EMPLOYMENT AGREEMENT 10.2
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of the 18th day of
September, 2000, by and between Thomas W. Smith ("Employee") and Americas
Power Partners, Inc., a Colorado corporation (the "Company").
RECITALS
A. The Company is engaged in the business of developing, owning, and
operating power plant systems including steam, electric, compressed
air, chilled water and condensate return, for industrial,
institutional and commercial clients primarily in North America.
The Company expects to expand its business lines internationally
during the term of the contract.
B. The Company and Employee are parties to a certain Employment
Agreement dated as of May 1, 1999 (the "Initial Agreement"). The
Company agrees to employ Employee on the terms and conditions
provided herein, such that the Initial Agreement is superseded and
canceled.
C. The Company has expanded the Board of Directors, has appointed
Employee as a member of the expanded Board, and has agreed to
nominate Employee to the Board of Directors at the first annual
meeting held following the execution of this Agreement. As a
director or officer, the Employee will receive Directors and
Officers liability insurance.
D. The parties consider it to be mutually advantageous to restate the
employment contract under the terms and conditions specified
herein.
E. In the course of such employment, Employee may utilize and have
access to confidential information, pricing lists, customer lists
and other proprietary assets of the Company.
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F. To protect the Company's legitimate business interests and
investments, Employee will agree not to compete with the Company or
to solicit the Company's customers after the termination of his
employment with the Company, as is more fully set forth below.
CLAUSES
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. EMPLOYMENT. The Company shall employ the Employee as President of
the Company during the term hereof and the Employee hereby accepts such
employment, upon the terms and conditions hereinafter set forth.
2. TERM. The term of employment commenced on May 1, 1999, pursuant
to the terms of the Initial Agreement. The initial term of this Agreement
shall commence on the date of execution of this Agreement (the "Commencement
Date") and shall terminate on the third anniversary of the Commencement Date,
unless otherwise extended by agreement of the Company and the Employee or
unless earlier terminated in accordance with the provisions of Paragraph 6
hereof (the "Initial Term).
3. DUTIES. The specific duties of Employee's position shall be as
reasonably assigned by the Company's Board of Directors from time to time.
During the Term, Employee shall contribute his best professional efforts,
skills and services for the business and benefit of the Company and shall
follow the reasonable directions of the Company's Board of Directors. The
Employee agrees to devote his full attention to the performance of his duties
and responsibilities to the Company. Employee shall direct to the Company
any business opportunities of which he becomes aware in the fields in which
the Company is in business or in related fields in which it may be beneficial
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for the Company to diversify consistent with his fiduciary duties as an
officer and director of the Company. The Company recognizes and acknowledges
that the Employee has or may already have entered into consulting
arrangements outside the scope of the duties required of him under this
Agreement and such existing consulting arrangements are expressly consented
to by the Company, with the understanding and agreement that any such
consulting arrangements shall in no way conflict with or limit any of the
Employee's responsibilities or duties owed to the Company under the terms of
this Agreement. It is further agreed and understood that the Company will
consent to future consulting arrangements which do not conflict with or limit
the Employee's duties or responsibilities hereunder.
4. COMPENSATION.
A. Subject to the termination provisions set forth in Paragraph 6
below, Employee shall receive, as compensation for his services
rendered under this Agreement during the Term, an annual salary of
Two Hundred Eighty Thousand Dollars ($280,000.00) ("Base
Compensation"). During the second and all subsequent years of
Employee's employment, the Employee shall receive as compensation
for his services an annual sum that is no less than that amount
which is equal to the prior year's Base Compensation times 100%
plus the percentage increase of the Consumer Price Index - All
Workers - for the Chicago Metropolitan area during the prior period
of his employment redetermined on each anniversary of his
employment
B. The Annual Salary shall be payable during the Term in accordance
with the normal payroll practices of the Company with respect to
its employees.
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C. (i) As a signing bonus and as part of the Initial Agreement, the
Company issued to Employee 1,275,000 shares of the common stock of
the Company.
