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Exhibit 10.27
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 5th day of May, 1998, by and between BayCorp
Holdings, Ltd., a Delaware corporation with its principal place of business
located at 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxx, Xxx Xxxxxxxxx 00000 (the
"Company"), and Xxxxx X. Xxxxxx, Xx., residing at 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000 ("Executive").
RECITAL
The Company and Executive are parties to an Employment Agreement dated
as of July 31, 1995, as amended (the "Prior Agreement"). The parties hereto wish
to enter into this Agreement in substitution for the Prior Agreement.
1. EMPLOYMENT.
The Company hereby employs Executive, and Executive hereby
accepts such employment, in accordance with the terms and subject to the
conditions set forth in this Agreement.
2. POSITION AND DUTIES.
a. Subject to the provisions of this Agreement, the
Company shall employ Executive, and Executive shall serve the Company, as
President and Chief Executive Officer and/or any other titles as may be
designated from time to time by the Board of Directors (the "Board") of the
Company. Executive shall report to the Board.
b. Executive shall have primary authority and
responsibility for operational, management and general business matters of the
Company and shall perform such executive duties and responsibilities on behalf
of the Company and its Affiliates (as defined below) as may be prescribed from
time to time by the Board. Executive shall devote his full-time best efforts to
the business of the Company so as to increase the profitability and shareholder
value of the Company; and Executive shall not during the term of this Agreement
be engaged in any other business activity, unless written approval is first
secured from the Board. The preceding sentence shall not be deemed to prohibit
Executive's activities relating to his ownership and management of a certain
residential apartment building located in Oneonta, New York and a certain
condominium located in Brighton, Massachusetts, provided that the ownership and
management of such building and condominium does not interfere with Executive's
duties hereunder. As used herein, "Affiliates" shall mean entities controlling,
controlled by or under common control with the Company. The Executive agrees
upon the Board's request, to serve on the Board (or any Affiliates's boards of
directors) for no additional consideration. The Executive acknowledges and
agrees that, incident to a material transaction involving the Company, his title
and duties may be shared with a "Co-Chief Executive Officer"
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(and the same, in and of itself, shall not constitute a "Material Adverse
Change," as defined below).
3. TERM OF EMPLOYMENT. Unless sooner terminated as provided in
Section 6 below, the term of this Agreement shall be approximately two (2)
years, commencing on May 5, 1998 (the "Commencement Date") and ending on
July 31, 2000 (the "Expiration Date"). As used herein, the word "Term" shall
refer to the period beginning on the Commencement Date and ending on the
effective date of the termination of Executive's employment with the Company as
provided in this Agreement.
4. COMPENSATION; BENEFITS. For all services rendered by Executive
pursuant to this Agreement, the Company shall compensate Executive, during the
Term of Executive's employment hereunder, as follows:
a. ANNUAL SALARY; DISCRETIONARY BONUS. From and after
the Commencement Date, Executive shall be paid an annual base salary of $150,000
per year, which shall be payable in equal bi-weekly installments. After the
first anniversary of the Commencement Date, such base salary shall be increased
to $160,000 per year. The Executive shall also be eligible to receive, from time
to time, one or more discretionary bonuses to be determined by the Board. All
salary and bonus payments to Executive shall be subject to payroll tax and
related deductions as required by law.
b. LOAN. The Company shall lend to Executive the sum of
$25,000 (the "Loan Amount"), which sum shall be paid to Executive promptly after
the Commencement Date, and of which at least 80% of which shall be used to
purchase common stock of the Company on the open market. One-half (1/2) of the
Loan Amount (or $12,500) shall be forgiven, and Executive shall have no
obligation to repay the Company with respect to such forgiven amount (a
"Forgiven Loan Amount"), on each anniversary of the Commencement Date.
Notwithstanding the foregoing sentence, in the event that the employment of
Executive is terminated by the Company for "Cause" (as defined in Section 6.c.
below) or by Executive in violation of the terms of this Agreement prior to the
Expiration Date, Executive shall, within thirty (30) days following such
termination, repay to the Company the Loan Amount, less any Forgiven Loan Amount
(the "Adjusted Loan Amount"), together with interest accrued on the Adjusted
Loan Amount, as calculated from the Commencement Date through the date of such
termination, at the rate of six percent (6%) per annum.
c. INSURANCE. During the Term, the Company shall
continue to pay life insurance and disability insurance premiums with respect to
the Executive, consistent with past practices and subject to the Executive's
continued eligibility for coverage at reasonable rates.
