EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made this 10th day of
July, 1998, between Enfinity Corporation, a Delaware corporation ("Enfinity"),
and Xxxxxxxx X. Xxxxxxxx (the "Executive").
WHEREAS, the parties hereto wish to enter into an employment agreement
to employ the Executive as Executive Vice President, General Counsel and
Secretary of Enfinity on the terms and conditions contained in this Agreement,
and to set forth certain additional agreements between the Executive and
Enfinity.
NOW, THEREFORE, in consideration of the mutual covenants and
representations contained herein, the parties hereto agree as follows:
1. TERM.
The term of this Agreement shall begin on the closing of Enfinity's initial
public offering and continue for three (3) years from such closing; provided,
however, in the event that such initial public offering of its Common Stock on
Form S-1 (the "IPO") is not closed on or before September 30, 1998, then (except
for Section 3(d)) this Agreement shall be null and void without having become
effective. Upon the expiration of such initial three-year period and upon each
anniversary date thereof, the term of this Agreement shall be extended for an
additional one-year period unless, not later than two months prior to each
respective renewal date, either party to this Agreement shall have given notice
to the other that this Agreement shall not be so extended . Notwithstanding the
foregoing, the Executive's employment hereunder may be earlier terminated, as
provided in Sections 4 and 13 hereof. The period of time between the
commencement and the termination of the Executive's employment hereunder shall
be referred to herein as the "Employment Period."
2. EMPLOYMENT.
(a) POSITION AND REPORTING. Enfinity hereby employs the Executive for
the Employment Period as its Executive Vice President, General Counsel and
Secretary the terms and conditions set forth in this Agreement.
(b) AUTHORITY AND DUTIES. The Executive shall exercise such authority,
perform such executive duties and functions and discharge such responsibilities
as are typically associated with the Executive's position, commensurate with the
authority vested in the Executive's position, pursuant to this Agreement and
consistent with the By-Laws of Enfinity, including responsibilities for the
corporate legal and human resources affairs of Enfinity. Without limiting the
generality of the foregoing, the Executive shall report directly and be
responsible to the Chief Executive Officer of Enfinity. During the Employment
Period, the Executive shall devote his full business time, skill and efforts to
the business of Enfinity. Notwithstanding the foregoing, the Executive may (i)
make and manage passive personal business investments of his choice (in
the case of publicly-held corporations, not to exceed one percent (1%) of the
outstanding voting stock without the approval of the Board of Directors of
Enfinity (the "Board") and not to exceed three percent (3%) of the outstanding
voting stock with the approval of the Board, which approval shall not be
unreasonably withheld or delayed) and serve in any capacity with any civic,
educational or charitable organization, or any trade association, without
seeking or obtaining approval by the Board, provided such activities and service
do not materially interfere or conflict with the performance of his duties
hereunder and (ii) with the approval of the Board, which shall not be
unreasonably be withheld or delayed, serve on the boards of directors of other
corporations.
3. COMPENSATION AND BENEFITS.
(a) SALARY. During the Employment Period, Enfinity shall pay to the
Executive, as compensation for the performance of his duties and obligations
under this Agreement, a base salary at the rate of $185,000 per annum, payable
in arrears not less frequently than monthly in accordance with the normal
payroll practices of Enfinity. Such base salary shall be subject to review each
year for possible increase by the Compensation Committee of the Board (once
constituted), but shall in no event be decreased from its then-existing level
during the Employment Period.
(b) ANNUAL BONUS. For 1998 and subsequent years, Enfinity shall develop,
as soon as practicable after the effective date of Enfinity's IPO, a written
incentive bonus plan setting forth reasonable criteria and performance standards
under which the Executive and other officers and key employees will be eligible
to receive year-end bonus awards (the "Bonus Plan"). Executive shall be entitled
under the Bonus Plan to receive a bonus equal to forty percent (40%) of his then
applicable base salary if the specified criteria and performance standards are
met and the Executive shall be entitled to receive a bonus equal to eighty
percent (80%) of his then applicable base salary if the specified criteria are
exceeded by an amount equal to or greater than thirty percent (30%) of such
specified criteria. Any bonus payable to the Executive pursuant to the Bonus
Plan shall be paid within 45 days following the end of the applicable fiscal
year. It is understood that the performance criteria for determining actual
bonuses will be determined by the Executive and the Compensation Committee of
the Board (once constituted) but that the criteria and performance standards to
be set under the Bonus Plan will be tied to Enfinity's anticipated results of
operations for the applicable bonus period.