(ii) The Company subsequently agreed to grant to Employee an option
to purchase an additional 444,698 shares of the common stock of the
Company, which option shares shall, at the election of Employee, be
either (1) "qualified shares" at an exercise price as will be
determined by the Company's Incentive Stock Option (ISO) Plan, to
be approved and implemented by the Board of Directors or the
Compensation Committee appointed and approved by the Board of
Directors; (2) "nonqualified shares" at an exercise price of $.01
per share; or (3) a combination of "qualified" and "unqualified"
shares as defined herein(iii) As an additional signing bonus, the
company will grant to Employee an option to purchase on the
anniversary date of the first year of employment an additional
100,000 shares at an exercise price as will be determined by the
Company's Incentive Stock Option (ISO) Plan, to be approved and
implemented by the Board of Directors or the Compensation Committee
appointed and approved by the Board of Directors.
D. If the Company releases the Employee for cause, or if the Employee
leaves the Company for any reason other than by reason of his death
or disability, the Company will have the non-negotiable right
without notice to purchase the Employee's options or shares of
stock purchased pursuant to Section 4.C (ii) and (iii) at the
following buyback prices: (1) 50% of the trailing thirty (30) day
average closing bid price of the stock calculated from the date the
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Employee leaves, if he leaves prior to May 1, 2001; (2) 75% of the
trailing thirty (30) day average closing bid price of the stock
calculated from the date the Employee leaves, if after May 1, 2001,
but before May 1, 2002; (3) 100% of the trailing thirty (30) day
average bid price of the stock calculated from the date the
Employee leaves, if after May 1, 2003.
E. Employee shall also be entitled to the following benefits
("Benefits"):
(i) HEALTH CARE: Participation in the Company's family health
care program. So long as permitted under the Company's group
insurance contract, this participation will begin immediately.
If it cannot begin immediately, the Employer will reimburse
the Employee for the cost of comparable family health
insurance until coverage under the Company's policy is in full
force. The foregoing does not extend to the Employee or
members of his family who suffer from a pre-existing condition
that may be excluded from coverage;
(ii) LONG-TERM DISABILITY: The Company shall apply for and
maintain during the time Employee is employed by the Company
and is under the age of 65, a long-term disability insurance
policy insuring the Employee, which policy shall provide for a
monthly benefit payable to Employee of the lesser of (i) sixty
percent (60%) of the Employee's annual salary or (ii) the
maximum benefit allowed by the insurance company and a waiting
period of not more than one hundred eighty (180) days. The
Company will reimburse the Employee for the cost of comparable
insurance until coverage under the Company's policy is in full
force. The Company's obligation to maintain such policy and
pay the premiums due thereon is expressly conditioned upon the
Employee being insurable at reasonable rates for a person of
his age; PROVIDED, HOWEVER, that if Employee is not insurable
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at reasonable rates and Employee wishes to be covered by the
provisions of such policy, then Employee shall have the right
to coverage under the policy upon agreement that Employee will
pay that portion of the premium which is in excess of the
reasonable rate and the Company shall pay the balance of the
premium.
(iii) LIFE INSURANCE: During the time Employee is employed by the
Company, the Company shall either (i) pay directly, or (ii)
pay or reimburse the Employee, for the premiums due on any
life insurance policy insuring the life of the Employee, with
a death benefit of two times annual base salary, payable to
such beneficiary as is designated by the Employee.
(iv) DENTAL CARE: During the time Employee is employed by the
Company, the Company shall pay or reimburse the Employee for
premiums due on a dental insurance policy insuring the
Employee and his immediate family.
(v) VACATION: Employee shall be entitled to four (4) weeks
vacation each year; provided, that any vacation shall be taken
with due consideration to the services required of the
Employee.
(vi) BONUS PLAN. On or before the first anniversary of the Commencement
Date and the second anniversary of the Commencement Date, the
Company's Compensation Committee shall establish a bonus plan with
objective performance targets acceptable to the Company's Board of
Directors, which shall apply to all senior executives for the year
then beginning ("Performance Target"). If Employee meets the
Performance Target for that given year, Employee shall receive a
target bonus of Three Hundred Thousand Dollars ($300,000). If the
approved bonus plan covering all senior executives provides for a
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less than target bonus in the event of achievement of part of the
Performance Target for the year and/or a greater than target bonus
if the Performance Target is exceeded, Employee shall receive a
lesser or greater than target bonus. The bonus earned shall be
paid within thirty (30) days after the determination of whether the
Performance Target has been met.
(vii) AUTOMOBILE/TRAVEL. The Company will provide an
automobile allowance to the Employee up to $750.00 per month,
plus reimbursement to the Employee for $0.15 per mile for
business travel in an automobile.
(vii)OTHER BENEFITS. During the term of his employment by the Company,
Employee shall also receive such other and additional employee
benefits as are hereafter provided to any of the other employees of
the Company (including, without limitation, stock option plans,
life insurance coverage, pension or profit sharing plans, non-
qualified deferred compensation plans, if any).
The Benefits described in this Section 4(E), along with the Directors
and Officers liability insurance provided for in Paragraph C of the
Recitals are, for purposes of this Agreement sometimes referred
to as the "Employee Benefits".
5. REIMBURSEMENT OF EXPENSES. Employee shall be reimbursed by the
Company for any and all amounts which are reasonably and necessarily incurred
by him on behalf of the Company in connection with his employment, including
amounts incurred for overnight travel, entertainment and miscellaneous
expenses, provided Employee submits to the Company and the Company approves
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an itemized expense report accompanied by all receipts and vouchers
evidencing the expenses.6.TERMINATION.
A. The Company may at any time hereafter terminate this Agreement
immediately for any reason with cause or without cause subject to
the conditions set forth in Paragraph 6(B) and the Employee may
upon not less than thirty (30) days' written notice terminate this
Agreement for any reason.
B. If the Company terminates this Agreement without cause, the Company
shall continue to pay to Employee his then annual salary and all
Employee Benefits for twelve (12) months ("Additional
Compensation") after Employee's employment with the Company has
been terminated. Such additional compensation shall constitute the
full and complete payment of all obligations of the Company to
Employee under this Agreement, except as is reserved in the Release
below, PROVIDED HOWEVER, that no Additional Compensation under this
Paragraph shall be paid unless and until Employee signs a full
release of all claims which shall read as follows:
In consideration for the additional compensation paid to Tom Smith
("Employee") pursuant to Paragraph 6B of his Employment Agreement with
Americas Power Partners, Inc., the adequacy of which is acknowledged,
Employee, on behalf of himself, his agents, heirs, executors,
administrators, successors, representatives and assigns, hereby fully
and finally releases and forever discharges Americas Power Partners,
Inc., and all related companies, and all of their officers, directors,
shareholders, agents, attorneys, current employees, former employees,
representatives, successors and assigns (the "Released Parties") from
any and all claims, actions or causes of action, known or unknown,
based upon this Agreement for his employment or any related agreement
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for his employment by Americas Power Partners, Inc. or its related
companies entered into prior to the execution of this Settlement
Agreement and General Release, including but not limited to any claims
arising out of or in connection with Employee's employment and/or
separation of employment, and Employee waives any right to file an
administrative charge or lawsuit against any of the Released Parties
under Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act, the Civil Rights Act of 1991, the Age Discrimination
in Employment Act of 1967, as amended by the Older Workers Benefit
Protection Act of 1990, and/or any other federal, state or local
statute, ordinance, rule or regulation, under the common law of any
state, or under any contract or any other theory of relief.
Notwithstanding anything stated in this Paragraph to the contrary, this
release shall not constitute a waiver of any claim that Employee may
have arising out of the Worker's Compensation Act or for Compensation or
Benefits accrued or vested through the date of termination.
(C) If the Company terminates this Agreement for cause or if the
Employee terminates this Agreement, the Employee's compensation,
including all Employee Benefits, shall be prorated and paid to
the date of termination, but no further salary or Employee
Benefits shall be paid to the Employee and the Company shall have
no further liability or obligation to Employee under this
Agreement. The term "cause" shall mean the occurrence of any
one or more of the following events during the Term:
(i) A felony conviction or a plea of guilty or nolo contendere
to a felony charge or a crime involving moral turpitude in a court
of law under applicable federal or state law and all rights of
appeal have expired; or
(ii) The commission by Employee as reasonably determined by the
Company's Board of Directors after affording Employee the
opportunity to be heard and present evidence, of any act of
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dishonesty, fraud, misappropriation or embezzlement against
the Company; or
(iii) Employee's repeated willful and intentional failure to follow
the reasonable and lawful instructions of the Company's Board
of Directors with respect to the services required to be
performed by him on behalf of the Company; or
(iv) The making by Employee of any public statement which reflects
in a material adverse manner upon the Company or its business,
except for statements made by Employee in good faith in
connection with his position with the Company; or
(v) Employee's gross misconduct or gross negligence with respect
to the services required to be performed hereunder and which
in the reasonable judgment of the Company's Board of Directors
is materially detrimental to the best interests of the
Company; or
(vi) Employee shall exhibit excessive use of alcohol or
debilitating drugs during normal business hours while on the
Company's premises in the performance of Company business; or
Employee's breach of the obligations set forth in paragraphs
7 and 8 hereof.
