Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of the 1st day
of January, 1998 by and between WATTMONITOR LLC, a Delaware limited liability
company with its principal place of business at 000 Xxxxxxxxxx Xxxxxx, Xxxx,
Xxxxxx 00000 (the ("Company") and Xxxxxx X. Xxxxxxxx, an individual currently
employed by the Company ("Employee" or "you").
1. Employment Period. The Company shall employ you for an
initial period of three years beginning January 1, 1998 and continuing until
December 31, 2000. The employment period shall be renewed upon mutual agreement
of the Company and you for an unlimited series of one year renewable periods.
Each renewable period shall run from January 1 of a year to the last day of
December of that year with the first such renewable period beginning January 1,
2001. Such renewal(s) shall be automatic unless either the Company or you notify
the other in writing prior to September 1 of any year that such party is not
renewing for an additional year. The initial term and any renewals are referred
to herein as the "Employment Period".
2. Employment Duties. The Company will employ you as its
President. In your role as President, you will report to the Board of Managers,
and you shall be subject to the directions of the Board of Managers. You agree
to continue in such employment for the duration of the Employment Period and to
perform in good faith and to the best of your ability all services which may be
required of you in your executive position and to be available to render such
services at all reasonable times and places in accordance with reasonable
directives and assignments issued by the Board of Managers. During your
Employment Period, you will devote that time and effort to the business and
affairs of the Company as required within the scope of your executive office.
Your principal place of employment will be 000 Xxxxxxxxxx Xxxxxx, Xxxx, Xxxxxx
or such other location in Reno, Nevada to which the parties jointly agree.
3. Compensation. The Employee shall receive a base annual
salary ("Base Salary") at the rate of $150,000 per year. Base annual salary
shall exclude all bonuses, and incentive payments. Your annual rate of Base
Salary will be subject to an annual adjustment (at the discretion of the Board
of Managers) but in no circumstances will it be decreased from its then current
level. The Base Salary shall be accrued until such time as the Company has
received equity contributions equal to or greater than $1,000,000 (the "Trigger
Investment") at which time such accrued salary shall be paid as a lump sum.
A. Except during the accrual period noted above, your
Base Salary will be paid at periodic intervals in accordance with the Company's
payroll for salaried employees.
B. You will be entitled to such bonuses (if any) for
service rendered during the Employment Period as the Board of Managers may
determine in its sole discretion.
C. The Company will deduct and withhold, from the
compensation payable to you hereunder, any and all Federal, State and local
income and employment withholding taxes and any other amounts required to be
deducted or withheld by the Company under the applicable statute or regulation.
4. Expense Reimbursement. You will be entitled to
reimbursement from the Company for all customary, ordinary and necessary
business expenses incurred by you in the performance of your duties hereunder in
accordance with Company policy.
5. Fringe Benefits. During the Employment Period, you will be
eligible to participate in any group life insurance plan, group medical and/or
dental insurance plan, accidental death and dismemberment plan, short-term
disability program and other employee benefit plans, including profit sharing
plans, cafeteria benefit programs, and equity options or similar plans, which
are made available to other Company executives and for which you qualify.
6. Vacation. You will accrue paid vacation benefits during the
Employment Period in accordance with the Company policy in effect for other
Company executive officers.
7. Death. Upon your death during the Employment Period, the
employment relationship created pursuant to this Agreement will immediately
terminate, and no further compensation will become payable to you pursuant to
Paragraph 3. In connection with such termination by your death after the Trigger
Investment, the Company will be required to pay you (or your estate) any unpaid
compensation earned under Paragraph 3 for services rendered through the date of
your death, plus six months Base Salary at the then applicable Base Salary rate.
8. Disability. Upon your disability during the Employment
Period, the employment relationship created will terminate. You will be deemed
disabled if you are, in the Company's reasonable opinion, unable by reason of
any permanent physical and/or mental injury or illness, to perform substantially
the services required of you hereunder either for a period in excess of one
hundred eighty (180) consecutive days or for a period of one hundred eighty
(180) days in the aggregate during any three-hundred sixty (360)-day period. In
such event, you will be deemed disabled as of such three hundred sixtieth (360)
day.
