1
EXHIBIT 10.109
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of May 1, 1997 (the
"Agreement"), is made by and between COGENTRIX ENERGY, INC., a
North Carolina corporation (the "Company"), and XXXX X. XXXXXX, a
resident of Nissequogue, New York (the "Employee").
WHEREAS, the Company is in the business of developing
and operating independent power and cogeneration facilities (the
"Business"); and
WHEREAS, the Company and the Employee are mutually
desirous that the Company employ the Employee, and the Employee
accept employment, as President and Chief Operating Officer of
the Company upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and
of the respective covenants and agreements of the parties herein
contained, the Company and the Employee hereby agree as follows:
1. Duties.
1.1 During the Term (as defined below), the Employee
shall be the President and Chief Operating Officer of the Company
(or such other and comparable titles and positions as shall be
given the Employee by the Board of Directors of the Company (the
"Board")), shall faithfully perform for the Company the duties of
said offices and shall perform such other duties of an executive,
managerial or administrative nature as shall be specified and
designated from time to time by the Chief Executive Officer of
the Company. The Employee shall have such corporate power and
authority as are necessary to perform the duties of such office
and any other office(s) that are so assigned to him. The
Employee shall report directly to the Chief Executive Officer and
Vice-Chairman of the Board. The Employee shall devote
substantially all of his business time and effort to the
performance of his duties hereunder, shall use his best efforts
to advance the best interests of the Company and shall not engage
in outside business activities which materially interfere with
the performance of his duties hereunder.
1.2 The duties to be performed by the Employee
hereunder shall be performed primarily in Charlotte, North
Carolina, subject to reasonable travel requirements on behalf of
the Company. The Company shall not relocate the Employee outside
of Charlotte, North Carolina, without his prior written consent.
2. Term. Subject to Section 12.2, the Company hereby
employs the Employee, and the Employee hereby accepts such
employment, for an initial term commencing as of the date hereof
and ending on the fifth anniversary of such date, unless sooner
terminated in accordance with the provisions of Section 4 (said
initial five-year term and any continuation thereof pursuant to
Section 12.2, unless sooner terminated in accordance with the
provisions of Section 4, being hereinafter referred to as the
"Term").
2
3. Compensation.
3.1 Base Salary. During the Term and subject to the
next sentence of this Section 3.1, the Employee shall be
compensated at the annual rate of $350,000 ("Base Salary"),
payable on a monthly basis in accordance with the Company's
standard payroll procedures. On each anniversary of the date
hereof, the Base Salary will be increased by an amount which will
not be less than the product (if positive) of (i) the Base Salary
in effect immediately prior to such anniversary and (ii) the
percentage (if positive) by which the Consumer Price Index (All
Items less shelter) for Urban Wage Earners and Clerical Workers,
for the South Region/Population Size B, published by the United
States Government for the month preceding such anniversary
exceeds such index for the comparable month in the preceding
year.
3.2 Incentive Compensation. In addition to the Base
Salary, the Employee shall be entitled to receive a cash bonus
("Bonus") in an amount to be determined following the conclusion
of each fiscal year of the Company during the Term in the sole
discretion of Xxxxx X. Xxxxx or the successor Chief Executive
Officer. Any Bonus to which the Employee is entitled under this
Section 3.2 shall be paid to the Employee during the month of
September immediately following the fiscal year to which such
Bonus relates in a manner consistent with the Company's past
practice with respect to payment of bonuses. Notwithstanding the
foregoing, the Bonus for the first and second full fiscal years
of the Company during the Term shall not be less than $80,000 and
$100,000, respectively.
3.3 Profit Sharing. The Employee shall be entitled to
participate in the Company's existing profit sharing plan (the
"Plan"). The Company shall waive the two-year waiting period and
any other vesting or eligibility requirements that otherwise
would apply to the Employee under the Plan. The Employee shall
be entitled to receive an amount in cash (a "Plan Distribution")
equal to the product of (i) 0.7% and (ii) the Company's net
income before taxes for each fiscal year of the Company during
the Term. The Employee shall receive a pro-rated portion of any
Plan Distribution for any partial fiscal year during the Term.
