EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement "), dated as of May 10,
2000, between US ENERGY SYSTEMS, INC., a Delaware corporation (the "Company"),
and Xxxxxxxx Xxxxxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company's business consists of (a) acquiring and
operating existing independent power plants ("IPPs") and cogeneration facilities
throughout the world, (b) developing, building and operating new IPPs and
cogeneration facilities throughout the world, and (c) developing, building and
selling special energy efficient products using cogeneration technology
throughout the world and (d) developing, building, acquiring and/or operating
"inside the fence" energy facilities and operations for commercial and
industrial users throughout the world, and (e) developing, building, acquiring
and/or operating district heating and cooling systems throughout the world.
WHEREAS, the Company and the Executive now desire to enter
into this Agreement in its entirety.
NOW, THEREFORE, in consideration of the mutual promises,
representations and warranties set forth herein. and for other good and valuable
consideration, it is hereby agreed as follows:
1. Position and Duties.
a) Employment and Position -The Company hereby
agrees to employ the Executive as set forth in the next succeeding sentence, and
the Executive hereby accepts such employment, upon the terms and conditions set
forth herein. The Executive shall serve as Chief Executive Officer of the
Company and shall have such other duties consistent with such office, as from
time to time may be prescribed by the Board of Directors of the Company (the
"Board ").
(b) Duties - During the Term (as defined in
Section 5(f) below), the Executive shall perform and discharge the duties that
may be assigned to him by the Board from time to time as provided in this
Agreement, and the Executive shall devote his reasonable best talents, efforts
and abilities to the performance of his duties hereunder. During the Term, the
Executive shall devote such time as is reasonably necessary to perform his
duties and the Executive shall have no other employment whatsoever that would
prevent him from fulfilling his obligations hereunder.
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2. Compensation. Notwithstanding anything to the contrary in
this Agreement, during the term of this Agreement, each part of the total
compensation paid to the Executive by the Company as well as Executive's total
compensation shall be no less than such part of the compensation and such total
compensation paid by the Company to Xxxxx Xxxxxxx in his capacity as an employee
of the Company or any successor President with respect to the corresponding time
period.
(a) Base Salary - The Company shall pay the
Executive for his services hereunder a salary (as the same may be increased from
time to time, the "Base Salary") at the annual rate of $180,000.00 which shall
be payable in accordance with the customary payroll practices of the Company but
not less frequently than on a monthly basis. The Base Salary shall be reviewed
periodically by the Board and shall be subject to such increases as the Board,
in its sole discretion, from time to time may determine.
(b) Incentive Bonus - In addition to the Base
Salary, the Executive shall at the end of each fiscal year for the Company
be awarded a bonus determined in accordance with the 2000 Executive Bonus Plan
(the "Bonus Plan") annexed hereto as Exhibit A and incorporated herein as if
fully set forth. In addition, the Executive is eligible for such other bonuses
which may be awarded by the Board in its sole discretion under such other plans
that the Board may establish in its sole discretion from time to time.
(c) Simultaneous herewith, the Company and the
Executive are executing (i) a Stock Option Agreement respecting 750,000 shares
(the "750,000 Share Agreement"), and (ii) a Stock Option Agreement respecting
1,000,000 shares (the "1,000,000 Share Agreement") dated as of the date hereof
providing collectively for up to 1,750,000 stock options (collectively the
"Stock Options") annexed hereto as Exhibit B and incorporated herein as if fully
set forth.
(d) Shareholder Consent - Executive acknowledges
that the Board may determine that it is required or advisable for the Board
to present the Stock Options, the 2000 Executive Incentive Plan (the "Incentive
Plan") and/or the Bonus Plan to the Company's shareholders for a vote
(individually each of the matters described above submitted to the Shareholders
for a vote shall be referred to as a "Voted Matter"). In the event the Board
presents any of the foregoing matters to the Company's shareholders for a vote,
in order for such Voted Matter to become effective, the affirmative vote of
a majority of the Company's shares, present in person or represented by proxy,
at a meeting of shareholders at which a quorum is present and in fact voting (a
"Majority of the Shareholders") must approve the material terms of the Voted
Matter, it being further understood that if the Majority of the Shareholders
do not approve the Incentive Plan none of the Stock Options shall be effective.
The Board shall present any Voted
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Matter (or the material terms thereof) to the Company's shareholders for a vote
as soon as reasonably possible after the execution of this Agreement. In the
event any Voted Matter (or the material terms thereof) is not approved by a
Majority of the Shareholders by November 15, 2000, the Executive shall have the
rights set forth in Section 5(g) hereof.
(e) Withholding. All payments required to be
made by the Company to the Executive under this Agreement (whether under this
Section 2 or otherwise) shall be subject to withholding of employment and income
taxes and other payroll deductions in accordance with applicable tax
requirements, the Company's policies applicable to employees of the Company at
the Executive's level and the provisions of the Benefit Plans (as defined in
Section 3 below).
3. Benefits. (a) Benefit Plans - During the Term, the Company
shall provide to the Executive all fringe benefits currently provided, as well
as those which the Company may generally make available to its senior
executives, including, without limitation, benefits provided under the Company's
pension and profit-sharing plans (if any), health benefit plans (such as medical
and hospitalization coverage), and insurance plans (such as life, supplemental
life, disability, business travel, accident and accidental death and
dismemberment) (collectively, the "Benefit Plans"). Such plans shall during the
term provide for at least the same level of benefits as the Benefit Plans
provide at the date of this Agreement and at least as provided for below. Such
Benefit Plans shall generally provide the following benefits:
o Medical and Dental Insurance
o 401K plan with Company, matching or equal, to be structured for
Company management
o $1 million Life Insurance (the employee's estate shall be the
beneficiary)
o Disability Insurance: 60% of base compensation for life
(b) Automobiles - During the Term, the Company
shall provide the Executive with a Company-owned or leased automobile of a type
to be agreed upon by the Executive and the Company, or at the Executive's option
a car allowance of $600 per month in lieu thereof. The Company will bear all
insurance, gasoline, registration, maintenance and repair costs incident to the
Executive's use of such Company-owned or leased or Executive-owned or leased
automobile in the performance of his duties hereunder.
(c) Vacations, sick leave and holidays. The
Executive shall be entitled to no less than four (4) weeks of paid vacation
during each year of the Term (and a pro rata portion thereof for any portion of
the Term that is less than a fiscal year). In addition, the Executive shall be
entitled to paid sick leave and holidays in accordance with the Company's usual
policies for its senior executives.
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(d) Company Life Insurance. In addition to the
life insurance policy described above, the Company intends to obtain a $5
million policy on Executive's life for which the Company shall be the
beneficiary. Executive shall cooperate with the Company in obtaining such
insurance.
4. Reimbursement of Expenses. During the Term, the Company
shall pay or reimburse the Executive for all reasonable travel, entertainment
and other business expenses actually incurred or paid by the Executive in the
performance of his duties hereunder upon presentation of expense statements or
vouchers or such other supporting information as the Company may reasonably
require of the Executive.
5. Term: Termination. Subject to the provisions of this
Section 5, the term of the Executive's employment under this Agreement shall
commence on the date hereof and shall end on the fifth anniversary hereof,
provided that the term of this Agreement shall automatically be renewed for
successive additional one-year periods at the end of such five-year period and
of each such one-year renewal period, unless either party elects not to renew by
giving written notice to the other at least 90 days before an annual renewal
date. The initial five-year term referred to herein, together with any renewal
thereof, is referred to in this Agreement as the "Term". The employment of the
Executive may be terminated prior to the expiration of the Term in the manner
described in this Section 5 solely on the following grounds.
(a) Termination by the Company for Cause - The
Company shall have the right to terminate the employment of the Executive prior
to expiration of the Term for Cause (as defined in Section 5(i)(iii) below) by
written notice to the Executive specifying the particulars of the conduct of
the Executive forming the basis for such termination, as provided in this
Agreement.
(b) Termination by the Executive for Good Reason
- The Executive shal have the right to terminate his employment hereunder
prior to expiration of the Term for Good Reason (as such term is defined in
Section 5(i)(iv) below) by written notice to the Company specifying the grounds
constituting such Good Reason, provided such written notice is given within six
months of the date the Executive reasonably became aware of such an event
constituting such Good Reason.
(c) Termination upon Death - The employment of
the Executive hereunder shall terminate immediately upon his death.
(d) The Company's Option upon Disability. If the
Executive becomes physically or mentally disabled during the Term so that he is
unable to perform the services required of him pursuant to this Agreement for
a period of six successive months, or an aggregate
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of six months in any consecutive twelve-month period (the "Disability Period"),
the Company shall have the option, in its discretion, by giving written notice
thereof, to terminate the Executive's employment hereunder prior to expiration
of the Term. Regardless of whether the Company exercises such option, during a
period of 18 month's from the date of the commencement of the Disability Period,
the Executive shall continue to receive his full compensation and other benefits
provided herein net of any payments received under any disability policy or
program provided by the Company of which the Executive is a beneficiary or
recipient.
(e) Termination by the Company for other reason
than under 5(a), 5(c), 5(d) - The Company shall have the right to terminate the
employment of the Executive prior to expiration of the Term for other reasons
than defined in 5(a), 5(c) and 5(d) above ("Without Cause") by written notice
to the Executive as provided in this Agreement. Such notice shall state for
informational reasons only, the reason for such Termination.
(f) Termination by the Executive for other
reason than under 5(b) The Executive shall have the right to terminate his
employment hereunder prior to expiration of the Term for other reason than
under 5(b) by written notice given at least 90 days prior to the "Termination
Date" as defined in section 5(h) below..
(g) Termination By Executive if A Voted Matter
is Not Approved -- The Executive shall have the right to terminate his
employment if Company's shareholders do not approve any Voted Matter (or
material terms thereof) on or before November 15, 2000 provided that such
notice is given within 30 days of the earlier of November 15, 2000 or the date
the shareholders reject the Voted Matter.
(h) Termination Date - Any notice of termination
given by the Company or the Executive pursuant to the provisions of this
Agreement shall specify therein the effective date of such termination (the
"Termination Date").
(i) Certain Definitions - For purposes of this
Agreement, the following terms shall have the following meanings:
(i) The "Affiliate" of any Person means
any other Person directly or indirectly through one or more intermediary
Persons, controlling, controlled by or under common control with such Person.
For purposes of this definition, "control" shall mean the power to direct the
management and policies of such Person, directly or indirectly, by or through
equity ownership, agency or otherwise, or pursuant to or in connection with an
agreement, arrangement or understanding (written or oral) with one or more
other Persons by or through equity ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
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(ii) "Change of Control" with respect to the
Company, means the occurrence of any of the following:
(A) the acquisition, with or without
the approval of the Board, directly or indirectly (in one or
more related transactions), by any Person (other than (i) the
Executive or an Affiliate of the Executive (ii) Sparkenergy or
any of their Affiliates (iii) Ormat or any of its Affiliates
or (iv) the Xxxxxx Group or any of its Affiliates or
(collectively the "Excluded Group")) or two or more Persons
acting as a group, of beneficial ownership (as that term is
defined in Rule 13d-3 under the Securities Exchange Act of
1934) of more than 30% of the outstanding voting stock of the
Company (Voting Stock");
(B) the merger or consolidation of
the Company with one or more other Persons (other than any one
or more of the Excluded Group) as a result of which the
holders of the outstanding Voting Stock of the Company
immediately before the merger hold less than 30% of the Voting
Stock (or equivalent thereof) of the surviving or resulting
Person;
(C) the sale to any Person (other
than any one or more of the Excluded Group) of all or
substantially all of the assets of the Company or its
subsidiaries taken as a whole, and this Agreement is not
assumed by the acquiring Person in connection therewith; or
(D) the Company or any of its
members enters into any agreement providing for any of the
foregoing and the transaction contemplated thereby is
ultimately consummated.
provided, however, that for purposes of this Agreement, the sale of any Voting
Stock (or equivalent thereof) of the Company (or any successor Person thereto)
pursuant to a public offering shall not constitute a Change of Control.
(iii) "Cause" shall mean (A) the continued
failure of the Executive to perform substantially his duties with the Company
('Non-Performance') other than any such failure resulting from (1) the
Executive's incapacity due to physical or mental illness or (2) the Executive's
delivery to the Company of a notice of termination for Good Reason or other
reason), which failure continues for a period of more than 7 business days after
a written demand for substantial performance is given to the Executive by the
Board which specifically identifies the manner in which the Board believes that
the Executive has not substantially performed his duties,
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(B) the Executive having been
convicted of a crime which
constitutes a felony under
applicable law or having
entered a plea of guilty or
nolo contendere with respect
thereto, or
(C) the engaging by the Executive
in illegal or fraudulent conduct
with respect to the Company.
(iv) "Good Reason" means the occurrence of
any one of the following events:
(A) a Change of Control of the
Company;
(B) the assignment to the Executive
of any duties inconsistent in any material respect with the
Executive's then position (including status, offices, titles
and reporting relationships), authority, duties or
responsibilities, or any other action by the Company which
when taken as a whole results in a significant diminution
in the Executive's position, authority, duties or
responsibilities, excluding for this purpose any isolated,
immaterial and inadvertent action not taken in bad faith and
which is remedied by the Company within 7 business days
after receipt of notice thereof given by the Executive;
(C) a reduction by the Company in
the Executive's Base Salary without the consent of such
Executive or the failure by the Company to continue in effect
any material benefit or compensation plan, life insurance
plan, health and accident plan or disability plan in existence
as of the date of this Agreement (or a replacement or
substitute plan providing the Executive with substantially
similar benefits) in which the Executive is participating or
the material reduction of the Executive's benefits under any
of such plans (or replacement or substitute plans); or
(D) the Company requiring the
Executive to be based at any location other than New York City
or any county in New York, New Jersey or Connecticut that
abuts New York City, Westchester, NY and north of the southern
boundary of New York City except for requirements of travel on
the Company's business which travel may be on a regular and
extensive basis given the geographic scope of the Company's
franchise territories.
(v) "Person" means any individual,
corporation, partnership, limited liability company, association, joint-stock
company, trust, unincorporated organization, joint venture, court or government
or political subdivision or agency thereof).
6. Obligations on Termination.
(a) Payment Obligations of the Company in Case
of Termination for Good Reason Under Section 5(b) and the Company's Termination
Without Cause under Section 5(e).
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(i) Upon termination of the Executive's
employment pursuant to Section 5(b) and Section 5(e), then, in lieu of any
further payment under 2(a), the Company shall pay the Executive a lump sum cash
payment equal to 2.9 times the Base Salary then in effect, plus any unreimbursed
expenses and unpaid accrued benefits (collectively, the "Severance Payment).
The Severance Payment shall be payable within 60 days after the Termination
Date. Executive's rights to payments under the Bonus Plan shall not be affected
by termination under Sections 5(b) and 5(e) except as provided in such Bonus
Plan.
(ii) Notwithstanding anything to the
contrary contained herein or in any other agreement between the Company and the
Executive, in the event that the Executive's employment is terminated pursuant
to Section 5(b) and 5(e), then (I) (A) any Stock Options which vest solely
based on the Executive's employment by the Company for specified periods of time
(including the options covered by the 750,000 Share Agreement) heretofore or
hereafter granted to the Executive vested and unvested, will be automatically
vested and may be exercised in full (to the extent not previously exercised and
provided that the term of the applicable option has not otherwise expired) at
any time within six months after such cessation of employment after which time
such options shall expire; and (B) any Stock Options described in the 1,000,000
Share Agreement shall be unaffected by any termination of employment under
Sections 5(b) and 5(e) hereof and shall continue to be in full force and effect
as if the Executive had continued to be an employee of the Company. Any and all
reasonable costs and expenses, including but not limited to, reasonable legal
fees incurred by the Executive in good faith in enforcing or establishing any of
his rights hereunder shall be immediately paid to the Executive upon
presentation of appropriate documentation to the Company.
(b) Payment Obligations of the Company in case
of Termination for Non-Performance as defined in Section 5(i)(iii)(A) Under
Section 5(a).
(i) Upon termination of the Executive's
employment for Non- Performance, then, in lieu of any further payment under 2(a)
the Company shall pay the Executive a lump sum cash payment equal to 1 times the
Base Salary then in effect, plus any unreimbursed expenses and unpaid accrued
benefits (collectively, the "Severance Payment). The Severance Payment shall be
payable within 60 days after the Termination Date. Executive's rights under the
Bonus Plan shall not be affected by termination under Section 5(a) except as
provided in such Bonus Plan.
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(ii) Notwithstanding anything to the
contrary contained herein or in any other agreement between the Company and the
Executive, in the event that the Executive's employment is terminated pursuant
to Section 5(a) for Non-Performance,
(A) then any stock options (or
equivalent thereof) heretofore or hereafter granted to the Executive pursuant
to this Agreement, which have vested, may be exercised in full (to the extent
not previously exercised and provided that the term of the applicable option has
not otherwise expired) at any time within six months after such cessation of
employment after which time such options shall expire; and
(B) any and all reasonable costs and
expenses, including but not limited to, reasonable legal fees incurred by the
Executive in good faith in enforcing or establishing any of his rights
hereunder shall be immediately paid to the Executive upon presentation of
appropriate documentation to the Company.
(c) Payment Obligations of the Company in case
of Termination for Death.
(i) Upon termination of the Executive's
employment upon death, the Company shall have no payment obligations to the
Executive hereunder, except for the payment of any proceeds received by the
Company from the $1,000,000 Life Insurance policy described in Section 3(a)
hereof, any accrued and unpaid compensation (including unpaid accrued
benefits), and reimbursement of any unreimbursed expenses. Executive's rights
under the Bonus Plan shall not be affected by termination under Section 5(c)
except as provided in such Bonus Plan.
(ii) Notwithstanding anything to the
contrary contained herein or in any other agreement between the Company and the
Executive, in the event that the Executive's employment is terminated pursuant
to Section 5(c),
(A) then any stock options (or
equivalent thereof) heretofore or hereafter granted to the Executive pursuant
to this Agreement, which have vested, may be exercised in full (to the extent
not previously exercised and provided that the term of the applicable option has
not otherwise expired) by the Executive's estate at any time within six months
after such termination; and
(B) any and all reasonable costs and
expenses, including but not limited to, reasonable legal fees incurred by the
Executive's estate in good faith in enforcing or establishing any of his rights
hereunder shall be immediately paid to the Executive's estate upon presentation
of appropriate documentation to the Company.
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(d) Payment Obligations of the Company in case
of Termination for Disability.
(i) Upon termination of the Executive's
employment upon disability, the Executive shall receive the compensation
provided for in Section 5(d) hereof plus any unreimbursed expenses and unpaid
accrued benefits. Upon termination under Section 5(d), Executive shall have the
same rights under the Bonus Plan as if his employment continued for eighteen
months after the commencement of the Disability Period.
(ii) Notwithstanding anything to the
contrary contained herein or in any other agreement between the Company and the
Executive, in the event that the Executive's employment is terminated pursuant
to Section 5(d),
(A) then any stock options (or
equivalent thereof) heretofore or hereafter granted to the Executive pursuant
to this Agreement, which have vested or which vest in accordance with the terms
of the Stock Option Agreement within the 18 month period after commencement
of the Disability Period, will vest as if the Executive's employment did not
terminate and may be exercised in full (to the extent not previously exercised
and provided that the term of the applicable option has not otherwise expired)
at any time within such eighteen month period after which time such options
shall expire; and
(B) any and all reasonable costs and
expenses, including but not limited to, reasonable legal fees incurred by the
Executive in good faith in enforcing or establishing any of his rights hereunder
shall be immediately paid to the Executive upon presentation of appropriate
documentation to the Company.
(e) Payment Obligations of the Company in case
of Termination for Voluntary Resignation or Cause as defined in Section 5(i)
(iii)(B) and (C).
(i) Upon termination of the Executive's
employment as a result of the voluntary resignation of the Executive under
Section 5(f) or termination of the Executive by the Company for Cause (except
Non-Performance) as defined in Section 5(i)(iii)(B) and (C) under Section 5(a),
the Company shall have no payment obligations to the Executive hereunder, except
for the payment of any accrued and unpaid compensation (including unpaid accrued
benefits), and reimbursement of any unreimbursed expenses. Executive's rights
under the Bonus Plan shall not be affected by such termination except as
provided in such Bonus Plan.
(ii) Notwithstanding anything to the
contrary contained herein
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or in any other agreement between the Company and the Executive, in the event
the Executive terminates his employment by voluntary resignation pursuant to
Section 5(f) or the Executive's employment is terminated pursuant to Section
5(a) for Cause (except Non-Performance),
(A) then any stock options (or
equivalent thereof) heretofore or hereafter granted to the Executive pursuant
to this Agreement, which have vested, may be exercised in full (to the extent
not previously exercised and provided that the term of the applicable option has
not otherwise expired) at any time within six months after such cessation of
employment after which time such options shall expire; and
(B) any and all reasonable costs and
expenses, including, but not limited to, reasonable legal fees incurred by the
Executive in good faith in enforcing or establishing any of his rights hereunder
shall immediately be paid to the Executive upon presentation of appropriate
documentation to the company.
(f) Continued Medical Dental Coverage. Upon the
termination of the Executive's employment with the Company for whatever reason,
to the extent permitted by applicable law, the Company shall continue to provide
the Executive (at the Company's cost or, in the case of a termination pursuant
to Sections 5(a) for other than Non-Performance and Section 5(f), at the
Executive's cost) with medical, dental and hospitalization insurance coverage
for the longest of- (i) the 18-month period from the Termination Date; (ii) the
period prescribed by applicable law; and (iii) the period set forth in the
applicable Benefit Plans.
(g) Company Obligations Upon Termination If a
Voted Matter is Not Approved.
(i) If the Executive terminates this
Agreement pursuant to Section 5(g) because any Voted Matter (or the material
terms thereof) is not approved by a Majority of the Shareholders then in lieu
of any further payments under 2(a) the Company shall pay the Executive $500,000
plus any unreimbursed expenses (collectively the "Severance Payment"). 50% of
such Severance Payment shall be made within 60 days of the Termination Date and
the remaining 50% shall be made within 420 days of the Termination Date.
(ii) In the event that the Executive's
employment is terminated pursuant to Section 5(g) then
(A) any stock options heretofore or
hereafter granted to the Executive pursuant to this Agreement pursuant to
authorized stock option plans which have vested may be exercised in full (to
the extent not previously exercised and provided that the term of the applicable
option has not otherwise expired) at any time within six months after such
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cessation of employment after which time such options shall expire and
(B) any and all reasonable costs and
expenses, including but not limited to reasonable legal fees incurred by the
Executive in good faith in enforcing or establishing any of his rights hereunder
shall be immediately paid to the Executive upon presentation of appropriate
documentation to the Company.
(h) Obligations of Company Under Bonus Plan.
Notwithstanding anything to the contrary subject to Executive's full compliance
under Section 7 after the Term, and 8 hereof, the Company's obligation to the
Executive under the Bonus Plan shall not be affected by the termination or
renewal of the Executive's employment except as provided in such Bonus Plan. In
the event the Executive commits a breach of Section 7 after the Term or Section
8 of this Agreement and fails to cure such breach within seven days after
receiving written notice describing such breach (provided the Company sends such
notice to Executive within 14 days of obtaining actual knowledge of the material
facts relating to such breach), the Company shall have the right to terminate
this Agreement under paragraph 5(a) (if Executive's employment has not already
been terminated or expired at such time) and effective upon the date of such
Termination (if Executive's employment has not already been terminated or
expired at such time) or the lapse of such cure period (if Executive's
employment has already been terminated or expired at such time), the Company
shall be relieved of its obligation to make any further payments under the Bonus
Plan. In the event the Executive and the Company dispute whether Executive has
committed an uncured breach of Sections 7 or 8 hereof, the Parties' rights and
obligations under the Bonus Plan shall remain in effect except that the Company
shall make any payments due under the Bonus Plan into an interest-bearing escrow
held by an outside escrow agent designated jointly by the parties until the
earlier of the passage of 180 days from the date of the lapse of the cure period
described above (in which case the Escrow shall be released to the Executive)
or;
(i) an arbitration panel described in
Section 12 of this Agreement and, finds that
(A) the Executive breached Sections
7 or 8, in which case, the escrow shall be released to the Company and the
Company shall have no further obligations to Executive under the Bonus Plan, or
(B) that the Executive did not
breach Sections 7 or 8, in which case the escrow shall be released to the
Executive and the Company shall thereafter make payments to the Executive under
the Bonus Plan in accordance with its terms, or
(ii) the Company and the Executive deliver a
joint written instruction to such escrow holder respecting the disposition of
the funds.
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At the request of the escrow holder, the parties shall execute an escrow
agreement containing normal terms and conditions consistent with this paragraph.
The parties agree to proceed expeditiously under any arbitration in which the
Executive's rights under the Bonus Plan is at issue so that the arbitration is
adjudicated within the 180 day period described above.
(i) Liability of the Company for Compensation in
the Event of Termination - Provided the Company fully complies with this Section
6, then the Company shall have no further liability to the Executive under
Section 2 above in the event of termination as provided for herein.
7. Trade Secrets; Confidentiality. The Executive recognizes
and acknowledges that, in connection with his employment with the Company, he
has had and will continue to have access to valuable trade secrets and
confidential information of the Company and its Affiliates including, but not
limited to, customer lists, business methods and processes, marketing,
promotional, pricing, financial information, technical information and data
relating to clients, employees and consultants (collectively, "Confidential
Information") and that such Confidential Information is being made available to
the Executive only in connection with the furtherance of his employment with the
Company. The Executive agrees that during the Term and for a period of 2 years
thereafter, the Executive shall not disclose any Confidential Information to any
Person, except that disclosure of Confidential Information will be permitted:
(a) to the Company and its respective Affiliates and advisors; (b) if such
Confidential Information has previously become available to the public through
no fault of the Executive; (c) if required by law or any court or governmental
agency or body, provided that in any such case covered by this clause (c) the
Executive shall provide the Company, in advance of any such disclosure, with
prompt notice of such requirement(s) and shall cooperate fully with the Company
to the extent it may seek to limit such disclosure; (d) if necessary to
establish or assert the rights of the Executive hereunder; or (e) if expressly
consented to by the Company.
8. Noncompetition and Nonsolicitation.
(a) The Executive hereby covenants and agrees
that during the Term and for the respective periods set forth below immediately
following the termination by the Company or the Executive, as applicable, of
his employment under the respective circumstances set forth below he shall not,
without the prior written consent of the Board, at any time, directly or
indirectly, on his own behalf or on behalf of any Person:
(i) own, manage, operate, control, be
employed by, participate in, provide consulting services to, or be connected or
associated in any manner with the ownership, management, operation or control of
any business which is in competition with the
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Company (in the business in which the Company is substantially engaged during
the Term in the case of acts committed during the Term or in the business in
which the Company is substantially engaged at the time of termination of
Executive's Employment in the case of acts committed after the Term) or any of
its Affiliates in any state of the United States or in any foreign country in
which any of them are engaged in business during the Term in the case of acts
committed during the Term or in any state of the United States or in any foreign
country in which any of them are engaged in business at the time of termination
of Executive's employment in the case of acts committed after the Term for as
long as the Company continues to conduct such business (the "Non-Compete"),
(ii) solicit or take any action to cause the
solicitation of, or recommend that, any supplier, client, customer, contractor,
vendor, agent or consultant of the Company or any of its Affiliates or other
Person having business relations with the Company, discontinue business or
cease such relationship, in whole or in part, with the Company or any of its
Affiliates (the "Customer Non-Solicit"),
(iii) employ any Person employed by the
Company or any of its Affiliates at the time of, or during the 12 months
preceding, such termination of the Executive's employment with the Company
(the "Non-Hire") or
(iv) solicit for employment (other than
through unaffiliated employment recruiting or placement firms or services who
are not specifically directed to solicit employees of the Company or provided
with the names of any such employees) any Person employed by the Company or any
of its Affiliates at the time of, or during the 12 months preceding such
termination of the Executive's employment with the Company, or otherwise
encourage or entice any such Person to leave such employment (the "Employee Non-
Solicit"), provided, however, that nothing in this Agreement shall preclude the
executive from owning less than five percent of any class of publicly traded
equity of any entity
Customer Employee
Reason for Termination Non-Compete Non-Solicit Non-Hire Non-Solicit
Good Reason 1 1/2 years 1 1/2 years 1 1/2 years 1 1/2 years
For Cause other than 2 years 2 years 1 1/2 years 2 years
Non-Performance
For Non-Performance 1 years 1 years 1 years 1 years
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Company Termination 0 years 1 1/2 years 1 1/2 years 1 1/2 years
for other than Cause and
Disability
Voluntary Resignation not for 2 years 2 years 2 years 2 years
Good Reason
Company Failure to Renew 0 years 2 years 1 year 2 years
Executive Failure to Renew 0 years 2 years 1 year 2 years
Disability 0 years 1 1/2 years 1 year 1 year
(b) The Employee acknowledges and agrees that
(i) the restrictive covenants set forth
in this Section 8 (the "Restrictive Covenants") are reasonable and valid in
geographical and temporal scope and in all other respects, and
(ii) it is the intention of the parties
hereto that the Restrictive Covenants be enforceable to the fullest extent
permitted by applicable law. Therefore, if any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected and shall
be given full force and effect, without regard to the invalid or unenforceable
parts. Specifically, if any court of competent jurisdiction should hold that
any portion of the Restrictive Covenants is overly broad as to one or more
states of the United States or one or more foreign jurisdictions, then that
state or states or foreign jurisdiction or jurisdictions shall be eliminated
from the territory to which the Restrictive Covenants apply and the restrictions
shall remain applicable in all other states of the United States and foreign
jurisdictions.
(c) If any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or unenforceable for any
reason, such court shall have the power to modify such Restrictive Covenant, or
any part thereof, and, in its modified form, such restrictive covenant shall
then be valid and enforceable.
9. Equitable Relief. In the event of a breach or threatened
breach by the Executive of any of the covenants contained in this Agreement, the
Company shall be entitled to a temporary restraining order, a preliminary
injunction and/or a permanent injunction restraining the
15
Executive from breaching or continuing to breach any of said covenants. Nothing
herein contained shall be construed as prohibiting the Company from pursuing any
other remedies that may be available to it under this Agreement for such breach
or threatened breach.
10. Severability. Should any provision of this Agreement be
held, by a court of competent jurisdiction, to be invalid or unenforceable, such
invalidity or unenforceability shall not render the entire Agreement invalid or
unenforceable, and this Agreement and each individual provision hereof shall be
enforceable and valid to the fullest extent permitted by law.
11. Successors and Assigns.
(a) This Agreement and all rights under this
Agreement are personal to the Executive and shall not be assignable other than
by will or the laws of descent. All of the Executive's rights under the
Agreement shall inure to the benefit of his heirs, personal representatives,
designees or other legal representatives, as the case may be.
(b) This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. Any Person
succeeding to the business of the Company by merger, purchase, consolidation or
otherwise shall assume by contract or operation of law the obligations of the
Company under this Agreement.
12. Governing Law: Jurisdiction. This Agreement shall be
construed in accordance with and governed by the laws of the State of New York.
The parties hereby agree to submit any and all disputes arising out of or in
connection with this Agreement to binding arbitration in accordance with the
rules of the American Arbitration Association. Such arbitration shall be held in
New York City. Each party shall select one arbitrator and the two such selected
arbitrators shall select a third arbitrator. Notwithstanding anything to the
contrary in this Section 12, such parties may seek in any court of competent
jurisdiction any injunctive relief pursuant to Section 9 of this Agreement.
Provided that Executive's position in such dispute has a good faith basis, any
and all reasonable out of pocket costs incurred by the Executive in connection
with any dispute arising out of this Agreement shall be immediately paid to the
Executive by the Company upon presentation of appropriate documentation, up to
an aggregate amount equal to $180,000.
13. Notices. All notices, requests and demands given to or
made upon the respective parties hereto shall be deemed to have been given when
received or refused if mailed by registered or certified mail, postage prepaid,
if delivered by hand, or if delivered by Federal Express or similar overnight
delivery service, addressed to the parties at their addresses set forth below or
to such other addresses furnished by notice given in accordance with this
Section 13:
(a) if to the Company, to
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Company Headquarters
Attention CEO
(b) if to the Executive, to
Xxxxxxxx Xxxxxxxxx
(most recent residential address
according to company records)
14. Complete Understanding. Together with the Stock Option
Agreement, Stock Option Plans and the Bonus Plan, this Agreement supersedes any
prior contracts, understandings, discussions and agreements relating to
employment between the Executive and the Company and constitutes the complete
understanding between the parties with respect to the subject matter hereof.
Notwithstanding anything to the contrary herein, this Agreement is not intended
to affect the Company's and the Executive's rights and obligations with respect
to any matters that are independent of the Executive's employment including,
without limitation, any stock options issued to Executive prior to the
effectiveness of this Agreement and the Company's Class A Preferred Stock. No
statement, representation, warranty or covenant has been made by either party
with respect to the subject matter hereof except as expressly set forth herein
or therein.
15. Modification:
(a) This Agreement may be amended or waived if,
and only if, such amendment or waiver is in writing and signed, in the case of
an amendment, by the Company and the Executive or in the case of a waiver, by
the party against whom the waiver is to be effective. Any such waiver shall be
effective only to the extent specifically set forth in such writing.
(b) No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
16. Mutual Representations.
(a) The Executive represents and warrants to the
Company that the execution and delivery of this Agreement and the fulfillment of
the terms hereof
(i) will not constitute a default under
or conflict with any agreement or other instrument to which he is a party or by
which he is bound, and
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(ii) do not require the consent of any
Person.
(b) The Company represents and warrants to the
Executive that this Agreement has been duly authorized, executed and delivered
by the Company and that except with respect to any Voted Matter the fulfillment
of the terms hereof
(i) will not constitute a default under
or conflict with any agreement or other instrument to which it is a party or by
which it is bound and
(ii) do not require the consent of any
Person.
(c) Each party hereto warrants and represents to
the other that this Agreement constitutes the valid and binding obligation of
such party enforceable against such party in accordance with its terms.
(d) The parties agree to indemnify, defend and
hold the each other harmless for any claim, loss, damage, cost, expense
including without limitation, reasonable attorney fees arising out of or
relating to a breach of the foregoing representations in Section 16 (a), (b),
and (c). The Executive's obligation under this Section 16 shall be limited to
an aggregate amount of $180,000.
17. Headings. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of this Agreement.
18. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by the other party hereto.
19. Inconsistencies. In the event of any inconsistency between
this Agreement on the one hand and the Incentive Plan or the Bonus Plan on the
other hand, this Agreement shall govern.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed in its corporate name by one of its officers duly authorized to
enter into and execute this Agreement, and the Executive has manually signed his
name hereto, all as of the day and year first above written.
US ENERGY SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------
Xxxxx Xxxxxxx, President
/s/ Xxxxxxxx Xxxxxxxxx
------------------
Xxxxxxxx Xxxxxxxxx
