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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the " Agreement
") is made and entered into as of this 8 th December,
2006, by and between GEMMA POWER SYSTEMS, LLC, a Connecticut
limited liability company (the " Company "), and JOEL M.
CANINO (the " Employee ").
RECITALS :
R-1. Argan, Inc., a
Delaware corporation (" Argan "), has acquired all of the
membership interests of the Company pursuant to that certain
Membership Interest Purchase Agreement (the " Purchase
Agreement "), of even date herewith, by and among
Argan, the Company, Gemma Power, Inc., a Connecticut corporation ("
GPS-Connecticut "), Gemma Power Systems California, Inc., a
California corporation (" GPS-California ," and together
with GPS-Connecticut, the " Affiliates "), the Employee and
William F. Griffin, Jr.; and has acquired and all of the issued and
outstanding shares of capital stock of the Affiliates pursuant to
that certain Stock Purchase Agreement, of even date herewith, by
and among Argan, the Affiliates, the Employee and William F.
Griffin, Jr.
R-2. The Company and the
Affiliates are in the business of engineering and constructing
power energy systems, and providing consulting, owner’s
representative, operating, and maintenance services to the energy
market (collectively, the " Business ").
R-3. The Employee
possesses intimate knowledge of the Business as a result of his
long-term employment by the Company.
R-4. The Company wishes
to continue to employ the Employee, and the Employee wishes to
accept such continued employment, subject to and in accordance with
the following terms and conditions.
NOW, THEREFORE , in
consideration of the foregoing premises, the mutual promises and
covenants set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Employment .
The Company hereby agrees to continue to employ the
Employee, and the Employee hereby agrees to accept such continued
employment, subject to the terms and conditions set forth in this
Agreement. This Agreement supersedes and replaces any previous oral
or written agreement concerning the Employee’s employment by
the Company.
2. Duties of the
Employee . During the " Term "
(as defined below) of employment of the Employee, the Employee
shall serve as a senior executive and Vice Chairman of the Board of
the Company, and shall faithfully and diligently perform all
services as may be assigned to him by the Board of Directors of the
Company (the " Board "), and shall exercise such power and
authority as may from time to time be delegated to him by the
Board. The Employee shall perform all services to be rendered by
him hereunder to the best of his ability and use his best efforts
to promote the interests of the Company and the Affiliates.
Notwithstanding the foregoing, it shall not be a breach or
violation of this Agreement for the Employee to manage personal
investments so long as such activities do not significantly
interfere with or significantly detract from the performance of the
Employee’s responsibilities to the Company in accordance with
this Agreement.
3. Term of
Employment . Employment of the Employee
pursuant to the terms and provisions of this Agreement shall
commence on the date of Closing, as defined in the Purchase
Agreement (the " Effective Date "), and shall continue for a
term of eighteen (18) months thereafter (the " Initial Term
"), unless earlier terminated as provided in this Agreement. At the
end of the Initial Term, the Employee’s employment hereunder
shall automatically renew for successive one year terms (each, a "
Renewal Term "), subject to earlier termination as provided
in this Agreement, unless the Company or the Employee delivers
written notice to the other at least three (3) months prior to the
expiration date of the Initial Term or any Renewal Term, as the
case may be, of its or his election not to renew the term of
employment. The period during which the Employee shall be employed
by the Company pursuant to the terms and provisions of this
Agreement is sometimes referred to herein as the " Term
."
4. Compensation
.
4.1 Salary . The Company
shall pay the Employee compensation at the annual rate of $310,000
(the " Salary ") during the Initial Term, payable in
installments consistent with the Company’s normal payroll
schedule, subject to applicable withholding and other taxes. Not
later than four (4) months prior to the expiration of the Initial
Term or of any Renewal Term, as the case may be, Argan and the
Employee shall commence discussions aimed at determining a mutually
acceptable Salary for the then impending Renewal Term.
4.2 Bonus . In addition
to Salary, the Employee shall be eligible for bonus compensation as
determined by the Board based upon the Employee’s performance
and the results of the Company’s operations.
5. Benefit Plans;
Insurance .
