SEPARATION AGREEMENT AND
RELEASE
This SEPARATION
AGREEMENT AND RELEASE (this “Agreement”) is made and
entered into effective as of April 16, 2007, by and between
Metretek Technologies, Inc., a Delaware corporation (the
“Company”), and A. Bradley Gabbard, a Colorado resident
(“Executive”).
WHEREAS, the
Company has employed Executive as its Executive Vice President and
Chief Financial Officer since its founding in 1991; and
WHEREAS, the terms
of Executive’s employment with the Company are set forth in a
Second Amended and Restated Employment Agreement, dated as of
March 30, 2006 (the “Employment Agreement”);
and
WHEREAS, Executive
has voluntarily decided to retire from his positions as Executive
Vice President and Chief Financial Officer of the Company,
terminate his employment with the Company and its subsidiaries and
affiliates and cease serving as a director of the Company;
and
WHEREAS, the
Company and Executive desire to set forth the terms and conditions
of Executive’s retirement from the Company in this
Agreement;
NOW, THEREFORE, in
consideration of the mutual agreements and covenants set forth
herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Executive and the
Company, intending to be legally bound hereby, agree as
follows:
1.
Termination of Employment and Officers . Effective
April 16, 2007 (the “Separation Date”), Executive
hereby voluntarily retires and resigns any and all of his offices
and positions he may hold as a director, officer, trustee,
employee, representative and in any other capacity with the Company
and its subsidiaries and affiliates, including but not limited to
his positions as Executive Vice President and Chief Financial
Officer of the Company, and his employment relationship with the
Company and its subsidiaries shall terminate; provided, however,
that notwithstanding the foregoing, Executive’s resignation
from the Board of Directors of the Company shall not be effective
until June 11, 2007 at the Company’s Annual Meeting of
Stockholders. Concurrently with the execution of this Agreement,
Executive shall execute and deliver the letter attached hereto as
Exhibit A , documenting his resignation from any and
all positions he previously held, and deliver such letter to the
Company on or before the Separation Date. As of the Separation
Date, Executive will no longer be required to fulfill any of the
duties or responsibilities associated with any of these positions
or offices and all authority of Executive related to such positions
and offices is hereby expressly terminated and revoked.
Notwithstanding the foregoing, after the Separation Date, Executive
shall provide consulting services to the Company on the terms and
subject to the conditions set forth in Section 2(c)
hereof.
2.
Severance Package . As a full and complete severance package
(the “Severance Package”) and in order to induce
Executive to enter into this Agreement and to grant the Release (as
defined below), upon expiration of the Revocation Period (as
defined below):
(a)
Severance Payments . The Company shall pay to Executive,
over the next 24 months (the “Severance Period”),
an amount equal to $1,310,540, which is an amount equal to two
times the sum of (i) Executive’s base salary in effect
on the Separation Date ($275,000), plus (ii) one-third of the
sum of (x) Executive’s bonus for fiscal 2005 ($235,000),
and (y) two times Executive’s bonus for fiscal 2006
($452,905) (the “Severance Payments”). The Severance
Payments shall payable as follows: $335,826, consisting of $327,635
for six months Severance Payments plus interest thereon of $8,191,
shall be payable on October 18, 2007 (the “Initial
Payment Date”) and the remainder shall be payable in equal
installments over the remaining Severance Period on the
Company’s regular payroll dates.
(b)
Incentive Compensation Fund . As full and complete
satisfaction of the Company’s obligations to pay
“Incentive Compensation” (as such term is defined in
Section 3.2 of the Employment Agreement) to Executive, the
Company shall pay to Executive the amount of $3,600,000, as
follows: (i) $2,767,500, consisting of $2,700,000 in Incentive
Compensation payments plus interest thereon of $67,500, payable on
the Initial Payment Date, and (ii) the remaining $900,000 on
June 15, 2008, plus interest at the simple rate of five percent
(5%) per annum.
(c)
Consulting Agreement .
