Exhibit 10.1

 

SECOND AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made
and entered into as of this 13th day of April, 2016 (the “Effective Date”), by,
between and among (i) GEMMA POWER SYSTEMS, LLC, a Connecticut limited liability
company (the “Company”), GEMMA POWER, INC., a Connecticut corporation
(“GPS-Connecticut”), GEMMA POWER SYSTEMS CALIFORNIA, INC., a California
corporation (“GPS-California”), GEMMA POWER HARTFORD, LLC, a Connecticut limited
liability company (“GPS-Hartford”), GEMMA RENEWABLE POWER, LLC, a Delaware
limited liability company (“GRP”), and GEMMA PLANT OPERATIONS, LLC, a Delaware
limited liability company (“GPO”); and (ii) WILLIAM F. GRIFFIN, JR. (the
“Executive”).

 

RECITALS:

 

R-1.                         The Company is a wholly-owned subsidiary of
Argan, Inc., a Delaware corporation (“Argan”);

 

R-2.                         GPS-Connecticut and GPS-California are also
wholly-owned subsidiaries of Argan;

 

R-3.                         GPS-Hartford and GRP and GPO are wholly-owned
subsidiaries of the Company (GPS-Hartford, GRP, GPS-Connecticut and
GPS-California and GPO are sometimes hereinafter referred to together as the
“Affiliates”);

 

R-4.                         The Executive is a principal employee of the
Company and the Affiliates (the Company and the Affiliates are sometimes
hereinafter referred to together as the “Companies”);

 

R-5.                         The Executive and the Companies (other than GPO)
entered into that certain Amended and Restated Employment Agreement dated as of
April 1, 2011, as amended by that certain First Amendment thereto dated as of
December 17, 2013 entered into by and between the Executive and the Companies
(the “Previous Employment Agreement”); and

 

R-6.                         The parties wish to enter into this Agreement to
amend and restate the terms of the Executive’s continued employment by the
Company and the Affiliates, as set forth hereinafter.

 

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.  Each of the Companies
hereby agrees to continue to employ the Executive, and the Executive 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 Executive’s employment by the
Company or the Affiliates.

 

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2.                                      Duties of the Executive.  During the
“Term” (as defined below) of employment of the Executive, the Executive shall
serve as Chief Executive Officer of the Company and of each of the Affiliates,
and shall faithfully and diligently perform all services as may be assigned to
him by the Board of Directors of the Company (the “Company Board”), and shall
exercise such power and authority as may from time to time be delegated to him
by the Company Board.  In addition, during the Term, the Executive shall also
serve as Vice Chairman of the Company Board and of the Boards of Directors of
GPS-Connecticut and GPS-California. The Executive 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 Executive to manage personal investments.

 

3.                                      Term of Employment.  Employment of the
Executive pursuant to the terms and provisions of this Agreement shall commence
on the Effective Date, and shall continue until March 17, 2017 (the “Initial
Term”), unless earlier terminated as provided in this Agreement.  At the end of
the Initial Term, the Executive’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 Executive
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 Executive shall be employed by the Companies
pursuant to the terms and provisions of this Agreement is sometimes referred to
herein as the “Term.”

 

4.                                      Compensation.

 

4.1                               Base Compensation.  For each Fiscal Year
(“Fiscal Year”) occurring within, or partially within, the Term, the Company
shall pay the Executive base compensation at the annual rate of One Million
Dollars ($1,000,000) (the “Base Compensation”) (any such Base Compensation to be
prorated for any partial Fiscal Year within the Term), payable in installments
consistent with the Company’s normal payroll schedule, subject to applicable
withholding and other taxes.

 

4.2                               Performance-Based Compensation.

 

(a)                                 In addition to the Base Compensation set
forth in Section 4.1, but subject to Section 4.2(c) below, for each Fiscal Year
occurring within, or partially within, the Term, the Executive shall be entitled
to additional compensation payable solely on account of the attainment of one or
more of the following performance goals (“Performance-Based Compensation”) (any
such Performance-Based Compensation to be prorated for any partial Fiscal Year
within the Term):

 

(i)                                    in the event that the Adjusted EBITDA of
the Companies for any Fiscal Year equals or exceeds Forty Million Dollars
($40,000,000), the Executive shall be entitled to Performance-Based Compensation
based thereon equal to the sum of (i) One Million Dollars ($1,000,000), and
(ii) six and sixty-seven hundreds percent (6.67%) of the amount by which
Adjusted EBITDA of the Companies exceeds Forty Million Dollars ($40,000,000). 
In the event that the Adjusted EBITDA of the Companies for any Fiscal Year is
less than Forty Million Dollars ($40,000,000), the Executive shall be entitled
to no Performance-Based Compensation based thereon.  For purposes of this
Section 4.2(a)(i), “Adjusted EBITDA of the Companies” means the net income of

 

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the Company and the Affiliates, excluding net income associated with
non-controlling interests, before interest expense (income), income tax expense,
depreciation and amortization of purchased intangible assets, as adjusted by
adding back the Argan, Inc. management fee, incentive compensation and
discretionary 401(k) profit sharing/match;

 

(ii)                                in the event that the OSHA Recordable
Incident Rate (“RIR”) of the Companies for any calendar year during the Term:

 