Subject to the next sentence of this Section 3.3, Plan
Distributions shall be paid in accordance with the terms of the
Plan in a manner consistent with the Company's past practice.
Notwithstanding anything to the contrary in this Agreement or the
Plan, the Employee and the Company agree that the Employee's
entitlement to receive Plan Distributions under the Plan upon
termination of the Employee's employment during the Term of this
Agreement for any reason (other than under Section 4.2) shall be
governed by this Agreement and not the Plan.
3.4 Expenses. Upon submission of appropriate invoices
or vouchers, the Company shall pay or reimburse the Employee for
all reasonable expenses actually incurred or paid by him during
the Term in the performance of his duties hereunder.
3.5 Participation in Benefit Plans. The Employee
shall be entitled to participate in any health benefit or other
employee benefit plans available to the Company's key employees
as in effect from time to time, to the extent that he may be
eligible to do so under the applicable provisions of any such
plan. To the fullest extent possible under applicable law, the
Company shall waive any and all vesting periods, minimum service
periods and waiting periods that may otherwise apply to the
2
3
Employee under the Company's health, benefit and other employee
benefit plans available to the Company's key employees.
3.6 Vacation. The Employee shall be entitled to four
weeks of annual vacation and shall be subject to the Company's
standard vacation policy applicable to someone of his position
and seniority. Unused vacation shall not be carried over into
any subsequent year during the Term. The Company shall have no
obligation to pay the Employee for any unused vacation.
3.7 Automobile. As promptly as practicable following
the date hereof, the Company shall pay the Employee an amount in
cash which, after tax, equals the value of the Employee's
existing company automobile. Except as provided in this Section
3.7, the Company shall have no obligation to provide the Employee
an automobile allowance or otherwise furnish to the Employee an
automobile for use during the Term.
3.8 Relocation. The Company shall, at its sole cost
and expense, offer the Employee relocation benefits similar to
the relocation benefits made available to the Employee by his
previous employer.
3.9. Insurance. In addition to providing Employee the
insurance coverage required under Section 3.5, the Company shall,
at its sole cost and expense, provide for the benefit of the
Employee during the Term a whole life insurance policy in the
amount of $5 million, which policy shall be owned by the
Employee. The Company shall pay the Employee such amounts in
cash as are necessary during the Term to pay any income tax
liability the Employee may incur in connection with or arising
out of (i) the whole life insurance policy described above and
(ii) the Company's agreement to pay any such income tax liability
arising therefrom. Upon any termination of the employment of the
Employee, the Employee shall have the right, at his sole cost and
expense, to assume the insurance policy described above and the
Company shall have no obligation to make any payments to maintain
such insurance policy or in the event the Employee elects not to
assume, or make any payments with respect to, such insurance
policy.
4. Termination. The Employee's employment hereunder
may be terminated only upon the expiration of the Term of this
Agreement pursuant to Section 2 above or under the following
circumstances:
4.1 Death. The Employee's employment hereunder shall
terminate automatically upon his death, in which event the
Company shall pay to the Employee's written designee or, if he
has no written designee, to his spouse or, if he leaves no spouse
and has no written designee, to his estate, (i) accrued but
unpaid Base Salary through the date of death, (ii) Base Salary
payable for the remainder of the Term, such amounts to be paid in
the same manner through the remainder of the term as if the
Employee's employment were not terminated, (iii) accrued but
unpaid Bonus through the date of death and (iv) all reasonable
expenses actually incurred or paid by the Employee in the
performance of his duties hereunder prior to the date of death.
3
4
4.2 Disability. The Company may terminate the
Employee's employment hereunder if (i) as a result of the
Employee's incapacity due to physical or mental illness, the
Employee shall have been absent from his duties hereunder on a
full-time basis for an aggregate of 180 consecutive or non-
consecutive business days in any 12 consecutive-month period and
(ii) within 10 days after written notice of termination hereunder
is given by the Company, the Employee shall not have returned to
the performance of his duties hereunder on a full-time basis.