(i) Upon
the terms and subject to the conditions of this Agreement, the
Company hereby engages Executive as an independent contractor, and
not as an employee, to render consulting services to the Company
and its subsidiaries, as hereinafter provided, and Executive hereby
accepts such engagement, for a period of 26 months commencing
on the Separation Date (the “Consulting
Period”).
(ii) During
the Consulting Period, the consulting services to be performed and
provided by Executive shall include services related to the
management transition and any other services related to the
business and affairs of the Company and its subsidiaries as
Executive is reasonably requested to perform by the Board of
Directors, the Chief Executive Officer or the Chief Financial
Officer of the Company. Executive shall report directly to the
Chief Executive Officer of the Company or his designee at such
times and in such detail as reasonably be required. Executive shall
not have any authority to bind or act on behalf of the Company or
its subsidiaries during or after the Consulting Period. Executive
shall render such consulting services to the Company and its
subsidiaries as the Company may from time to time request, for not
more than twenty-five (25) hours per month, cumulating up to a
maximum of 50 hours on a carry-forward basis. Executive agrees to
provide such consulting services in good faith and to the best of
his ability.
(iii) As
compensation for Executive’s consulting services to the
Company, the Company shall pay to Executive a consulting fee at a
rate in the gross amount of eight thousand dollars ($7,500) per
month during the Consulting Period, as follows: $46,125, consisting
of $45,000 for the first six months of consulting services plus
interest thereon of $1,125, shall be payable on the Initial Payment
Date, and thereafter the consulting fee shall be payable over the
remainder of the Consulting Period on the Company’s regular
payroll dates.
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(iv) During
the Consulting Period, the Company shall reimburse Executive for
all reasonable, ordinary and necessary out-of-pocket expenses
incurred during the Consulting Period in connection with any such
consulting services requested by the Company, in accordance with
the Company’s policies relating to reimbursement of
expenses’ and with reasonable supporting documentation,
provided that any expense in excess of $500 shall require the prior
written approval of the Company, which approval shall not be
unreasonably withheld, provided that no expenses shall be
reimbursed until after the Initial Payment Date.
(i)
Escrow . On April 24, 2007, the Company shall deposit
into an escrow account with Zions First National Bank, as escrow
agent, the sum of $1,303,880 (which is equal to $2,226,951, the sum
of all payments due on the Initial Payment Date, other than
$900,000 in Incentive Compensation payments and interest thereon,
less $923,071 in required tax withholdings), pursuant to an escrow
agreement in substantially the form of Exhibit B
hereto. The withheld amounts shall be promptly, and within the time
required by law or regulation, paid over to the appropriate taxing
authorities after the escrowed funds are released to Executive. The
escrowed funds shall be released from escrow on the Initial Payment
Date and paid over to Executive by the escrow agent in payment in
part of the Company’s obligations hereunder on such date,
without further instruction to the escrow agent by any person;
provided, however, that (A) the escrowed funds shall remain
the property of the Company and subject to the general claims of
creditors until the Initial Payment Date, (B) the Company
shall bear the costs and expenses of the escrow agreement,
(C) any interest on the escrowed funds, remaining after the
payment of such costs and expenses, shall be paid over to the
Company on the Initial Payment Date, and (D) the escrow agent
must pay over the escrowed funds (without interest) to Executive on
the Initial Payment Date unless it is ordered or otherwise legally
compelled to do otherwise by a court of competent jurisdiction,
arbitrator or governmental or regulatory body or authority. In the
event the Company learns of any actual or potential claims made
against the escrow, then the Company shall promptly notify
Executive thereof, shall aggressively defend any such claims at its
own cost and expense, and shall consult with Executive on the
defense strategy. In the event Executive does not timely receive
the escrowed funds from the escrow account for any reason, then the
Company’s obligations hereunder to make payments to Executive
shall continue in full force and effect and the Company shall be
obligated to make such payments out of its own funds.
(ii)
Change in Control . Notwithstanding the foregoing, in the
event that there is a “Change in Control”, as such term
is defined in Section 409A of the Internal Revenue Code of
1986, as amended (“Section 409A”), then any
Severance Payments, installments of Incentive Compensation or
consulting fees that were then unpaid shall become due and payable
in full on the later of the Initial Payment Date or the date of
such Change in Control, to the extent permissible under 409A.
