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Exhibit
10.1
EMPLOYMENT AND
NON-COMPETITION AGREEMENT
This Employment and
Non-Competition Agreement (this “Agreement”), is dated
as of the 28th day of September, 2007 (the “Effective
Date”) and is entered into by and between Advanced
Lighting Systems, LLC , a Delaware limited liability company
(“Employer”) and Paul Streitz , an individual
resident of the State of Minnesota
(“Employee”).
W I T
N E S S E T H
:
WHEREAS , Employer is
a wholly owned subsidiary of Nexxus Lighting, Inc., a Delaware
corporation (“Parent”).
WHEREAS , effective as
of the date hereof, Advanced Lighting Systems, Inc., a Minnesota
corporation (“ALS”), was merged (the
“Merger”) with and into Employer (known prior to the
Merger as Advanced Lighting Systems, LLC), pursuant to the terms of
that certain Agreement and Plan of Merger, dated of even date
herewith, by and among Parent, ALS, Employer and Employee (the
“Merger Agreement”);
WHEREAS , heretofore
Employee was the owner and president of ALS; and
WHEREAS, in accordance
with the terms of the Merger Agreement, and in consideration of the
consummation of the Merger, and as a condition to the parties
obligations to consummate the Merger, Employer and Employee desire
to enter into this Agreement relating to the employment of Employee
by Employer, upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE , in
consideration of the premises and other good and valuable
consideration, receipt and sufficiency of which is hereby
acknowledged, Employee and the Employer agree as
follows:
Section 1. Employment of
Employee
(a) Term.
Employee’s employment hereunder will commence on the
Effective Date and will terminate three (3) years after the
Effective Date (the “Initial Term”). Thereafter this
Agreement will be extended automatically for successive one-year
periods (each a “Renewal Term”; and together with the
Initial Term, collectively, the “Term”), unless either
party gives at least ninety (90) days’ written notice to
the other party of its desire to terminate this Agreement prior to
the end of the Initial Term or any Renewal Term, as the case may be
(a “Non-Renewal Notice”). During such 90-day notice
period, Employee agrees to continue to provide services under this
Agreement. Employee’s employment hereunder may be terminated
sooner than the expiration of the Term pursuant to the terms and
conditions described below in Section 2. If either party
provides written notice to the other party of its desire to
terminate this Agreement at least ninety (90) days prior to
the expiration of the Initial Term or any Renewal Term, upon the
expiration of the Initial Term or any Renewal Term, as applicable,
this Agreement shall terminate. The provisions of Sections 2, 3, 4,
5, 6 and 8 shall continue in effect after termination of this
Agreement. The date on which Employee ceases to be employed by
Employer, regardless of the reason therefore is referred to in this
Agreement as the “Date of Termination.”
(b) Duties and
Responsibilities . Employer engages and employs
Employee as the President of Employer for the Term, and Employee
accepts such employment, on the terms and
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subject to the conditions of this
Agreement. During the Term, Employee agrees to faithfully exercise
such authority and perform such responsibilities and duties on
behalf of Employer as are normally associated with his title and
position as President, as well as such other reasonable duties,
responsibilities or positions as the Chief Executive Officer of
Parent or the Board of Directors or managers of Employer (the
“Board”) may reasonably determine. Employee will apply
his best efforts, entire working time, attention, and energies to
the business of Employer and shall assume and perform such
reasonable responsibilities and duties as may be assigned to him
from time to time. To the extent that the Employer shall have any
parent, subsidiaries, or affiliated corporations (collectively
“Related Entities”), Employee shall perform such duties
to promote these entities and their respective interests to the
same extent as the interests of the Employer and without additional
compensation. At all times during the Term, Employee agrees to
abide by any employee handbook, policy or practice that Employer
has established with respect to, and that is generally applicable
to, its employees. Notwithstanding the foregoing, Employee shall be
permitted to engage in charitable and civic activities, manage his
personal passive investments and engage in real estate endeavors;
provided that such activities (individually or collectively) do not
materially interfere with the performance of his duties or
responsibilities under this Agreement.
(c) Compensation.