The determination of incapacity or disability under the preceding
sentence shall be made in good faith by the Company based upon
information supplied by a physician selected by the Company or
its insurers and reasonably acceptable to the Employee or his
legal representative. During any period that the Employee fails
to perform his duties hereunder as a result of incapacity due to
physical or mental illness (the "Disability Period"), the
Employee shall continue to receive his full Base Salary hereunder
until his employment is terminated pursuant to this Section 4.2,
provided that amounts payable to the Employee shall be reduced by
the sum of the amounts, if any, paid to the Employee during the
Disability Period under any disability benefit plans of the
Company.
4.3 Termination by the Company.
4.3.1 The Company (i) shall have "cause" to
terminate the Employee's employment hereunder upon the Employee
(A) being convicted of a felony, a crime of moral turpitude or
any crime involving the Company (other than pursuant to actions
taken at the direction or with the approval of the Board),
(B) being found by reasonable determination of the Company, made
in good faith, to have engaged in (1) willful misconduct,
(2) willful or gross neglect, (3) fraud, (4) misappropriation or
(5) embezzlement in the performance of his duties hereunder or
(C) having breached in any material respect the terms and
provisions of this Agreement and failed to cure such breach
within 15 days following written notice from the Company
specifying such breach and (ii) may terminate the Employee's
employment on written notice given to the Employee at any time
following the occurrence of any of the events described in
clauses (i)(A) and (i)(B) above and on written notice given to
the Employee at any time not less than 60 days following the
occurrence of any of the events described in clause (i)(C) above.
In the event the Employee's employment is terminated by the
Company for "cause", the Employee shall be entitled to continue
to receive Base Salary accrued but unpaid and expenses incurred
but not repaid to the Employee, in each case only until the
effective date of such termination.
4.3.2 In the event the Employee's employment is
terminated by the Company other than for "cause", the Employee
shall be entitled to continue to receive (i) Base Salary, (ii) an
amount equal to (A) the average Bonus paid to the Employee during
the three-year period immediately prior to termination by the
Company other than for "cause" or (B) if three years have not
elapsed prior to such termination, the average Bonus paid to the
Employee, or which would have been paid to the Employee pursuant
to this Agreement but for such termination, during the first two
full fiscal years of the Company during the Term, (iii) Plan
Distributions and (iv) the benefits contemplated by Section 3.5
of this Agreement, in each case for the remainder of the Term as
if such employment had not been terminated, such amounts to be
4
5
paid (and benefits to be provided) in the same manner through the
remainder of the Term as if such employment were not terminated
and without offset for earnings from subsequent employment or
otherwise. Notwithstanding the foregoing, if the benefit plans
with respect to the benefits described above do not provide
coverage for or with respect to the Employee after the Employee's
employment is terminated by the Company other than for "cause",
the Company shall, at its sole cost and expense, provide the
Employee supplemental benefits to the extent necessary to afford
the Employee the same benefit coverage that would have been
available to the Employee for the remainder of the Term had his
employment not been terminated.
4.4 Termination by the Employee.
4.4.1 Definitions. For purposes of this Section
4.4, the following terms shall have the respective meanings set
forth below:
(a) "Affiliate" means, with respect to the Company,
any entity directly or indirectly controlled, controlling or
under common control with the Company.
(b) "Acceleration Payment" means an amount in cash
equal to the value of (i) any Bonus accrued but unpaid prior
to the date of termination, (ii) any vacation accrued but
unused prior to the date of termination and (iii) all stock
options, restricted stock awards, stock appreciation rights
and any other similar Company capital-stock based
compensation awards (whether vested or not vested) that have
been granted or awarded to the Employee prior to the date of
termination.