Notwithstanding the foregoing, both the Company and Executive
acknowledge and agree that this Agreement and the transactions
contemplated hereby, including the retirement of Executive and the
simultaneous retirement of W. Phillip Marcum from the Company,
(A) shall not constitute, and shall not be construed as, and
are not intended to create, a change in control of the Company, as
such term is defined in Sections 280G or 409A of the Internal
Revenue Code of 1986, as amended, and the regulations promulgated
thereunder (the “Code”), and (B) are intended to
comply with the provisions of Sections 162(m), 280G, and 409A
of the Code, such that the payments made by the Company hereunder
are intended to be fully deductible by the Company and not to
create any excise tax on Executive. To the extent any party hereto
reasonably determines that any provision of this
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Agreement would
prevent the Company from deducting any payment hereunder as an
expense, or would subject Executive to any excise tax, under any
Section of the Code, then the parties agree in good faith to
cooperate to reform this Agreement in a manner that would avoid the
imposition of such excise tax on Executive while preserving any
affected benefit or payment to the extent reasonably
practicable.
(iii)
Penalty for Late Payments . In the event the Company, for
any reason, fails to make any payment due to Executive under this
Section 2 within 10 business days of the date it is due,
including, without limitation, amounts to be paid out of the escrow
account contemplated by Section 2(d)(i), then the rate of
interest on such payment shall increase to 18% per annum commencing
on the due date of that installment and continuing at such rate
until actual payment of such installment, and the Company shall
also pay to Executive a late fee in the amount of 5% of that
installment.
(i)
Life Insurance Policy . The Company currently is the owner
of a group term life insurance policy that includes Executive. The
life insurance coverage and benefits provided and funded by the
Company for Executive shall terminate, and the Company will not
make any further payments with respect thereto, after the end of
the month in which the Separation Date occurs.
(ii)
Disability Insurance . The Company will terminate
Executive’s disability insurance coverage and benefits, and
will discontinue paying Executive’s premiums therefor, as of
April 30, 2007. Thereafter, Executive shall be solely
responsible for all arrangements and expenses relating to his
disability insurance coverage.
(iii)
Health Care and COBRA . The Company will terminate
Executive’s health care coverage and benefits, and will
discontinue paying Executive’s premiums for health care
coverage, as of April 30, 2007. Thereafter, Executive shall be
solely responsible for all arrangements and expenses relating to
his health care coverage. The Company has given Executive written
notice of Executive’s rights to continuation of insurance
coverage under the provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1986 (“COBRA”). Executive shall
be responsible for the full cost of continued coverage in
accordance with the provisions of COBRA if he elects coverage
thereunder.
(f)
No Further Benefits . After the Separation Date, Executive
shall cease to be eligible for any benefits under any Company
employee benefits plan or program or otherwise, except (i) as
expressly provided in this Agreement, or (ii) as otherwise
required under the terms of a Company employee benefits plan or
program or applicable law. Notwithstanding the foregoing, nothing
contained herein shall be construed to adversely affect
Executive’s rights and benefits under the Company’s
401(k) plan and under stock options awards, which rights shall
continue, after the Separation Date, to be governed by the terms of
the plan and the awards, and as such plan and awards treat the
termination of employment.
(g)
Taxes and Withholdings . The payments and benefits to be
made pursuant to this Section 2 shall be subject to all
applicable withholdings for federal, state and local income taxes,
social security, Medicare and all other customary withholdings. The
Company makes no representations or warranties regarding the tax
implications of the compensation, payments and benefits to be paid
to Executive under this Agreement. However, both the Company and
Executive have endeavored to structure this Agreement in such a way
as to maximize the
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deductibility
for tax purposes of all payments made by the Company pursuant to
this Agreement, and to minimize and avoid any adverse tax
consequences, including but not limited to excise taxes, to either
the Company or Executive. The Company and Executive acknowledge
that this Agreement has been prepared to the benefit of both
parties, and the Company acknowledges and agrees to assume the
responsibility to aggressively defend any tax audits or other
claims against either the Company or Executive relative to the
transactions contemplated hereby, at the Company’s cost and
expense.