(A)                               is less than the National Average for the most
recently published calendar year at the time that the determination of
Performance-Based Compensation under this Section 4.2(a)(ii) is being made, the
Executive shall be entitled to Performance-Based Compensation based thereon
equal to One Hundred Twenty-five Thousand Dollars ($125,000);

 

(B)                               is less than One (1), the Executive shall be
entitled to Performance-Based Compensation based thereon equal to Two Hundred
Fifty Thousand Dollars ($250,000); (provided, however, that if the National
Average for said most recently published calendar year is less than One (1),
then the Executive shall be entitled to Performance-Based Compensation under
this Clause (B) only and not also to Performance-Based Compensation under Clause
(A) above); and

 

(C)                               equals or exceeds the National Average for the
most recently published calendar year at the time that the determination of
Performance-Based Compensation under this Section 4.2(a)(ii) is being made, the
Executive shall be entitled to no Performance-Based Compensation based thereon. 
For purposes of this Section 4.2(a)(ii), the “National Average” means the U.S.
national average RIR as published for each calendar year by the U.S. Bureau of
Labor Statistics under the “Nonfatal injury and illness rates by industry”
category for the “Other heavy and civil engineering construction” industry
(North American Industry Classification System Code 2379); and

 

(iii)                            in the event that Success Fees received by the
Companies during any Fiscal Year equal or exceed One Hundred Thousand Dollars
($100,000), the Executive shall be entitled to Performance-Based Compensation
based thereon equal to Five Thousand Dollars ($5,000) for each full One Hundred
Thousand Dollars ($100,000) of Success Fees so received.  For purposes of this
Section 4.2(a)(iii), “Success Fees” means project development success fees
associated with developmental loans that the Company extends to third parties
for the purpose of developing or conceptually designing power plants and other
such projects, such as solar arrays and wind farms.

 

(b)                                 It is understood and agreed that the
performance goals set forth in Section 4.2(a) above have been determined by the
Compensation Committee of the Company Board (the “Compensation Committee”); and
that before payment of any such Performance-Based Compensation, the material
terms under which the Performance-Based Compensation is to be paid, including
the performance goals, shall be disclosed to the shareholders of the Company and
approved by a majority of the vote in a separate vote of the shareholders of the
Company, and the Compensation Committee shall certify that the performance goals
and any other material terms have been in fact satisfied.  The terms of this
Section 4.2(b) are intended to satisfy the requirements for exclusion from the
definition of “applicable employee remuneration” set forth in Section 162(m) of
the Internal Revenue Code of 1986,

 

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as it may be amended from time to time hereafter (the “Code”), and the
regulations thereunder. The determination of whether a performance goal is made
for any Fiscal Year during the Term shall be made in February, March or April of
the following such Fiscal Year.

 

(c)                                  Notwithstanding anything to the contrary
contained in the foregoing provisions of this Section 4.2, the total amount of
Performance-Based Compensation for any Fiscal Year as a result of the attainment
of one or more of the above performance goals shall not exceed a total amount of
Four Million Dollars ($4,000,000).

 

4.3                               Apportionment of Base Compensation,
Performance-Based Compensation and Benefits.  Notwithstanding anything to the
contrary contained in the foregoing provisions of this Section 4 and elsewhere
in this Agreement, Base Compensation, Performance-Based Compensation and the
costs of all benefit plans or programs in which the Executive participates, as
set forth in Section 5 below, or other benefits made available to the Executive,
as set forth elsewhere in this Agreement, may be equitably apportioned among the
Company and the Affiliates in such manner as the Company and the Affiliates
shall agree among themselves, and reconciliation of any such allocation of
Executive-related costs shall be effectuated through appropriate inter-company
transfers not less frequently than annually.

 

5.                                      Benefit Plans; Insurance.

 

5.1  Benefit Plans.  The Executive shall be permitted to participate in all
employee health, retirement and insurance benefit plans applicable to officers
of the Companies, and such other plans as may from time to time be made
available or applicable to the Companies, consistent with the policies of the
Companies.

 

5.2  Key-Man Term Life Insurance.  The Company and/or the Affiliates, as the
case may be, will maintain and will pay the premiums on a key-man term life
insurance policy on the life of the Executive.  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.  The Executive and each of the
Companies agree 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 Executive’s employment hereunder for any reason, the Company
and/or the Affiliates, as the case may be, shall assign to the Executive 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 Executive shall be
entitled to unlimited paid vacation during the Term; provided that the Executive
is available by telephone during such periods of paid vacation.  The Executive
shall not be entitled to any accrued vacation upon termination of employment for
any reason.

 

7.                                      Expenses.  The Companies shall reimburse
the Executive, consistent with the Companies’ 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

 

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business expenses incurred or expended by the Executive incident to the
performance of his duties hereunder.

 

8.                                      Working Facilities; Parking; Car
Allowance.  During the Term the Company shall furnish the Executive 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 Executive with and pay for covered (if reasonably available) and
reserved parking.  In addition to the payment for covered and reserved parking
costs, the Company shall provide to the Executive a car allowance in the amount
of $1,500 per month, to be used by the Executive to defray the costs of
ownership, leasing, financing, maintenance and/or operation of a car or other
vehicle.

 

9.                                      Withholding.  Notwithstanding anything
in this Agreement to the contrary, all payments required to be made by the
Company hereunder to the Executive 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.