(c) "Change of Control" means: (i) a person,
corporation, entity or group acquires, directly or
indirectly, the beneficial ownership of 50% or more of the
issued and outstanding stock of the Company in a single
transaction or series of transactions, (ii) the Company is a
party to a merger, consolidation or similar transaction and
following such transaction 50% or more of the issued and
outstanding securities of said party is beneficially owned
by a person, corporation, entity or group other than the
Company or an Affiliate of the Company, (iii) the Company
sells or transfers 50% or more of its assets to any other
person or persons other than an Affiliate of the Company,
(iv) the shareholders of the Company approve a plan or
proposal for the liquidation or dissolution of the Company
or (v) during any two-year period, individuals who comprise
a majority of the Board at the beginning of such two-year
period do not comprise a majority of the Board at the end of
such two-year period (such Board composition being referred
to as a "Continuing Majority"). Notwithstanding the
foregoing, the absence of a Continuing Majority during the
Term shall not constitute a Change of Control if such
absence is in contemplation of an initial public offering or
a private placement of the capital stock or other securities
of the Company.
(d) "Good reason" means: (i) the assignment to the
Employee of any duties inconsistent with his status as
President and Chief Operating Officer of the Company or a
material adverse alteration in the nature or status of his
responsibilities from those provided herein or the transfer
5
6
of a significant portion of such responsibilities to one or
more other persons; (ii) the failure by the Company to pay
or provide to the Employee, within 30 days of a written
demand therefor, any amount of compensation or any benefit
which is due, owing and payable pursuant to the terms hereof
or of any applicable plan, program, arrangement or policy;
(iii) the breach in any material respect by the Company of
any of its other obligations or agreements set forth herein
and the failure by the Company to cure such breach within 30
days after written notice thereof from the Employee; or (iv)
the occurrence of a Change of Control.
(e) "Severance" means the sum of (i) the highest Base
Salary that was paid to the Employee at any time prior to
termination by the Employee for good reason, (ii) the
average Bonus paid to the Employee during the three-year
period immediately prior to termination by the Employee for
good reason or, if three years have not elapsed prior to
such termination, the average Bonus paid to the Employee, or
which would have been paid to the Employee pursuant to this
Agreement but for such termination, during the first two
full fiscal years of the Company during the Term, and (iii)
the average Plan Distribution paid to the Employee during
the three-year period immediately prior to termination by
the Employee for good reason or, if three years have not
elapsed prior to such termination, the Plan Distribution (on
an annualized basis) the Employee would have received for
the year during which the Employee's employment was
terminated by the Employee for good reason.
(f) "Severance Benefits" means the benefits
contemplated by Section 3.5 of this Agreement.
(g) "Severance Term" means the longer of (i) three
years and (ii) the remainder of the Term as if the
Employee's employment had not been terminated.
4.4.2 At the election of the Employee for "good
reason," the Employee may terminate his employment immediately
upon written notice to the Company. If during the Term the
Employee's employment is terminated by the Employee for good
reason, the Employee shall be entitled to receive from the
Company (i) Severance and Severance Benefits for each year during
the Severance Term and the Acceleration Payment and (ii) in
addition to the amounts described above, cash payments in an
amount sufficient to ensure that the amounts received under this
Section 4.4.2 as a result of a Change of Control are not subject
to net reductions due to the imposition of excise taxes under
Section 4999 of the Internal Revenue Code of 1986, as amended.
4.4.3 Upon 90 days' prior written notice, the
Employee may terminate his employment with the Company other than
for good reason. If the Employee voluntarily terminates his
employment with the Company other than for good reason, no
further payment shall be due the Employee pursuant to Section 3
above (other than payments for accrued and unpaid Base Salary and
expenses incurred but not repaid to the Employee, in each case
prior to such termination).
6
7
4.5 Effect of Termination on Certain Obligations. No
termination of the employment of the Employee, whether voluntary
or involuntary, shall terminate, affect or impair any of the
obligations or rights of the parties set forth in Sections 3.9, 4
and 5 of this Agreement, all of which obligations and rights
shall survive any termination of employment of the Employee
hereunder.
5. Covenants of the Employee.
5.1 Covenant Against Competition. The Employee
acknowledges that (i) the Company is one of a limited number of
persons who have developed the Business; (ii) the Business is
national and international in scope; (iii) the Employee's work
for the Company will give him access to the confidential affairs
and proprietary information of the Company; (iv) the agreements
and covenants of the Employee contained in this Section 5 are
essential to the business and goodwill of the Company; and (v)
the Company would not have entered into this Agreement but for
the covenants and agreements set forth in this Section 5.