(h)
Breach by Executive . If Executive materially breaches any
of his obligations under this Agreement, then the Company shall
have no further obligation to make the payments and provide the
benefits under this Agreement or the Employment Agreement, and that
it shall have all other remedies available to it under law and/or
equity, but that any such discontinuance of payments or benefits
shall not affect the validity of the Release of Claims by Executive
in Section 4 hereof.
3. Full
Payment; Employment Agreement .
(a)
Full Payment Under Employment Agreement . The parties hereto
agree that the payments, benefits and other consideration provided
in this Agreement by the Company to Executive are intended to be in
fulfillment in their entirety of the Company’s obligations to
make payments and to provide benefits pursuant to the Employment
Agreement upon Executive’s termination of employment,
including but not limited to Sections 2 and 3 of the
Employment Agreement, and to the extent any of the provisions of
this Agreement are inconsistent with any of the provisions of the
Employment Agreement, then this Agreement shall be controlling and,
to the extent necessary to effect the transactions contemplated
hereby, shall be deemed to be an amendment of the Employment
Agreement. Executive further acknowledges and agrees that the
Company has satisfied all of its obligations owed to Executive
pursuant to his Employment Agreement and otherwise related to his
employment with the Company, and that, except as provided herein,
no additional sums or compensation is owed to Executive by the
Company for any reason.
(b)
Waivers of Notice . The Company and Executive each hereby
waives the obligation of the other to give, and its or his own
right to receive, any notice of termination under the Employment
Agreement, including without limitation the notice contemplated by
Section 2.7 of the Employment Agreement, and the Company and
Executive each hereby agrees that no additional notices shall be
required to be given under the Employment Agreement by either the
Company or Executive.
(c)
Full Consideration . Executive acknowledges, agrees and
confirms that the Severance Package set forth in this Agreement
includes all compensation due and owing to Executive with respect
to his employment with the Company and under the Employment
Agreement and from any and all other sources of entitlement,
including but not limited to all wages, salary, commissions,
bonuses, incentive payments, profit-sharing payments, expense
reimbursements, leave, vacation pay, severance pay, or other pay
and benefit , which fully and finally discharges the
Company’s obligations to Executive regarding salary, bonuses,
vacation and sick pay, severance pay and any other payments and
benefits, whether under the Employment Agreement or otherwise, and
that the Severance Package includes payments, benefits and other
consideration substantially over and above those required in the
Employment Agreement or otherwise required to be paid by the
Company under the terms of executive’s employment
arrangements or under any other express or implied, oral or written
agreement,
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contract or
understanding with the Company, or under applicable law, and are
consideration for Executive’s promises, covenants and
representations contained in this Agreement, including but not
limited to the Release in Section 4 hereof.
4.
