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Exhibit 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into this ___ day of
__________, 1996, but is effective for all purposes as of the date specified
below in Section 2, by and between ECHELON INTERNATIONAL CORPORATION, a Florida
corporation (the "Company"), and XXXXX X. XXXXX, residing at 0000 00xx Xxxxxx
X., Xx. Xxxxxxxxxx, Xxxxxxx 00000 (the "Executive").
W I T N E S S E T H:
1. EMPLOYMENT
The Company hereby employs the Executive, and the Executive hereby
accepts such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. TERM
Subject to the provisions for termination as hereinafter provided, the
term of employment under this Agreement shall begin as of the completion of the
"Distribution" as that term is defined in the Company's Registration Statement
on Form 10, as amended (the "Distribution"), and shall continue through
December 31, 1998, provided, however, that this Employment Agreement shall
automatically be renewed for successive one year terms unless either party
gives the other written notice of termination at least ninety (90) days prior
to the end of any such term.
3. COMPENSATION
(a) Base Salary. The Company shall pay to the Executive as basic
compensation for all services rendered by the Executive during the term of this
Agreement a basic annualized salary of $100,000 per year, or such other sum in
excess of that amount as the parties may agree on from time to time or as
provided in the next sentence (as in effect from time to time, the "Base
Salary"), payable monthly or in other more frequent installments, as determined
by the Company. The Board of Directors shall have no authority to reduce the
Executive's Base Salary in effect from time to time. In addition, the Board of
Directors, in its discretion, may award a bonus or bonuses to the Executive in
addition to the bonuses provided for in Section 3(b).
(b) Bonuses. In addition to the Base Salary to be paid pursuant to
Section 3(a), for each of the Company's two fiscal years ending December 31,
1997 and December 31, 1998 during the term of this Agreement, the Company shall
pay as incentive compensation the annual bonuses, to the extent earned,
specified on Exhibit A to this Agreement. For each fiscal year ending after
December 31, 1998, provided the Executive continues to be employed by the
Company under this Agreement, the Executive shall be eligible for incentive
compensation annual bonus plan(s) adopted by the Board of Directors of the
Company from time to time in accordance with the terms of such plans.
(c) Certain Plans and Initial Award. (i) It is anticipated that the
Company will adopt certain incentive compensation plans including a long term
incentive plan (the "LTIP"), providing for annual or other periodic awards to
key employees, among other things, of restricted stock and a stock option
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plan (the "ISO/NSO Plan"), providing for the annual or other periodic issuance
of options to purchase the Company's common stock. The LTIP and ISO/NSO are
referred to collectively in this Agreement as the "Plans." The Executive will
be given an opportunity to participate in the Plans, in accordance with and
subject to the terms of the Plans as they may be adopted, amended and
administered from time to time.
(ii) In addition to the incentive compensation referred to n
Section 3(c)(i), the Company hereby agrees to issue to the Executive under the
LTIP, effective immediately following the completion of the Distribution, that
number of shares of the Company's common stock (the "Initial Restricted Stock")
as will equal two-tenths of one percent (0.20%) of the shares of the Company's
common stock distributed in the Distribution, which Initial Restricted Stock
shall be subject to risk of forfeiture, which risk will lapse as to one-fourth
of the shares of the Initial Restricted Stock on January 31, 1998, and as to an
additional one-fourth of the Initial Restricted Stock on each of January 31,
1999, January 31, 2000 and January 31, 2001.
(iii) In addition to the incentive compensation referred to
in Section 3(c)(i) and the Initial Restricted Stock, the Company hereby agrees
to grant to the the Executive under the LTIP, effective immediately following
the completion of the Distribution, options to purchase one thousand (1,000)
shares of the Company's common stock (the "Initial Options"), which Initial
Options shall be exerciseable as to one-fourth of the shares of common stock
covered by the Initial Options on January 31, 1998, and as to an additional
one-fourth of such shares on each of January 31, 1999, January 31, 2000 and
January 31, 2001. The exercise price for the Initial Options shall be the
closing price on the New York Stock Exchange (or such other market on which the
Company's stock trades if it is not listed on the New York Stock Exchange) on
the trading day which is the eighth month anniversary of the day of the
completion of the Distribution (the "Option Pricing Date"), or if the Option
Pricing Date is not a trading day, the first trading day thereafter.
(iv) Any and all risks of forfeiture shall lapse as to all of
the Initial Restricted Stock and the Initial Options shall be fully vested and
shall be exerciseable as to all of the shares of common stock covered by the
Initial Options upon (i) the death of the Executive or termination of
employment upon the "Permanent Disability" (as that term is defined in Section
7(b)(ii) of this Agreement) of the Executive, (ii) the termination of
employment of the Executive by the Company"Without Good Cause" (as that term is
defined in Section 8(b)(ii) of this Agreement) or (iii) the exercise by the
Executive of his rights to terminate his employment under Section 8(d)(ii)
following a "Change of Control" (as that term is defined in Section 8(d)(i) of
this Agreement).