d. EXECUTIVE BENEFITS; VACATION. During the term of his
employment hereunder, Executive shall be entitled to participate in all employee
pension and welfare benefit plans and programs made
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available to executive employees of the Company, as such plans or programs may
be in effect from time to time and as determined by the Board, including,
without limitation, 401(K) plans and health insurance and life insurance plans
not covered above. Executive shall be entitled to three (3) weeks of paid
vacation per calendar year or a pro rata number of vacation days for a period
that is less than a complete calendar year in accordance with the Company's
vacation policy in effect from time to time.
e. REIMBURSEMENT OF EXPENSES. Executive shall be
reimbursed for reasonable business expenses incurred in connection with carrying
out the business of the Company, subject to authorization and documentation in
accordance with the Company's policies in effect from time to time.
5. CONFIDENTIAL INFORMATION; NON-COMPETITION; ANTI-RAIDING.
a. Executive agrees that all operating and/or financial
data and projections, plans, contracts, agreements, literature, manuals,
brochures, books, schedules, correspondence and other materials furnished,
disclosed or otherwise made available to Executive by the Company or its
Affiliates, or secured through the efforts of Executive, relating to the
business conducted by the Company and/or its Affiliates, are and shall remain
the property of the Company and/or its Affiliates, and Executive agrees to
deliver all such materials, including all copies or abstracts thereof, to the
Company upon the termination of Executive's employment hereunder, or at any
other time at the Company's request.
b. Executive agrees that, except in the good faith
performance of his duties and responsibilities under this Agreement or as
required by order of a court or governmental agency having jurisdiction, he will
not at any time during or after his employment with the Company use, reveal,
divulge or make known to any person or entity any confidential or proprietary
knowledge or information concerning the Company or its Affiliates, including
without limitation any such information concerning any equipment, facilities,
contracts, leases, operating and/or financial data and projections, processes,
developments, schedules, lists, plans or other matters relating to the business
of the Company or its Affiliates and will retain all knowledge and information
Executive acquired during his employment therewith relating to the business of
the Company or its Affiliates in trust in a fiduciary capacity for the sole
benefit of the Company, its Affiliates and their respective successors and
assigns. Executive's obligations under this Section 5.b. shall not apply to any
information that (i) is or becomes known to the general public under
circumstances involving no breach by Executive of this Agreement, (ii) is
generally disclosed to third parties (excluding counsel, accountants, financial
advisors, employees, agents and material creditors of the Company) by the
Company without restriction on such third parties, or (iii) is approved for
release by written authorization of the Board.
c. During the Term and for a period of one (1) year
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thereafter, Executive shall not (i) enter into the employment of, or act as a
consultant, director, officer, or employee of, or render any service or advice
to, any other business, partnership, association, corporation or other entity
engaged in the "public utility" industry within one or more of the six New
England States, other than the Company or any Affiliate (a "Competing
Business"), or (ii) invest or otherwise acquire any interest, whether as a
shareholder, lender, partner, proprietor, vendor or otherwise, in any Competing
Business (excluding ownership of less than 2% of a class of securities of a
publicly-traded company). "Public utility" shall mean for the purposes of this
Section 5.c. any company which directly or indirectly owns or operates
facilities used for the generation, transmission, or distribution of electric
energy for sale.
d. During the Term and for a period of two (2) years
thereafter, Executive will not, directly or indirectly, entice, induce or in any
manner influence any person who is, or shall have been during such period, in
the service of the Company, to leave such service for the purpose of engaging in
a Competing Business, or being employed or engaged by or otherwise associated
with any person or entity which is a Competing Business.