Release of Claims . In consideration for the mutual promises
and covenants set forth herein:
(a)
Release by Executive . Executive, knowingly and voluntarily,
for himself and on behalf of his past, present and future spouse,
descendents, heirs, estate, executors, administrators,
representatives, agents, successors and assigns, does hereby
irrevocably, fully, finally and forever release and discharge the
Company and its subsidiaries, affiliates, successors and assigns
and their respective current and former officers, directors,
trustees, shareholders, employees, insurers, attorneys, agents and
representatives (the “Company Released Persons”) from
and against any and all claims, demands, obligations, rights,
promises, judgments, debts, damages, demands, disputes,
controversies, contentions, grievances, differences, liabilities,
responsibilities and causes of actions of any kind, nature or
description whatsoever, whether statutory, tort, contract or any
other theory of recovery, in law or equity, and whether now known
or unknown, fixed or contingent, asserted or unasserted, which
Executive now has, ever had or in the future may have against any
one or more of them, accruing on or at any time prior to the date
hereof, by reason of, based upon, arising out of or in any way
relating to or connected with Executive’s employment with, or
his position as a director, officer, trustee or employee of, or any
other relationship or interest of Executive with or in, the Company
or its subsidiaries and affiliates, or the terms or the termination
thereof (the “Released Claims”). Specifically, the
Released Claims include, but are not limited to, any and all
claims:
(i) arising
under any contract, expressed or implied, written or
oral;
(ii) for
wrongful dismissal or termination of employment;
(iii) relating
to back wages, salary, overtime, bonuses, commissions, severance,
deferred compensation, vacation or sick pay, reinstatement,
insurance coverage, benefits, premiums, medical expenses, business
expenses, or other employee compensation or benefits;
(iv) arising
under any applicable federal, state, local or foreign statute, law,
order, ordinance, regulation, rule or the like, or case law, that
relate to employment or employment practices, including those that
prohibit discrimination based upon age, race, color, ancestry,
religion, sex, sexual orientation, national origin, handicap,
disability, medical condition, marital status, or any other
protected characteristic or unlawful basis, including, but not
limited to, any claim under the Age Discrimination in Employment
Act of 1967 (as amended by the Older Worker’s Benefit
Protection Act of 1990), Title VII of the Civil Rights Act of 1964,
the Civil Rights Act of 1991, the Equal Pay Act of 1963, the Fair
Labor Standards Act, Section 1981 of the Civil Rights Acts of
1866 and 1871, the Vietnam Era Veterans Readjustment Assistance Act
of 1974, the Family and Medical Leave Act of 1993, the Employee
Retirement Income Security Act of 1974, the American with
Disability Act of 1992, the Consolidated Omnibus Budget
Reconciliation Act of 1985, the Occupational Safety and Health Act,
the Worker Adjustment and Retraining Notification Act (each of such
Acts, as amended), and any similar foreign, federal, state and
local statutes, laws, orders, ordinances, rules, regulations or the
like, or case law, including but not limited to the laws of the
State of Colorado, or any political subdivision thereof;
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(v) arising
under or based upon any other federal, state, local or foreign
statute, law, order, rule, regulation, ordinance on the like, or
case law;
(vi) related
to wrongful or retaliatory discharge or demotion, breach of
contract, harassment, tortious or harassing conduct, breach of
public policy, intentional or negligent infliction of emotional or
mental injury or distress, physical or mental injury, pain and
suffering, negligent and intentional torts, fraud,
misrepresentation, defamation, libel, slander, breach of the
implied covenant of good faith and fair dealing, violation of
public policy, invasion of privacy, inducement of breach,
conspiracy, defamation, unlawful effort to prevent employment,
interference with contract, breach of fiduciary duty or any other
theory of recovery by Executive as an employee or concerning
compensation, wages, hours, or terms or conditions; and
(vii) any
and all claims for damages, including without limitation, punitive
or compensatory damages, or for attorney’s fees, expenses,
costs, wages, injunctive or equitable relief.
(b)
Release by the Company . The Company, on behalf of itself
and its subsidiaries and affiliates and their respective directors,
officers, employees, successors and assigns, does hereby
irrevocably, fully, finally and forever release and discharge
Executive and his past, present and future spouse, descendents,
heirs, estate, executors, administrators, representatives, agents,
successors and assigns (the “Executive Released
Persons”) from and against any and all Released Claims;
provided, however, that the Company Release shall not apply to any
claims related to or arising out of Executive’s actions or
omissions involving fraud, criminal conduct, bad faith or other
willful misconduct.
(c)
Exclusions From Released Claims . The Released Claims shall
not apply to and shall not release or waive any rights or claims
that either Executive or the Company may have related to the
following: (i) this Agreement; (ii) the Employment
Agreement (except as expressly modified in this Agreement),
including but not limited to the provisions of Sections 3
through 6 thereof; (iii) any claims for accrued or vested benefits
under the provisions of any pension or employee benefit plan
maintained by the Company, including but not limited to the
Company’s 401(k) plan; (iv) stock options held by
Executive; (v) Executive’s rights to
indemnification
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