5.1
Benefit Plans . The Employee
shall be permitted to participate in all employee medical,
retirement and insurance benefit plans applicable to officers of
the Company, and such other plans as may from time to time be made
available or applicable to the Company, consistent with the
policies of the Company.
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5.2 Key-Man Term Life Insurance .
The Company will maintain and will pay the premiums
on a key-man term life insurance policy on the life of the
Employee. Such policy shall (a) name Argan as sole beneficiary, (b)
be in the amount of not less than Five Million Dollars
($5,000,000), and (c) remain in full force and effect for the Term,
or until the expiration of the term of said policy, if sooner. Each
of the Employee and the Company agrees to take whatever action is
reasonably required by the insurer to maintain such policy in full
force and effect for such time. Upon the termination of the
Employee’s employment hereunder for any reason, the Company
shall assign to the Employee any and all rights which it may have
in and to said insurance policy for the value of the prepaid
unearned premium thereof.
6. Vacation .
The Employee shall be entitled to unlimited paid
vacation during the Term; provided that the Employee is available
by telephone during such periods of paid vacation; and provided
that the Employee notifies the Company a reasonable period in
advance of taking any such vacation and schedules same at a time
and in a manner that will not adversely affect the
Company.
7. Expenses .
The Company shall reimburse the Employee, consistent
with the Company’s expense reimbursement policies and
procedures and subject to receipt of appropriate documentation, for
all reasonable and necessary out-of-pocket travel, business
entertainment, and other business expenses incurred or expended by
the Employee incident to the performance of his duties
hereunder.
8. Working Facilities;
Parking . During the Term the Company
shall furnish the Employee with an office, secretarial help and
such other facilities and services suitable to his position and
adequate for the performance of his duties hereunder; and will
provide the Employee with and pay for covered (if reasonably
available) and reserved parking.
9. Withholding
. Notwithstanding anything in this Agreement to the
contrary, all payments required to be made by the Company hereunder
to the Employee or his estate or beneficiaries shall be subject to
the withholding of such amounts relating to taxes as the Company
may reasonably determine it should withhold pursuant to any
applicable law or regulation. In lieu of withholding such amounts,
in whole or in part, the Company may, in its sole discretion,
accept other provisions for payment of taxes and withholding as
required by law, provided it is satisfied that all requirements of
law affecting its responsibilities to withhold have been
satisfied.
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10. Termination of
Employment .
10.1 For Cause .
The Company may terminate the Employee’s
employment at any time for " Cause " (as defined below). For
the purposes of this Agreement, " Cause " shall mean (i)
habitual drunkenness or any substance abuse which adversely affects
the Employee’s performance of his job responsibilities; (ii)
any illegal use of drugs; (iii) commission of a felony (including,
without limitation, any violation of the Foreign Corrupt Practices
Act); (iv) dishonesty materially relating to the Employee’s
employment; (v) any misconduct by the Employee which would cause
the Company to violate any state or federal law relating to sexual
harassment or age, sex or other prohibited discrimination, or any
intentional violation of any written policy of the Company or any
successor entity adopted in respect to any such law; (vi) any other
conduct in the performance of the Employee’s employment which
the Employee knows or should know (either as a result of a prior
warning by the Company, custom within the industry or the flagrant
nature of the conduct) violates applicable law or causes the
Company to violate applicable law in any material respect; (vii)
failure to follow the lawful written instructions of the Board, if
such failure continues uncured for a period of 10 days after
receipt by the Employee of written notice from the Company stating
that continuation of such failure would constitute grounds for
termination for Cause; (viii) any violation of the confidentiality
or non-competition provisions hereof; or (ix) any other material
violation of this Agreement.
10.2 Upon Death or
Disability . The employment of the
Employee shall automatically terminate upon the death of the
Employee and may be terminated by the Company upon the "
Disability " (as defined below) of the Employee. For
purposes of this Section 10.2, the Employee shall be deemed "
Disabled " (and termination of his employment shall be
deemed to be due to such " Disability ") if an independent
medical doctor (selected by the Company’s applicable health
or disability insurer) certifies that the Employee, for a
cumulative period of more than 120 days during any 365-day period,
has been disabled in a manner which seriously interferes with his
ability to perform the essential functions of his job even with a
reasonable accommodation to the extent required by law. Any refusal
by the Employee to submit to a medical examination for the purpose
of certifying Disability shall be deemed conclusively to constitute
evidence of the Employee’s Disability.