9. Restrictive Covenant/Non-Competition.
A. The Employee agrees that he will not (i) during the
period he is employed by the Company engage in, or otherwise directly or
indirectly be employed by, or act as
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a consultant or lender to, or be a director, officer, employee, owner, or
partner of, any other business or organization that is or shall then be
competing with the Company in the United States, and (ii) for a period of one
year after he ceases to be employed by the Company under this Agreement,
directly or indirectly compete with or be engaged in the same business as the
Company in the United States, or be employed by, or act as consultant or lender
to, or be a director, officer, employee, owner, or partner of, any business or
organization which, at the time of such cessation, competes with or is engaged
in the same business as the Company in the United States.
B. You will have the right to perform incidental
services as are necessary in connection with (i) your private passive
investments, (ii) your charitable or community activities, and (iii) your
participation in trade or professional organizations, but only to the extent
such incidental services do not interfere with the performance of your services
hereunder.
10. Patents; Copyrights. Any interest in patents, patent
applications, inventions, copyrights, developments, and processes ("Such
Inventions") which the Employee now or hereafter during the period he is
employed by the Company under this Agreement may own or develop relating to the
fields in which the Company may then be engaged shall belong to the Company; and
forthwith upon request of the Company, the Employee shall execute all such
assignments and other documents and take all such other action as the Company
may reasonably request in order to vest in the Company all his right, title, and
interest in and to Such Inventions, free and clear of all liens, charges, and
encumbrances.
11. Confidential Information. All confidential information
which the Employee may now possess, may obtain during the Employment Term, or
may create prior to the end of the period he is employed by the Company under
this Agreement, relating to the business of the Company or of any customer or
supplier of the Company shall not be published, disclosed, or made accessible by
him to any other person, firm, or corporation during the Employment Term except
as required in the ordinary course of business of the Company, or any time
thereafter without the prior written consent of the Company. The Employee shall
return all tangible evidence of such confidential information to the Company
prior to or at the termination of his employment.
12. Severance Benefits.
A. In the event that the Company has (i) annual revenues
of $10 million or greater or (ii) the Company has received as capital
contributions an aggregate sum of $10 million or greater (each such criteria, a
"Benchmark Event"), and if the Company terminates you after a Benchmark Event
for any reason (other than a termination for cause, described below), including
non-renewal of the Employment Period as provided in Paragraph 2 above, the
Company shall pay to you an amount equal to twenty four (24) months Base Salary,
payable in one lump sum on the date of termination. In addition, (if after a
Benchmark Event) you and your eligible dependents will
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continue to receive the Company's health care coverage and life insurance (on
the same terms as you had while an employee) for two (2) years after the date of
termination.
B. Notwithstanding anything therein contained, if on or
after the date hereof and prior to the end of the Employment Period, the
Employee is terminated "for cause" (as defined below), then the Company shall
have the right to give notice of termination of Employee's services hereunder as
of a date specified in such notice, and this Agreement shall terminate on the
date so specified. Termination "for cause" shall mean that the Employee shall
(i) be convicted of a felony crime, (ii) commit an act or omit to take any
action in bad faith and to the detriment of the Company, (iii) commit an act of
fraud against the Company, or (iv) materially breach any term of this Agreement
and fail to correct such breach within five (5) days after written notice from
the Board of Managers of commission thereof.
13. Change in Control Benefits.
A. For purposes of this Agreement the following
definition shall apply:
A Change in Control means:
(i) a merger or acquisition in which the Company is
not the surviving entity, except for a transaction, the
principal purpose of which, is to change the State of the
Company's incorporation, or to change from a Limited Liability
Company to a Corporation;
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Company in a
liquidation or dissolution of the Company;
(iii) a reverse merger in which the Company is the
surviving entity but in which fifty percent (50%) or more
of the Company's membership interests are transferred to
holders different from those who held such interests
immediately prior to such merger;
(iv) the acquisition of more than fifty percent (50%)
of the Company's membership interests pursuant to a tender
or exchange offer made by a person or related group of
persons;
(v) a change in the composition of the Managers
such that the individuals elected as Managers at the last
meeting of the members at which there is not a contested
election subsequently cease to comprise a majority of the
Managers.