During the Term, as full compensation for his services hereunder
and in consideration for Employee’s covenants contained in
this Agreement, Employer shall pay Employee a base salary at the
per annum rate of $175,000 payable in accordance with the customary
payroll practices of Employer (“Base Salary”). In
addition, during the Term, Employee shall be eligible to receive
performance bonus compensation of up to fifty percent (50%) of
Base Salary under performance criteria to be determined on an
annual basis by the Board of Directors of Parent or the
compensation committee of the Board of Directors of Parent (the
“Compensation Committee”) after consultation with
Employee. The initial performance criteria for the period ending
December 31, 2007 are set forth on the attached
Exhibit A , which Exhibit may be amended on an annual
basis to reflect the performance criteria determined in accordance
with this Agreement. The Base Salary payable to Employee during
each fiscal year commencing after December 31, 2007, shall be
established by the Compensation Committee based on Employee’s
annual performance review depending on various factors, such as
Employer’s performance and Employee’s satisfactory job
performance, but in no event shall the Base Salary for any
subsequent year be less than the Base Salary in effect for the
prior year. Notwithstanding anything herein to the contrary,
subject to the consent of Employer, which consent shall not be
unreasonably withheld, Employee may choose to receive a
commercially reasonable Base Salary that is less than the Base
Salary to which he is entitled by providing Parent with thirty
(30) days’ written notice.
(d) Stock Options
. On the Effective Date, Employee shall be granted stock
options pursuant to Parent’s 2003 Stock Incentive Plan to
purchase an aggregate of 100,000 shares of Parent’s common
stock at an exercise price equal to the fair market value of such
shares on the Effective Date as determined by the Compensation
Committee. Except as otherwise provided in this Agreement, subject
to Employee’s continued employment with Parent and/or any
subsidiary of Parent (“Group”) on the applicable date,
the stock options shall vest as follows: (i) with respect to
35,000 shares on March 31, 2008, if Employee is employed by
the Group on December 31, 2007, and Employer and ALS have
combined earnings before interest, taxes, depreciation and
amortization (“EBITDA”) for the 12 months ending
December 31, 2007 greater than $250,000; (ii) with
respect to 15,000 shares on March 31, 2008, if Employee is
employed by the Group on December 31, 2007 and Employer and
ALS have revenue for the 12 months ending December 31, 2007
greater than $3.5 million; (iii) with respect to 35,000 shares
on March 31, 2009, if Employee is employed by the Group on
December 31, 2008 and Employer has EBITDA for the 12 months
ending December 31, 2008 greater than $450,000; and
(iv) with respect to 15,000 shares on March 31, 2009, if
Employee is employed by the Group on
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December 31, 2008 and Employer has
revenue for the 12 months ending December 31, 2008 greater
than $5.0 million. All such stock options shall be subject to the
terms and conditions of Parent’s stock option plan (a copy of
which has been provided to Employee) pursuant to which the options
are granted and shall be conditioned upon Employee’s
execution of a stock option agreement with Parent in substantially
the form attached hereto as Exhibit B . Notwithstanding
anything to the contrary in this Agreement, options may vest after
termination of employment so long as Employee is employed on the
last day of the applicable measuring period as set forth
above.
For purposes of this Agreement,
(i) the revenue and EBITDA of ALS for the period beginning on
January 1, 2007 and ending on the closing date of the Merger
shall be determined in accordance with generally accepted
accounting principles in the United States, as in effect from time
to time (“GAAP”) consistent with those employed in
preparation of ALS’s financial statements prior to the
Effective Date and (ii) the revenue and EBITDA of Employer
shall be determined in accordance with GAAP and accounting policies
and procedures consistent with those employed in preparation of
Parent’s publicly filed financial statements.
For purposes of calculating revenue,
(i) all effects of purchase accounting adjustments caused by
the transactions contemplated by the Merger Agreement shall be
disregarded and (ii) Employer products and services sold
directly by Parent or a Related Entity (other than Employer), shall
include the amount of revenue generated by such sales as if Parent
or such Related Entity (other than Employer) was operating as the
third-party reseller of Employer conducting sales of a
substantially similar nature with the most favorable discount or
reseller rate then applicable to such substantially similar
sales.
For purposes of calculating EBITDA,
(i) third party professional fees and expenses incurred by ALS
or Employee directly related to the performance of the transactions
contemplated by the Merger Agreement, (ii) any extraordinary
gains or losses and (iii) gains or losses from the sale of
capital assets shall be excluded.
Except with respect to calculation of
revenue and EBITDA of ALS prior to the closing of the Merger, all
amounts calculated in determining revenue and EBITDA under this
Agreement shall be determined in accordance with GAAP and
accounting policies and procedures consistent with those employed
in preparation of Parent’s publicly filed financial
statements.