(c) OTHER BENEFITS. The Executive shall be entitled to receive
additional benefits and compensation from Enfinity in such form and to such
extent as specified below:
(i) Insurance. The Executive shall be entitled to participate, at
the sole cost and expense of Enfinity, in the medical, disability, dental, life
and other insurance and benefit plans made available by Enfinity to any of its
other officers, directors and key employees.
(ii) Business Expenses. Enfinity shall promptly reimburse the
Executive for all business travel and other out-of-pocket expenses reasonably
incurred by the Executive in the
-2-
performance of the Executive's services pursuant to this Agreement. All
reimbursable expenses shall be documented in reasonable detail by the Executive
upon submission of any request for reimbursement.
(iii) Other Perquisites. Enfinity shall provide the Executive
with other executive perquisites as may be available to or deemed appropriate
for the Executive by the Board and participation in all other Enfinity-wide
employee benefits as available from time to time, including, but not limited to,
four (4) weeks of paid vacation per year.
(d) INDEMNIFICATION. In connection with any threatened, pending or
contemplated claim, demand, liability, action, suit, arbitration or proceeding,
whether civil, criminal, administrative or investigative, or any appeal
therefrom, whether by or in the right of Enfinity or otherwise, arising out of
or relating to the fact that the Executive is or was a director, officer,
employee or agent of Enfinity (or any predecessor of Enfinity, whether or not
incorporated), or is or was serving at the request of Enfinity in any such role
for any other corporation or entity, or by reason of anything done or not done
by the Executive in any such capacity, Enfinity hereby expressly agrees and
shall indemnify and hold harmless the Executive, to the fullest extent
authorized by law, against any and all expenses (including, without limitation,
attorneys' fees and all other costs, expenses or obligations paid or incurred in
connection with investigating, defending, being a witness in or participating in
(including on appeal) any such matter), damages, judgments, fines and amounts
paid in settlement, as actually and reasonably incurred by the Executive in
connection therewith. In the event that both the Executive and Enfinity are made
a party to the same action, complaint, suit, arbitration or proceeding, Enfinity
agrees to engage competent and experienced legal counsel reasonably acceptable
to the Executive, and the Executive agrees to use the same legal counsel,
provided that if counsel selected by Enfinity could reasonably be expected to
have a conflict of interest that prevents such counsel from vigorously
representing the Executive, then the Executive shall be entitled to engage
separate legal counsel and Enfinity shall pay all costs, expenses or obligations
paid or incurred in connection with such separate legal counsel. Further, while
the Executive is expected at all times to use the Executive's best efforts to
discharge faithfully his duties under this Agreement, the Executive cannot be
held liable to Enfinity for a breach of his duty of care, acts or omissions made
in good faith or where the Executive has not exhibited intentional misconduct or
performed criminal and fraudulent acts which materially damage the business of
Enfinity. Enfinity shall promptly pay (or advance to the Executive, to the
fullest extent authorized by law) on behalf of and for the Executive, upon
presentation of invoices, any and all amounts for which indemnification is
provided under this Section 3(d). In addition, Enfinity shall purchase and
maintain directors' and officers' liability insurance in an amount and in a form
customarily held by publicly-traded companies situated similarly to Enfinity,
and the Executive shall be a beneficiary of such policy or policies.
Notwithstanding any statement contained in this Agreement to the contrary, the
obligations of Enfinity set forth in this Section 3(d) shall survive any
termination or expiration of this Agreement.
-3-
4. TERMINATION OF EMPLOYMENT.
(a) TERMINATION FOR CAUSE. This Agreement and Executive's employment may
be terminated in any one of the following ways:
(i) Death. The death of the Executive shall immediately terminate
this Agreement with no severance compensation due to the Executive's estate.
(ii) Disability. If, as a result of incapacity due to physical or
mental illness or injury, as reasonably determined by the Executive's physician,
the Executive shall have been absent from the Executive's full-time duties
hereunder for six (6) consecutive months, then thirty (30) days after receiving
written notice (which notice may occur before or after the end of such six (6)
month period, but which shall not be effective earlier than the last day of such
six (6) month period), Enfinity may terminate the Executive's employment
hereunder provided the Executive is unable to resume his full-time duties at the
conclusion of such notice period. Also, the Executive may terminate his
employment hereunder if his health should become impaired to an extent that
makes the continued performance of the Executive's duties hereunder hazardous to
the Executive's physical or mental health or life, provided that the Executive
shall have furnished Enfinity with a written statement from the Executive's
doctor to such effect and provided, further, that, at Enfinity's request made
within thirty (30) days of the date of such written statement, the Executive
shall submit to an examination by a doctor selected by Enfinity who is
reasonably acceptable to the Executive or his doctor and such doctor shall have
concurred in the conclusion of the Executive's doctor. If the two doctors cannot
agree as to whether or not the Executive is so disabled, the two doctors shall
designate a third doctor to examine the Executive and a majority of the three
doctors so selected shall make such determination. In the event this Agreement
is terminated by either party as a result of the Executive's disability,
Enfinity shall continue to compensate the Executive at his then-current base
salary until such time as any applicable waiting periods under the Executive's
long-term disability policy provided by Enfinity shall be exhausted and the
Executive shall be receiving payments pursuant to such policy.
(iii) Good Cause. Enfinity may terminate this Agreement at any
time ten (10) days after delivery of written notice to the Executive for good
cause, which shall be: (1) the Executive's willful, material and irreparable
breach of this Agreement; (2) the Executive's gross negligence in the
performance or intentional nonperformance (in either case, continuing for ten
(10) days after receipt of written notice from Enfinity that specifically
identifies the manner in which Enfinity believes that the Executive has failed
to perform such duties and responsibilities) of any of the Executive's material
duties and responsibilities hereunder; (3) the Executive's willful dishonesty,
fraud or misconduct with respect to the business or affairs of Enfinity which
materially and adversely affects the operations or reputation of Enfinity; (4)
the Executive's conviction of a felony crime; or (5) chronic alcohol abuse or
illegal drug abuse by the Executive. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for good cause without (x)
reasonable written notice to the Executive setting forth the reasons for
Enfinity's intention to terminate for good cause, (y) an opportunity for the
Executive, together with his legal counsel, to be heard before the Board, and
(z) delivery to the Executive of a notice
-4-
of termination on behalf of the Board setting forth the reasons for such
termination. In the event of a termination for good cause, as enumerated above,
the Executive shall have no right to any severance compensation.
(b) WITHOUT CAUSE. At any time during the Employment Period, the
Executive may, without cause, terminate this Agreement and the Executive's
employment, effective thirty (30) days after written notice is provided to
Enfinity. The Executive may only be terminated without cause by Enfinity during
the Employment Period if such termination is approved by at least two-thirds of
the members of the Board. Should the Executive's employment be terminated by
Enfinity without cause during the Employment Period, the Executive shall receive
from Enfinity, in a lump-sum payment due on the effective date of termination,
an amount equal to two times his then applicable annual base salary, plus any
accrued salary and declared but unpaid bonus and reimbursement of expenses. If
the Executive resigns or otherwise terminates his employment without cause
pursuant to this Section 4(b), the Executive shall receive no severance
compensation.
(c) CHANGE IN CONTROL. In the event of a "Change in Control" of Enfinity
(as defined in Section 13) during the Employment Period, refer to Section 13
below.
(d) FOR GOOD REASON. In addition to his other rights set forth in this
Agreement, the Executive may terminate this Agreement at any time ten (10) days
after delivery of notice to the Board for "good reason," which shall be (i) a
material diminution during the Employment Period in the Executive's office,
duties or responsibilities (including following any Change in Control), (ii) a
material breach by Enfinity of this Agreement, or (iii) Enfinity's requiring
that the Executive change the location of his job or office (without the
Executive's express, written consent), so that he would be located more than 50
miles from his office/job in Atlanta as contemplated by this Agreement.
Notwithstanding the foregoing, the Executive may not terminate this Agreement
for good reason without providing (x) reasonable written notice to the Board
setting forth the reasons for the Executive's intention to terminate for good
reason, (y) an opportunity for the Board to meet with the Executive, together
with legal counsel, and (z) delivery by the Executive to the Board of a notice
of termination for good reason setting forth the reasons for such termination.
Should the Executive terminate his employment with Enfinity pursuant to this
Section 4(d), the Executive shall receive from Enfinity, in a lump-sum payment
due on the effective date of termination, an amount equal to two times his then
applicable annual base salary, plus any accrued salary and declared but unpaid
bonus and reimbursement of expenses.
(e) CONSEQUENCES OF TERMINATION.
(i) Upon termination of this Agreement for any reason provided
above, Enfinity shall pay promptly to the Executive all compensation earned and
all benefits and reimbursements due through the effective date of termination.
Additional compensation subsequent to termination, if any, will be due and
payable to the Executive only to the extent and in the manner expressly provided
in this Agreement. All other rights and obligations of Enfinity and the
-5-
Executive under this Agreement shall cease as of the effective date of
termination, except that Enfinity's obligations under Sections 3(d) and 17
hereof and the Executive's obligations under Sections 7, 8 and 9 hereof shall
survive any termination or expiration of this Agreement.
(ii) In the event of any termination of the Executive's
employment for any reason, the Executive shall be under no obligation to seek
other employment and there shall be no offset against any amounts due to the
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that the Executive may obtain. Any amounts due under
this Section 4 are in the nature of severance payments, or liquidated damages,
or both, and are not in the nature of a penalty.
(iii) Notwithstanding any statement contained in this Agreement
to the contrary, upon any termination or expiration of this Agreement, other
than by Enfinity pursuant to Section 4(a)(iii) (good cause) or by the Executive
pursuant to Section 4(b)(without cause): (x) any options or rights to purchase
securities of Enfinity shall immediately vest and remain exercisable until the
ten year anniversary of the date of grant of such options or rights and (y) any
restrictions or forfeiture provisions applicable to any securities of Enfinity
owned beneficially or of record by the Executive (or his spouse or estate) shall
immediately lapse.
5. PLACE OF PERFORMANCE.
It is understood that the Executive will be required to relocate to Atlanta,
Georgia from his present residence in order to fulfill his duties and
responsibilities hereunder. Enfinity will pay all actual reasonable relocation
costs to move the Executive, his immediate family and their personal property
and effects (in each case grossed up for applicable taxes). Such costs may
include, but are not limited to, moving expenses, temporary lodging expenses
prior to moving into a new permanent residence and all closing costs on the
purchase of a residence (comparable to the Executive's present residence) in the
new location. The general intent of the foregoing is that the Executive shall
not personally bear any out-of-pocket cost as a result of the relocation, with
an understanding that the Executive will use the Executive's best efforts to
incur only those costs which are reasonable and necessary to effect a smooth,
efficient and orderly relocation with minimal disruption to the business affairs
of Enfinity and the personal life of Executive and his family. In addition, to
compensate the Executive for incidental costs associated with such relocation,
Enfinity shall pay to Executive at the time of such relocation an amount equal
to two times the Executive's then applicable monthly salary (grossed up for
applicable taxes).
6. STOCK OPTIONS.
At the effective date of Enfinity's IPO, Enfinity shall grant to the Executive
options to acquire 75,000 shares of Enfinity common stock at the price per share
at which such stock is offered to the public in the initial public offering.
Such options shall vest in installments of 18,750 shares at the effective date
of the IPO and on each of the first, second and third anniversaries of the
effective date of the IPO. The other terms and conditions of such options shall
be usual and
-6-
customary and shall be as set forth in a stock option agreement to be entered
into between Enfinity and the Executive.
7. CONFIDENTIALITY.
The Executive agrees that he will not at any time during the Employment Period
hereof or at any time thereafter for any reason, in any fashion, form or manner,
either directly or indirectly, divulge, disclose or communicate to any person,
firm, corporation or other business entity, in any manner whatsoever, any
confidential information or trade secrets concerning the business of Enfinity,
including, without limiting the generality of the foregoing, any confidential or
proprietary techniques, methods or systems of its operation or management, any
information regarding its financial matters, or any other material non-public
information concerning the business of Enfinity, its manner of operation, its
plans or other material data. The provisions of this Section 7 shall not prevent
the disclosure or use of or apply to (i) information that is public knowledge or
in the public domain other than as a result of disclosure by the Executive in
breach of this Section 7; (ii) information disseminated by Enfinity to third
parties in the ordinary course of business; (iii) information lawfully received
by the Executive from a third party who, based upon inquiry by the Executive, is
not bound by a confidential relationship to Enfinity; (iv) information disclosed
under a requirement of law or as compelled or directed by applicable legal
authority; or (v) information disclosed by Executive necessary to perform his
duties and responsibilities for and on behalf of Enfinity.
8. INVENTIONS.
The Executive is hereby retained in a capacity such that the Executive's
responsibilities include the making of technical and managerial contributions of
value to Enfinity. The Executive hereby assigns to Enfinity all right, title and
interest in such contributions and inventions made or conceived by the Executive
alone or jointly with others during the Employment Period that relate to the
business of Enfinity. This assignment shall include (a) the right to file and
prosecute patent applications on such inventions in any and all countries, (b)
the patent applications filed and patents issuing thereon, and (c) the right to
obtain copyright, trademark or trade name protection for any such work product.
The Executive shall promptly and fully disclose all such contributions and
inventions to Enfinity and shall take reasonable steps to assist Enfinity (at
Enfinity's cost) in obtaining and protecting the rights therein (including
patents thereon) in any and all countries; provided, however, that said
contributions and inventions will be the property of Enfinity, whether or not
patented or registered for copyright, trademark or trade name protection, as the
case may be. The Executive hereby agrees to execute any documentation reasonably
requested by Enfinity to be so executed if such request is made in order to
carry out the purpose and terms of this Section 8. Inventions conceived by the
Executive that are not related to the business of Enfinity will remain the
property of the Executive.
9. NON-COMPETITION.
The Executive agrees that he shall not during the Employment Period and for two
years following the Employment Period, without the approval of the Board,
directly or indirectly,
-7-
alone or as partner, joint venturer, officer, director, employee, consultant,
agent, independent contractor or stockholder (other than as provided below) of
any company or business, engage in any "Competitive Business" within the United
States. For purposes of the foregoing, the term "Competitive Business" shall
mean any business involved in providing energy or indoor environmental systems
or services, which is in direct competition with Enfinity in any community in
which Enfinity is doing business. Notwithstanding the foregoing, the Executive
shall not be prohibited during the non-competition period applicable above from
acting as a passive investor in any publicly-held company under the
circumstances described in Section 2(b) hereof. During the period that the above
non-competition restriction applies, the Executive shall not, without the
written consent of Enfinity, solicit or encourage any employee of Enfinity or
any current or future subsidiary or affiliate thereof to terminate his or her
employment.
10. BREACH OF RESTRICTIVE COVENANTS.
The parties agree that a breach or violation of Section 7, 8 or 9 hereof will
result in immediate and irreparable injury and harm to the innocent party, which
party shall have, in addition to any and all remedies of law and other
consequences under this Agreement, the right to an injunction, specific
performance or other equitable relief to prevent the violation of the obligation
hereunder.
11. NOTICES.
For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to Enfinity, to such address as shall be its then current
principal place of business.
(b) If to the Executive, to:
Xxxxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address as a party hereto shall designate to the other party by
like notice, provided that notice of a change of address shall be effective only
upon receipt thereof.
12. ARBITRATION: LEGAL FEES.
Except as provided in Section 10 hereof, any dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in Atlanta, Georgia in
-8-
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. Enfinity shall reimburse the Executive for all reasonable legal
fees and costs and other fees and expenses that the Executive may incur in
respect of any dispute or controversy arising against Enfinity under or in
connection with this Agreement; provided, however, that Enfinity shall not
reimburse any such fees, costs and expenses if the fact finder determines that
an action brought by the Executive was substantially without merit.
Notwithstanding the foregoing, in the event of a Change of Control, Enfinity
shall be unconditionally responsible for legal fees, costs and expenses with
respect to any action brought by the Executive against Enfinity arising from
this Agreement.
13. CHANGE IN CONTROL.
(a) Unless the Executive elects to terminate this Agreement pursuant to
(c) below, the Executive understands and acknowledges that Enfinity may be
merged or consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of Enfinity hereunder or
that Enfinity may undergo another type of Change in Control. In the event such a
merger or consolidation or other Change in Control is initiated prior to the end
of the Employment Period, then the provisions of this Section 13 shall be
applicable.
(b) In the event of a pending Change in Control wherein Enfinity and the
Executive have not received written notice at least five (5) business days prior
to the anticipated closing date of the transaction giving rise to the Change in
Control from the successor to all or a substantial portion of Enfinity's
business and/or assets that such successor is willing as of the closing to
assume and agree to perform Enfinity's obligations under this Agreement in the
same manner and to the same extent that Enfinity is hereby required to perform,
then such Change in Control shall be deemed to be a termination of this
Agreement by Enfinity without cause during the Employment Period and the
applicable portions of Section 4(b) will apply; however, under such
circumstances, the amount of the lump-sum severance payment due to the Executive
shall be an amount equal to three times his then applicable annual base salary,
plus any accrued salary and declared but unpaid bonus and reimbursement or
expenses, and the provisions of Section 9 of this Agreement shall be effective
for two years following such date. Notwithstanding any statement contained
herein to the contrary, Enfinity shall require, as a condition to any
transaction constituting a Change in Control, that any successor to all or any
portion of Enfinity's business and/or assets expressly assume and agree to
perform Section 3(d) of this Agreement in the same manner and to the same extent
that Enfinity would be required to perform it if no such Change in Control had
taken place.
(c) In any Change in Control situation, the Executive may elect to
terminate this Agreement by providing written notice to Enfinity at least five
(5) business days prior to the anticipated closing of the transaction giving
rise to the Change in Control. In such case, the applicable provisions of
Section 4(b) will apply as though Enfinity had terminated the Agreement without
cause during the Employment Period; however, under such circumstances, the
amount of the lump-sum severance payment due to the Executive shall be an amount
equal to two times his then applicable annual base salary, plus any accrued
salary and declared but unpaid bonus and reimbursement or expenses, and the
provisions of Section 9 of this Agreement shall be
-9-
effective for two years following such date. Notwithstanding any statement
contained herein to the contrary, Enfinity shall require, as a condition to any
transaction constituting a Change in Control, that any successor to all or any
portion of Enfinity's business and/or assets expressly assume and agree to
perform Section 3(d) of this Agreement in the same manner and to the same extent
that Enfinity would be required to perform it if no such Change in Control had
taken place.
(d) In the event of termination due to a Change in Control, the
Executive shall continue to receive coverage under the group medical care and
dental insurance benefit plans in which the Executive is participating at the
time of termination for the term of the applicable severance period or upon the
Executive's obtaining coverage under another medical and dental plan, whichever
occurs first. Notwithstanding the foregoing, to the extent that the Executive
was making payments in connection with such benefits, the Executive shall
continue to be responsible for such payments for the duration of such extended
coverage.
(e) For purposes of applying Section 4 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements and lump-sum payments due the Executive must be
paid in full by Enfinity at or prior to such closing. In addition, immediately
prior to any Change in Control, any options or rights to purchase securities of
Enfinity held by the Executive shall immediately vest and become and remain
fully exercisable and any restrictions or forfeiture provisions applicable to
any securities of Enfinity owned beneficially or of record by the Executive (or
his spouse or estate) shall immediately lapse, such that the Executive, at his
discretion, may exercise such options or rights prior to the Change in Control
and receive the consideration to be received by the stockholders of Enfinity in
connection with the Change in Control or convert such options or rights into
options or rights to purchase equivalent securities of the acquiring corporation
or other entity.
(f) A "Change in Control" shall be deemed to have occurred if:
(i) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) , other than Enfinity or an employee benefit plan of Enfinity, becomes
the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act
, directly or indirectly, of any voting security of Enfinity and immediately
after such acquisition, such person, directly or indirectly, is the beneficial
owner of voting securities representing 35% or more of the total voting power of
all of the then-outstanding voting securities of Enfinity and has a larger
percentage of voting securities of Enfinity than any other person, entity or
group holding voting securities of Enfinity, unless the transaction pursuant to
which such acquisition is made is approved by more than two-thirds (2/3) of the
Board; or
(ii) the following individuals no longer constitute a majority of
the members of the Board: (A) the individuals who, as of the closing date of
Enfinity's IPO, constitute the Board (the "Original Directors"); (B) the
individuals who thereafter are elected to the Board and whose election, or
nomination for election, to the Board was approved by a vote of more than
two-thirds
-10-
(2/3) of the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following their election);
and (C) the individuals who are elected to the Board and whose election, or
nomination for election, to the Board was approved by a vote of more than
two-thirds (2/3) of the Original Directors and Additional Original Directors
then still in office (such directors also becoming "Additional Original
Directors" immediately following their election).
(iii) there shall be consummated any merger or consolidation of
Enfinity in which Enfinity is not the continuing or surviving corporation or
pursuant to which shares of Enfinity's capital stock are converted into cash,
securities or other property, other than a consolidation or merger of Enfinity
in which the holders of Enfinity's voting stock immediately prior to the
consolidation or merger, own at least 50% of the total voting power represented
by the voting securities of the surviving entity outstanding immediately after
such transaction or any sale, lease, exchange or other transfer (in one
transaction or a series or transaction contemplated or arranged by any party as
a single plan) of all or substantially all of the assets of Enfinity; or
(iv) the stockholders of Enfinity approve a plan of complete
liquidation of Enfinity.
(g) The Executive must be notified in writing by Enfinity at any time
that Enfinity or any member of its Board anticipates that a Change in Control
may take place.
14. WAIVER OF BREACH.
Any waiver of any breach of the Agreement shall not be construed to be a
continuing waiver or consent to any subsequent breach on the part of either the
Executive or of Enfinity.
15. NON-ASSIGNMENT: SUCCESSORS.
Neither party hereto may assign his or its rights or delegate his or its duties
under this Agreement without the prior written consent of the other party;
provided, however, that (i) subject to the rights of the Executive under Section
13 hereof, this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of Enfinity upon any sale of all or substantially all of
the assets of Enfinity, or upon any merger, consolidation or reorganization of
Enfinity with or into any other corporation, all as though such successors and
assigns of Enfinity and their respective successors and assigns were Enfinity;
(ii) this Agreement shall inure to the benefit of and be binding upon the heirs,
assigns or designees of the Executive to the extent of any payments due to the
Executive hereunder; and (iii) this Agreement shall inure to the benefit of
Enfinity. As used in this Agreement, the term "Enfinity" shall be deemed to
refer to any such successor or assign of Enfinity referred to in the preceding
sentence. Notwithstanding any statement contained in this Agreement to the
contrary, Enfinity agrees to and shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Enfinity to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that Enfinity would be
-11-
required to perform it if no such succession had taken place. This Agreement and
all rights of the Executive hereunder shall inure to the benefit of and be
enforceable by the Executive's legal representative in the event of mental
incapacity or by the Executive's duly appointed executors or administrators in
the event of the Executive's death. If the Executive should die while any
amounts are payable to him hereunder, all such amounts unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Executive's estate.
16. WITHHOLDING OF TAXES.
All payments required to be made by Enfinity to the Executive under this
Agreement shall be subject to the withholding of such amounts, if any, relating
to tax, and other payroll deductions as Enfinity may reasonably determine it
should withhold pursuant to any applicable law or regulation.