e. The provisions of this Section 5 shall survive the
termination of this Agreement and the termination of Executive's employment with
the Company and shall run to and inure to the benefit of the Company and its
successors and assigns. Executive represents, warrants and acknowledges that he
has carefully read this Section 5, that he has had an opportunity to have the
provisions contained herein explained to him by his attorney, and that he
understands the provisions contained herein. Executive further acknowledges
that, by reason of his training, skills, experience and employment hereunder,
the services to be rendered by him under the provisions of this Agreement and
their value to the Company are of a special, unique and extraordinary character
and that it would be difficult or impossible to replace such services, and he
further acknowledges that a violation by him of any of the provisions of this
Section 5 could cause continuing material and irreparable injury to the Company
and that in such event money damages would not be readily calculable and the
Company would not have an adequate remedy at law. Executive acknowledges and
agrees that (i) the restrictions under this Section 5 are reasonable and will
not interfere with Executive's ability to earn a livelihood or impose upon him
any undue hardship, and (ii) any breach of the covenants, provisions and
restrictions contained in this Section 5 shall cause, and shall be deemed to be,
a fundamental and material breach of Executive's fiduciary and contractual
obligations to Employer. Therefore, Executive agrees that the Company shall be
authorized and entitled to obtain from any court of competent jurisdiction,
interim and permanent equitable relief, including without limitation, injunctive
relief, in the event of any such breach or threatened breach, together with
payment of reasonable attorneys' fees and disbursements and any other costs of
enforcement incurred in connection with such breach or threatened breach. These
rights and remedies shall be cumulative and shall be in addition to any other
rights or remedies whatsoever to which the Company shall
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otherwise be entitled hereunder, at law or otherwise, including the right to
seek damages (including any consequential damages) which any court of competent
jurisdiction may deem appropriate.
6. TERMINATION OF EMPLOYMENT. The term of employment may
terminate upon the occurrence of any of the following events:
a. TERMINATION DUE TO DEATH. Executive's employment
hereunder shall terminate upon his death. In such event his estate or his
beneficiaries, as the case may be, shall be entitled to:
(1) Salary accrued through the date of death;
and
(2) The right to exercise his 125,000 stock
options (the "Options"), subject to the
terms of the Stock Option Agreements dated
as of July 31, 1995 and September 17, 1996
(the "Option Agreements") and the applicable
Stock Option Plans.
b. TERMINATION DUE TO DISABILITY. The Company may
terminate Executive's employment at any time on written notice after his
"Disability." "Disability" shall mean Executive's inability by reason of illness
or injury substantially to perform his duties and responsibilities under this
Agreement, as reasonably determined by a majority of the Board based upon the
report of a reputable physician designated by the Board (whom Executive shall
permit to examine him), for a period of eight- four (84) consecutive days or one
hundred (100) days in any twelve (12) month period. In the event Executive's
employment is terminated due to his Disability, he shall be entitled to receive
the following:
(1) The amount of any disability or retirement
benefits provided to Executive by the
Company under the provisions of any Company
plan for its employees with respect to which
Executive is qualified; and
(2) Any accrued and unpaid salary through the
effective date of termination.
c. INVOLUNTARY TERMINATION FOR CAUSE. The Company may
terminate Executive's employment at any time for "Cause" on written notice.
"Cause" shall mean (i) Executive is convicted of a felony, or a misdemeanor
involving moral turpitude; or (ii) the Board determines in good faith, after
reasonable notice to Executive and an opportunity for Executive to present his
views of the relevant facts and circumstances, that Executive has (A) materially
failed or refused to perform competently his duties and responsibilities (after
notice and opportunity to cure if such material failure or refusal can be cured)
as provided in this Agreement; (B) has breached his duty of loyalty to, or
committed any act of fraud, theft or dishonesty against, the Company or any of
its Affiliates; or (C) has violated any of his material obligations under this
Agreement after
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written notice and a reasonable opportunity (not to be less than ten (10) days)
to cure such default. In the event of such termination for Cause, all rights and
benefits of Executive under this Agreement (including without limitation all
unexercised Options) shall immediately terminate and in no event shall the
Company be obligated to pay Executive any compensation (other than salary and
accrued and vested benefits through the date of termination) with respect to any
period before or after the date of such termination.
d. VOLUNTARY TERMINATION BY EXECUTIVE. Executive may
terminate this Agreement in a "Qualifying Termination" (as defined in Section
7.d. below).
e. OTHER TERMINATION. In the event of the termination of
Executive's employment (i) by the Company other than pursuant to the provisions
of Subsection 6.a., b. or c. above, or (ii) by Executive following a material
breach by the Company of its obligations under this Agreement which remains
uncured after written notice to the Company and a reasonable opportunity (not to
be less than ten (10) days) to cure such breach:
(1) Executive shall be entitled to receive in cash an
amount equal to his annual salary (excluding loan
forgiveness) from the effective date of such
termination through the Expiration Date; PROVIDED,
however, that such sum shall be offset by the amount
of any compensation earned by Executive through other
employment from the effective date of such
termination through the Expiration Date (it being
understood that Executive shall be under no
obligation to mitigate his damages in such event);
(2) The Loan Amount (to the extent not then forgiven),
together with any interest thereon, shall be
immediately forgiven, and Executive shall have no
obligation to repay the same;
(3) All Options previously issued to Executive (other
than the 25,000 "contingent options" awarded to the
Executive in 1996 (the "Contingent Options")) shall
immediately become exercisable (as provided in the
Option Agreements); and
(4) The covenants contained in Subsections 5.c. and 5.d.
shall not apply.
