EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") entered into effective as of
October 28, 2004, by and between Xxxxx Xxxxx (the "Executive"), and Gexa Corp.,
a Texas corporation having its principal place of business at 00 Xxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx, Xxxxx 00000 (the "Company");
W I T N E S S E T H:
WHEREAS, The Company wishes to employ the Executive as Vice President Sales
and to perform services incident to such position for the Company, and the
Executive wishes to be so employed by the Company, all upon the terms and
conditions hereinafter set forth:
NOW THEREFORE, in consideration of the premises and mutual covenants and
obligations herein set forth and for other good and valuable consideration, the
receipt, sufficiency and adequacy of which is hereby acknowledged, accepted and
agreed to, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. EMPLOYMENT AND TERM. The Company hereby employs the Executive to serve
as Vice President Sales. The term of this Agreement (the "Term of this
Agreement") shall be effective as of the date first above written and shall
terminate on the day after the second anniversary of the date hereof (the
"Termination Date"), unless earlier terminated by either party hereto in
accordance with the provisions of Section 5 hereof; provided, however, that
beginning on the second anniversary date of the date hereof and on each
anniversary date of the date hereof thereafter, the Term of this Agreement shall
be automatically extended one additional year unless either party gives written
notice to the other prior to such anniversary of the date hereof that the Term
of this Agreement shall cease to be so extended. During the Term of this
Agreement, the terms of employment shall be as set forth herein unless modified
by the Executive and the Company in accordance with the provisions of Section 12
hereof. The Executive hereby agrees to accept such employment and to perform the
services specified herein, all upon the terms and conditions hereinafter set
forth.
2. POSITION AND RESPONSIBILITIES. The Executive shall serve as Vice
President Sales of the Company and shall report to, and be subject to the
general direction of the Chief Executive Officer and other superior Officers of
the Company. The Executive shall have other obligations, duties, authority and
power to do all acts and things as are customarily done by a person holding the
same or equivalent position or performing duties similar to those to be
performed by executives in corporations of similar size to the Company and shall
perform such managerial duties and responsibilities for the Company which are
not inconsistent with his position as he may agree to, or as may reasonably be
assigned to him by a superior Executive Officer. Unless otherwise agreed to by
the Executive, the Executive shall be based at the Company's principal executive
offices located in the greater Houston, Texas metropolitan area.
3. EXTENT OF SERVICE. (a) The Executive shall devote his full business time
and attention to the business of the Company. During the Term of this Agreement,
Executive shall devote his best efforts and skills to the business and interests
of Company, do his utmost to further enhance and develop Company's best
interests and welfare, and endeavor to improve his ability and knowledge of
Company's business, in an effort to increase the value of his services for the
mutual benefit of the parties hereto. During the Term of this Agreement, it
shall not be a violation of this Agreement for Executive to (i) serve on any
corporate board or committee thereof with the approval of the CEO (except for
boards or committees of a competing business unless approved by the Board of
Gexa), (ii) serve on any civic or charitable boards or committees, (iii) deliver
lectures, fulfill teaching or speaking engagements, (iv) testify as a witness in
litigation involving a former employer or (v) manage personal investments;
provided, however, any such activities must not consume in the aggregate more
than 15 hours during any month, nor materially interfere with performance of
Executive's responsibilities under this Agreement.
(b) The Executive represents and covenants to the Company that he is not
subject or a party to any employment agreement, noncompetition covenant,
nondisclosure agreement, or any similar agreement or covenant that would
prohibit the Executive from executing this Agreement and fully performing his
duties and responsibilities hereunder, or would in any manner, directly or
indirectly, limit or affect the duties and responsibilities that may now or in
the future be assigned to the Executive hereunder. The Executive further
represents and warrants that he is not presently subject to any legal actions,
claims or administrative proceedings, including bankruptcy proceedings or IRS
audits or proceedings, which would affect his ability to perform his
responsibilities hereunder.
(c) The Executive agrees and acknowledges that he owes a fiduciary duty of
loyalty, fidelity and allegiance to act at all times in the best interests of
the Company and to do no act and to make no statement, oral or written, which
would injure the Company's business, its interests or its reputation.
(d) The Executive agrees to execute and comply at all times during the
Employment Period with all applicable policies, rules and regulations of the
Company, including, without limitation, the Company's business ethics policy and
the Company's policy regarding trading in the Common Stock, as each is in effect
from time to time during the Employment Period.