17. CERTAIN TAX MATTERS.
(a) Notwithstanding any statement contained in this Agreement to the
contrary, upon termination or expiration of this Agreement in connection with a
Change in Control, Enfinity shall reimburse the Executive, on a grossed up
basis, for any excise or similar taxes that the Executive incurs under Section
4999 of the Internal Revenue Code of 1986, as amended (or any successor
statutory provision or rule), and comparable provisions of applicable state
laws, rules or regulations. Such amount shall be paid by Enfinity within ten
(10) days after the Executive delivers a written request for reimbursement
accompanied by a copy of the Executive's tax return(s) showing the excise taxes
actually incurred by the Executive.
(b) The parties hereto stipulate and agree that the Executive has, pursuant
to that subscription agreement dated June 26, 1998, subscribed for and purchased
.407554 shares of common stock of Enfinity, par value $.01 per share (the
"Shares"), for an aggregate purchase price of $40.75 (the "Purchase Price").
Enfinity agrees to pay or cause to be paid, and shall be liable for, and
covenants and agrees to defend, indemnify and hold the Executive harmless (on a
grossed up basis for applicable taxes) from and against, any and all Losses (as
defined below) resulting from, arising out of or relating to or otherwise based
upon Taxes (as defined below) that arise out of, are attributable to, or relate
to any claim or determination by the Internal Revenue Service or other
governmental authority that the fair market value of the Shares on the date the
Executive purchased them was greater than the Purchase Price (such claim or
determination an "Indemnified Tax Matter"). Notwithstanding any statement
contained in this Agreement to the contrary, Enfinity agrees to promptly pay, or
advance to the Executive for payment, without regard to when the Executive
actually sells any Shares, any and all amounts for which the Executive is
indemnified in this Section 17. As used herein (i) "Losses" means expenses,
damages, judgments, fines, amounts paid in settlement, liabilities, obligations,
losses, penalties, costs, or deficiencies, including, without limitation,
attorneys fees and fees of other professionals, and all costs, expenses or other
obligations paid or incurred in connection with investigating, defending, being
a witness in or participating in (including an appeal) any hearing, review,
litigation or other proceeding or matter arising out of or relating to Taxes,
and (ii) "Taxes" means any income (whether ordinary or otherwise), alternative
minimum, employment,
-12-
payroll, social security, unemployment, withholding or other similar tax,
assessment or other governmental charge (including, without limitation, all
interest and penalties thereon and additions thereto whether disputed or not)
imposed by any federal, state or local government. The Executive agrees, upon
any future sale of the Shares for cash, to reimburse Enfinity in an amount equal
to the actual benefit of any increase in the tax basis of the Shares disposed of
by the Executive as a result of any payment or payments made by Enfinity
pursuant to this Section 17; provided, however, that the Executive's
reimbursement obligation hereunder shall not exceed the lesser of (1) the
aggregate net amount of payments (but without giving effect to any payments made
to "gross up" any tax owed by the Executive) in respect of Tax liabilities
previously made to the Executive by Enfinity hereunder or (2) the difference
between the fair market value of the Shares on the date the Executive purchased
them (as determined by the Internal Revenue Service or other governmental
authority) and the Purchase Price multiplied by a percentage equal to
then-applicable capital gains (as opposed to ordinary income) rate. The
obligation of Enfinity hereunder shall survive any termination or expiration of
this Agreement, any transfer by the Executive of the Shares, any termination or
cessation of the Executive's employment with Enfinity, and shall, following the
Executive's death, inure to the benefit of the Executive's estate.
18. SEVERABILITY.
To the extent any provision of this Agreement or portion thereof shall be
invalid or unenforceable, it shall be considered deleted therefrom and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect.
19. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and
the same instrument.
20. GOVERNING LAW.
This Agreement shall be construed, interpreted and enforced in accordance with
the internal laws of the State of Delaware, without giving effect to the choice
of law provisions of such state.
21. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement by Enfinity and the Executive
with respect to the subject matter hereof and supersedes any and all prior
agreements or understandings between the Executive and Enfinity with respect to
the subject matter hereof, whether written or oral. This Agreement may be
amended or modified only by a written instrument executed by the Executive and
Enfinity.
-13-
IN WITNESS WHEREOF, the parties have executed this Agreement as of date
first above written.
ENFINITY CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
/s/ Xxxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxxx X. Xxxxxxxx
-14-