 

10.                               Termination of Employment.

 

10.1                        For Cause.  The Company may terminate the
Executive’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 Executive’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 Executive’s employment; (v) any
misconduct by the Executive which would cause the Company or any of the
Affiliates 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 Companies adopted with respect to any such law; (vi) any
other conduct in the performance of the Executive’s employment which the
Executive knows or should know (either as a result of a prior warning by any of
the Companies, custom within the industry or the flagrant nature of the conduct)
violates applicable law or causes any of the Companies to violate applicable law
in any material respect; (vii) failure to follow the lawful written instructions
of the Company Board, if such failure continues uncured for a period of ten
(10) days after receipt by the Executive 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
Executive shall automatically terminate upon the death of the Executive and may
be terminated by the Company upon the “Disability” (as defined below) of the
Executive.  For purposes of this Section 10.2, the Executive 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 Executive, 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

 

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perform the essential functions of his job even with a reasonable accommodation
to the extent required by law.  Any refusal by the Executive to submit to a
medical examination for the purpose of certifying Disability shall be deemed
conclusively to constitute evidence of the Executive’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 Executive, to terminate the Executive’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 Executive 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 Executive shall have the right to resign
at any time upon ninety (90) days’ written notice to the Company.

 

(b)                                 For the purposes of this Agreement,
resignation by the Executive as a result of the following shall be deemed to
constitute resignation for “Good Reason,” provided that and on condition that
the Executive 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 (iii) below, following the expiration of the 45-day cure
period), and that the Executive 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 Executive (other than on a temporary
basis), to a location which would increase the Executive’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  change made by the Company to the Executive’s duties,
responsibilities and/or working conditions such that such duties,
responsibilities and/or working conditions are inappropriate and not customary
for a chief executive officer of a similarly situated company, or (iii) a
material breach by the Company or any of the Affiliates of this Agreement which
breach continues uncured for a period of 45 days after receipt by the Company of
written notice thereof from the Executive specifying the breach.

 

11.                               Effect of Termination on Compensation.

 

11.1  Termination for Cause; Resignation.  In the event (i) the Executive’s
employment with the Companies is terminated by the Company for Cause, or
(ii) the Executive resigns (for reasons other than Good Reason), none of the
Companies shall have any further liability to the Executive hereunder, whether
for Base Compensation, Performance-Based Compensation, benefits, or otherwise,
other than for Base Compensation and benefits accrued and reimbursement of
expenses properly incurred, in each case through the date of termination or
resignation, and any other benefits required by applicable law (e.g., COBRA) for
which the Executive may be eligible.

 

11.2  Death or Disability.  In the event the Executive’s employment with the
Companies terminates as a result of the death of the Executive or is terminated
by the Company as a result of the Disability of the Executive, the Executive or,
in the event of his death, his surviving spouse

 

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(or his estate, if there is no surviving spouse), shall be entitled to receive
his Base Compensation and benefits accrued, reimbursement of expenses properly
incurred, and a pro rata share of any Performance-Based Compensation determined
following the end of the Fiscal Year in which the employment termination occurs
(which proration shall be calculated upon the elapsed portion of the Fiscal Year
in which the employment termination occurs [for purposes of illustration, if the
Executive were to become Disabled as of September 1 in any Fiscal Year, then the
Executive would be entitled to 7/12s of the Performance-Based Compensation for
such Fiscal Year, covering the period of February 1 through August 31 of such
Fiscal Year]), in each case through the date of termination, as well as
applicable health, disability or death benefits, if any, offered by the Company
or the Affiliates, as the case may be, at the time consistent with the policies
of the Companies and subject to the eligibility requirements of such benefits.

 

11.3.                     The Company’s Convenience or Good Reason.

 

(a)                                 In the event the Executive’s employment with
the Companies is terminated by the Company at the Company’s Convenience or by
the Executive for Good Reason, then the Executive shall be entitled to
(i) continue to receive his Base Compensation for the duration of the Term,
(ii) a pro rata share of any Performance-Based Compensation determined following
the end of the Fiscal Year in which the employment termination occurs (which
proration shall be calculated upon the elapsed portion of the Fiscal Year in
which the employment termination occurs [for purposes of illustration, if the
Executive’s employment were terminated as of September 1 in any Fiscal Year,
then the Executive would be entitled to 7/12s of the Performance-Based
Compensation for such Fiscal Year, covering the period of February 1 through
August 31 of such Fiscal Year]), and (iii) continue to participate in the
Companies’ health and benefit plans and programs described in Section 5.1 other
than the Companies’ 401(k) plan(s) and any other qualified retirement
plan(s) for the duration of the Term, or, in the case of the Companies’ health
plan(s), until the Executive becomes eligible for health insurance from another
source other than Medicare (e.g., another employer’s health insurance program),
if earlier; provided that such 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 Companies to their 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.  The compensation, allowances and benefits described in the
foregoing provisions of this Section 11.3(a) (“Severance Benefits”) shall
continue to be paid or provided at the times and in the manner consistent with
the standard payroll practices of the Companies for their active executive-level
employees.  In addition, the Executive shall be entitled to receive his Base
Compensation and benefits accrued and reimbursement of expenses properly
incurred, in each case through the date of termination.  Except as provided in
this Section, no other compensation or benefits hereunder shall be payable
during the balance of the Term.