4. COMPENSATION.
(a) In consideration of the services to be rendered by the Executive to the
Company, the Company will pay the Executive a salary ("Salary") of $132,000.00
per year during the Term of this Agreement. Such Salary will be payable in
conformity with the Company's prevailing practice for executives' compensation
as such practice shall be established or modified from time to time. Salary
payments shall be subject to all applicable federal and state withholding,
payroll and other taxes. From time to time during the Term of this Agreement,
the amount of the Executive's Salary may be further increased by, and at the
sole discretion of, the Compensation Committee of the Board of Directors of the
Company (the "Board" and the "Compensation Committee"), which shall review the
Executive's Salary no less regularly than annually
(b) The Company hereby agrees to grant to the Executive nonqualified stock
options covering 120,000 shares of common stock (the "Options"). In addition the
Company shall grant to Executive 20,000 shares of common stock which stock shall
bear restricted legend pursuant to the Company's 2004 Incentive Stock Plan.
Options will be issued pursuant to the Company's 2004 Incentive Stock Plan (the
"Plan") which has been adopted by the Board and is to be submitted to the
stockholders of the Company for approval within 12 months of the date of this
Agreement. The Options will be granted on the execution date of this Agreement
(the "Date of Grant"). The Option will have a strike price determined under the
Plan as of the Date of Grant, will have a 10 year term and will provide for
vesting of one-third of the option shares on each of the first three
anniversaries of the date of this Agreement. The Executive is, subject to
compliance with the Plan, eligible for stock options as determined by the
Compensation Committee on an annual basis in their sole discretion. The
restricted shares shall only vest provided Executive is employed by Company on
the first anniversary of this agreement.
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(c) The Executive will be considered for an annual cash and/or stock bonus
based on an evaluation of his performance by the Company. Any such bonus will be
at the sole discretion of the Compensation Committee;
(d) During the term of this Agreement, the Company shall pay or reimburse
the Executive for all reasonable out-of-pocket expenses for travel, meals, hotel
accommodations, entertainment and the like incurred by him in connection with
the business of the Company upon submission by him and approval of an
appropriate statement documenting such expenses as required by the Company's
policy and the Internal Revenue Code of 1986, as amended (the "Code").
(e) The Executive shall be entitled to two weeks of paid vacation during
each calendar year during the term of this Agreement. Vacation shall accrue on
the first day of each calendar year. The Company shall not pay the Executive for
any accrued but unused portion of vacation and any such unused portion of
vacation shall not be carried forward to the next year.
(f) During the term of this Agreement, the Executive shall be entitled to
participate in and to receive all rights and benefits under any life,
disability, medical and dental, health and accident and profit sharing or
deferred compensation plans and such other plan or plans as may be implemented
by the Company during the term of this Agreement. The Executive shall also be
entitled to participate in and to receive all rights and benefits under any plan
or program adopted by the Company for any other or group of other executive
employees of the Company, including without limitation, the rights and benefits
under the directors' and officers' liability insurance in place from time to
time under the Company's insurance program for the directors and officers of the
Company.
(g) The Company shall cause Executive to be covered by any policy or
contract of insurance obtained by it to insure its directors and officers
against personal liability for acts or omissions in connection with service as
an officer or director of Company or service in other capacities at the request
of the company. The coverage provided to Executive pursuant to this paragraph
shall be of a scope and on terms and conditions at least as favorable as the
most favorable coverage provided to any other officer or director of Company (or
any successor). In addition, the Company agrees that any Indemnification
Agreement entered into by and between the Company and the Executive, as well as
all other rights to which Executive is entitled with regard to indemnification
and advancement of expenses, whether by virtue of the Company's certificate of
incorporation, bylaws or otherwise, will remain in full force and effect, in
accordance with its terms.
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5. TERMINATION.