10.3 For Convenience of the
Company . Notwithstanding any other
provisions of this Agreement, the Company shall have the right,
upon ninety (90) days written notice to the Employee, to terminate
the Employee’s employment at the " Company’s
Convenience " (i.e., for reasons other than Cause, resignation
for reasons other than " Good Reason " [as defined below],
death or Disability). For purposes hereof, resignation by the
Employee for Good Reason also shall be deemed to constitute
termination by the Company at the Company’s
Convenience.
10.4 Resignation; Good
Reason .
(a) The Employee shall
have the right to resign at any time upon ninety (90) days’
written notice to the Company.
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(b) For the purposes of
this Agreement, resignation by the Employee as a result of the
following shall be deemed to constitute resignation for " Good
Reason ," provided that and on condition that the Employee has
not consented to the action constituting Good Reason and such
resignation occurs within 15 days following the occurrence of such
action (or, in the case of clause (iv) below, following the
expiration of the 45-day cure period), and that the Employee is not
Disabled (or incapacitated in a manner which would, with the
passage of time and appropriate doctor’s certification,
constitute Disability) at the time of resignation: (i) a transfer
of the Company’s offices, or a transfer of the Employee
(other than on a temporary basis), to a location which would
increase the Employee’s commute (by the most direct route)
from his residence as of the date hereof by more than 25 miles in
each direction, or (ii) a material adverse change made by the
Company to the Employee’s duties, responsibilities and/or
working conditions such that such duties, responsibilities and/or
working conditions are inappropriate and not customary for a
president and chief executive officer of a similarly situated
company, or (iii) a material breach by the Company of this
Agreement which breach continues uncured for a period of 45 days
after receipt by the Company of written notice thereof from the
Employee specifying the breach.
11. Effect of Termination on
Compensation .
11.1
Termination for Cause; Resignation .
In the event (i) the Employee’s employment
with the Company is terminated by the Company for Cause, or (ii)
the Employee resigns (for reasons other than Good Reason), the
Company shall have no further liability to the Employee hereunder,
whether for salary, benefits, or otherwise, other than for salary
and benefits accrued, reimbursement of expenses properly incurred,
payment for all accrued vacation calculated in accordance with the
Company’s standard payroll practices, in each case through
the date of termination or resignation, and any other benefits
required by applicable law (e.g., COBRA) for which the Employee may
be eligible.
11.2
Death or Disability . In the
event the Employee’s employment with the Company terminates
as a result of the death of the Employee or is terminated by the
Company as a result of the Disability of the Employee, the Employee
or, in the event of his death, his surviving spouse (or his estate,
if there is no surviving spouse), shall be entitled to receive his
salary and benefits accrued, reimbursement of expenses properly
incurred and payment for all accrued vacation calculated in
accordance with the Company’s standard payroll practices, in
each case through the date of termination, as well as applicable
health, disability or death benefits, if any, offered by the
Company at the time consistent with the policies of the Company and
subject to the eligibility requirements of such
benefits.
11.3. The Company’s
Convenience or Good Reason .
(a) In the event the
Employee’s employment with the Company is terminated by the
Company at the Company’s Convenience or by the Employee for
Good Reason, then the Employee shall be entitled to (i) continue to
receive his Salary for the duration of the Term, and (ii) continue
to participate in the Company’s health and benefit plans and
programs described in Section 6 (but specifically excluding the
vacation benefit described in Section 7) for the duration of the
Term (provided that continued participation during such period does
not cause a plan, program or practice to cease to be qualified
under any applicable law or regulation and is permitted by the plan
or program, and that continuation under any such plan, program or
practice shall be limited to benefits customarily provided by the
Company to its senior executives during the period of such
continuation, and provided further that any such plan or program
shall be subject to modifications applicable to executive-level
employees generally). Such compensation, allowances and benefits
shall continue to be pa
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