March 11, 1997
Mr. James Clemens
4131 West Channel Islands Blvd.
Oxnard, California 93035
Dear Jim:
On behalf of the Board of Directors of Mechanical Technology Incorporated,
I am pleased to offer you the position of Vice President and General Manager of
Ling Electronics, Inc., effective March 24, 1997.
As such, you will be responsible for all aspects of the operations and
performance of Ling. You will report to the President and Chief Operating
Officer of MTI and will work closely with the Chief Executive Officer and the
Board of Directors to develop and implement strategies and goals designed to
return the Ling to profitability and to position it for future growth and
profitability.
We have agreed to employ you for three years at a base annual salary of
$115,000. From time to time, but not less than annually, your performance will
be reviewed and you may be eligible for salary adjustments at the discretion of
the Compensation Committee of MTI's Board of Directors.
You will also be eligible for cash incentive compensation as follows:
3% of Annual Pretax Income up to $1,000,000
2% of Annual Pretax Income in excess of $1,000,000
You will be awarded options to purchase 15,000 shares of MTI common stock at
a price to be set on the day you sign this agreement. Vesting in these options
will occur as follows:
Year 1 5,000 options if Pre Tax Income exceeds $1,000,000
Year 2 5,000 options if Pre Tax Income exceeds $1,400,000
Year 3 5,000 options if Pre Tax Income exceeds $1,700,000
Mr. James Clemens
March 11, 1997
Page 2
Pre Tax Income will be defined as income prior to corporate assessments and
taxes. Cash incentive compensation and vesting in options will be subject to
the review of operating results by the Company's independent auditors. Normally,
we expect such payments and vesting to occur in December or January following
the close of the fiscal year on September 30.
You will be eligible for three weeks paid vacation annually and to
participate in the standard employee benefit packages offered to individuals in
comparable positions in the Company. An employee handbook explaining these
benefits will be provided under separate cover.
MTI will advance to you the sum of $30,000 in conformance with the enclosed
agreement and promissory note. Of this amount, $10,000 will be advanced upon
execution of this letter; $10,000 will be advanced on the effective date of your
employment (anticipated to be March 24, 1997); and the balance will be advanced
within 30 days of the effective date of employment. This advance is to cover
your cash flow needs during the transition period of your relocation, including
but not limited to temporary living expenses (housing, food and travel) for the
first three months of your employment, security deposits on housing rental, etc.
Reimbursement for normal business expenses will be in accordance with Company
policy. Should you buy a home during the first 18 months of employment,
refunded security deposits may be applied to closing costs associated therewith.
You will be eligible for reimbursement of ordinary relocation costs
associated with your move to the Anaheim area, including: two visits by you and
your spouse to explore living arrangements; personal transportation and expenses
for you and your spouse during relocation; packing, transportation, and
insurance associated with moving household goods; temporary living arrangements
pending the availability of housing; and reasonable closing costs associated
with the purchase of a primary residence. Reimbursement for the costs of moving
your personal, household possessions will be "grossed up" to reflect the tax
consequences of such reimbursement.
If MTI decides to sell or discontinue the operations of Ling during the
period of this agreement, and if a buyer of Ling does not continue your
employment, you will be paid severance allowance equivalent to one year's base
salary. If you leave employment on your own initiative within one year, the
relocation costs cited above will be reimbursed to the Company.
Mr. James Clemens
March 11, 1997
Page 3
If this offer is acceptable to you, please sign and return an original copy
of this letter where indicated. Jim, we are all looking forward to your joining
us on the 24th and to working together to achieve our common objectives. Best
regards to you and Jackie.
Sincerely,
/s/ R. Wayne Diesel
Accepted By: /s/ James Clemens Date: 3/14/97
-------------------- ----------
James Clemens
cc: George McNamee, Chairman
Marty Mastroianni, President & Chief Operating Officer
AGREEMENT
---------
THIS AGREEMENT, made this 11th day of March, 1997, by and between
Mechanical Technology Inc. ("MTI") and James Clemens ("Employee").