(a) Termination by Company; Discharge for Cause. The Company shall be
entitled to terminate this Agreement and the Executive's employment with the
Company at any time and for whatever reason; or at any time for "Cause" (as
defined below) by written notice to the Executive. Termination of the
Executive's employment by the Company shall constitute a termination for "Cause"
if such termination is for one or more of the following reasons: (i) the willful
failure or refusal of the Executive to render services to the Company in
accordance with his obligations under this Agreement, including, without
limitation, the willful failure or refusal of the Executive to comply with the
work rules, policies, procedures, and directives as established by the Company
and consistent with this Agreement; such failure or refusal to be uncured and
continuing for a period of not less than fifteen (15) days after notice
outlining the situation is given by the Company to the Executive; (ii) the
commission by the Executive of an act of fraud or embezzlement; (iii) the
commission by the Executive of any other action with the intent to injure the
Company or any act that could have been reasonably foreseen to materially injure
the Company that in fact materially injures the Company; (iv) the Executive
having been indicted for a felony or a crime involving moral turpitude; (v) the
Executive having misappropriated the property of the Company; (vi) the Executive
having engaged in personal misconduct which materially injures the Company; or
(vii) the Executive having willfully violated any law or regulation relating to
the business of the Company which results in material injury to the Company. In
the event of the Executive's termination by the Company for Cause hereunder, the
Executive shall be entitled to no severance or other termination benefits except
for any unpaid Salary accrued through the date of termination. A termination of
this Agreement by the Company without Cause pursuant to this Section 5(a) (which
shall expressly not include the decision by the Company to not renew the Term of
this Agreement for any additional one year periods as provided in Section 1
above) shall entitle the Executive to the Severance Payment and other benefits
specified in Section 5(e) hereof.
(b) Death. If the Executive dies during the term of this Agreement and
while in the employ of the Company, this Agreement shall automatically terminate
and the Company shall have no further obligation to the Executive or his estate
except that the Company shall pay to the Executive's estate that portion of his
Salary and benefits accrued through the date of death. All such payments to the
Executive's estate shall be made in the same manner and at the same time as the
Executive's Salary.
(c) Disability. If during the term of this Agreement after the Probationary
Period, the Executive shall be prevented from performing his duties hereunder
for a period of 90 days by reason of disability, then the Company, on 30 days'
prior notice to the Executive, may terminate this Agreement. For purposes of
this Agreement, the Executive shall be deemed to have become disabled when the
Company, upon verification by a physician designated by the Company, shall have
determined that the Executive has become physically or mentally unable
(excluding infrequent and temporary absences due to ordinary illness) to perform
the essential functions of his duties under this Agreement with reasonable
accommodation. In the event of a termination pursuant to this paragraph (c), the
Company shall be relieved of all its obligations under this Agreement, except
that the Company shall pay to the Executive or his estate in the event of his
subsequent death, that portion of the Executive's Salary and benefits accrued
through the date of such termination. All such payments to the Executive or his
estate shall be made in the same manner and at the same time as his Salary would
have been paid to him had he not become disabled.
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(d) Voluntary Termination. Notwithstanding anything to the contrary herein,
after the Probationary Period, the Executive shall be entitled to voluntarily
terminate this Agreement and his employment with the Company at his pleasure
upon thirty (30) days written notice to such effect. In such event, the
Executive shall not be entitled to any further compensation other than any
unpaid Salary and benefits accrued through the date of termination. At the
Company's option, the Company may elect to have the Employee leave after notice
of Voluntary Termination and discontinue all pay to the Executive including the
salary and benefits that the Executive would have received during such thirty
(30) day period in lieu of requiring the Executive to stay at the Company.
(e) Termination Benefits Upon Involuntary Termination. In the event that
the Company terminates this Agreement and the Executive's employment with the
Company after the Probationary Period for any reason other than for Cause (as
defined in Section 5(a) hereof) or the death or disability (as defined in
Section 5(c) hereof) of the Executive, then the Company shall continue to pay
the Executive, for ninety (90) days after the date of termination, the
Executive's annual Salary in existence at the time immediately preceding the
date of termination; provided that if the date of termination occurs after the
first anniversary of this Agreement, such annual Salary will be continued only
for sixty (60) days after the date of termination, in all cases at the same time
as the Company pays its other employees and minus applicable withholding and
authorized salary reductions (in each case, the "Severance Payment"). In
addition, following such termination, the Executive shall be entitled to or
effected by modifications to the following benefits (collectively, the
"Additional Benefits");
(i) immediate termination of any of the Executive's outstanding options to
purchase securities of the Company which were not vested by their own terms on
the date of termination;
(ii) continued coverage, at the Company's cost, under the Company's group
health plan for the applicable coverage period under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA") but only if Executive
elects such COBRA continuation in accordance with the time limits and in the
applicable COBRA regulations, and provided, further, that if the Executive
obtains any employment or consulting work during the period during which the
COBRA benefits are being paid by the Company, such COBRA benefits shall be
reduced to the extent the Executive is eligible to receive similar benefits
pursuant to such new employment or consulting work; and
(iii) an amount, in cash, equal to any unreimbursed expenses incurred by
the Executive in the performance of his duties hereunder and in compliance with
Company policy through the date of termination.
The parties agree that, because there can be no exact measure of the
damages which would occur to the Executive as a result of termination of
employment, such payments contemplated in this Section 5(e) shall be deemed to
constitute liquidated damages and not a penalty. The termination compensation in
this Section 5(e) shall be paid only if the Executive executes a termination
agreement releasing all legally waivable claims arising from the Executive's
employment.
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(f) Survival. Notwithstanding the termination of this Agreement under this
Section 5, the provisions of Sections 7 and 8 of this Agreement, and all other
provisions hereof which by their terms are to be performed following the
termination hereof shall survive such termination and be continuing obligations.
6. CONSENT AND WAIVER BY THIRD PARTIES. The Executive hereby represents and
warrants that he has obtained all necessary waivers and/or consents from third
parties as to enable him to accept employment with the Company on the terms and
conditions set forth herein and to execute and perform this Agreement without
being in conflict with any other agreement, obligations or understanding with
any such third party.
7. CONFIDENTIAL INFORMATION. The Executive acknowledges that in the course
of his employment with the Company, he has received and will receive access to
confidential information of a special and unique value concerning the Company
and its business, including, without limitation, trade secrets, know-how, lists
of customers, employee records, books and records relating to operations, costs
or providing service and equipment, operating and maintenance costs, pricing
criteria and other confidential information and knowledge concerning the
business of the Company and its affiliates (hereinafter collectively referred to
as "Confidential Information") which the Company desires to protect. The
Executive acknowledges that such Confidential Information is confidential and
the protection of such Confidential Information against unauthorized use or
disclosure is of critical importance to the Company. The Executive agrees that
he will not reveal such Confidential Information to any one outside the Company.
The Executive further agrees that during the term of this Agreement and
thereafter he will not use or disclose such Confidential Information. Upon
termination of his employment hereunder, the Executive shall surrender to the
Company all papers, documents, writings and other property produced by him or
coming into his possession by or through his employment hereunder and relating
to the Confidential Information referred to in this Section 7, and the Executive
agrees that all such materials will at all times remain the property of the
Company. The obligation of confidentiality, non-use and non- disclosure of
know-how set forth in this Section 7 shall not extend to know-how and
information (i) which was in the public domain prior to disclosure by the
disclosing party, (ii) which comes into the public domain other than through a
breach of this Agreement, (iii) which is disclosed to the Executive after the
termination of this Agreement by a third party having legitimate possession
thereof and the unrestricted right to make such disclosure, or (iv) which is
necessarily disclosed in the course of the Executive's performance of his duties
to the Company as contemplated in this Agreement. The agreements in this Section
7 shall survive the termination of this Agreement. For purposes of this Section
7, the term "Company" shall include the Company and its Affiliates.
8. COVENANT NOT TO COMPETE. The Executive acknowledges that he has been and
will continue to be provided with Confidential Information in the course of his
employment with the Company. For purposes of this Section 8, the term "Company"
shall include the Company and its Affiliates. The Executive agrees that in order
to protect the Company's Confidential Information, it is necessary to enter into
the following restrictive covenant, which is ancillary to the enforceable
promises between the Company and the Executive in Section 7 of this Agreement.
Commencing on the day after the end of the Probationary Period the Executive
covenants that the Executive shall, during the term of this Agreement and for a
period of 180 calendar days following the termination of the Executive's
employment hereunder for whatever reason, observe the following separate and
independent covenants:
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(a) Neither the Executive nor any Affiliate (as defined in subsection (c)
below) will, without the prior written consent of the Company, within the Area
(as defined in subsection (c) below), either directly or indirectly, (1) become
financially interested in a Competing Enterprise (as defined in subsection (c)
below) (other than as a holder of less than five percent (5%) of the outstanding
voting securities of any entity whose voting securities are listed on a national
securities exchange or quoted by the NASDAQ Stock Market, including the OTC
Bulletin Board or any comparable system), or (2) engage in or be employed by any
Competing Enterprise as a consultant, officer, director, or executive or
managerial employee.