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B. Should there occur a Change in Control after the
Trigger Investment, and you are subsequently involuntarily terminated or you
resign, in either case, within six months of the Change in Control, you will
become entitled to the special change in control benefits specified below:
(i) you will receive all of the benefits provided
in Section 12(A) above; and
(ii) you will receive a lump sum payment equal to
the greater of (a) your bonuses for the three years prior to
the termination or (b) eighteen months Base Salary as a
retroactive bonus for such prior years service.
C. Notwithstanding the foregoing, the compensation
referred to in Section 13(B) above shall not exceed 2.99 times Employee's
average annual cash compensation hereunder over the course of the previous five
years (or such period he is employed by the Company if such term of employment
is less than five years).
14. Indemnification. The indemnification provisions for
Officers and Directors under the Company's Operating Agreement, as amended, will
(to the maximum extent permitted by law) be extended to you, during the period
following your termination irrespective of a Change in Control, with respect to
any and all matters, events or transactions occurring or effected during your
Employment Period.
15. Conversion to a Corporation. If the Company's legal form
is converted from a Limited Liability Company to a Corporation all of the terms
associated herein shall be changed to conform with their meaning contained
herein but as applied to a traditional corporate form. For example, references
to Managers become references to members of a Board of Directors, references to
members or membership interests become references to stockholders or voting
capital stock, etc. Upon the occurrence of such a conversion, the parties hereto
will cooperate in good faith in executing a revised employment agreement.
16. Miscellaneous. The provisions of this Agreement will be
binding upon the Company, its successors and assigns (including, without
limitation, the surviving entity or successor party resulting from a Change in
Control) and will be construed and interpreted under the laws of the State of
Delaware. This agreement incorporates the entire agreement between you and the
Company relating to the terms of your employment and the subject of severance
benefits and supersedes all prior agreements and understandings with respect to
such subject matter. This agreement may only be amended by written instrument
signed by you and an authorized manager of the Company.
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17. Arbitration. Any controversy which may arise between you
and the Company with respect to the construction, interpretation or application
of any of the terms, provisions, covenants or conditions of this agreement or
any claim arising from or relating to this agreement will be submitted to final
and binding arbitration in either San Francisco, California or Washington, D.C.
in accordance with the rules of the American Arbitration Association then in
effect.
Please indicate your acceptance of the foregoing provisions of
this employment agreement by signing the enclosed copy of this agreement and
returning it to the Company.
Very truly yours,
WATTMONITOR LLC
By:
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Name: Xxxxxx X. XxXxxx
Title: Secretary
ACCEPTED AND AGREED
Signature:
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Xxxxxx X. Xxxxxxxx
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ASSIGNMENT AND ASSUMPTION OF EMPLOYMENT AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION OF EMPLOYMENT AGREEMENT (the
"Assignment") is made as of this ____ day of February, 1999, by and between
WattMonitor LLC, a Delaware limited liability company (the "Assignor"), and
Wattage Monitor Inc., a Nevada corporation (the "Assignee").
The Assignor hereby assigns to the Assignee all of the duties
and obligations of the Assignor under the Employment Agreement between the
Assignor and Xxxxxx X. Xxxxxxxx, dated as of January 1, 1998 (the "Agreement"),
as attached hereto as Exhibit A.
The Assignee hereby assumes all of the duties and obligation
of the Assignor under the Agreement, for the term defined by the Agreement.
IN WITNESS WHEREOF, the undersigned have executed this
Assignment and Assumption of Employment Agreement on the date first above
written.
WATTMONITOR LLC
By:
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Name: Xxxxxxx X. Xxxxx
Title:
WATTAGE MONITOR INC.
By:
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Name:
Title:
