Persons (other than any one or
more of the Excluded Group) as a result of which the holders
of the outstanding Voting Stock of the Company immediately
before the merger hold less than 30% of the Voting Stock (or
equivalent thereof) of the surviving or resulting Person;
(C) the sale to any Person (other than
any one or more of the Excluded Group) of all or substantially
all of the assets of the Company or its subsidiaries taken as
a whole, and this Agreement is not assumed by the acquiring
Person in connection therewith; or
(D) the Company or any of its members
enters into any agreement providing for any of the foregoing
and the transaction contemplated thereby is ultimately
consummated;
provided, however, that for purposes of this Agreement, the sale of any Voting
Stock (or equivalent thereof) of the Company (or any successor Person thereto)
pursuant to a public offering shall not constitute a Change of Control.
(iii) "Cause" shall mean (A) failure by
the Company to raise 5 million dollars in financing during the first 9 months of
the Term (`Non-Performance'), provided that "Non-Performance" shall not include
a failure by the Executive to perform resulting from (1) the Executive's
incapacity due to physical or mental illness or (2) the Executive's delivery to
the Company of a notice of termination for Good Reason or other reason, (B) the
Executive having been convicted of a crime which constitutes a felony under
applicable law or having entered a plea of guilty or nolo contendere with
respect thereto, or (C) the engaging by the Executive in illegal or fraudulent
conduct with respect to the Company.
(iv) "Good Reason" means the occurrence
of any one of the following events:
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(A) the assignment to the Executive
of any duties inconsistent in any
material respect with the
Executive's then position (including
status, offices, titles and
reporting relationships), authority,
duties or responsibilities, or any
other action by the Company which
when taken as a whole results in a
significant diminution in the
Executive's position, authority,
duties or responsibilities,
excluding for this purpose any
isolated, immaterial and inadvertent
action not taken in bad faith and
which is remedied by the Company
within 7 business days after receipt
of notice thereof given by the
Executive; or
(B) a reduction by the Company in
the Executive's Base Salary without
the consent of such Executive or the
failure by the Company to continue
in effect any material benefit or
compensation plan, including the
2001 Finance Incentive Plan, life
insurance plan, health and accident
plan or disability plan in existence
as of the date of this Agreement (or
a replacement or substitute plan
providing the Executive with
substantially similar benefits) in
which the Executive is participating
or the material reduction of the
Executive's benefits under any of
such plans including the 2001
Finance Incentive Plan (or
replacement or substitute plans) or
the failure to make any payment of
Base Salary or FIP Payment within 90
days of the date it was due.
(C) a Change of Control of the
Company;
(D) the Company requiring the
Executive to be based at any
location other than New York City or
any county in New York, New Jersey
or Connecticut that abuts New York
City or Westchester, NY except for
requirements of travel on the
Company's business which travel may
be on a regular and extensive basis
given the geographic scope of the
Company's franchise territories.
(v) "Person" means any individual,
corporation, partnership, limited liability company, association, joint-stock
company, trust, unincorporated organization, joint venture, court or government
(or political subdivision or agency thereof).
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6. Obligations on Termination.
(a) Payment Obligations of the Company in Case
of Termination by Executive for Good Reason Under Section 5(b) and the Company's
Termination Without Cause under Section 5(e).
(i) Upon termination of the Executive's
employment pursuant to Section 5(b) and Section 5(e), then, in lieu of any
further payment under 2(a), the Company shall pay the Executive a lump sum cash
payment equal to the current Base Salary times 0.5. If termination of the
Executive's employment pursuant to Section 5(b) and Section 5(e) occurs after
the Agreement has been renewed pursuant to Section 5, then in lieu, of any
further payment under 2(a), the Company shall pay the Executive a lump sum cash
payment equal to the current Base Salary times 1 (except such lump sum cash
payment shall equal the then current Base Salary times 2 in the case of a
termination following a Change of Control), plus any unreimbursed expenses and
unpaid accrued benefits (collectively, the "Severance Payment"). The Severance ,
Payment shall be paid within 60 days after the Termination Date.
(ii) Notwithstanding anything to the
contrary contained herein or in any other agreement between the Company and the
Executive, in the event that the Executive's employment is terminated pursuant
to Section 5(b) or 5(e),
(A) then any stock options (or
equivalent thereof) heretofore or hereafter granted to the Executive, which have
vested, may be exercised in full (to the extent not previously exercised and
provided that the term of the applicable option has not otherwise expired) at
any time within six months after such cessation of employment after which time
such options shall expire; and
(B) any and all reasonable costs and
expenses, including but not limited to, reasonable legal fees incurred by the
Executive in good faith in enforcing or establishing any of his rights hereunder
shall be immediately paid to the Executive upon presentation of appropriate
documentation to the Company.
(C) The Executive's rights to
payments under Section 2(b) hereof shall not be affected in the case of
termination of employment under Section 5(b) and 5(e) notwithstanding any
language to the contrary in the Incentive Plans or this Agreement. Any
Restricted Shares that are unvested on the Termination Date subject to
restriction shall vest.
(b) Payment Obligations of the Company in case of
Termination for Death.
(i) Upon termination of the Executive's
employment upon death, the Company shall have no payment obligations to the
Executive hereunder, except for the payment of any proceeds received by the
Company from the Life Insurance policy described in Section 3(a) hereof, any
accrued and unpaid compensation (including unpaid accrued benefits), and
reimbursement of any unreimbursed expenses.
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(ii) Notwithstanding anything to the contrary
contained herein or in any other agreement between the Company and the Executive
, in the event that the Executive's employment is terminated pursuant to Section
5(c),
(A) then any stock options (or equivalent
thereof) heretofore or hereafter granted to the Executive, which have vested,
may be exercised in full (to the extent not previously exercised and provided
that the term of the applicable option has not otherwise expired) by the
Executive's estate at any time within six months after such termination; and
(B) any and all reasonable costs and
expenses, including but not limited to, reasonable legal fees incurred by the
Executive's estate in good faith in enforcing or establishing any of his rights
hereunder shall be immediately paid to the Executive's estate upon presentation
of appropriate documentation to the Company.
(C) The Executive's rights to payments under
Section 2(b) hereof shall not be affected by the termination of employment under
Section 5(c) notwithstanding any language to the contrary in the Incentive Plans
or this Agreement. The Restricted Shares that are unvested on the Termination
Date shall vest.
(c) Payment Obligations of the Company in case of
Termination for Disability.
(i) Upon termination of the Executive's
employment upon disability, the Executive shall receive the Compensation
provided for in Section 5(d) hereof plus unreimbursed expenses and unpaid
accrued benefits. Upon termination under Section 5(d), Executive shall
have the same rights under the Plans as if his employment continued for eighteen
months after the commencement of the Disability Period.
(ii) Notwithstanding anything to the contrary
contained herein or in any other agreement between the Company and the Executive
, in the event that the Executive's employment is terminated pursuant to Section
5(d),
(A) then any stock options (or equivalent
thereof) heretofore or hereafter granted to the Executive, which have vested or
which vest in accordance with the terms of the Stock Option Agreement will vest
as if the Executive's employment did not terminate and may be exercised in full
(to the extent not previously exercised and provided that the term of the
applicable option has not otherwise expired) at any time within such eighteen
month period after which time such options shall expire; and
(B) any and all reasonable costs and
expenses, including but not limited to, reasonable legal fees incurred by the
Executive in good faith in enforcing or establishing any of his rights hereunder
shall be immediately paid to the Executive upon presentation of appropriate
documentation to the Company.
(C) The Executive's rights to payments under
Section 2(b) hereof shall not be affected in the case of termination of
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employment under Section 5(c) notwithstanding any language to the contrary in
the Incentive Plans or this Agreement. Any Restricted Shares that are unvested
on the Termination Date shall vest.
(d) Payment Obligations of the Company in case
of Termination for other Reason under Section 5(f) or Termination For Cause
under Section 5(a).
(i) Upon termination of the Executive's
employment as a result of termination for other reasons under Section 5(f) or
for cause under Section 5(a), the Company shall have no payment obligations to
the Executive hereunder, except for
(A) the payment of the
Executive's then current Base Salary through December 31, 2002 if termination is
for Non-Performance; and
(B) the payment of any accrued
and unpaid compensation (including unpaid accrued benefits), and reimbursement
of any unreimbursed expenses.
(ii) Notwithstanding anything to the
contrary contained herein or in any other agreement between the Company and the
Executive, in the event the Executive terminates his employment by voluntary
resignation pursuant to Section 5(f) or is terminated For Cause under Section
5(a),
(A) then any stock options (or
equivalent thereof) heretofore or hereafter granted to the Executive, which have
vested, may be exercised in full (to the extent not previously exercised and
provided that the term of the applicable option has not otherwise expired) at
any time within six months after such cessation of employment after which time
such options shall expire; however, if the Executive voluntarily resigns prior
to September 30, 2002, then he shall forfeit any vested stock options granted
herewith and
(B) any and all reasonable costs and
expenses, including, but not limited to, reasonable legal fees incurred by the
Executive in good faith in enforcing or establishing any of his rights hereunder
shall immediately be paid to the Executive upon presentation of appropriate
documentation to the company.
(C) The Restricted Shares that are
unvested on the Termination Date shall be forfeited and reacquired by the
Company.
[(e) Continued Medical Dental Coverage at Company Cost. To the
extent permitted by applicable law, the Company shall continue to provide the
Executive at the Company's cost, with medical, dental and hospitalization
insurance coverage for: until December 31, 2002 in the case of a Termination For
Non-Performance under Section 5(a); 6 months from the Termination Date in the
case of a termination under Section 5(b) and 5(e); and 18 months from the
Termination Date in the case of a termination under Section 5(d).
(f) [Reserved]
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(g) [Reserved]
(h) Liability of the Company for Compensation in the Event of
Termination. Provided the Company fully complies with this Section 6, then the
Company shall have no further liability to the Executive under Section 2 and
Section 3 above in the event of termination as provided for herein.
7. Trade Secrets; Confidentiality. The Executive recognizes
and acknowledges that, in connection with his employment with the Company, he
has had and will continue to have access to valuable trade secrets and
confidential information of the Company and its Affiliates including, but not
limited to, customer lists, business methods and processes, marketing,
promotional, pricing, financial information, technical information and data
relating to clients, Executives and consultants (collectively, "Confidential
Information") and that such Confidential Information is being made available to
the Executive only in connection with the furtherance of his employment with the
Company. The Executive agrees that during the Term and for a period of 2 years
thereafter, the Executive shall not disclose any Confidential Information to any
Person, except that disclosure of Confidential Information will be permitted:
(a) to the Company and its respective Affiliates and advisors; (b) if such
Confidential Information has previously become available to the public through
no fault of the Executive; (c) if required by law or any court or governmental
agency or body, provided that in any such case covered by this clause (c) the
Executive shall provide the Company, in advance of any such disclosure, with
prompt notice of such requirement(s) and shall cooperate fully with the Company
to the extent it may seek to limit such disclosure; (d) if necessary to
establish or assert the rights of the Executive hereunder; or (e) if expressly
consented to by the Company.
8. Noncompetition and Nonsolicitation.
(a) The Executive hereby covenants and agrees that during the
Term (and only if the Agreement is renewed or extended beyond December 31, 2002,
for the respective periods set forth below immediately following the termination
by the Company or the Executive, as applicable, of his employment under the
respective circumstances set forth below)he shall not, without the prior written
consent of the Board, at any time, directly or indirectly, on his own behalf or
on behalf of any Person:
(i) own, manage, operate, control, be employed
by, participate in, provide consulting services to, or be connected or
associated in any manner with the ownership, management, operation or control of
any business which is in competition with the Company (in the business in which
the Company is substantially engaged during the Term in the case of acts
committed during the Term or in the business in which the Company is
substantially engaged at the time of termination of Executive's employment in
the case of acts committed after the Term) or any of its Affiliates in any state
of the United States or in any foreign country in which any of them are engaged
in business during the Term in the case of acts committed during the Term or in
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any state of the United States or in any foreign country in which any of them
are engaged in business at the time of termination of Executive's employment in
the case of acts committed after the Term for as long as the Company continues
to conduct such business (the "Non-Compete"), provided that Executive's
employment in the investment or commercial banking industry after termination of
his employment will not be deemed to be in competition with the Company so long
as he does not, directly or indirectly participate in a merger or acquisition
transaction for which the Company is competing and is evidenced by a public
tender offer, confidentiality agreement or letter of intent between the Company
and the party it intends to pursue for merger or acquisition.
(ii) solicit or take any action to cause the
solicitation of, or recommend that, any supplier, client, customer, contractor,
vendor, agent or consultant of the Company or any of its Affiliates or other
Person having business relations with the Company, discontinue business or cease
such relationship, in whole or in part, with the Company or any of its
Affiliates (the "Customer Non-Solicit").
(iii) employ any Person employed by the Company or
any of its Affiliates at the time of, or during the 12 months preceding, such
termination of the Executive's employment with the Company (the "Non-Hire") or
(iv) solicit for employment (other than through
unaffiliated employment recruiting or placement firms or services who are not
specifically directed to solicit Executives of the Company or provided with the
names of any such Executives) any Person employed by the Company or any of its
Affiliates at the time of, or during the 12 months preceding such termination of
the Executive's employment with the Company, or otherwise encourage or entice
any such Person to leave such employment (the "Executive Non-Solicit"), provided
, however, that nothing in this Agreement shall preclude the executive from
owning less than five percent of any class of publicly traded equity of any
entity
Customer Executive
Reason for Termination Non-Compete Non-Solicit Non-Hire Non-Solicit
---------------------- ----------- ----------- -------- -----------
Good Reason (5(b)) 1 year* 1 1/2 years 1 1/2years 1 1/2 years
For Cause (5(a)) except Non- 2 years 1 1/2 years 1 1/2years 1 1/2 years
Performance
Company Termination 0 years 1 1/2 years 1 1/2years 1 1/2 years
for other than Cause (5(a)) and
Disability (5(e))
Voluntary Resignation not for 1 year 1 1/2 years 1 1/2years 1 1/2 years
Good Reason (5(f))
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Company Failure to Renew 0 years 1 1/2 year 1 1/2 years 1 1/2 years
Executive Failure to Renew 0 years 1 1/2 years 1 1/2 years 1 1/2 years
Disability (5(d)) 0 years 1 1/2 years 1 1/2 years 1 1/2 years
Non-Performance 1/2 year 1/2 year 1/2 year 1/2 year
* If the Executive terminates his employment for Good Reason and, at such time,
notifies the Company that he is waiving any right to the lump sum cash payment
referred to in Section 6(a)(i) hereof, then the Non-Compete shall be reduced to
0 years.
(b) The Employee acknowledges and agrees that
(i) the restrictive covenants set forth in this
Section 8 (the "Restrictive Covenants") are reasonable and valid in geographical
and temporal scope and in all other respects, and
(ii) it is the intention of the parties hereto
that the Restrictive Covenants be enforceable to the fullest extent permitted by
applicable law. Therefore, if any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the remainder of
the Restrictive Covenants shall not thereby be affected and shall be given full
force and effect, without regard to the invalid or unenforceable parts.
Specifically, if any court of competent jurisdiction should hold that any
portion of the Restrictive Covenants is overly broad as to one or more states of
the United States or one or more foreign jurisdictions, then that state or
states or foreign jurisdiction or jurisdictions shall be eliminated from the
territory to which the Restrictive Covenants apply and the restrictions shall
remain applicable in all other states of the United States and foreign
jurisdictions.
(c) If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable for any reason, such
court shall have the power to modify such Restrictive Covenant, or any part
thereof, and, in its modified form, such restrictive covenant shall then be
valid and enforceable.
(d) The Company acknowledges and agrees that the Restrictive
Covenants in Section 8 only will apply to the Executive in the event of a
termination of the Executive's employment after renewal or extension of the
Agreement pursuant to Section 5. Any termination of Executive's employment
(including notice by the Company or Executive of their election not to renew the
Agreement pursuant to Section 5) on or prior to December 31, 2002, shall not
require the Executive to comply with the provisions or Restrictive Covenants of
Section 8 herein.
9. Equitable Relief. In the event of a breach or threatened
breach by the Executive of any of the covenants contained in this Agreement, the
Company shall be entitled to a temporary restraining order, a preliminary
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injunction and/or a permanent injunction restraining the Executive from
breaching or continuing to breach any of said covenants. Nothing herein
contained shall be construed as prohibiting the Company from pursuing any other
remedies that may be available to it under this Agreement for such breach or
threatened breach.
10. Severability. Should any provision of this Agreement be
held, by a court of competent jurisdiction, to be invalid or unenforceable, such
invalidity or unenforceability shall not render the entire Agreement invalid or
unenforceable, and this Agreement and each individual provision hereof shall be
enforceable and valid to the fullest extent permitted by law.
11. Successors and Assigns.
(a) This Agreement and all rights under this
Agreement are personal to the Executive and shall not be assignable other than
by will or the laws of descent. All of the Executive's rights under the
Agreement shall inure to the benefit of his heirs, personal representatives,
designees or other legal representatives, as the case may be.
(b) This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. Any Person
succeeding to the business of the Company by merger, purchase, consolidation or
otherwise shall assume by contract or operation of law the obligations of the
Company under this Agreement, if provided that Executive's position in such
dispute has a good faith basis, any and all reasonable out-of-pocket costs
incurred by the Executive in connection with any dispute arising out of this
Agreement shall be immediately paid to the Executive by the Company upon
presentation of appropriate documentation up to an aggregate amount of $50,000.
12. Governing Law: Jurisdiction. This Agreement shall be
construed in accordance with and governed by the laws of the State of New York.
The parties hereby agree to submit any and all disputes arising out of or in
connection with this Agreement to binding arbitration in accordance with the
rules of the American Arbitration Association for the resolution of employment
disputes. Such arbitration shall be held in New York City. Each party shall
select one arbitrator and the two such selected arbitrators shall select a third
arbitrator. Notwithstanding anything to the contrary in this Section 12, such
parties may seek in any court of competent jurisdiction any injunctive relief
pursuant to Section 9 of this Agreement.
13. Notices. All notices, requests and demands given to or made upon
the respective parties hereto shall be deemed to have been given when received
or refused if mailed by registered or certified mail, postage prepaid, if
delivered by hand, or if delivered by Federal Express or similar overnight
delivery service, addressed to the parties at their addresses set forth below or
to such other addresses furnished by notice given in accordance with this
Section 13:
(a) if to the Company, to
Company Headquarters
Attention: President
(b) if to the Executive, to
Xxxxxx Xxxxxxx
0000 Xxxx Xxxxxx
Xxxxxx Xxxxx, Xxx Xxxx 00000
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14. Complete Understanding. Together with the Stock Option
Agreement, Stock Option Plans and the Incentive Plans, this Agreement supersedes
any prior contracts, understandings, discussions and agreements relating to
employment between the Executive and the Company and constitutes the complete
understanding between the parties with respect to the subject matter hereof. No
statement, representation, warranty or covenant has been made by either party
with respect to the subject matter hereof except as expressly set forth herein
or therein. In the event of any contract between the terms of this Agreement and
any of said documents, this Agreement shall govern.
15. Modification:.
(a) This Agreement may be amended or waived if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company and the Executive or in the case of a waiver, by the party
against whom the waiver is to be effective. Any such waiver shall be effective
only to the extent specifically set forth in such writing.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
16. Mutual Representations.
(a) The Executive represents and warrants to the Company
that the execution and delivery of this Agreement and the fulfillment of the
terms hereof
(i) will not constitute a default under or
conflict with any agreement or other instrument to which he is a party or by
which he is bound, provided that the Company acknowledges Executive has executed
certain confidentiality or non-disclosure agreements pertaining to Catamount
Energy and Environmental Power Corporation prior to the commencement of the Term
, the performance of which shall not constitute a violation of this
representation and the Executive has given the Company timely notice of such
agreements and the restrictions contained therein, and
(ii) do not require the consent of any Person.
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(b) The Company represents and warrants to the Executive that
this Agreement has been duly authorized, executed and delivered by the Company
and that the fulfillment of the terms hereof
(i) will not constitute a default under or
conflict with any agreement or other instrument to which it is a party or by
which it is bound and
(ii) do not require the consent of any Person.
(c) Each party hereto warrants and represents to the other
that this Agreement constitutes the valid and binding obligation of such party
enforceable against such party in accordance with its terms.
(d) The parties agree to indemnify, defend and hold the each
other harmless for any claim, loss, damage, cost, expense including without
limitation, reasonable attorney fees arising out of or relating to a breach of
the foregoing representations in Section 16 (a), (b), and (c). The Executive's
obligation under Section 16 shall be limited to $50,000.
17. Headings. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of this Agreement.
18. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by the other party hereto.
19. Inconsistencies. In the event of any inconsistency
between this Agreement on the one hand and the Incentive Plans on the other hand
, this Agreement shall govern.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed in its corporate name by one of its officers duly authorized to enter
into and execute this Agreement, and the Executive has manually signed his name
hereto, all as of the day and year first above written.
US ENERGY SYSTEMS, INC.
/s/ Xxxxx Xxxxxxx
--------------------
Name: Xxxxx Xxxxxxx
Title: President
/s/ Xxxxxx X. Xxxxxxx
-----------------
Name: Xxxxxx X. Xxxxxxx
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