(b) Neither the Executive nor any Affiliate will, without the prior written
consent of the Company, either directly or indirectly, on Executive's own behalf
or in the service or on behalf of others, solicit, divert or appropriate, or
attempt to solicit, divert, or appropriate, to any Competing Enterprise, any
person or entity whose account with the Company was serviced by the Company
during the term of this Agreement.
(c) Neither the Executive nor any Affiliate will, without the Company's
prior written consent, either directly or indirectly, on the Executive's own
behalf or in the service or on behalf of others, solicit, divert, or hire away,
or attempt to solicit, divert, or hire away, to any Competing Enterprise, any
person employed by the Company whether or not such employee is a full-time or a
temporary employee of the Company and whether or not such employment is pursuant
to written agreement and whether or not such employment is at will.
The following terms used in Sections 7 and 8 shall have the definitions set
forth below:
"Affiliate" means any person or entity directly or indirectly controlling,
controlled by, or under common control with the Executive. As used herein, the
word "control" means the power to direct the management and affairs of a person.
"Area" means (i) any "Metropolitan Statistical Area" or "Primary
Metropolitan Statistical Area" (as each such term is defined by the U.S. Federal
Office of Management and Budget then in effect) in which the Company has
customers who purchase electricity from the Company and the area within 10 miles
of any such Metropolitan Statistical Area or Primary Metropolitan Statistical
Area.
"Competing Enterprise" means any person or any business organization of
whatever form, engaged directly or indirectly within the Area in the business of
the Company or any of it Affiliates or any other related business conducted by
the Company or any of its Affiliates as of the time of the termination of the
Executive's employment by the Company.
9. NOTICES. All notices, requests, consents and other communications under
this Agreement shall be in writing and shall be deemed to have been delivered on
the date personally delivered or on the date mailed, postage prepaid, by
certified mail, return receipt requested, or telegraphed and confirmed if
addressed to the respective parties as follows:
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If to the Executive: Xxxxx Xxxxx
_____________________
_____________________
If to the Company: Gexa Corp.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Chairman, Compensation Committee
Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto.
10. SPECIFIC PERFORMANCE. The Executive acknowledges that a remedy at law
for any breach or attempted breach of Section 7 or 8 of this Agreement will be
inadequate, agrees that the Company shall be entitled to specific performance
and injunctive and other equitable relief in case of any such a breach or
attempted breach, and further agrees to waive any requirement of the securing or
posting of any bond in connection with the obtaining of any such injunctive or
any other equitable relief.
11. WAIVERS AND MODIFICATIONS. This Agreement may be modified, and the
rights and remedies of any provision hereof may be waived, only in accordance
with this Section 11. No modifications or waiver by the Company shall be
effective without the consent of at least a majority of the Compensation
Committee of the Board of Directors then in office at the time of such
modification or waiver. No waiver by either party of any breach by the other or
any provision hereof shall be deemed to be a waiver of any later or other breach
thereof or as a waiver of any other provision of this Agreement. This Agreement
sets forth all the terms of the understandings between the parties with
reference to the subject matter set forth herein and may not be waived, changed,
discharged or terminated orally or by any course of dealing between the parties,
but only by an instrument in writing signed by the party against whom any
waiver, change, discharge or termination is sought.
12. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Texas.
13. CONSTRUCTION. Whenever the context so requires, the masculine shall
include the feminine and neuter, and the singular shall include the plural, and
conversely.
14. SEVERABILITY. In case of one or more of the provisions contained in
this Agreement for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provisions had never
contained herein.
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15. ARBITRATION. In the event that a dispute or controversy should arise
between the Executive and the Company as to the meaning or application of any
provision, term or condition of this Agreement, such dispute or controversy
shall be settled by binding arbitration in Houston, Texas and for said purpose
each of the parties hereto hereby expressly consents to such arbitration in such
place. Such arbitration shall be conducted in accordance with the existing rules
and regulations of the American Arbitration Association governing commercial
transactions. The expense of the arbitrator shall be borne by the Company.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date and year first above written.
COMPANY:
GEXA CORP.
By: /s/ Xxxx Xxxxxxx
_____________________________
Xxxx Xxxxxxx, Chairman & CEO
EXECUTIVE:
/s/ Xxxxx Xxxxx
____________________________
Xxxxx Xxxxx
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