 

(b)                                 As a condition to receiving the Severance
Benefits described in clause (a) above, the Executive shall be required to
execute and deliver to the Company, and not to have revoked, the written
confirmation described in Section 12 and a general release of all claims the
Executive may have against the Company, the Affiliates or Argan, and their
respective subsidiaries and affiliates, and the officers, directors,
shareholders, managers, members and agents of each of them, in each case in such
form as may be reasonably requested by the Company, including without limitation
all claims for

 

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wrongful termination, for employment discrimination under Title VII of the Civil
Rights Act of 1964, as amended, and claims under the Americans with Disabilities
Act of 1990, the Equal Pay Act of 1963, the Age Discrimination in Employment Act
of 1967, the Older Workers Benefit Protection Act of 1990, the Civil Rights Act
of 1866, the Family and Medical Leave Act of 1993, the Civil Rights Act of 1991,
the Executive Retirement Income Security Act of 1974 and any equivalent state,
local and municipal laws, rules and regulations).  Notwithstanding the
foregoing, the Executive shall not be required to release any claims (i) for
unpaid compensation or other benefits remaining unpaid by the Company or the
Affiliates at the time of termination, but may be required to agree upon and
acknowledge the amount, if any, thereof remaining unpaid if such amount is
calculable at the time, and (ii) which the Executive may have in connection with
any unexercised options to purchase common stock of Argan granted to the
Executive under and pursuant to any stock option plan maintained by Argan from
time to time hereinafter.

 

(c)                                  Upon the occurrence of any material breach
of this Agreement after the effective date of employment termination (it being
understood that, without limitation, any breach of Sections 12, 13 or 14 of this
Agreement shall be deemed material), the Company shall have no further liability
to pay Severance Benefits hereunder and may, in addition to exercising any other
remedies it may have hereunder or under law, immediately discontinue payment of
remaining unpaid Severance Benefits.

 

11.4                        Adjustments to Comply with American Jobs Creation
Act (Code Section 409A).  All payments under this Agreement are intended to be
exempt from or compliant with the provisions of Section 409A of the Code.  In
the event any of the payment provisions of this Agreement should prove to be
subject to and inconsistent with the requirements of Section 409A of the Code,
or the regulations thereunder, the Companies and the Executive shall endeavor to
amend those payment provisions in order to eliminate any inconsistency with
Section 409A of the Code while ensuring, to the greatest extent possible, that
the Executive will continue to be entitled to the benefits provided under this
Agreement without increase in the economic cost to either party.  In particular,
the parties agree that (i) if at the time of the Executive’s separation from
service with the Companies the Executive is a “specified employee” as defined in
Section 409A of the Code and the deferral of the commencement of any payments or
benefits otherwise payable hereunder as a result of such separation from service
is necessary in order to prevent any accelerated or additional tax under
Section 409A of the Code, then the Companies will defer the commencement of the
payment of any such payments or benefits hereunder (without any reduction in
such payments or benefits ultimately paid or provided to the Executive) until
the date that is six (6) months following the Executive’s separation from
service with the Companies (or the earliest date as is permitted under
Section 409A of the Code) and (ii) if any other payments of money or other
benefits due to the Executive hereunder could cause the application of an
accelerated or additional tax under Section 409A of the Code, such payments or
other benefits shall be deferred if deferral will make such payment or other
benefits compliant under Section 409A of the Code, or otherwise such payment or
other benefits shall be restructured, to the extent possible, in a manner,
determined by the Board, that does not cause such an accelerated or additional
tax.  The Companies shall consult with the Executive in good faith regarding the
implementation of the provisions of this Section.  For purposes of Section 409A
of the Code, each payment made under this Agreement that is subject to the
provisions of Section 409A of the Code shall be designated as a “separate
payment” within the meaning of the Section 409A of the Code, and references
herein to the Executive’s “termination of employment” shall refer to the
Executive’s separation from service with

 

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the Companies within the meaning of Section 409A of the Code.  To the extent any
reimbursements or in-kind benefits due to the Executive under this Agreement
constitute “deferred compensation” under Section 409A of the Code, any such
reimbursements or in-kind benefits shall be paid to the Executive in a manner
consistent with Treas. Regs. Section 1.409A-3(i)(1)(iv).

 

11.5                        COBRA
Benefits.                                              Should the Executive
(i) be eligible for COBRA benefits (allowing the Executive to maintain his
health insurance benefits at his expense for up to the applicable coverage
period under COBRA) after the termination of his employment with the Companies
for reasons other than Cause, and (ii) make a timely affirmative election of
continuation coverage under COBRA, then, if and to the extent that continuation
coverage under COBRA would apply to a period beyond the period for which the
Executive is entitled to participate in the Companies’ health plan(s) pursuant
to Section 11.3(a) above, the Company will pay the monthly premium costs thereof
for coverage for the Executive, and/or his spouse and dependent children, if
any, for the period(s) for which the Executive, or his spouse and any dependent
children, as the case may be, are entitled to continuation coverage under COBRA,
or until the Executive, or his spouse or any dependent children, as the case may
be, become eligible for health insurance from another source other than Medicare
(e.g., another employer’s health insurance program), if earlier; provided,
however, that if the Company’s payment of any monthly premium costs would cause
the Company to be subject to any additional taxes or penalties the Company and
the Executive shall consult in good faith to determine a reasonable alternative.