(d) Reimbursement. The Company shall reimburse the Executive, in
accordance with the Company's policies and practices for senior management, for
all reasonable expenses incurred by the Executive in the performance of the
Executive's duties under this Agreement, provided, however, that the Executive
must furnish to the Company an itemized account, satisfactory to the Company,
in substantiation of such expenditures.
(e) Certain Benefits. The Executive shall be entitled to such fringe
benefits including, but not limited to, medical and other insurance benefits as
may be provided from time to time by the Company to other senior officers of
the Company. In addition, without restricting the foregoing, the Company shall
provide the Executive at the Company's sole cost and expense with (i) a policy
or policies of term life insurance (the "Basic Life Insurance") providing,
among other things, basic death benefits
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of not less than two times the Base Salary in effect from time to time, (ii)
directors and officers liability insurance with coverage, terms and limits
suitable for a vice president of a New York Stock Exchange listed company
comparable in financial size and wherewithal to that of the Company and (iii)
a monthly allowance of $500 cash to reimburse the Executive for the use and
maintenance of his automobile in furtherance of the business and affairs of the
Company, provided that the Executive shall at all times insure the Executive
and the Company in such amounts as may be reasonably requested by the Company
against claims for bodily injury, death and property damages occurring as a
result of its use. The Company shall use its reasonable best efforts to make
available to the Executive in connection with providing and paying for the
Basic Life Insurance the opportunity to purchase at the Executive's sole cost
and expense additional life insurance with a basic death benefit (the "Optional
Life Insurance") equal to two times the Executive's Base Salary in effect from
time to time (affording the Executive the opportunity to have basic death
benefit life insurance coverage equal to four times such Base Salary). The
Company shall use its reasonable best efforts to effect the transfer of the
ownership to the Executive of the policy or policies for the Basic Life
Insurance and the Optional Life Insurance, if any, upon the termination of the
Executive's employment by the Company. After the Executive's termination,
payment of any premiums would be the obligation of the Executive.
(f) Other Incentive and Benefit Plans. The Executive shall be
eligible to participate, in accordance with the terms of such plans as they may
be adopted, amended and administered from time to time, in incentive, bonus,
benefit or similar plans, including without limitation, any stock option, bonus
or other equity ownership plan, any short, mid or long term incentive plan and
any other bonus, pension or profit sharing plans established by the Company
from time to time.
4. DUTIES
(a) General. The Executive is engaged as a Vice President of the
Company. In addition, at the request of the Board of Directors, the Executive
shall serve in the same positions in any wholly owned subsidiary of the
Company, without any additional compensation. The Executive shall have such
duties and hold such other offices as may from time to time be reasonably
assigned to him by the Board of Directors of the Company.
(b) Indemnification. To the fullest extent permitted by law, the
Company shall indemnify and hold harmless the Executive for all liabilities,
costs, expenses and damages arising out of or in connection with the
Executive's service to the Company under this Agreement. In furtherance of
this indemnity, the Company shall enter into an indemnification agreement, in
form and substance reasonably satisfactory to the Executive and the Company.
In addition, the indemnity provided hereunder shall extend to service by the
Executive as an officer or director, or service in a similar capacity, for any
civic, community or charitable organization, provided such service is
undertaken at the request of or with the knowledge and acquiescence of the
Company. The foregoing indemnification shall be in addition to any rights or
benefits the Executive may have under statute, the Bylaws or Articles of
Incorporation of the Company, under a policy of insurance, or otherwise.
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5. EXTENT OF SERVICES; VACATIONS AND DAYS OFF
(a) Extent of Services. During the term of the Executive's
employment under this Agreement, except during customary vacation periods and
periods of illness, the Executive shall devote full-time energy and attention
during regular business hours to the benefit and business of the Company as may
be reasonably necessary in performing the Executive's duties pursuant to this
Agreement.
(b) Vacations. The Executive shall be entitled to vacations with pay
and to such personal and sick leave with pay in accordance with the policy of
the Company as may be established from time to time by the Company and applied
to other senior officers of the Company. In no event shall the Executive be
entitled to fewer than four weeks' annual vacation. Unused vacation days may
be carried over from one year to the next for a period of up to two years. Any
vacation days which remain unused on the second anniversary of the end of the
fiscal year to which they originally related shall expire and shall thereafter
no longer be useable by the Executive.
6. FACILITIES
The Company shall provide the Executive with a fully furnished office,
and the facilities of the Company shall be generally available to the Executive
in the performance of the Executive's duties pursuant to this Agreement, it
being understood and contemplated by the parties that all equipment, supplies
and office personnel required in the performance of the Executive's duties
under this Agreement shall be supplied by and at the sole expense of the
Company.
7. ILLNESS OR INCAPACITY, TERMINATION ON DEATH, ETC.
(a) Death. If the Executive dies during the term of the Executive's
employment, the Company shall pay to the estate of the Executive within 30 days
after the date of death such Base Salary and any cash bonus compensation earned
pursuant to the provisions of any incentive compensation plan then in effect
but not yet paid, as would otherwise have been payable to the Executive up to
the end of the month in which the Executive's death occurs. After receiving
the payments provided in this Section 7(a) and the benefits provided in Section
8(e) of this Agreement, the Executive and the Executive's estate shall have no
further rights under this Agreement (other than those rights already accrued).