7. RESTRICTIVE COVENANT. The Employee agrees that, except in the
performance of his duties hereunder, during the Term and for a period of one
(1) year following the termination of his employment for any reason, so long
as the Company is not in default of the performance of any of its material
obligations to Employee under this Agreement, he will not, either directly or
indirectly, in any capacity (whether as owner, partner, shareholder, broker,
dealer, agent, employee, consultant or otherwise):
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(i) solicit employees of the Company for employment; or
(ii) call upon any customer of the Company for the purpose of
soliciting and/or selling products to any customer, or sell or
deliver any products or provide any services to any customer, which
are or may be in competition with those products sold or services
provided by the Company, or to induce any of such customers to
terminate or curtail in any fashion their business dealings with
the Company.
For purposes of this Paragraph, the term "customer(s)" shall be defined
as any person, firm, corporation or other entity to whom the Company has sold
product or provided services to, or product for, or to whom the Company has
made a written proposal for the sale of product or the provision of services,
to or for during the twelve month period ending on the termination of the
employment of the Employee. Provided, further, with respect to any customer
for whom the Company has made a written proposal for the sale of product or
the provision of services, said customer shall, for purposes of this
Agreement, be deemed a "customer" only during the twelve month period
following the delivery of the written proposal to said customer, and shall
only be deemed a customer with respect to the specific geographic location(s)
set forth in the written proposal.
Upon the expiration of the Initial Term, in the event the Company does
not renew or extend the term of this Agreement, Employee shall not be bound
by the provision of the Restrictive Covenant as set out in this Section 7,
unless Company agrees to pay the Additional Compensation for twelve (12)
months as set out in Section 6(B) of this Agreement
The parties acknowledge that they have attempted to limit Employee's
right to compete only to the extent necessary to protect the Company from
unfair competition. The parties further acknowledge that they have not
included a geographical restriction as the business of the Company is
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international. The parties recognize, however, that reasonable people may
differ in making such a determination. Consequently, the parties hereby agree
that, if the scope or enforceability of this restrictive covenant is in any
way disputed at any time, a court or other trier of fact may modify and
enforce the covenant to the extent that it believes to be reasonable under
the circumstances existing at that time. The Employee further acknowledges
that (a) in the event this Agreement of his relationship with the Company
terminates for any reason, he will be able to earn a livelihood without
violating the foregoing restrictions; and (b) his ability to earn a
livelihood without violating such restrictions is a material condition to
this Agreement. This Paragraph shall survive the termination of this
Agreement.
8. PROTECTION OF CONFIDENTIAL INFORMATION.
A. Employee agrees that all information which is furnished by the
Company to Employee or to which Employee gains access during the course of
his employment with the Company which is either non-public, confidential or
proprietary in nature, including, but not limited to financial statements
that pertain to the Company's channels of distribution, pricing policy and
records, sales representative commission policy, inventory records, sales
volume by products, customer or geographic area, methods of manufacturing or
producing the Company's products, computer systems, software, compute
hardware, computer codes, programs and formula, technology, designs, secret
processes and such information normally understood to be confidential or
otherwise designated by the Company as confidential, together with analyses,
proposals, compilations, forecasts, studies or other documents prepared by
the Company, its agents, representatives (including attorney's, accountants
and financial advisors) or employees which contain or otherwise reflect such
information is hereinafter referred to as "Confidential Information". All
Confidential Information furnished to Employee by the Company shall be
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returned to the Company upon the termination of Employee's employment,
together with all copies made thereof. Employee agrees that, except in the
performance of his duties to the Company, not to use, duplicate nor
communicate to third parties any of the Confidential Information. This
Paragraph 8 shall survive the termination of this.