(e) Expenses
. Employer agrees to pay or reimburse Employee for all
reasonable documented business expenses incurred for the business
of Employer and/or Related Entities during his employment which
have been submitted in accordance with any expense reimbursement
policy or practice of Employer.
(f) Benefits .
Employer will provide to Employee and, to the extent eligible, his
dependents, any benefit, including without limitation, medical
insurance, 401k savings plan, etc., which are provided by Employer
or Parent generally to their employees, subject to the provisions
of the various benefit plans, programs, or policies in effect from
time to time. Employer and Parent reserve the right to change or
eliminate these benefits at any time. To the extent permitted by
the applicable benefit plan, program or policy, Employee’s
date of hire with ALS will continue to be recognized for all
benefit and employment purposes.
(g) Vacation; Personal
Days . During the Term, Employee shall be entitled to three
(3) weeks paid vacation annually, three (3) personal/sick
days and as many holidays as are in accordance with
Employer’s or Parent’s policy then in effect generally
for their respective employees. Any unused vacation may be carried
over only to the extent permitted by Employer’s or
Parent’s then applicable policies and practices.
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(h) Life Insurance.
(i) Employee agrees that Employer shall have the right to
obtain life insurance on Employee’s life, at Employer’s
sole expense and with Employer as the sole beneficiary thereof.
Employee shall (A) cooperate fully with Employer in obtaining
such life insurance, (B) sign any necessary consents,
applications and other related forms or documents and (C) take
any required medical examinations. (ii) Employer agrees to
assign, and Employee agrees to assume, all of ALS’s rights
and obligations under the current life insurance policy that it
holds on Employee, at Employee’s sole expense and with
Employee as the sole beneficiary thereof. Employer shall
(A) cooperate fully with Employee in transferring such life
insurance and (B) sign any necessary consents, applications
and other related forms or documents.
(i) Car Allowance. During the
Term, Employer will provide Employee with a monthly car allowance
of $800 to cover the costs of insuring and maintaining an
automobile for use in the business of Employer.
(j) Location. The location at
which Employee shall perform services for Employer shall be Sauk
Centre, Minnesota, or such other principal office of Employer as
shall be established by the Board from time to time. Employer may
require Employee to travel to other locations on Employer’s
business. In the event that Employee and his family are required to
relocate to another location before the end of the Initial Term,
Employer shall reimburse Employee for costs of relocating by paying
Employee a $25,000 non-accountable moving allowance.
Section 2. Termination of
Employment
(a) Termination by
Employer . Employer may terminate the employment of
Employee at any time, with or without Cause (as defined below),
immediately upon written notice. If, at any time during the Term,
Employer shall terminate Employee for Cause (as defined below),
Employer shall provide written notice of termination for Cause to
Employee, which notice shall specify in reasonable detail the basis
upon which such termination is made.
If Employee’s employment is
terminated by Employer for any reason other than death, Disability
or Cause (as such terms are defined below), during the Term,
Employee shall receive (i) Base Salary payable in accordance
with the customary payroll practices of Employer for
twelve (12) months, (ii) any unpaid reimbursable expenses
outstanding as of the Date of Termination and (iii) payment
for accrued and unused benefits as of the Date of Termination, such
as vacation.
In the event of termination of
Employee’s employment by Employer for Cause (as defined
below), Employee shall receive unpaid Base Salary through, and any
unpaid reimbursable expenses outstanding as of, the Date of
Termination and payment for accrued and unused benefits as of the
Date of Termination such as vacation. If Employee’s
employment with Employer is terminated by Employer for any reason,
or no reason, all of the restrictions contained in Section 3
shall survive the expiration or termination of Employee’s
employment in accordance with the terms set forth therein. Except
as set forth in this Agreement, if Employee’s employment with
Employer is terminated by Employer, following the Date of
Termination the Employer shall have no further obligations under
this Agreement.
“Cause” shall be
determined by the Board of Directors of Parent and limited to the
following: (i) Employee’s refusal to perform his duties
in a satisfactory manner as contemplated by this Agreement;
(ii) dishonesty or other acts by Employee that adversely
affect Employer; (iii) a violation of Employer’s
policies or practices which justifies immediate termination;
(iv) arrest or conviction of a felony or of any crime
involving moral turpitude, fraud or misrepresentation; (v) the
commission by Employee of any act which could reasonably be
expected to inj
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