EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of the 1st
day of April, 1996 by and between KENETECH Corporation, a Delaware corporation
with its principal place of business at 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000 (the "Company") and Xxxx X. Xxxxxx, 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 running from the date hereof to March 31, 1999. The employment
period shall be renewed upon mutual agreement of the Company and the Employee
for an unlimited series of one year renewal periods. Each renewal period shall
run from April 1 of a year to the last day of March the following year with the
first such renewal period beginning April 1, 1999. Such renewal shall be
automatic unless either the Company or you notify the other in writing prior to
January 1 of any year that such party is not renewing for the next year. The
initial term and any renewals are referred to herein as the "Employment Period."
2. Employment Duties. The Company will employ you as the President and
Chief Executive Officer. 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
Company's Board of Directors. During your Employment Period, you will devote
your full time and effort to the business and affairs of the Company within the
scope of your executive office.
3. Compensation.
A Upon the execution hereof, you shall be paid a bonus in the amount of One
Hundred Thousand Dollars ($100,000.00).
B. For service in the remainder of the 1996 calendar year, your base
salary will be at the annual rate of Four Hundred Thousand
Dollars ($400,000). Your annual rate of base salary will be
subject to adjustment every year by the Company's Board of
Directors (or its Compensation Committee) but in no circumstances
will it be decreased below the current level. Your first
adjustment date will be July 1, 1997. There is no current
agreement as to the level of future increases, if any.
C. Your base salary will be paid at periodic intervals in accordance
with the Company's payroll for salaried employees.
D. You will be entitled to such bonuses (if any) for service
rendered during the Employment Period as the Company's Board of
Directors (or its Compensation Committee) may determine in its
sole discretion and such additional factors as the Board (or its
Compensation Committee) deems appropriate, specifically including
your individual performance and the Company's profitability. You
are currently eligible for an annual bonus equal to 25% of your
base salary.
E. 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 stock option plans, which are made available to
other Company executives and for which you qualify.
6. Objective Payments. Notwithstanding the provisions of Section 3.D above,
the Company will pay to you certain sums upon the completion of certain events
as follows:
(a) the sale, transfer or other disposition of all or substantially
all of the assets or stock of CNF Industries, Inc. or CNF
Constructors, Inc.;
(b) the sale, transfer or other disposition of all or substantially
all of the assets making up the independent power business (as
defined in the Xxxxx Xxxxxx offering memorandum) or any other
transaction effecting the disposition of the assets or stock of
the Puerto Rico co-generation plant or other realization of the
value by the Company of the Puerto Rico co-generation plant; and
(c) final settlement or adjudication of Xxxxxx x. Xxxxxxx, et al.
The sums to be paid upon the completion of the above noted events are: (a)
$150,000; (b) $200,000; and (c) $100,000. Additionally, if events (a) and (b)
are completed before (c) is complete, (c) is accelerated and paid as if it had
occurred on such date as the later to be completed of (a) or (b).
The amounts described in (a), (b) and (c) above are referred to as the
"Objective Payments". All amounts are due and payable within 5 business days of
the day on which the event occurs.
7. Vacation. You will accrue paid vacation benefits during the Employment
Period in accordance with the Company policy in effect for other Company
executive officers.
8. Death. Upon your death during the Employment Period, the employment
relationship created pursuant to this letter agreement will immediately
terminate, and no further compensation will become payable to you pursuant to
Paragraph 3. In connection with such termination, the Company will only be
required to pay you (or your estate) any unpaid compensation earned under
Paragraph 3 for services rendered through the date of your death. The Company
shall maintain the current life insurance in effect at the date hereof and shall
pay such amounts to your estate upon receipt.
9. 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 mental injury or illness to substantially perform 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 (360th) day.
10. Restrictive Covenant. During the Employment Period:
(i) You will devote your full working time and effort to the
performance of your duties as an executive officer of the
Company.
(ii) You will not directly or indirectly, whether for your own account
or as an employee, consultant or advisor, provide services to any
business enterprise other than the Company, unless otherwise
authorized by the Company in writing.
However, you will have the right to perform such incidental services as are
necessary in connection with (a) your private passive investments, (b) your
charitable or community activities, and (c) 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.