 

11.6                        Change in Control.

 

(a)                                 In the event of a Change in Control (as
defined in Section 11.6(b) below), then the Companies shall pay to the
Executive, in a single lump sum payment, an amount equal to twenty-four (24)
times the Base Compensation paid to the Executive under Section 4.1 above for
the thirty (30) day period ending on the date of the Change in Control, such
payment to be made within thirty (30) days after the date of the Change in
Control, without reduction or offset for any other monies which the Executive
may thereafter earn or be paid; and the Executive shall remain thereafter an
employee of the Companies pursuant to all of the terms and conditions of this
Agreement.

 

(b)                                 For purposes of Section 11.6(a) above,
“Change in Control” shall mean (i) any transfer or other transaction whereby the
right to vote more than fifty percent (50%) of the then issued and outstanding
capital stock of Argan, the Company, or any subsidiary of Argan or the Company
to which Argan or the Company, as the case may be, shall have transferred all or
substantially all of its business (any such subsidiary hereinafter referred to
as, a “Transferee Subsidiary”), is transferred to any party or affiliated group
of parties; (ii) any merger or consolidation of Argan, the Company or a
Transferee Subsidiary with any other business entity, at the conclusion of which
transaction the persons who were holders of all the voting stock of Argan, the
Company or such Transferee Subsidiary, as the case may be, immediately prior to
the transaction hold less than fifty percent (50%) of the total voting stock of
the successor entity immediately following the transaction; (iii) any sale,
lease, transfer or other disposition of all or substantially all the assets of
Argan, the Company, or a Transferee Subsidiary, as the case may be, or
(iv) when, during any period of twelve (12) consecutive months, the individuals
who, at the beginning of such period, constitute Argan’s, the Company’s or a
Transferee Subsidiary’s Board of Directors, as the case may be (the “Incumbent
Directors”), cease for any reason other than death to constitute at least

 

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a majority thereof, provided that a director who was not a director at the
beginning of such 12-month period shall be deemed to have satisfied such
12-month requirement (and be an Incumbent Director) if such director was elected
by, or on the recommendation of or with the approval of, at least two-thirds of
the directors who then qualified as Incumbent Directors either actually (because
they were directors at the beginning of such 12-month period) or by prior
operation of this Section 11.6(b).

 

11.7                        Compliance with Section 280G.

 

(a)                                 Notwithstanding any other provision of this
Agreement or any other plan, arrangement or agreement to the contrary, if any of
the payments or benefits provided or to be provided by the Company or the
Affiliates to the Executive or for the Executive’s benefit pursuant to the terms
of this Agreement or otherwise (“Covered Payments”) constitute “parachute
payments” within the meaning of Section 280G of the Code and would, but for this
Section 11.7 be subject to the excise tax imposed under Section 4999 of the Code
(or any successor provision thereto) or any similar tax imposed by state or
local law or any interest or penalties with respect to such taxes (collectively,
the “Excise Tax”), then the Covered Payments shall be reduced (but not below
zero) to the minimum extent necessary to ensure that no portion of the Covered
Payments is subject to the Excise Tax.

 

(b)                                 Any such reduction shall be made by the
Company in its sole discretion consistent with the requirements of Section 409A
of the Code.

 

12.                               Confidentiality.  The Executive recognizes and
acknowledges that certain information possessed by the Company and the
Affiliates, and any subsidiaries and affiliates of them, constitutes valuable,
special, and unique proprietary information and trade secrets.  Accordingly, the
Executive shall not, during the Term of his employment with the Companies, or at
any time thereafter, divulge, use, furnish, disclose or make available to any
person, whether or not a competitor of any of the Companies, any confidential or
proprietary information concerning the assets, business, or affairs of the
Company or the Affiliates, of any affiliate or subsidiary of them, or of its or
their suppliers, customers, licensees or licensors, including, without
limitation, any information regarding trade secrets and information (whether or
not constituting trade secrets) concerning sources of supply, costs, pricing
practices, financial data, business plans, employee information, manufacturing
processes, product designs, production applications and technical processes
(hereinafter called “Confidential Information”), except as may be required by
law or as may be required in the ordinary course of performing his duties
hereunder.  The foregoing shall not be applicable to any information which now
is or hereafter shall be in the public domain other than through the fault of
the Executive.  Upon the expiration or termination of the Executive’s
employment, for any reason, whether voluntary or involuntary and whether by the
Company or the Executive, or at any time the Company may request, the Executive
shall (a) surrender to the Company all documents and data of any kind (including
data in machine-readable form) or any reproductions (in whole or in part) of any
items relating to the Confidential Information, as well as information stored in
an electronic or digital format, containing or embodying Confidential
Information, including without limitation internal and external business forms,
manuals, notes, customer lists, and computer files and programs (including
information stored in any electronic or digital format), and shall not make or
retain any copy or extract of any of the foregoing, and (b) will confirm in
writing that (i) no Confidential Information exists on any computers, computer
storage devices or other electronic media that were at any time within the
Executive’s control (other

 

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than those which remain at, or have been returned to, the Company) and (ii) he
has not disclosed any Confidential Information to others outside of any of the
Companies in violation of this Section.  The Company shall have the right at any
time at its option to replace the hard drive in the Executive’s laptop or other
computer supplied by any of the Companies with another equivalent hard drive. 
As used in this Agreement, “affiliate” means, with respect to the Company or any
other entity, any person or entity controlling, controlled by or under common
control with, the Company or such other entity, including without limitation
Argan, and “control” for such purpose means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person or entity, whether through the ownership of voting
securities or voting interests, by contract or otherwise.

 

13.                               Rights in the Company’s Property; Inventions.

 

13.1                        Company Property.  The Executive hereby recognizes
the Companies’ proprietary rights in the tangible and intangible property of the
Companies and acknowledges that notwithstanding the relationship of employment,
the Executive will not obtain or acquire, and has not obtained or acquired,
through such employment any personal property rights in any of the property of
any of the Companies, including without limitation any writing, communications,
manuals, documents, instruments, contracts, agreements, files, literature, data,
technical information, secrets, formulas, products, methods, mailing lists,
business models, business plans, procedures, processes, devices, apparatuses,
trademarks, trade names, trade styles, service marks, logos, copyrights,
patents, or other matters which are the property of any of the Companies.

 

13.2                        Inventions.  The Executive agrees that during the
Term of his employment with the Companies and for a period of three (3) months
thereafter, any and all discoveries, inventions, improvements and innovations
(including all data and records pertaining thereto) (“Inventions”), whether or
not patentable, copyrightable or reduced to writing, which the Executive may
have conceived or made, or may conceive or make, either alone or in conjunction
with others and whether or not during working hours or by the use of the
facilities of any of the Company, which are related or in any way connected with
the Business of the Company or the Affiliates, or any affiliate or subsidiary
thereof, are and shall be the sole and exclusive property of the Company, or the
Affiliates, or any such affiliate or subsidiary thereof, as the case may be. 
The Executive shall promptly disclose all such Inventions to the Company, shall
execute at the request of the Company any assignments or other documents the
Company may deem necessary to protect or perfect its or any of the Affiliates’
or such affiliates’ or subsidiaries’ rights therein, and shall assist the
Company, at the Company’s expense, in obtaining, defending and enforcing the
Companies’ rights therein.  The Executive hereby appoints the Company as his
attorney-in-fact to execute on his behalf any assignments or other documents
deemed necessary by the Company to protect or perfect its, or any of the
Affiliates’ or such affiliates’ or subsidiaries’, rights to any Inventions.  For
purposes of this Agreement, the “Business” of the Company or the Affiliates, or
any affiliate or subsidiary thereof, shall mean the business of engineering and
constructing power energy systems, providing consulting, owner’s representative,
operating, and maintenance services to the energy market, and such other
businesses or enterprises in which the Company or the Affiliates, or any
affiliate or subsidiary thereof, shall be actively engaged from time to time
(collectively, the “Business”).

 

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14.                               Non-Competition, Non-Solicitation Covenants.

 

14.1                        Covenant Not to Compete.  At all times during the
Term and for a period of two (2) years after the Term (the “Restrictive
Period”), the Executive shall not, directly or indirectly, alone or with others,
engage in any competition with, or have any financial or ownership interest in
any sole proprietorship, corporation, company, partnership, association, venture
or business or any other person or entity (whether as an employee, officer,
director, partner, manager, member, agent, security holder, creditor, consultant
or otherwise) that directly or indirectly (or through any affiliated entity)
competes with, the Business of the Company or the Affiliates, or any affiliate
or subsidiary thereof; provided that such provision shall not apply to (i) the
Executive’s ownership of Argan stock; (ii) the Executive’s ownership of
interests in entities which may develop, own and operate (but not design or
build) power plants; or (iii) the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, and
that are listed or admitted for trading on any United States national securities
exchange or that are quoted on the Nasdaq Stock Market, or any similar system or
automated dissemination of quotations of securities prices in common use, so
long as the Executive does not control, acquire a controlling interest in, or
become a member of a group that exercises direct or indirect control of, more
than 5% of any class of capital stock or other indicia of ownership of such
issuer.  For purposes of clause (ii) of this Section 14.1 above, and for clause
(b) of Section 14.2 below, “develop” or “development of” power plants shall mean
the usual and customary actions taken by an owner or potential owner of a power
plant to obtain licenses, permits or other governmental approvals required in
order to own and operate a power plant, but not the designing or constructing of
a power plant.  Notwithstanding anything to the contrary contained in this
Section 14.1, however, nothing set forth herein shall prohibit the Executive
from providing consulting or advisory services as a consultant or independent
contractor during the period of two (2) years after the Term (but not during the
Term) to any person or entity, even if such person or entity competes with the
Business of the Company or the Affiliates, or any affiliate or subsidiary
thereof, provided that the Executive uses best efforts to ensure that such
services do not adversely impact the Company or the Affiliates, or any affiliate
or subsidiary thereof, and provided that, in providing such services, the
Executive does not breach or violate any of the other terms or conditions of
this Agreement, including without limitation the restrictive covenants set forth
in Sections 12 (Confidentiality) or 14.2 (Non-Solicitation) hereof.

 

14.2                        Non-Solicitation.  At all times during the
Restrictive Period, the Executive shall not, directly or indirectly, for himself
or for any other person, firm, corporation, company, partnership, association,
venture or business or any other person or entity: (a) solicit for employment,
employ or attempt to employ or enter into any contractual arrangement with any
employee or former employee (which, for purposes of this Section 14.2 shall mean
anyone employed during the 24 month period ending on the date of termination of
the Executive’s employment with the Companies) of the Company, the Affiliates,
or Argan, or any affiliate or subsidiary of any of them, except Raymond J.
Bednarz and Fred Kresse; and/or (b) call on or solicit any of the actual or
targeted prospective customers or clients, or any actual distributors or
suppliers, of the Company (except in connection with the Executive’s
development, ownership and operation (but not the designing or building) of
power plants), the Affiliates, or Argan, or any affiliate or subsidiary of any
of them, on behalf of himself or on behalf of any person or entity in connection
with any business that competes with the Business of the Company or the
Affiliates, or any affiliate or subsidiary of any of them, nor shall the
Executive make known the names or addresses or other contact information of such
actual or prospective customers or clients, or

 

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any such actual distributors or suppliers, or any information relating in any
manner to the Company’s, or the Affiliates’ or Argan’s, or any of their
subsidiaries’ or affiliates’, trade or business relationships with such actual
or prospective customers or clients, or any such actual distributors or
suppliers, other than in connection with the performance by the Executive of his
duties under this Agreement.

 

14.3                        Restrictive Covenants in Event of Change in
Control.  Notwithstanding anything to the contrary contained in Sections 14.1
and 14.2 above, in the event of a Change in Control, as defined in
Section 11.6(b) above, the covenant not to compete, as set forth in
Section 14.1, above, and the covenant not to solicit employees or former
employees, or actual or targeted prospective customer or clients, or actual
distributors or suppliers, as set forth in Section 14.2, above, shall be
rendered null and void and of no further force or effect, without any further
action required of any of the parties.

 

15.                               Acknowledgment by the Executive.  The
Executive acknowledges and confirms that the restrictive covenants contained in
Sections 12, 13 and 14 hereof (including without limitation the length of the
term of the provisions of Section 14) are required by the Companies as an
inducement to enter into this Agreement, are reasonably necessary to protect the
legitimate business interests of the Companies, and are not overbroad, overlong,
or unfair and are not the result of overreaching, duress or coercion of any
kind.  The Executive further acknowledges that the restrictions contained in
Sections 12, 13 and 14 hereof are intended to be, and shall be, for the benefit
of and shall be enforceable by the Companies and their successors and assigns. 
The Executive expressly agrees that upon any breach or violation of the
provisions of Sections 12, 13, or 14 hereof, the Companies, or any of them,
shall be entitled, as a matter of right, in addition to any other rights or
remedies they may have, to: (a) temporary and/or permanent injunctive relief in
any court of competent jurisdiction as described in Section 16 hereof; and
(b) such damages as are provided at law or in equity.  The existence of any
claim or cause of action against any of the Company, the Affiliates, or Argan,
or their respective subsidiaries or affiliates, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement of any
of the restrictions contained in Sections 12, 13 or 14 hereof.

 

16.                               Enforcement; Modification.

 

16.1                        Injunction.  It is recognized and hereby
acknowledged by the parties hereto that a breach by the Executive of any of the
covenants contained in Sections 12, 13 or 14 of this Agreement will cause
irreparable harm and damage to the Companies.  As a result, the Executive
recognizes and hereby acknowledges that each of the Companies shall be entitled
to an injunction from any court of competent jurisdiction enjoining and
restraining any violation of any or all of the covenants contained in Sections
12, 13 or 14 of this Agreement by the Executive or any of his affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Companies may possess.

 

16.2                        Reformation by Court.  In the event that a court of
competent jurisdiction shall determine that any provision of Sections 12, 13 or
14 is invalid or more restrictive than permitted under the governing law of such
jurisdiction, then only as to enforcement of Sections 12, 13 or 14 within the
jurisdiction of such court, such provision shall be interpreted or reformed and
enforced as if it provided for the maximum restriction permitted under such
governing law.

 

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16.3                        Extension of Time.  If the Executive shall be in
violation of any provision of Sections 12, 13 or 14, then each time limitation
set forth in Sections 12, 13 or 14 shall be extended for a period of time equal
to the period of time during which such violation or violations occur.  If any
of the Companies seeks injunctive relief from such violation in any court, then
the covenants set forth in Sections 12, 13 and 14 shall be extended for a period
of time equal to the pendency of such proceeding including all appeals by either
of the Sellers.

 

16.4                        Survival.  The provisions of Sections 12, 13, 14 and
15, and of this Section 16, shall survive the termination of this Agreement.

 

17.                               Assignment.  Each of the Company and the
Affiliates shall have the right to assign this Agreement and its rights and
obligations hereunder in whole, but not in part, to any corporation or other
entity with or into which the Company or such Affiliate, as the case may be, may
hereafter merge or consolidate or to which the Company or such Affiliate may
transfer all or substantially all of its assets, if in any such case said
corporation or other entity shall by operation of law or expressly in writing
assume all obligations of the Company or such Affiliate hereunder as fully as if
it had been originally made a party hereto, but may not otherwise assign this
Agreement or its rights and obligations hereunder.  The Executive may not assign
or transfer this Agreement or any rights or obligations hereunder.

 

18.                               Benefits; Binding Effect.  This Agreement
shall be for the benefit of and binding upon the parties hereto and their
respective heirs, personal representatives, legal representatives, successors
and, where permitted and applicable, assigns, including, without limitation, any
successor to the Company or any Affiliate, whether by merger, consolidation,
sale of stock, sale of assets or otherwise.

 

19.                               Severability.  The invalidity of any one or
more of the words, phrases, sentences, clauses, provisions, sections or articles
contained in this Agreement shall not affect the enforceability of the remaining
portions of this Agreement or any part thereof, all of which are inserted
conditionally on their being valid in law, and, in the event that any one or
more of the words, phrases, sentences, clauses, provisions, sections or articles
contained in this Agreement shall be declared invalid, this Agreement shall be
construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, provisions or provisions, section or sections or
article or articles had not been inserted.  If such invalidity is caused by
length of time or size of area, or both, the otherwise invalid provision will be
considered to be reduced to a period or area which would cure such invalidity.

 

20.                               Waivers.  The waiver by either party hereto of
a breach or violation of any term or provision of this Agreement shall not
operate nor be construed as a waiver of any subsequent breach or violation.

 

21.                               Damages; Attorneys Fees.  Nothing contained
herein shall be construed to prevent the Company or any Affiliate, on the one
hand, or the Executive, on the other, from seeking and recovering from the other
damages sustained as a result of the other’s breach of any term or provision of
this Agreement.  In the event that either party hereto seeks to collect any
damages resulting from, or the injunction of any action constituting, a breach
of any of the terms or provisions of this Agreement, then the party found to be
at fault shall pay all reasonable costs and attorneys’ fees of the other party.

 

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22.                               Section Headings.  The article, section and
paragraph headings contained in this Agreement are for reference purposes only,
and shall not affect in any way the meaning or interpretation of this Agreement.

 

23.                               No Third Party Beneficiary.  Nothing expressed
or implied in this Agreement is intended, or shall be construed, to confer upon
or give any person other than the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.

 

24.                               Counterparts; Signatures by Electronic Mail. 
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original but all of which together shall constitute one and
the same.  Signatures to this Agreement transmitted by telecopy or electronic
mail shall be valid and effective to bind the party so signing.

 

25.                               Governing Law.  This Agreement shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Connecticut, without regard to principles of conflict of laws.

 

26.                               Jurisdiction and Venue.  Each of the parties
irrevocably and unconditionally:  (a) agrees that any suit, action or legal
proceeding arising out of or relating to this Agreement which is expressly
permitted by the terms of this Agreement to be brought in a court of law, shall
be brought in the Superior Court of the State of Connecticut for the Judicial
District of Hartford or in the United States District Court for the District of
Connecticut; (b) consents to the jurisdiction of each such court in any such
suit, action or proceeding; (c) waives any objection which it or he may have to
the laying of venue of any such suit, action or proceeding in any of such
courts; and (d) agrees that service of any court papers may be effected on such
party by mail, as provided in this Agreement, or in such other manner as may be
provided under applicable laws or court rules in such courts.

 

27.                               Notices.  All notices required or permitted to
be given hereunder shall be in writing and shall be personally delivered by
courier, sent by registered or certified mail, return receipt requested, sent by
overnight courier, or sent by confirmed facsimile transmission addressed as set
forth herein.  Notices personally delivered, sent by facsimile or sent by
overnight courier shall be deemed given on the date of delivery and notices
mailed in accordance with the foregoing shall be deemed given upon the earlier
of receipt by the addressee, as evidenced by the return receipt thereof, or
three days after deposit in the U.S. mail.  Notice shall be sent: (a) if to the
Company or to any Affiliate, addressed to the Company or such Affiliate, as the
case may be, One Church Street, Suite 201, Rockville, Maryland 20850, Attention:
David Watson; and (b) if to the Executive, to his address as reflected on the
payroll records of the Company, or to such other address as either party shall
request by notice to the other in accordance with this provision.

 

28.                               Entire Agreement.  This Agreement constitutes
the entire agreement between and among the parties hereto with respect to the
subject matter hereof and, upon its effectiveness, shall supersede all prior
agreements, understandings and arrangements, both oral and written, between the
Executive and the Company and/or the Affiliates with respect to such subject
matter, including without limitation the Previous Employment Agreement.  This
Agreement may not be modified in any way unless by a written instrument signed
by the Companies and the Executive.

 

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[SIGNATURES ON FOLLOWING PAGES]

 

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IN WITNESS WHEREOF, each of the undersigned has executed, or has caused its duly
authorized representative to execute, this Agreement as of the date first above
written.

 

 

 

THE COMPANY:

 

 

 

GEMMA POWER SYSTEMS, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

THE AFFILIATES:

 

 

 

GEMMA POWER, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

GEMMA POWER SYSTEMS CALIFORNIA, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

 

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GEMMA POWER HARTFORD, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

GEMMA RENEWABLE POWER, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

GEMMA PLANT OPERATIONS, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

THE EMPLOYEE:

 

 

 

 

 

 

 

WILLIAM F. GRIFFIN, JR.

 

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