Accordingly, the Employee covenants and agrees that:
(a) During the Term, the Employee shall not, in
the United States or Asia, directly or indirectly, (1) engage in
any business that competes with the Business (or any part
thereof) for the Employee's own account; (2) render any services
to any person (other than the Company) engaged in such
activities; or (3) become interested in any such person (other
than the Company) as a partner, shareholder, principal, agent,
consultant or in any other relationship or capacity; provided,
however, that notwithstanding the above, the Employee may own,
directly or indirectly, solely as an investment, securities of
any such person which are traded on any national securities
exchange or NASDAQ if the Employee (A) is not a controlling
person of, or a member of a group which controls, such person and
(B) does not, directly or indirectly, own 2% or more of any class
of securities of such person.
(b) During the Term and for the period ending
five years following the date upon which the Employee ceases to
be an employee of the Company (the "Restricted Period"), the
Employee shall keep secret and retain in strictest confidence,
and shall not use for his benefit or the benefit of others,
except in connection with the business and affairs of the Company
and its affiliates, all confidential matters relating to the
Business or to the Company and its affiliates learned by the
Employee heretofore or hereafter, directly or indirectly, from
the Company and its affiliates, including, without limitation,
information with respect to (i) prospective facilities, (ii)
sales figures, (iii) profit or loss figures, and (iv) customers,
clients, suppliers, sources of supply and customer lists (the
"Confidential Information"), and shall not disclose such
Confidential Information to anyone outside of the Company and its
affiliates except with the Company's express prior written
consent and except for Confidential Information which (A) is at
the time of receipt or thereafter becomes publicly known through
no wrongful act of the Employee or (B) is received from a third
party not under an obligation to keep such information
confidential and without breach of this Agreement.
(c) All memoranda, notes, lists, records and
other documents (and all copies thereof) made or compiled by the
Employee or made available to the Employee concerning the
7
8
Business or the Company shall be the Company's property and shall
be delivered to the Company at any time on request.
5.2 Rights and Remedies upon Breach. If the Employee
breaches, or threatens to commit a breach of, any of the
provisions of Section 5.1 (the "Restrictive Covenants"), the
Company shall have the following rights and remedies (upon
compliance with any necessary prerequisites imposed by law upon
the availability of such remedies), each of which rights and
remedies shall be independent of the other and severally
enforceable, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity:
(a) The right and remedy to have the Restrictive
Covenants specifically enforced (without posting bond) by any
court having equity jurisdiction, including, without limitation,
the right to an entry against the Employee of restraining orders
and injunctions (preliminary, mandatory, temporary and permanent)
against violations, threatened or actual, and whether or not then
continuing, of such covenants, it being acknowledged and agreed
that any such breach or threatened breach will cause irreparable
injury to the Company and that money damages will not provide an
adequate remedy to the Company.
6. Severability. The Employee acknowledges and
agrees that (i) he has had an opportunity to seek advice of
counsel in connection with this Agreement and (ii) the
Restrictive Covenants are reasonable in geographical and temporal
scope and in all other respects. If it is determined that any of
the provisions of this Agreement, including, without limitation,
any of the Restrictive Covenants, or any part thereof, is invalid
or unenforceable, the remainder of the provisions of this
Agreement shall not thereby be affected and shall be given full
effect, without regard to the invalid portions.
7. Blue-Pencilling. If any court determines that any
of the covenants contained in this Agreement, including, without
limitation, any of the Restrictive Covenants, or any part
thereof, is unenforceable because of the duration or geographical
scope of such provision, the duration or scope of such
provisions, as the case may be, shall be reduced so that such
provision becomes enforceable and, in its reduced form, such
provision shall then be enforceable and shall be enforced.