WHEREAS, Employee has accepted employment by MTI as Vice President and
General Manager of Ling Electronics, Inc.; and
WHEREAS, Employee has executed the attached Promissory Note; and
WHEREAS, MTI and Employee believe it to be mutually advantageous to
provide for the payout of bonuses to Employee upon the terms and conditions
hereafter set forth;
NOW THEREFORE, the parties hereto agree as follows:
1. MTI will pay bonuses to Employee on March 24, 1998, March 24, 1999, and
March 24, 2000, provided that Employee is still employed by MTI on those dates,
each bonus to be in an amount equal to the then-due principal and interest
payments under the attached Promissory Note. Any bonuses paid are compensation
to the Employee, and subject to standard payroll withholdings.
2. In the event that Employee ceases to be employed by MTI for any reason
whatsoever prior to any of the dates set forth in Paragraph 1 above, then
Employee will not be entitled to receive any bonus or partial or prorated bonus
for having been employed by MTI.
3. Any bonuses payable hereunder shall be withheld by MTI and shall be
applied to the payment of then-due principal and interest obligations pursuant
to the attached Promissory Note. Employee hereby consents to such withholding
and application.
4. Notwithstanding any other provision herein to the contrary, in the event
Employee is still employed by MTI and dies or becomes permanently disabled prior
to the last bonus payment date set forth in Paragraph 1 above, MTI will pay, as
of the date of Employee's death or the date of the determination of Employee's
permanent disability, a bonus equal in amount to the then-outstanding principal
balance and all accrued but unpaid interest under the attached Promissory Note,
and shall withhold and apply said bonus as provided in paragraph 3 above.
Employee, for himself, and for his estate, heirs, legatees, executors and
personal representatives, consents to such payment, withholding and application.
5. This Agreement and any bonus payable hereunder shall not be assignable
by voluntary or involuntary assignment or by operation of law including, without
limitation, garnishment, attachment or other creditors' process, and payment of
bonuses hereunder is specifically conditioned on MTI's ability to withhold and
apply the bonus as provided in Paragraph 3 above, without interference from
Employee's creditors.
This Agreement shall be subject to and construed in accordance with the laws
of the State of New York.
MTI's March 11, 1997 letter to employee is attached to this Agreement and is
made a part hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date hereinabove written.
MECHANICAL TECHNOLOGY INCORPORATED
By: /s/ R. Wayne Diesel .
-----------------------------
Chief Executive Officer
/s/ James Clemens 3/14/97
-----------------------------
Employee
PROMISSORY NOTE
---------------
Latham, New York
March 11, 1997
1. FOR VALUE RECEIVED, the undersigned promises to pay to Mechanical
Technology Incorporated ("MTI") the principal sum of Thirty Thousand and no/100
Dollars ($30,000.00) plus interest at the rate of 6.5% per annum on the balance
remaining from time to time unpaid. Principal shall be due and payable in three
equal annual installments of Ten Thousand and no/100 Dollars ($10,000.00)
commencing one (1) year from the date hereof. Accrued interest shall be due and
payable at the same time as the payment of principal installments.
2. In the event the undersigned's employment with MTI terminates for any reason
other than death or permanent disability, whether involuntary or voluntary and
for whatever cause, the principal amount, plus accrued interest, shall be due
and payable as of the date of the undersigned's termination.
3. The undersigned has the right to prepay at any time the unpaid principal and
interest on the indebtedness.
4. In the event that bonuses are paid to the undersigned by MTI pursuant to the
attached Agreement there shall be a mandatory prepayment of this Promissory Note
as, when and to the extent, that such bonuses are paid to the undersigned. Any
bonuses paid are compensation to the Employee, and subject to standard payroll
withholdings.
5. The undersigned understands and agrees that in the event of default in
payment of any amount due hereunder not cured within fifteen days, MTI shall
have the right, without notice, to withhold any and all amounts payable by it
to the undersigned, as compensation or otherwise, and apply such amounts to the
indebtedness hereunder.
6. In the event that MTI is obliged to refer the note to an attorney for
collection, Employee agrees to pay all reasonable costs and attorneys' fees
incurred by MTI in the collection thereof.
This note is attached to and made a part of the Agreement dated March 11,
1997 between Employee and Mechanical Technology Incorporated.
/s/ James Clemens 3/14/97
----------------------------
Employee: