EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of April 2, 1993, by and
between California Energy Company, a Delaware corporation (the "Company"), and
David L. Sokol (the "Executive").
RECITALS
The Company desires to employ the Executive as its President and Chief
Executive Officer on the terms set forth in this Agreement, and the Executive
desires to accept such employment.
Accordingly, the Company and the Executive agree as follows:
AGREEMENT
Section 1. Defined Terms. Terms used but not defined in this Agreement
will have the meanings ascribed to them in Exhibit A to this Agreement.
Section 2. Employment.
(a) The Company will employ the Executive as, and the Executive
will act as, the President and Chief Executive Officer of the Company upon the
terms set forth in this Agreement, for the Term of Employment.
(b) The Executive's primary place of employment will be Omaha,
Nebraska or such other place as is determined by the Board to be in the best
interest of the Company. However, after reestablishing his residence in
Omaha, Nebraska, the Executive will not be required to relocate from such
residence.
Section 3. Duties.
(a) The Executive (i) will manage the business of the Company
and supervise and direct the other officers of the Company (except the
Chairman of the Board) and its employees, agents and representatives, and (ii)
will perform and discharge such other duties, and will have such other
authority, as are customary to his office. In performing such duties, the
Executive will report directly to the Chairman of the Board and will consult
with the Chairman of the Board regarding significant decisions and strategic
options for the Company.
(b) The Board will not reduce the title, office, duties or
authority of the Executive in any material respect except pursuant to Section
7. During the Term of Employment, the Company will use its best efforts to
cause the Executive to be nominated and elected to the Company's Board of
Directors.
(c) The Executive will act, without any compensation in addition
to the compensation payable pursuant to this Agreement, as an officer of any
subsidiary of the Company, or as a member of the Board of the board of
directors of any subsidiary of the Company, if so appointed or elected.
(d) During the Term of Employment, the Executive (i) will devote
his entire time, attention and energies during normal business hours to the
business of the Company, and (ii) will not, without the Consent of the Board,
perform any services for any other Person or engage in any other business or
professional activity, whether or not performed or engaged in for profit.
(e) Notwithstanding subsection (d), the Executive, without the
Consent of the Board, may (i) perform the consulting duties contemplated the
letter agreement dated October 5, 1990, by and among the Executive, Ogden
Corporation and Ogden Projects, Inc. (ii) purchase securities issued by,
or otherwise passively invest his personal or family assets in, any other
company or business, and (iii) engage in governmental, political, educational
or charitable activities, but only to the extent that those activities (A) are
not inconsistent with any direction of the Board or any duties under this
Agreement, and (B) do not interfere with the devotion by the Executive of his
entire time, attention and energies during normal business hours to the
business of the Company.
Section 4. Compensation.
(a) During the Term of Employment, the Company will pay the
Executive a base salary at an annual rate of $350,000, in substantially equal
periodic payments in accordance with the Company's practices for executive
employees, as determined from time to time by the Board.
(b) The Board will review the salary payable to the Executive
at least annually beginning in the fourth fiscal quarter of 1993. The Board,
in its discretion, may increase the salary of the Executive from time to time,
but may not reduce the salary of the Executive below the amount set forth in
subsection (a).
(c) During the Term of Employment, the Company will pay the
Executive an annual bonus, not later than ten calendar days after the
completion of the financial statements or audit of the Company for the
preceding fiscal year of the Company in an amount determined by the Board, by
reference to the accomplishment by the Executive of goals established by the
Board for the related fiscal year. The annual bonus paid to the Executive,
however, will not be less than the Minimum Bonus.
(d) If the Executive suffers a Disability which continues for
more than 60 consecutive calendar days, the Company may elect to pay the
Executive, for so long as the Disability continues, fifty (50) percent of the
salary otherwise payable to the Executive under Section 4(a), and fifty (50)
percent of the Minimum Bonus otherwise payable to the Executive pursuant to
Section 4(c). Any such election will not affect the rights of the Company
under Section 7(a)(v).
(e) (i) The Company will issue to the Executive, within five
business days after the date of this Agreement, options under the Company's
1986 Stock Option Plan to acquire 250,000 shares of the common stock of the
Company at an exercise price equal to the closing price for the common stock
on the American Stock Exchange on April 2, 1993, of which options to purchase
100,000 shares shall vest immediately and the remaining 150,000 options shall
vest at an equal monthly rate over the next four (4) years. The terms and
provisions of the option will be similar in all other material respects to the
other options granted to the senior executives of the Company.
(ii) The Company and the Executive have agreed in
principle that a grant of 1,000,000 options in the aggregate over five (5)
years is the expected grant amount to be made over such period of employment,
which grants would be at the discretion of the Board, assuming Executive's
satisfactory performance of his duties hereunder. In light of this
expectation, the Board will review the number of options granted to the
Executive at least annually beginning in the fourth fiscal quarter of 1993.
However the Board may, in its discretion, increase or decrease the number of
options expected to be granted hereunder (except for the 250,000 options
granted under (i) above).
(f) The Company will reimburse the Executive, (i) subject to
compliance by the Executive with the Company's customary reimbursement
practices, for all reasonable and necessary out-of-pocket expenses incurred
by the Executive on behalf of the Company in the course of its business and
(ii) for all costs and expenses incurred in relocating his residence from New
York to Omaha which are reimbursable under the Company's relocation plan.
(g) The Company may reduce any payments made to the Executive
under this Agreement by any required federal, state or local government
withholdings or deductions for taxes or similar charges, or otherwise pursuant
to law, regulation or order.
(h) The compensation payable to the Executive pursuant to this
Agreement will be in consideration for all services rendered by the Executive
under this Agreement, and the Executive will receive no other compensation
from the Company.
(i) Any base salary or Minimum Bonus payable to the Executive
for any period of employment of less than a year during the Term of Employment
will be reduced to reflect the actual number of days of employment during the
period except as provided in Section 8(b).
Section 5. Other Benefits.
(a) During the Term of Employment, the Executive and his family
may participate in and receive benefits under any employee benefit plan which
the Company makes generally available to its employees and their families,
including any pension, life insurance, medical benefits, dental benefits or
disability plan, but only to the extent that the Executive or his family
otherwise satisfies the standards established for participation in the plan.
(b) The Executive may take up to four weeks of vacation during
each full calendar year during the Term of Employment, without loss of
compensation or other benefits under this Agreement.
Section 6. Confidentiality and Post-Employment Restrictions.
(a) The Executive acknowledges that the Company has confidential
information and trade secrets, whether written or unwritten, with respect to
carrying on its business, including sensitive technology and engineering
information and data, names of past, present and prospective customers and
vendors of the Company, methods of pricing contracts and income and expenses
associated therewith, negotiated prices and offers outstanding, credit terms
and status of accounts and the terms or circumstances of any business
arrangements between the Company and any third parties ("Confidential
Information and Trade Secrets"). As used in this Agreement, the term
Confidential Information and Trade Secrets does not include (i) information
which becomes generally available to the public other than as a result of a
disclosure by the Executive, (ii) information which becomes available to the
Executive on a nonconfidential basis from a source other than the Company, or
(iii) information known to the Executive prior to any disclosure to him by the
Company. The Executive further acknowledges that the Executive possesses a
high degree of knowledge of the geothermal energy industry and, in particular,
has committed to a long-standing relationship with the Company as employee,
director and officer, which has allowed, and will continue to allow, him
access to the Company's Confidential Information and Trade Secrets.
Accordingly, any employment by the Executive with another employer in the
geothermal energy industry or participation by him as a substantial investor
in any such industry may necessarily involve disclosure of the Company's
Confidential Information and Trade Secrets. Consequently, the Executive
agrees that, if he voluntarily resigns his employment with the Company for any
reason other than a breach of this Agreement by the Company, he shall not at
any time during the two-year period after such resignation, directly or
indirectly accept employment by or invest in (except as a passive investor in
a public corporation or in a publicly issued partnership interest which, in
either event, would not exceed an ownership interest of 3% of the outstanding
equity or partnership interest) in any person, firm, corporation, partnership,
joint venture or business which is primarily engaged in the production or
marketing of electrical energy from geothermal resources.
(b) Without the Consent of the Board, the Executive will not,
for two years after the Term of Employment, (i) disclose any Confidential
Information and Trade Secrets of the Company or any Affiliate of the Company
to any Person (other than the Company, directors, officers or employees of the
Company or representatives thereof), or (ii) otherwise make use of any
Confidential Information and Trade Secrets other than in connection with
authorized dealings with or by the Company.
(c) For a period of two years after the Term of Employment, the
Executive shall neither directly nor indirectly solicit, on behalf of another
employer, the employment of any person who is then currently employed by the
Company, or otherwise induce, on behalf of another employer, such person to
leave the employment of the Company without the Company's prior written
approval.
(d) The Executive will hold, on behalf of the Company and as the
property of the Company, all memoranda, manuals, books, papers, letters,
documents, computer software and other similar property obtained during the
course of his employment by the Company and relating to the Company's
business, and will return such property to the Company at any time upon demand
by the Board and, in any event, within five calendar days after the end of the
Term of Employment.
Section 7. Termination of Employment.
(a) The employment of the Executive under this Agreement will
terminate on the earliest of: (i) written notice by the Executive of his
resignation; (ii) the 30th calendar day after the Company gives to the
Executive written notice of termination without Cause; (iii) the fifth
calendar day after the Company gives to the Executive written notice of the
existence of Cause; (iv) the 30th calendar day after the Executive gives to
the Company written notice of (A) the failure by the Company to pay to the
Executive, for a material period of time and in a material amount,
compensation due and payable by the Company under Section 4(a) or 4(c), or (B)
any breach by the Company or the Board of Section 3(b) or Section 4(b); (v)
the Permanent Disability of the Executive; or (vi) the death of the Executive.
(b) If the employment of the Executive is terminated under this
Agreement, the obligations of the Executive under Section 6 will remain in
full force and effect, and the termination will not abrogate any rights or
remedies of the Company or the Executive with respect to any breach of the
Agreement, except as expressly provided in Sections 8 and 9.
Section 8. Payment Upon Termination.
(a) If the employment of the Executive is terminated pursuant
to subsections (i), (iii), (v), or (vi) of Section 7(a), the Company will pay
to the Executive, within 30 calendar days, (i) any salary pursuant to Section
4(a) which is accrued but unpaid through the Termination Date, and (ii) a
bonus payment, in an amount determined by the Board by reference to the
performance of the Executive for the portion of the fiscal year of the Company
before the Termination Date, which is not less than a pro rata share
(determined by reference to the portion of the fiscal year before the
Termination Date) of the Minimum Bonus.
(b) If the employment of the Executive is terminated pursuant
to subsection (ii) or subsection (iv) of Section 7(a), the Company will pay
the Executive, on or before the related Termination Date, an amount equal to
twice the sum of the annual salary and Minimum Bonus then in effect pursuant
to Section 4. In addition, any portion of the options granted pursuant to
Section 4 which would become vested within the next 24 months (beginning with
the month following the month in which the Termination Date occurs) will vest
immediately and may be exercised within the remaining term of the options as
provided in the option agreement.
Section 9. Remedies.
(a) The Company will be entitled, if it elects, to enjoin any
breach or threatened breach of, or enforce the specific performance of, the
obligations of the Executive under Sections 3 or 6, without showing any actual
damage or that monetary damages would be inadequate. Any such equitable
remedy will not be the sole and exclusive remedy for any such breach, and the
Company may pursue other remedies for such a breach.
(b) Any court proceeding to enforce this Agreement may be
commenced in the federal courts, or in the absence of federal jurisdiction the
state courts, located in Omaha, Nebraska. The parties submit to the
jurisdiction of such courts and waive any objection which they may have to
pursuit of any such proceeding in any such court.
(c) Except to the extent that the Company elects to seek
injunctive relief in accordance with subsection (a), any controversy or claim
arising out of or relating to this Agreement or the validity, interpretation,
enforceability or breach of this Agreement will be submitted to arbitration
in Omaha, Nebraska, in accordance with the then existing rules of the American
Arbitration Association, and judgement upon the award rendered in any such
arbitration may be entered in any court having jurisdiction.
(d) The Company will pay, promptly upon request, any legal fees
or expenses incurred by the Executive in connection with any legal proceedings
instituted by the Company to enforce the provisions of this Agreement against
the Executive, but such advances will be reimbursable to the Company, but only
to the extent the Company ultimately prevails in the proceeding (after any
applicable appeals have been exhausted).
Section 10. Assignment. Neither the Company nor the Executive may
sell, transfer or otherwise assign their rights, or delegate their
obligations, under this Agreement.
Section 11. Unfunded Benefits. All compensation and other benefits
payable to the Executive under this Agreement will be unfunded, and neither
the Company nor any affiliate of the Company will segregate any assets to
satisfy any obligation of the Company under this Agreement. The obligations
of the Company to the Executive are not the subject of any guarantee or other
assurance of any Person other than the Company.
Section 12. Severability. Should any provision, paragraph, clause or
portion thereof of this Agreement be declared or be determined by any court
or arbitrator of competent jurisdiction to be illegal, unenforceable or
invalid, the validity or enforceability of the remaining parts, terms or
provisions shall not be affected thereby and said illegal or invalid part,
term or provision shall be deemed not to be a part of this Agreement.
Alternatively, the court or arbitrator having jurisdiction shall have the
power to modify such illegal, unenforceable or invalid provision so that it
will be valid and enforceable, and, in any case, the remaining provisions of
this Agreement shall remain in full force and effect.