11. Confidentiality.
A. You hereby acknowledge that the Company may, from time to time
before or during the Employment Period, disclose to you
confidential information pertaining to the Company's business and
affairs and client base, including (without limitation) customer
lists and accounts, other similar items indicating the source of
the Company's income, and information pertaining to the salaries,
during and performance levels of the Company's employees. You
will not, at any time during or after such Employment Period,
disclose to any third party or directly or indirectly make use of
any such confidential information, including (without limitation)
the names, addresses and telephone numbers of the Company's
customers, other than in connection with, and in furtherance of,
the Company's business and affairs.
B. All documents and data (whether written, printed or otherwise
reproduced or recorded) containing or relating to any such
confidential or proprietary information of the Company which come
into your possession during the Employment Period will be
returned by you to the Company immediately upon the termination
of the Employment Period or upon any earlier request by the
Company, and you will not retain any copies, notes or excerpts
thereof.
C. Your obligations under this Paragraph 11 will continue in effect
after termination of your employment with the Company, whatever
the reason or reasons for such termination, and the Company will
have the right to communicate with any of your future or
prospective employers concerning your continuing obligations
under this Paragraph 11.
12. Ownership Rights.
A. All materials, ideas, discoveries and inventions pertaining to
the Company's business, including (without limitation) all
patents and copyrights, patent applications, patent renewals and
extensions, and the names, addresses and telephone numbers of
customers, will belong solely to the Company.
B. You will continue to be bound by all the terms and provisions of
your existing Proprietary Information and Inventions Agreements
with the Company or its affiliates, and nothing in this document
will be deemed to modify or affect your duties and obligations
under those other agreements.
13. Severance Benefits.
A. If the Company terminates you 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 two years salary plus
any unpaid Objective Payments pursuant to Section 6, payable on
the date of termination. In addition, you and your eligible
dependents will continue to receive the Company's health care
coverage and life insurance (on the same terms as you had while
an employee) for two years after the date of termination.
B. If you commit one or more acts of fraud, embezzlement,
misappropriation of property or information or engage in any
other conduct materially adversely affecting the business
reputation of the Company, you may be terminated for cause and
you will not be paid the severance benefits described in
paragraph 13(A) above.
14. Change in Control Benefits.
A. For purposes of this Agreement, the following definition shall
apply:
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;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in
liquidation or dissolution of the Company;
(iii)any reverse merger in which the Company is the surviving
entity but in which fifty percent (50%) or more of the
Company's outstanding voting stock is transferred to holders
different from those who held the stock immediately prior to
such merger;
(iv) the acquisition of more than fifty percent (50%) of the
Company's outstanding voting stock pursuant to a tender or
exchange offer made by a person or related group of persons
(other than the Company or a person that directly or
indirectly controls, is controlled by or is under common
control with the Company);
(v) a change in the composition of the Board such that the
individuals elected to the Board at the last meeting of the
stockholders at which there is not a contested election
subsequently cease to comprise a majority of the Board; or
(vi) a change in a composition of the Board such that any
combination of the individuals currently serving on the
Board (Messrs. Alderson, Christenson, Duthie, Laskow,
Lerdal, Pifer, and Xxxxxx) do not comprise a majority of the
members of the Board.
B. Should there occur a Change in Control 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 13(A) above; and
(ii) You will receive a lump sum payment equal to one year of salary.
15. Non-Competition Covenant. During any period subsequent to the
Employment Period that you are eligible to receive the Company's health care
coverage you agree that you will not engage in any act which is directly
competitive with the Company's wind generated electricity activities or any
other line of business where the Company has a significant technological
advantage. Prohibited acts include acting as an employee, directly or indirectly
investing, serving as a board member, serving as a consultant or otherwise
assisting any company, other than KENETECH, which has as one of its businesses,
any activity associated with the generation of electricity from wind turbines.
16. Indemnification. The indemnification provisions for Officers and
Directors under the Company's Bylaws 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.
17. Miscellaneous. The provisions of this letter agreement will be binding
upon the Company, its successors and assigns (including, without limitation, the
surviving entity or successor party resulting from the Change in Control) and
will be construed and interpreted under the laws of the State of California.
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 including, without limitation, that certain Employment Agreement
between you and the Company dated December 31, 1995. This agreement may only be
amended by written instrument signed by you and an authorized officer of the
Company.
18. 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 San Francisco, California 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,
KENETECH CORPORATION
By___________________________
Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President and Chief
Financial Officer
By___________________________
Name: Xxxxx X. Xxxxxx
For the Compensation Committee of the
Board of Directors
ACCEPTED AND AGREED TO:
Signature:_________________________
Xxxx X. Xxxxxx