If this Agreement expires by its terms on the Expiration Date, the
covenant contained in Subsection 5.c. shall only remain in force (i) for (6)
months instead of one year and then only if (ii) the Company elects, in its sole
discretion, to continue paying the Executive 50% of his then-currently bi-weekly
base salary during such restricted period.
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7. CHANGE OF CONTROL.
a. In the event that Executive's employment by the
Company terminates in a Qualifying Termination (as defined in Subsection 7.d.
below):
(1) Executive shall be entitled to receive in
cash upon the Qualifying Termination an
amount equal to the greater of (a) the sum
of his annual salary (excluding loan
forgiveness) from the date of the Qualifying
Termination through the Expiration Date or
(b) twice his annual salary (excluding loan
forgiveness) immediately prior to the date
of the Change in Control;
(2) The Loan Amount (to the extent not then
forgiven), together with any interest
thereon, shall be immediately forgiven, and
Executive shall have no obligation to repay
the same;
(3) All Options (including the Contingent
Options) previously issued to Executive
shall immediately become exercisable in
accordance with the Option Agreements; and
(4) The covenants contained in Subsections 5.c
and 5.d. shall not apply;
PROVIDED, HOWEVER, that if $500,000 exceeds the sum of (a) the amount payable to
Executive under Section 7.a(1), plus (b) the Net Value of the Options (as
defined below) exercisable under 7.a(3), the Company will also, subject to
subsection 7.b. below, make a cash payment to the Executive equal to the amount
of such excess. As used herein, the "Net Value of the Options" shall be equal to
the difference obtained by subtracting the aggregate exercise price payable by
Executive upon the exercise of the Options from the aggregate fair market value
(as of the date of Change of Control) of the Common Shares issuable upon such
exercise.
b. Payments under this Subsection 7.a. shall be made
without regard to whether the deductibility of such payments (or any other
"parachute payments," as that term is defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), to or for the Executive's
benefit) would be limited or precluded by Section 280G and without regard to
whether such payments (or any other "parachute payments" as so defined) would
subject the Executive to the federal excise tax levied on certain "excess
parachute payments" under Section 4999 of the Code; provided that if the total
of all "parachute payments" to or for the Executive's benefit, after reduction
for all federal, state and local taxes (including the tax described in Section
4999 of the Code, if applicable) with respect to such payments (the "Total
After-Tax Payments"), would be increased by the limitation or elimination of any
payment under this Subsection 7.a., amounts payable under this Subsection 7.a.
shall be reduced to the extent, and only to the extent, necessary to maximize
the Total After-Tax Payments. The determination as to whether and to what extent
payments under this Subsection 7.a. are required to be reduced in accordance
with the preceding sentence shall be made at the Company's expense by Xxxxxx
Xxxxxxxx or by such other certified public accounting or law firm as the Board
may designate prior to a Change of Control of the Company. In the event of any
underpayment or overpayment under this Subsection
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7.a. as determined by Xxxxxx Xxxxxxxx (or such other firm as may have been
designated in accordance with the preceding sentence), the amount of such
underpayment or overpayment shall forthwith be paid to the Executive or refunded
to the Company, as the case may be, with interest at the applicable federal rate
provided for in Section 7872 of the Code.
c. For purposes of this Agreement, a "Change of Control"
occurs upon the occurrence prior to the Expiration Date of any event specified
below:
(1) any corporation, person or other entity
(other than the Company, a majority-owned
subsidiary of the Company, any employee
benefit plan maintained by the Company or
any subsidiary or one of the three largest
shareholders as of the Commencement Date
(any such person, a "Permitted Acquiror")
acquires or becomes the holder of more than
fifty percent (50%) of the Company's voting
equity securities, or
(2) the stockholders of the Company approve a
definitive agreement to merge or consolidate
the Company with or into another corporation
(other than a subsidiary of the Company) or
to sell or otherwise dispose of all or
substantially all of its assets.
d. For purposes of this Agreement, a "Qualifying
Termination" occurs if, prior to the earlier of the Expiration Date or the
second anniversary of a Change of Control, (a) the employment of Executive is
terminated other than for Cause or (b) Executive resigns following any material
impairment or material adverse change in his working conditions, authority,
autonomy, compensation or benefits immediately prior to the Change of Control,
as the same may from time to time have been improved, or otherwise altered with
the written consent of Executive such that his position within the Company or
its successor is no longer reasonably comparable (a "Material Adverse Change").
An assignment by the Company of all rights and obligations hereunder to an
entity into or with which the Company merges or consolidates or to which the
Company transfers substantially all of its assets shall not constitute a
Material Adverse Change in and of itself so long as such entity fully assumes
the Company's obligations under this Agreement. In the event that both
Subsection 6.e. and this Subsection 7.d. are applicable, the provisions of this
Section shall exclusively govern Executive's
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rights and remedies.
8. MISCELLANEOUS.
a. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New Hampshire without
reference to principles of conflict of laws. Any dispute, action or proceeding
arising hereunder shall be maintained in the state or federal courts located in
New Hampshire and each party hereto consents to service of process in the manner
provided in Subsection b. of this Section 8 (which shall constitute "personal
service").
b. Any notice given to a party shall be in writing and
shall be deemed to have been given when delivered personally or sent by
certified or registered mail, postage prepaid, return receipt requested, duly
addressed to the party concerned at the address indicated below or to such other
address as to which such party may subsequently give such notice:
If to the Company:
BayCorp Holdings, Ltd.
000 Xxxx Xxxxxx
Xxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxxx, Chairman
If to Executive: 000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
Copies of all notices to the Company shall be sent to Xxxxxx X. Xxxxx, Esq.,
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C., 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000. Copies of all notices to Executive shall be sent to Xxxxxx X.
Xxxxxx, Esq., Peabody & Xxxxxx, 00 Xxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
c. This Agreement is personal to Executive and shall not
be assignable by Executive, except that Executive's rights to compensation and
benefits may be transferred in the event of death or Disability by will or
operation of law (subject to the terms hereof and of the applicable plans).
Subject to the provisions of Section 7.d. above, the Company may assign (without
Executive's consent) all rights and obligations hereunder to an entity into or
with which the Company merges or consolidates or to which the Company transfers
substantially all of its assets. This Agreement shall be binding upon and inure
to the benefit of Executive's heirs and legal representatives and shall be
binding upon and inure to the benefit of the Company and its successors and
assigns.
d. Executive and the Company each represents and
warrants to the other that such party is fully authorized and empowered to enter
into this Agreement and that the entry into and
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performance of such party's obligations hereunder will not violate any agreement
between such party and any other person or entity. Executive represents and
warrants that he has made a thorough investigation of and is knowledgeable about
the facts and circumstances affecting the business and prospects of the Company.
e. This Agreement contains the entire understanding and
agreement between the parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect thereto.
No provision hereof may be amended unless such amendment is agreed to in writing
and signed by Executive and an authorized officer of the Company acting at the
direction of the Board. No waiver by either party of any breach by the other
party of any condition or provision contained herein to be performed by such
other party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver must be in
writing and signed by Executive or an authorized officer of the Company, as the
case may be.
f. Any provision of this Agreement that may be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions thereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by law, the parties hereby waive any provision of law that renders any provision
of this Agreement prohibited or unenforceable in any respect. In addition, in
the event of any such prohibition or unenforceability, the parties agree that it
is their intention and agreement that any such provision, as written, in any
jurisdiction shall nonetheless be in force and binding to the fullest extent
permitted by the law of such jurisdiction as though such provision had been
written in such a manner and to such an extent as to be enforceable therein
under the circumstances. Without limitation of the foregoing, with respect to
the restrictive covenant contained herein, if it is determined that any such
provision is excessive as to duration, scope or area, it is intended that it
nonetheless be enforced for such shorter duration or with such narrower scope or
area as will render it enforceable, and the court making such determination
shall have the power to modify such duration, scope or area, or all of them,
and/or to delete specific words or phrases, and such provision shall then be
applicable and enforceable in such modified form.
g. The Prior Agreement (except with respect to Section
4.b thereof) is hereby terminated and of no further force or effect.
The parties hereto have signed this Employment Agreement as of the date
first written above.
BAYCORP HOLDINGS, LTD.
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx, Director
/s/ Xxxxx X. Xxxxxx Xx.
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Xxxxx X. Xxxxxx Xx.