8. Enforceability; Jurisdictions. The Company and
the Employee intend to and hereby confer jurisdiction to enforce
the Restrictive Covenants upon the courts of any jurisdiction
within the geographical scope of the Restrictive Covenants. If
the courts of any one or more of such jurisdictions hold the
Restrictive Covenants wholly unenforceable by reason of breadth
of scope or otherwise, it is the intention of the Company and the
Employee that such determination not bar or in any way affect the
Company's right to the relief provided above in the courts of any
other jurisdiction within the geographical scope of such
Restrictive Covenants, as to breaches of such Restrictive
Covenants in such other respective jurisdictions, such
Restrictive Covenants as they relate to each jurisdiction being,
for this purpose, severable, diverse and independent covenants,
subject, where appropriate, to the doctrine of res judicata.
8
9
9. Indemnification. To the fullest extent permitted
or required by the laws of the State of North Carolina, the
Company shall indemnify and hold harmless (including the advance
payment of expenses) the Employee, in accordance with the terms
of such laws, if the Employee is made a party, or threatened to
be made a party, to any threatened, pending, or contemplated suit
or proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that the Employee is or was
an officer or director of the Company or any subsidiary or
affiliate of the Company, against expenses (including reasonable
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with any
such action, suit or proceeding. The Company's obligations under
this paragraph will survive the termination of this Agreement for
any reason whatsoever.
10. D&O Liability Insurance. During the Term, the
Company shall maintain customary directors' and officers'
liability insurance.
11. Notice. Any notice or other communication
hereunder shall be in writing and shall be mailed or delivered to
the respective parties hereto as follows:
(a) If to the Company:
Cogentrix Energy, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxx
with a copy to:
Fennebresque, Clark, Xxxxxxxx & Hay
Suite 2900
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxxxxx
(b) If to the Employee:
Xxxx X. Xxxxxx
00 Xxxx Xxx
Xxxxxxxxxxx, XX 00000
The addresses of either party hereto above may be changed by
written notice to the other party.
9
10
12. Amendment; Waiver; Renegotiation.
12.1 This Agreement may be amended, modified,
superseded, cancelled, renewed or extended and the terms of
covenants hereof may be waived, only by a written instrument
executed by the party against whom such modification or waiver is
sought to be enforced. The failure of either party at any time
or times to require performance of any provision hereof shall in
no manner affect the right at a later time to enforce the same.
No waiver by either party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in
any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in
this Agreement.
12.2 During the six-month period after the third
anniversary of the date of this Agreement, the parties shall
amend or modify this Agreement upon mutually satisfactory terms.
Such amendments or modifications shall, at the very least, extend
the original Term of this Agreement for an additional five years
after the fifth anniversary of the date of this Agreement, unless
sooner terminated as provided in Section 4 hereof.
13. Benefit and Binding Effect. This Agreement shall
inure to the benefit of and be binding upon the successors and
assigns of the Company, but shall be personal to and not
assignable by the Employee. The obligations of the Company
hereunder are personal to the Employee or where applicable to his
spouse or estate, and shall be continued only so long as the
Employee shall be personally discharging his duties hereunder.
The Company may assign its rights, together with its
obligations, to any corporation which is a direct or indirect
wholly-owned subsidiary of the Company; provided, however, that
the Company shall not be released from its obligations hereunder
without the prior written consent of the Employee, which consent
shall not be unreasonably withheld.
14. Governing Law. This Agreement shall be governed
by the laws of the State of North Carolina regardless of the laws
that might be applicable under principles of conflicts of law.
15. Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original but all such
counterparts together shall constitute one and the same
instrument. Each counterpart may consist of two copies hereof
each signed by one of the parties hereto.
16. Headings. The headings in this Agreement are for
reference only and shall not affect the interpretation of this
Agreement.
17. Entire Agreement. This Agreement constitutes the
entire understanding between the parties with respect to the
subject matter hereof, superseding all negotiations, prior
discussions and preliminary agreements. No subsequent
modification may be made to this Agreement except by signed
writing of the parties.
10
11
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first set forth above.
Witness:________________________ /s/ Xxxx X. Xxxxxx (SEAL)
--------------------
Xxxx X. Xxxxxx
COGENTRIX ENERGY, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------
Name: Xxxxx X. Xxxxx
Title: CEO & Vice-Chairman
11