Section 13. Miscellaneous.
(a) This Agreement may be amended or modified only by a writing
executed by the Executive and the Company.
(b) This Agreement will be governed by and construed in
accordance with the internal laws of the State of Nebraska.
(c) This Agreement constitutes the entire agreement of the
Company and the Executive with respect to the matters set forth in this
Agreement and supersedes any and all other agreements between the Company and
the Executive relating to those matters.
(d) Any notice required to be given pursuant to this Agreement
will be deemed given (i) when delivered in person, or (ii) on the third
calendar day after it is sent by facsimile, express delivery service, or
registered or certified mail, if to the Company at 10831 Old Mill Road, Omaha,
Nebraska, 68154, and if to the Executive at 516 Cross River Road, Katonah, NY
10536, or to such other address as may be designated by the Company or the
Executive in writing to the other party.
(e) A waiver by a party of a breach of this Agreement will not
constitute a waiver of any other breach, prior or subsequent, of this
Agreement.
IN WITNESS WHEREOF, the Company and the Executive have entered into this
Agreement as of April 2, 1993.
CALIFORNIA ENERGY COMPANY, INC.
BY: /s/ Steven A. McArthur
Steven A. McArthur
Vice President
EXECUTIVE:
BY: /s/ David L. Sokol
David L. Sokol
EXHIBIT A
Defined Terms
"Affiliate" means, with respect to a Person, (a) any Person directly or
indirectly owning, controlling, or holding power to vote 10% or more of the
outstanding voting securities of the Person; (b) any Person 10% or more of
whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote by the Person; (c) any Person directly
or indirectly controlling, controlled by or under common control with, the
Person and (d) any officer or director of the Person, or of any Person
directly or indirectly controlling the Person, controlled by the Person or
under common control with the Person. As used in this definition, "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person.
"Agreement" means this Employment Agreement dated as of April 2, 1993,
by and between the Company and the Executive, as it may be amended from time
to time in accordance with its terms.
"Board" means the Board of Directors of the Company or, if the context
is appropriate, any duly authorized and appointed committee or member of the
Board of Directors having authority to act on behalf of the Board of Directors
with respect to the matter in question.
"Cause" means any or all of the following:
(a) the willful and continued failure by the Executive to perform
substantially the services contemplated by the Agreement (other
than any such failure resulting from the Executive's incapacity
due to disability) after a written demand for substantial
performance is delivered to the Executive by a member or
representative of the Board which specifically identifies the
manner in which it is alleged that the Executive has not
substantially performed such services;
(b) the willful engaging by the Executive in gross misconduct which
is materially and demonstrably injurious to the Company, provided
that, no act, or failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be done, in bad
faith and without reasonable belief that such action or omission
was in, or not opposed to, the best interests of the Company; or
(c) the gross negligence of the Executive in performing the services
contemplated by the Agreement which is materially and
demonstrably injurious to the Company.
Cause will exist only if the Board has delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of a majority of the
entire membership of the Board at a meeting of the Board called and held for
that purpose (after reasonable notice to the Executive and an opportunity for
the Executive, together with his counsel, to be heard before the Board),
finding that, in the good faith judgement of the Board, the Executive was
guilty of the conduct constituting such Cause and specifying the particulars
thereof in detail.
"Company" means California Energy Company, Inc., a Delaware corporation,
and any successor or assign permitted under the Agreement.
"Consent of the Board" means, with respect to an action, the consent of
the Board to the action given prior to the action in a resolution duly adopted
by the Board, appropriate committee of the Board, or by a member of the Board
duly authorized to consent to such action.
"Disability" means, with respect to the Executive, that the Executive
has become physically or mentally incapacitated or disabled so that, in the
reasonable judgement of majority of the members of the Board, he is unable to
perform his duties under this Agreement and such other services as he
performed on behalf of the Company before incurring such incapacity or
disability.
"Minimum Bonus" means, with respect to a fiscal year, $75,000.
"Permanent Disability" means a Disability which has continued for at
least six consecutive calendar months.
"Person" means any natural person, general partnership, limited
partnership, corporation, joint venture, trust, business trust, or other
entity.
"Term of Employment" means the period of time beginning on April 19,
1993 and ending on the third anniversary of such date, unless earlier
terminated pursuant to Section 7(a) or automatically extended pursuant to the
following sentence. The Term of Employment will be automatically extended for
one year on each anniversary of the date of this Agreement beginning on the
third anniversary unless the Executive has given the Company a notice
declining automatic extension at least 120 calendar days before the
anniversary.
"Termination Date" means the date of termination of employment of the
Executive pursuant to Section 7 of this Agreement.