(b) Disability. (i) During any period of disability, illness or
incapacity during the term of this Agreement which renders the Executive at
least temporarily unable to perform the services required under this Agreement,
the Executive shall receive the Base Salary payable under Section 3(a) of this
Agreement plus any cash bonus compensation earned pursuant to the provisions of
any incentive compensation plan then in effect but not yet paid, less any cash
benefits received by him under any disability insurance carried by or provided
by the Company. Upon the Executive's "Permanent Disability" (as defined
below), which permanent disability continues during the payment periods
specified herein, the Company shall pay to the Executive for the period of time
specified below an amount (the "Disability Payment") equal to the (i) sum of
(A) the Base Salary in effect at the time of the Executive's permanent
disability plus (B) an amount equal to the target level of the annual cash
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bonus payable to the Executive under the Company's Management Incentive
Compensation Plan as described on Exhibit A or any similar bonus or incentive
plans or programs then in effect (the "MICP Target Amount"), in respect of the
fiscal during which the Executive's permanent disability occurred, which MICP
Target Amount shall be paid in pro rata equal monthly installments over the
period of time specified below (ii) reduced by the amount of any monthly
payments under any policy of disability income insurance paid for by the
Company which payments are received during the time when any Disability Payment
is being made to the Executive following the Executive's Permanent Disability.
For so long as the Executive's permanent disability continues, the Disability
Payment shall be paid by the Company to the Executive in equivalent
installments at the same time or times as would have been the case for payment
of Base Salary over the unexpired term of this Agreement if the Executive had
not become permanently disabled and had remained employed by the Company
hereunder, but in no case shall such period exceed 24 months. The Executive
may be entitled to receive payments under any disability income insurance which
may be carried by or provided by the Company from time to time. Upon
"Permanent Disability" (as that term is defined in Section 7(b)(ii) below) of
the Executive, except as provided in this Section 7(b) all rights of the
Executive under this Agreement (other than rights already accrued) shall
terminate.
(ii) The term "Permanent Disability" as used in this
Agreement shall mean, in the event a disability insurance policy is maintained
by the Company covering the Executive at such time and is in full force and
effect, the definition of permanent disability set forth in such policy. In
the event no disability insurance policy is maintained at such time and in full
force and effect, "Permanent Disability" shall mean the inability of the
Executive, as determined by the Board of Directors of the Company, by reason of
physical or mental disability to perform the duties required of him under this
Agreement for a period of one hundred and eighty (180) days in any one-year
period. Successive periods of disability, illness or incapacity will be
considered separate periods unless the later period of disability, illness or
incapacity is due to the same or related cause and commences less than six
months from the ending of the previous period of disability. Upon such
determination, the Board of Directors may terminate the Executive's employment
under this Agreement upon ten (10) days' prior written notice. If any
determination of the Board of Directors with respect to permanent disability is
disputed by the Executive, the parties hereto agree to abide by the decision of
a panel of three physicians. The Executive and Company shall each appoint one
member, and the third member of the panel shall be appointed by the other two
members. The Executive agrees to make himself available for and submit to
examinations by such physicians as may be directed by the Company. Failure to
submit to any such examination shall constitute a breach of a material part of
this Agreement.
8. OTHER TERMINATIONS
(a) By the Executive. (i) The Executive may terminate the
Executive's employment hereunder upon giving at least ninety (90) days' prior
written notice. In addition, the Executive shall have the right to terminate
the Executive's employment hereunder on the conditions and at the times
provided for in Section 8(d) of this Agreement.
(ii) If the Executive gives notice pursuant to Section
8(a)(i) above, the Company shall have the right (but not the obligation) to
relieve the Executive, in whole or in part, of the Executive's duties under
this Agreement, or direct the Executive to no longer perform such duties, or
direct that
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the Executive should no longer report to work, or any combination of the
foregoing. In any such event, the Executive shall be entitled to receive only
the Base Salary not yet paid, as would otherwise have been payable to the
Executive up to the end of the month specified as the month of termination in
the termination notice. In the event the Executive gives notice pursuant to
Section 8(a)(i) above but specifies a termination date in excess of ninety (90)
days from the date of such notice, the Company shall have the right (but not
the obligation) to accelerate the termination date to any date prior to the
date specified in the notice that is in excess of ninety (90) days from the
date of the notice, and the Company shall have the right (but not the
obligation) to relieve the Executive, in whole or in part, of the Executive's
duties under this Agreement, or direct the Executive to no longer perform such
duties, or direct that the Executive should no longer report to work, or any
combination of the foregoing; provided, however, that in any such event the
Executive shall be entitled to receive the Base Salary, as would otherwise have
been payable to the Executive up to the end of the month of the termination
date properly selected by the Company. Upon receiving the payments provided
for under this Section 8(a), all rights of the Executive under this Agreement
(other than rights already accrued) shall terminate.
(b) Termination for "Good Cause". (i) Except as otherwise provided
in this Agreement, the Company may terminate the employment of the Executive
hereunder only for "good cause," which shall mean: (A) the Executive's
conviction of either a felony involving moral turpitude or any crime in
connection with the Executive's employment by the Company which causes the
Company a substantial detriment, but specifically shall not include traffic
offenses; (B) actions by the Executive as an executive officer of the
Executive which clearly are contrary to the best interests of the Company; (C)
the Executive's willful failure to take actions permitted by law and necessary
to implement policies of the Company's Board of Directors which the Board of
Directors has communicated to him in writing, provided that minutes of a Board
of Directors meeting attended in its entirety by the Executive shall be deemed
communicated to the Executive; (D) the Executive's continued failure to attend
to the Executive's duties as an executive officer of the Executive; or (E) any
condition which either resulted from the Executive's substantial dependence, as
determined by the Board of Directors of the Company, on alcohol, or any
narcotic drug or other controlled or illegal substance. If any determination
of substantial dependence is disputed by the Executive, the parties hereto
agree to abide by the decision of a panel of three physicians appointed in the
manner and subject to the same penalties for noncompliance as specified in
Section 7(b)(ii) of this Agreement.
(ii) Notwithstanding the foregoing, each of the foregoing
bases for termination specified in (A) through (E) of Subsection 8(b)(i) shall
constitute "Good Cause" only if (1) the Executive has been provided with
written notice of any assertion that there is a basis for termination for good
cause which notice shall specify in reasonable detail specific facts regarding
any such assertion and the Executive has been given a reasonable period of time
within which to remedy or cure the problem or complaint, (2) such notice is
provided to the Executive a reasonable time before the Board of Directors meets
to consider any possible termination for cause, (3) at or prior to the meeting
of the Board of Directors to consider the matters described in the written
notice, an opportunity is provided to the Executive and his counsel to be heard
by the Board of Directors with respect to the matters described in the written
notice, before it acts with respect to such matter, (4) any resolution or other
action by the Board of Directors with respect to any deliberation regarding or
decision to terminate the Executive for good cause is duly adopted by a vote of
a majority of the entire Board of Directors of the Company at a meeting of the
Board duly called and held and (5) the Executive is
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promptly provided with a copy of the resolution or other corporate action taken
with respect to such termination.
(iii) If the employment of the Executive is terminated for
good cause under Section 8(b)(i) of this Agreement, the Company shall pay to
the Executive any Base Salary earned prior to the effective date of termination
but not yet paid and any cash bonus compensation earned pursuant to the
provisions of any incentive compensation plan then in effect but not paid to
the Executive prior to the effective date of such termination. Under such
circumstances, such payments shall be in full and complete discharge of any and
all liabilities or obligations of the Company to the Executive hereunder, and
the Executive shall be entitled to no further benefits under this Agreement
(other than rights already accrued).
(iv) Termination of the employment of the Executive other
than as expressly specified above in this Section 8(b) for good cause shall be
deemed to be a termination of employment "Without Good Cause."
(c) Termination Without Good Cause. (i) Notwithstanding any other
provision of this Agreement, the Company shall have the right to terminate the
Executive's employment Without Good Cause pursuant to the provisions of this
Section 8(c). If the Company shall terminate the employment of the Executive
Without Good Cause effective on a date earlier than the termination date
provided for in Section 2 (with the effective date of termination as so
identified by the Company being referred to herein as the "Accelerated
Termination Date"), the Executive, until the end of the term of this Agreement
then in effect as provided for in Section 2 or until the date which is 24
months after the Accelerated Termination Date, whichever is the first to occur,
shall continue to receive (1) the Base Salary, paid in the same monthly on
other periodic installments ad in effect prior to the Accellerated Termination
Date (2) an equal monthly pro rata portion of an amount of cash equal to the
sum of the MICP Target Amount (as that term is defined in Section 7(b)(i)) in
respect of the year during which the Executive's employment terminates
multiplied times the number of years (or fractions thereof) remaining in the
then unexpired term of this Agreement or multiplied times two if the 24 month
payment period under this Section 8(c)(i) is in effect, and (3) any other cash
or other bonus compensation earned prior to the date of such termination
pursuant to the terms of all incentive compensation plans then in effect other
than the Company's Management Incentive Plan as described on Exhibit A or any
similar bonus on incentive plans or programs then in effect; provided that,
notwithstanding such termination of employment, the Executive's covenants set
forth in Section 10 and Section 11 are intended to and shall remain in full
force and effect and provided further that in the event of such termination,
the Company shall have the right (but not the obligation) to relieve the
Executive, in whole or in part, of the Executive's duties under this Agreement,
or direct the Executive to no longer perform such duties, or direct that the
Executive no longer be required to report to work, or any combination of the
foregoing.
(ii) The parties agree that, because there can be no exact
measure of the damage that would occur to the Executive as a result of a
termination by the Company of the Executive's employment Without Good Cause,
the payments and benefits paid and provided pursuant to this Section 8(c) shall
be deemed to constitute liquidated damages and not a penalty for the Company's
termination of the Executive's employment Without Good Cause.
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(d) Change of Control. (i) For purposes of this Agreement, a
"Change in Control" shall mean the first to occur of:
(1) a change in control of the Company of a nature that
is required, pursuant to the Securities Exchange Act
of 1934 (the "1934 Act"), to be reported in response
to Item 1(a) of a Current Report on Form 8-K or Item
6(e) of Schedule 14A under the 1934 Act (in each case
under this Agreement, references to provisions of the
1934 Act and the rules and regulations promulgated
thereunder being understood to refer to such law,
rules and regulations as the same are in effect on
November 1, 1996); or
(2) the acquisition of "Beneficial Ownership" (as defined
in Rule 13d-3 under the 0000 Xxx) of the Company's
securities comprising 35% or more of the combined
voting power of the Company's outstanding securities
by any "person" (as that term is used in Sections
13(d) and 14(d)(2) of the 1934 Act and the rules and
regulations promulgated thereunder, but not including
any trustee or fiduciary acting in that capacity for
an employee benefit plan sponsored by the Company)
and such person's "affiliates" and "associates" (as
those terms are defined under the 1934 Act), but
excluding any ownership by the Executive and his
affiliates and associates; or
(3) the failure of the "Incumbent Directors" (as defined
below) to constitute at least a majority of all
directors of the Company (for these purposes,
"Incumbent Directors" means individuals who were the
directors of the Company on November 1, 1996, and,
after his or her election, any individual becoming a
director subsequent to November 1, 1996, whose
election, or nomination for election by the Company's
stockholders, is approved by a vote of at least
two-thirds of the directors then comprising the
Incumbent Directors, except that no individual shall
be considered an Incumbent Director who is not
recommended by management and whose initial
assumption of office as a director is in connection
with an actual or threatened "election contest"
relating to the "election of directors" of the
Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the 0000 Xxx); or
(4) the closing of a sale of all or substantially all of
the assets of the Company;
(5) the Company's adoption of a plan of dissolution or
liquidation; or
(6) the closing of a merger or consolidation involving
the Company in which the Company is not the surviving
corporation or if, immediately following such merger
or consolidation, less than seventy-five percent
(75%) of the surviving corporation's outstanding
voting stock is held or is anticipated to be held by
persons who are stockholders of the Company
immediately prior to such merger or consolidation.
(ii) If a Change in Control of the Company occurs, the
Executive shall have the right, exercisable for a period of one year thereafter
by delivering a written statement to that effect to the
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Company, to immediately terminate this Agreement and upon such a determination
the Executive shall have the right to receive and the Company shall be
obligated to pay to Executive in cash a lump sum payment in an amount equal to
the sum of (1) two times the annual Base Salary then in effect, (2) two times
the MICP Target Amount (as that term is defined in Section 7(b)(i)) in the year
in which employment terminates and (3) the additional payments necessary to
discharge certain tax liabilities (the "Gross Up") as that term is defined in
Section 13 of this Agreement (the sum of the foregoing amounts other than the
Gross Up being referred to as the "Change in Control Payment"). If the
Executive fails to exercise his rights under this Section 8(d) within one year
following a Change in Control, such rights shall expire and be of no further
force or effect.
(e) Intentions Regarding Certain Stock and Benefit Plans. Except as
otherwise provided herein, upon any termination of the Executive's employment
Without Good Cause, or upon the exercise by the Executive of his rights to
terminate his employment following a Change of Control, it is the intention of
the parties that any and all vesting or performance requirements or conditions
affecting any outstanding restricted stock, performance stock, stock option,
stock appreciation right, bonus, award, right, grant or any other incentive
compensation under any of the Plans, under this Agreement, or otherwise
received, shall be deemed to be fully satisfied and any risk of forfeiture with
respect thereto shall be deemed to have lapsed.
(f) Certain Rights Mutually Exclusive. The provisions of Section
8(c) and Section 8(d) are mutually exclusive, provided, however, that if within
one year following commencement of an 8(c) payout there shall be a Change in
Control as defined in Section 8(d)(i), then the Executive shall be entitled to
the amount payable to the Executive under Section 8(d)(ii) and Section
8(d)(iii) reduced by the amount that the Executive has received under Section
8(c) up to the date of the change in control. The triggering of the lump sum
payment requirement of Section 8(d) shall cause the provisions of Section 8(c)
to become inoperative.
9. DISCLOSURE
The Executive agrees that during the term of the Executive's
employment by the Company, the Executive will disclose and disclose only to the
Company all ideas, methods, plans, developments or improvements known by him
which relate directly or indirectly to the business of the Company, whether
acquired by the Executive before or during the Executive's employment by the
Company. Nothing in this Section 9 shall be construed as requiring any such
communication where the idea, plan, method or development is lawfully protected
from disclosure as a trade secret of a third party or by any other lawful
prohibition against such communication. The covenants of this Section 9 shall
not be violated by ordinary and customary communications with reporters,
bankers and securities analysts and other members of the investment community.
10. CONFIDENTIALITY
The Executive agrees to keep in strict secrecy and confidence any and
all information the Executive assimilates or to which the Executive has access
during the Executive's employment by the Company and which has not been
publicly disclosed and is not a matter of common knowledge in the fields of
work of the Company. The Executive agrees that both during and after the term
of
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the Executive's employment by the Company, the Executive will not, without the
prior written consent of the Company, disclose any such confidential
information to any third person, partnership, joint venture, company,
corporation or other organization. The foregoing covenants shall not be
breached to the extent that any such confidential information becomes a matter
of general knowledge other than through a breach by the Executive of the
Executive's obligations under this Section 10.
11. NONCOMPETITION AND NONSOLICITATION
(a) General. The Executive hereby acknowledges that, during and
solely as a result of the Executive's employment by the Company, the Executive
has received and shall continue to receive: (1) special training and education
with respect to the operations of the Company's real estate development and
management businesses and its leasing, lending and financing activities, and
other related matters, and (2) access to confidential information and business
and professional contacts. In consideration of the special and unique
opportunities afforded to the Executive by the Company as a result of the
Executive's employment, as outlined in the previous sentence, the Executive
hereby agrees to the restrictive covenants in this Section 11.
(b) Noncompetition. During the term of the Executive's employment,
whether pursuant to this Agreement, any automatic or other renewal hereof or
otherwise, and, except as may be otherwise herein provided, for a period of two
(2) years after the termination of the Executive's employment with the Company,
regardless of the reason for such termination, the Executive shall not,
directly or indirectly, enter into, engage in, be employed by or consult with
any business which competes with the Company's real estate lending, leasing,
development or management businesses in Florida. The Executive shall not
engage in such prohibited activities, either as an individual, partner,
officer, director, stockholder, employee, advisor, independent contractor,
joint venturer, consultant, agent, or representative or salesman for any
person, firm, partnership, corporation or other entity so competing with the
Company. The restrictions of this Section 11 shall not be violated by (i) the
ownership of no more than 2% of the outstanding securities of any company whose
stock is traded on a national securities exchange or is quoted in the Automated
Quotation System of the National Association of Securities Dealers (NASDAQ), or
(ii) other outside business investments that do not in any manner conflict with
the services to be rendered by the Executive for the Company and that do not
diminish or detract from the Executive's ability to render the Executive's
required attention to the business of the Company.
(c) Nonsolicitation. During the Executive's employment with the
Company and, except as may be otherwise herein provided, for a period of two
(2) years following the termination of the Executive's employment with the
Company, regardless of the reason for such termination, the Executive agrees
the Executive will refrain from and will not, directly or indirectly, as an
individual, partner, officer, director, stockholder, employee, advisor,
independent contractor, joint venturer, consultant, agent, representative,
salesman or otherwise solicit any of the employees of the Company to terminate
their employment.
(d) Term Extended or Suspended. The period of time during which the
Executive is prohibited from engaging in certain business practices pursuant to
Sections 11(b) or (c) shall be extended by any length of time during which the
Executive is in breach of such covenants.
10.
11
(e) Essential Element. It is understood by and between the parties
hereto that the foregoing restrictive covenants set forth in Sections 11(a)
through (c) are essential elements of this Agreement, and that, but for the
agreement of the Executive to comply with such covenants, the Company would not
have agreed to enter into this Agreement. Such covenants by the Executive
shall be construed as agreements independent of any other provision in this
Agreement. The existence of any claim or cause of action of the Executive
against the Company, whether predicated on this Agreement, or otherwise, shall
not constitute a defense to the enforcement by the Company of such covenants.
(f) Severability. It is agreed by the Company and Executive that if
any portion of the covenants set forth in this Section 11 are held to be
invalid, unreasonable, arbitrary or against public policy, then such portion of
such covenants shall be considered divisible both as to time and geographical
area. The Company and Executive agree that, if any court of competent
jurisdiction determines the specified time period or the specified geographical
area applicable to this Section 11 to be invalid, unreasonable, arbitrary or
against public policy, a lesser time period or geographical area which is
determined to be reasonable, non-arbitrary and not against public policy may be
enforced against the Executive. The Company and the Executive agree that the
foregoing covenants are appropriate and reasonable when considered in light of
the nature and extent of the business conducted by the Company.
12. SPECIFIC PERFORMANCE
The Executive agrees that damages at law will be an insufficient
remedy to the Company if the Executive violates the terms of Sections 9, 10 or
11 of this Agreement and that the Company would suffer irreparable damage as a
result of such violation. Accordingly, it is agreed that the Company shall be
entitled, upon application to a court of competent jurisdiction, to obtain
injunctive relief to enforce the provisions of such Sections, which injunctive
relief shall be in addition to any other rights or remedies available to the
Company. The Executive agrees to pay to the Company all reasonable costs and
expenses incurred by the Company relating to the enforcement of the terms of
Sections 9, 10 or 11 of this Agreement, including reasonable fees and
reasonable disbursements of counsel selected by the Company (during
investigation and before and at trial and in appellate proceedings).
13. PAYMENT OF EXCISE TAXES
(a) Payment of Excise Taxes. If the Executive is to receive any (1)
Change of Control Payment under Section 8(d), (2) any benefit or payment under
Section 7 as a result of or following the death or Permanent Disability of the
Executive, (3) any benefit or payment under Section 8(c) as a result of or
following any termination of employment hereunder Without Good Cause, (4) any
benefit or payment under the Plans as a result of a Change of Control,
following the death of Permanent Disability of the Executive or following the
termination of employment hereunder Without Good Cause (such sections being
referred to as the "Covered Sections" and the benefits and payments to be
received thereunder being referred to as the "Covered Payments"), the Executive
shall be entitled to receive the amount described below to the extent
applicable: If any Covered Payment(s) under any of the Covered Sections or by
the Company under another plan or agreement (collectively,
11.
12
the "Payments") are subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986 (as amended from time to time, the "Code"), or
any successor or similar provision of the Code (the "Excise Tax"), the Company
shall pay the Executive an additional amount (the "Gross Up") such that the net
amount retained by the Executive after deduction of any Excise Tax on the
Payments and the federal income tax on any amounts paid under this Section 13
shall be equal to the Payments.
(b) Certain Adjustment Payments. For purposes of determining the
Gross Up, the Executive shall be deemed to pay the federal income tax at the
highest marginal rate of taxation (currently 39.5%) in the calendar year in
which the payment to which the Gross Up applies is to be made. The
determination of whether such Excise Tax is payable and the amount thereof
shall be made upon the opinion of tax counsel selected by the Company and
reasonably acceptable to the Executive. The Gross Up, if any, that is due as a
result of such determination shall be paid to the Executive in cash in a lump
sum within thirty (30) days of such computation. If such opinion is not
finally accepted by the Internal Revenue Service upon audit or otherwise, then
appropriate adjustments shall be computed (without interest but with Gross Up,
if applicable) by such tax counsel based upon the final amount of the Excise
Tax so determined; any additional amount due the Executive as a result of such
adjustment shall be paid to the Executive by his or her Company in cash in a
lump sum within thirty (30) days of such computation, or any amount due the
Executive's Company as a result of such adjustment shall be paid to the Company
by the Executive in cash in a lump sum within thirty (30) days of such
computation.
14. MISCELLANEOUS
(a) Waiver of Breach. The waiver by either party to this Agreement
of a breach of any of the provisions of this Agreement by the other party shall
not be construed as a waiver of any subsequent breach by such other party.
(b) No Right to Continued Employment. Notwithstanding the fact that
certain provisions of this Agreement and/or Exhibit A reference a three year
cycle or provide for benefits upon a third year of employment, this Agreement
shall have a two year term with annual one year renewal terms subject to the
termination provisions contained herein.
(c) Compliance With Other Agreements. The Executive represents and
warrants that the execution of this Agreement by him and the Executive's
performance of the Executive's obligations hereunder will not conflict with,
result in the breach of any provision of or the termination of or constitute a
default under any Agreement to which the Executive is a party or by which the
Executive is or may be bound.
(d) Binding Effect; Assignment. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the Company. This Agreement is a personal
employment contract and the rights, obligations and interests of the Executive
hereunder may not be sold, assigned, transferred, pledged or hypothecated.
(e) Entire Agreement. This Agreement contains the entire agreement
and supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof. This
12.
13
Agreement may be changed only by an agreement in writing signed by the party
against whom any waiver, change, amendment, modification or discharge is
sought.
(f) No Duty to Mitigate. The Executive shall be under no duty to
mitigate any loss of income as result of the termination of his employment
hereunder and any payments due the Executive upon termination of employment
shall not be reduced in respect of any other employment compensation received
by the Executive following such termination.
(g) Florida Law. This Agreement shall be construed pursuant to and
governed by the substantive laws of the State of Florida (except that any
provision of Florida law shall not apply if the law of a state or jurisdiction
other than Florida would otherwise apply).
(h) Venue; Process. The parties to this Agreement agree that
jurisdiction and venue in any action brought pursuant to this Agreement to
enforce its terms or otherwise with respect to the relationships between the
parties shall properly lie in and only in the Circuit Court of the Sixth
Judicial Circuit of the State of Florida in and for Pinellas County (the
"Circuit Court") and the parties agree that jurisdiction shall not properly lie
in any other jurisdiction provided, however, if jurisdiction does not properly
lie with the Circuit Court, the parties agree that jurisdiction and venue shall
properly lie in and only in the United States District Court for the Middle
District of Florida, Tampa Division. The parties hereby waive any objections
which they may now or hereafter have based on venue and/or forum non conveniens
and irrevocably submit to the jurisdiction of any such court in any legal suit,
action or proceeding arising out of or relating to this Agreement. The parties
further agree that the mailing by certified or registered mail, return receipt
requested, of any process required by any such court shall constitute valid and
lawful service of process against them, without the necessity for service by
any other means provided by statute or rule of court.
(i) Headings. The headings of the various sections in this Agreement
are inserted for the convenience of the parties and shall not affect the
meaning, construction or interpretation of this Agreement.
(j) Severability. Any provision of this Agreement which is
determined by a court of competent jurisdiction to be prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction. In any such case, such determination
shall not affect any other provision of this Agreement, and the remaining
provisions of this Agreement shall remain in full force and effect. If any
provision or term of this Agreement is susceptible to two or more constructions
or interpretations, one or more of which would render the provision or term
void or unenforceable, the parties agree that a construction or interpretation
which renders the term or provision valid shall be favored.
(k) Deduction for Tax Purposes. The Company's obligations to make
payments under this Agreement are independent of whether any or all of such
payments are deductible expenses of the Company for federal income tax
purposes.
(l) Enforcement. If, within 10 days after demand to comply with the
obligations of one of the parties to this Agreement served in writing on the
other, compliance or reasonable assurance of
13.
14
compliance is not forthcoming, and the party demanding compliance engages the
services of an attorney to enforce rights under this Agreement, the prevailing
party in any action shall be entitled to recover all reasonable costs and
expenses of enforcement (including reasonable attorneys' fees and reasonable
expenses during investigation, before and at trial and in appellate
proceedings). In addition, each of the parties agrees to indemnify the other
in respect of any and all claims, losses, costs, liabilities and expenses,
including reasonable fees and reasonable disbursements of counsel (during
investigation prior to initiation of litigation and at trial and in appellate
proceedings if litigation ensues), directly or indirectly resulting from or
arising out of a breach by the other party of their respective obligations
hereunder. The parties' costs of enforcing this Agreement shall include
prejudgment interest. Additionally, if any party incurs any out-of-pocket
expenses in connection with the enforcement of this Agreement, all such amounts
shall accrue interest at 18% per annum (or such lower rate as may be required
to avoid any limit imposed by applicable law) commencing 30 days after any such
expenses are incurred.
(m) Notices. All notices which are required or may be given under
this Agreement shall be in writing and shall be deemed to have been duly given
when received if personally delivered; when transmitted if transmitted by
telecopy or similar electronic transmission method; one working day after it is
sent, if sent by recognized expedited delivery service; and three days after it
is sent, if mailed, first class mail, certified mail, return receipt requested,
with postage prepaid. In each case notice shall be sent to:
To the Company: Echelon International Corporation
Xxx Xxxxxxxx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
Attn: Chairman of the Board
Telecopy: (000) 000-0000
To the Executive at the Executive's address herein first above
written, or to such other address as either party may specify by written notice
to the other.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
ATTEST: ECHELON INTERNATIONAL CORPORATION
(Corporate Seal)
________________________________ By:____________________________________
Secretary
Title:
EXECUTIVE
Witnesses:
________________________________ _______________________________________
Xxxxx X. Xxxxx
________________________________
As to Executive
14.
15
EXHIBIT A
TO
EMPLOYMENT AGREEMENT WITH XXXXX X. XXXXX
DATED ________, 1996
The Company will establish a Management Incentive Compensation Plan
("MICP") for its senior management in which the Executive will participate.
During the first two full fiscal years of the Company's operation following the
completion of the Spinoff ending on December 31, 1997, and December 31, 1998,
respectively (the "Covered Years"), the MICP will provide for annual cash
bonuses based upon the Company's net income for each of the Covered Years. The
Executive's participation in the MICP during the Covered Years shall be based
upon the criteria and shall include awards with the values indicated in the
tables set forth below and as more fully described in this Exhibit A.
MICP
During each of the Covered Years, (i) all MICP bonuses shall be paid
in cash; (ii) if Threshold Net Income is not achieved, no MICP cash bonus will
be paid; (iii) if actual net income exceeds Threshold Net Income, but is less
than Target Net Income, or exceeds Target Net Income but is less than Maximum
Net Income, the percentage of the MICP bonus shall be proportionately increased
above the Threshold bonus amount or the Target Bonus amount, as the case may
be, and (iv) if actual net income equals or exceeds Maximum Net Income, the
Maximum MICP cash bonus will be paid, but no additional cash bonus will be
payable under the MICP regardless of the amount by which actual net income in
that Covered Year exceeds Maximum Net Income. The following table sets forth
information regarding the MICP Net Income Threshold, Target and Maximum and
cash bonuses.
-------------------------------------------------------
MICP 1997 1998
-------------------------------------------------------
THRESHOLD
-------------------------------------------------------
Net Income $1,584,274 $1,768,816
-------------------------------------------------------
MICP Cash Bonus $7,500 $7,500
(% of Target Bonus) (50%) (50%)
-------------------------------------------------------
TARGET
-------------------------------------------------------
Net Income $2,112,366 $2,358,422
-------------------------------------------------------
MICP Cash Bonus $15,000 $15,000
(% of Base Salary) (15%) (15%)
-------------------------------------------------------
MAXIMUM
-------------------------------------------------------
Net Income $2,640,457 $2,948,027
-------------------------------------------------------
MICP Cash Bonus $22,500 $22,500
(% of Target Bonus) (150%) (150)%
-------------------------------------------------------
15.