9. EQUITABLE REMEDIES. Employee further acknowledges and agrees that
the covenants set forth in Paragraphs 7 and 8 are reasonable and necessary
for the protection of Company's business interests, that irreparable injury
will result to the Company if Employee breaches any of the terms of said
covenants, and that in the event of any actual or threatened breach by him of
any of said covenants, the Company shall be entitled to immediate injunctive
and other equitable relief, and without the necessity of showing actual
monetary damages. Nothing contained herein shall be construed as prohibiting
the Company from pursuing any other remedies available to it for such breach
or threatened breach, including the recovery of any damages which it is able
to prove. This Paragraph shall survive the termination of this Agreement.
10. WAIVER. Failure of any party hereto to insist upon strict
compliance with any of the terms, covenants, and conditions hereof shall not
be deemed a waiver or relinquishment of such terms, covenants, and conditions
or of any similar right or power hereunder at any subsequent time.
11. NOTICES. Any notice required to be given hereunder shall be
deemed to be effective and validly given if it contains the information
required by the relevant provisions hereof and is personally delivered or is
sent by United States registered or certified mail, postage prepaid, to the
person or entity to whom the notice is given at such address as is set forth
in this Agreement or at such other address as is designated in writing by a
party to the Company. The date three (3) business days following the date of
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deposit in the mail or the date of personal delivery shall be deemed the
effective date of the notice.
12. AMENDMENT. This Agreement may be altered, amended, revoked or
terminated only by an instrument in writing executed by the parties hereto.
13. ENTIRE AGREEMENT. This instrument contains the entire agreement
of the parties regarding the subject matter hereof.
14. ARBITRATION OF DISPUTES. Except for disputes in which injunctive
relief is sought, in the event of any dispute over the terms of this
Agreement, the matter shall be submitted to arbitration in accordance with
the rules of the American Arbitration Association for expedited hearing. The
decision of the arbitrator shall be final and binding upon all parties and
not subject to further judicial review.
15. DEDUCTIONS AND WITHHOLDING. The Employee agrees that the Company
shall withhold from any and all payments required to be made to the Employee
pursuant to this Agreement all Federal, state, local and/or other taxes which
the Company determines are required to be withheld in accordance with
applicable statutes and/or regulations from time to time in effect.
16. APPLICABLE LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of Illinois. The parties agree to
the jurisdiction of the Courts of the State of Illinois, County of DuPage,
and the Northern District of Illinois to hear and resolve any disputes
involving this Agreement, unless such disputes are otherwise governed Section
14 hereof dealing with arbitration of disputes.
17. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
successors and assigns.
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18. SEVERABILITY. If any provision of this Agreement shall be
declared by any court to be illegal, void or unenforceable, the other
provisions shall not be affected but shall remain in full force and effect.
19. AUTHORIZED ACTS. The Company has been authorized to enter into
this Agreement by proper action of its Board of Directors and has the right,
authority and the ability and authority to perform all that is required of it
by the terms of this Agreement.
20. RECITALS. The recitals set forth in the portion of this Agreement
headed "Recitals" are incorporated and made a part of the Agreement and are
binding on the parties as if fully set forth in the body of the Agreement.
21. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which is for all purposes deemed to be an original and
all of which when taken together, will constitute one and the same
instrument.
22. INDEMNIFICATION. The Company agrees to indemnify and hold
Employee harmless from all liability, loss, damage and expense, including
reasonable attorneys' fees, costs of litigation, interest and penalties,
which the Employee may sustain, incur or be threatened by reason of or
arising out of his performing the services to the Company pursuant to the
terms of this Agreement.
23. ATTORNEYS' FEES. In the event that any party hereto commences
litigation or arbitration for the judicial interpretation, enforcement,
termination, cancellation or rescission of this Agreement, or for damages for
the breach hereof, then, in addition to any or all other relief awarded in
such litigation or arbitration, the prevailing party therein shall be
entitled to a judgment or award against the other for an amount equal to
reasonable attorneys' fees, court costs, arbitration fees and expense, and
other costs incurred (including paralegal, legal assistant and computerized
research fees). For purposes of this Paragraph, "Prevailing Party" shall
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mean, in the case of the claimant or plaintiff, one who is successful in
obtaining substantially all of the relief initially sought, and in the case
of the defendant or respondent, one who is successful in denying
substantially all of the relief initially sought by the claimant.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
Americas Power Partners, Inc.,
a Colorado corporation
By:____________________________________
Thomas R. Casten, Chief Executive Officer
___________________________________
Thomas W. Smith
