Document:

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of April 28, 2016, between Lime Energy Co., a Delaware corporation (the “Company”) and Bruce D. Torkelson (the “Executive”).

 

WHEREAS, the Company and the Executive knowingly and voluntarily desire to enter into an employment relationship on and subject to the terms and conditions set forth below.

 

NOW, THEREFORE, in consideration of the covenants and other terms and conditions set forth below, the Company and the Executive hereby agree and contract as follows:

 

1.                                      Employment Duties

 

Conditioned on the Executive successfully passing a background check and drug testing to be performed by the Company (or its designee), the Company agrees to employ the Executive as the Chief Financial Officer (“CFO”), and the Executive hereby accepts such employment on and subject to the terms set forth in this Agreement. The Executive will report to and be subject to the authority and direction of the Chief Executive Officer of the Company (“CEO”).

 

The Executive agrees to use his best and full-time efforts to perform his duties as CFO, and perform such other services and responsibilities for the Company or its Affiliates (as defined below) as the Company may from time to time request. Without limiting the generality of the foregoing, the Executive will ordinarily devote not less than five (5) days per week to the Company’s business (except for vacations and regular business holidays observed by the Company) on a full-time basis, during normal business hours Monday through Friday.

 

2.                                      Period of Employment

 

The Executive’s employment pursuant to this Agreement shall commence on May 2, 2016 (the “Commencement Date”) and shall continue until May 1, 2018 (the “Initial Employment Period”), unless earlier terminated pursuant to Section 4 of this Agreement; provided, however, that the Executive shall not assume the CFO responsibilities until May 16, 2016 or such earlier date as the Company may select. Notwithstanding the foregoing sentence, the Executive’s employment shall automatically renew for successive one-year periods (each, a “Renewal Period”) at the end of the Initial Employment Period, and at the end of each Renewal Period, unless notice of non-renewal is given by the Company on or before November 2 of the year before the Initial Employment Period, or any Renewal Period, as applicable, would end, or unless this Agreement is terminated pursuant to Section 4 of this Agreement. The Initial Employment Period and any Renewal Period, as such periods may be shortened as result of a termination pursuant to Section 4 of this Agreement, shall be known as the “Period of Employment.” In the event the Company provides the Executive with a timely notice of non-renewal, the Executive shall continue his employment according to the terms of this Agreement, until the end of the Initial Employment Period, or the Renewal Period, as applicable, unless the parties hereto agree on a different date or an earlier termination occurs pursuant to Section 4 of this Agreement. Non-renewal of this Agreement by the Company shall be considered a termination in accordance with Section 4(a) of this Agreement, and termination shall take effect on the applicable date the employment ends, in accordance with the immediately preceding sentence. The parties acknowledge and agree that certain provisions of this Agreement shall continue in effect after the Period of Employment, as set forth herein. The non-renewal of Executive’s employment with the Company shall be at the will of the Company, and there shall be no obligation on the part of the Company or the Executive to continue such employment. Additionally, the

 

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Company retains the right to excuse the Executive from active employment (including reporting to work and having access to Company materials and systems) after providing notice of termination or notice of non-renewal.

 

3.                                      Compensation and Benefits

 

(a)                                 Salary

 

During the Period of Employment, the Company will pay the Executive a salary (the “Base Salary”) in periodic installments, timed in accordance with the Company’s deliveries of salary payments to other exempt employees. The Base Salary will be subject to all payroll deductions and other deductions as may be required to be made pursuant to law, governmental order, or by agreement with, or consent of, the Executive. Beginning on the Commencement Date, the salary installments will be calculated based on a gross annualized rate of Two Hundred Thirty Thousand Dollars ($230,000). During the Period of Employment, the Company will endeavor, but will not be obligated, to review the Executive’s compensation annually, and give consideration to whether any increase in the Base Salary is warranted, in the Company’s sole and absolute discretion. Upon any change in Base Salary, all references herein to Base Salary shall be to the changed amount.

 

(b)                                 Relocation Benefit

 

The Executive will use his best efforts to relocate to the Newark, New Jersey metropolitan area within five (5) months after the Commencement Date. Provided that the Executive submits all applicable receipts and otherwise complies with the Company’s reimbursement policies and practices (and subject to Section 21(e) of this Agreement), within 30 days after the submission of such receipts, the Company shall reimburse the Executive for reasonable relocation-related expenses that the Executive incurs, up to a maximum total amount of $50,000 (the “Relocation Benefit”). The specific expenses for which the Executive shall be permitted to use the Relocation Benefit are set forth in Appendix A of the Executive’s offer letter. Notwithstanding the foregoing, if, within 12 months after (i) the Company pays the Relocation Benefit, or (ii) if the Relocation Benefit is paid in two or more installments, the date it pays the last installment thereof, the Executive voluntarily resigns his employment with the Company for any reason or his employment with the Company is terminated by the Company for Due Cause (as defined below), then the Executive shall, within 30 days after his separation, repay to the Company a prorated (based on the percentage of the 12-month period that the Executive is not employed by the Company) portion of the Relocation Benefit.

 

(c)                                  Stock Option

 

Subject to necessary approvals from the Company’s Board of Directors, pursuant to the 2008 Long-Term Incentive Plan, as amended (the “Plan”), Executive will be granted an option to purchase 100,000 shares of common stock of the Company at a per share exercise price equal to the closing price of a share on the date of grant (the “Option”). One-third of the shares shall vest on each of May 2, 2017, 2018, and 2019, provided that Executive is employed pursuant to this Agreement on the applicable vesting date. The terms of the Plan and a separate option agreement shall govern Executive’s rights with respect to the Option.

 

(d)                                 Annual Bonus

 

The Executive shall be eligible to participate in the performance bonus plan generally made available to other senior executives of the Company, with an initial annual bonus target of between 0 to 50 percent of Base Salary. Payment of an annual bonus shall be at the Company’s sole and absolute

 

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discretion and is generally based on the Executive’s performance in combination with the Company’s performance.

 

(e)                                  Reimbursement of Business Expenses

 

Subject to Section 21(e) of this Agreement, the Company will reimburse the Executive for reasonable business expenses the Executive actually incurs in the performance of his duties for the Company during the Period of Employment, consistent with the Company’s policies in effect from time to time with respect to reimbursement of business expenses, and subject to the Executive’s prior submissions of complete and truthful expense reports in a form acceptable to the Company, with original invoices and proofs of payment attached.

 

(f)                                    Laptop and Cell Phone

 

During the Period of Employment, the Company shall provide the Executive with a laptop computer for his business use and reimburse the Executive in an amount not to exceed $125 per month for a mobile phone, personal digital assistant and/or smartphone for business use. Such reimbursement is subject to the Executive’s prior submissions of complete and truthful expense reports in a form acceptable to the Company, with original invoices and proofs of payment attached. Such reimbursement is also subject to Section 21(e) of this Agreement.

 

(g)                                 Holidays

 

During the Period of Employment, the Executive will be entitled to take paid holidays as provided by the Company from time to time to all of its employees, which holidays may change from time to time in the Company’s sole and absolute discretion. As of the date of this Agreement, the Company observes the following holidays:  New Year’s Day, Martin Luther King Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, the day after Thanksgiving Day, Christmas Eve, and Christmas Day.

 

(h)                                 Paid Time Off

 

The Executive will initially be entitled to twenty (20) days of paid time off per Company fiscal year. Paid time off will accrue at a rate of 3.08 hours per week, beginning on the Commencement Date. Thereafter, the number of days of paid time off per fiscal year, and the accrual rate of hours per month, may change in the Company’s sole and absolute discretion. Except in cases of emergency, the Executive will obtain the written approval of the CEO as early as possible and at least thirty (30) days before scheduling any paid time off in excess of five (5) consecutive calendar days.

 

The Executive’s accrual and carry forward of paid time off shall be in accordance with Company policy. Upon the Executive’s termination, all accrued, unused hours of paid time off will be payable at the next regularly scheduled payroll date (except for any paid time off that has been forfeited previously for lack of use within a particular fiscal year), pursuant to Company policy.

 

(i)                                    Other Benefits

 

Beginning up to 90 days after the Commencement Date, depending on the benefit, the Executive will be entitled to participate in whatever benefit plans and programs the Company offers to executive-level employees, subject to the terms of such plans and programs. Currently, the Company offers medical (employee and Company shared cost), dental (employee and Company shared cost), short-term disability (Company paid), long-term disability (Company paid), life insurance at one times salary (Company paid),

 

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Flexible Spending Account (employee paid), and 401(k) (Company discretionary match). The Company reserves the right to cancel or change any and all benefit plans and programs at any time, in the Company’s sole and absolute discretion, without providing any substitute benefits or compensation to the Executive whatsoever. Additionally, during the Period of Employment, Executive shall be eligible to participate in a supplemental life insurance plan that offers a death benefit of $1 million.

 

4.                                      Termination

 

(a)                                 Termination by the Company for Due Cause

 

In this Agreement, “Due Cause” means any of the following:

 

	
(i)
    	
a material or continued breach by the Executive of   this Agreement, if such breach is not remedied, if curable, within ten (10)   calendar days following his receipt of written notice thereof from the   Company, or, if the breach cannot be remedied within ten (10) days, within   such longer time (not to exceed forty-five (45) days) as the Company, in its   sole and absolute discretion, may deem to be reasonably necessary for the   Executive to remedy the breach if the Company, in its sole and absolute   discretion, determines that the breach is curable and the Executive has promptly   commenced and is diligently and continuously pursuing his best efforts to   remedy the breach as quickly as possible;
    
	
 
    	
 
    
	
(ii)
    	
conviction, or plea of guilty or nolo contendere, or   commission by the Executive of a felony or any other crime that has, or is   likely to have, a materially adverse impact upon the Company or its   Affiliates, their reputation, or their relationship with their employees,   suppliers, or customers;
    
	
 
    	
 
    
	
(iii)
    	
action or inaction by the Executive (other than   action or inaction taken with the approval of the CEO) which results in a   material injury to the business, property, or reputation of the Company   and/or any of its Affiliates;
    
	
 
    	
 
    
	
(iv)
    	
refusal to perform or substantial neglect by the   Executive of the duties assigned to the Executive pursuant to Section 1 of   this Agreement if such refusal or neglect is not remedied (if curable) within   ten (10) calendar days following written notice thereof from the Company;
    
	
 
    	
 
    
	
(v)
    	
the commission by the Executive of any act   constituting embezzlement, fraud, misappropriation, willful misconduct, or   breach of fiduciary duty or duty of loyalty owed to the Company;
    
	
 
    	
 
    
	
(vi)
    	
the Company determines that the Executive has made   any material misrepresentation of his education or prior work experience;
    
	
 
    	
 
    
	
(vii)
    	
material violation by the Executive of the Company’s   employment policies, including all policies set forth in the Company’s   Employee Handbook and all drug and alcohol and anti-discrimination and   anti-retaliation policies; or
    

 

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(viii)
    	
commission by the   Executive of an act of moral turpitude.
    

 

In this Agreement, “Affiliates” means and includes:  The Company and all of the Company’s affiliate and subsidiary companies (present and future); and all their respective officers, directors, and shareholders; and each of them.

 

The Company may terminate the Period of Employment for Due Cause at any time by delivering written notice of the termination to the Executive. Upon the Executive’s separation from employment for Due Cause or as a result of the non-renewal of the Initial Employment Period or the Renewal Period, as applicable, the Company shall have no further obligations to the Executive other than the payment of the Accrued Obligations (as defined below). Such payment shall be made in accordance with the Company’s normal payroll schedules.

 

In this Agreement, “Accrued Obligations” means (a) any Base Salary earned through the date of termination (or death) and any bonus earned relating to the fiscal year prior to the fiscal year in which such termination (or death) occurs, each to the extent not yet paid, (b) reimbursement for any previously unreimbursed expenses incurred by the Executive pursuant to this Agreement, and (c) such retirement, incentive and other payments and benefits earned and vested (if applicable) by the Executive as of the date of his termination (or death) under any equity, insurance or employee benefit plan of the Company in which the Executive participates, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of such plans.

 

(b)                                 Termination Due to Death or Disability

 

The Period of Employment will automatically terminate in the event of the Executive’s death or upon 30 days’ written notice in the event of the Disability (as defined below) of the Executive. Upon such termination, the Company shall have no further obligations to the Executive, or his estate or beneficiaries, other than the payment of the Accrued Obligations. Such payment shall be made in accordance with the Company’s normal payroll schedules.

 

In the event the Executive becomes physically or mentally disabled so as to become materially unable, with or without a reasonable accommodation, for a period of more than 120 consecutive days or for more than 150 days in the aggregate during any 12-month period, to perform the Executive’s duties hereunder on substantially a full-time basis, or over such longer period as may be required by applicable law, the Executive will be deemed to have a “Disability” for purposes of this Agreement.

 

(c)                                  Termination by the Company for Any Reason Other Than Due Cause, Disability or Death

 

The Company may terminate the Period of Employment at any time prior to the end of the Initial Employment Period or any Renewal Period (as applicable), for any reason other than Due Cause, Disability or death, by delivery of written notice of the termination to the Executive. If the effective date of any such termination is after December 31, 2016, the Company shall pay as severance compensation to Executive (i) six (6) months of his Base Salary at his then annual salary compensation rate, plus (ii) any Accrued Obligations. If the termination is effective prior to January 1, 2017, the Company will have no further obligations to the Executive other than payment of the Accrued Obligations. Any such payments shall be made in accordance with the Company’s normal payroll schedules. As a condition precedent to Executive’s right to receive any severance compensation hereunder, Executive shall upon termination of his employment, (i) return all Company property in Executive’s possession, (ii) enter into a release agreement reasonably acceptable to the Company that releases all claims which may be legally released by Executive against the Company and its Affiliates, including all claims in connection with or arising out

 

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of his employment by the Company and (iii) comply in all material respects with the post-separation obligations contained herein, including in Sections 5, 6, 7, 8, 9 and 10 below. Provided Executive satisfies the foregoing requirements, the Company shall begin paying the severance compensation to him during the 60-day period following the termination of his employment; provided that if such 60-day period spans two of Executive’s tax years, the Company shall begin paying the severance compensation to him in the second tax year.

 

(d)                                 Termination by the Executive for Convenience

 

The Executive may terminate the Period of Employment for his convenience at any time upon 30 days’ notice by delivering a written notice of termination to the Company. Upon such a termination, the Company shall have no further obligations to the Executive, other than the payment of the Accrued Obligations. Such payment shall be made in accordance with the Company’s normal payroll schedules.

 

(e)                                  Resignation Effective Upon Termination

 

Upon any termination of the Period of Employment, regardless of the reason therefor, and whether caused by the Company or the Executive, the Executive will be deemed to have resigned as an employee of the Company and from any and all other positions that the Executive then holds with the Company and any Affiliates.

 

(f)                                    Return of All Company Property Upon Termination

 

Upon the termination of the Period of Employment, regardless of the cause or reason therefor, or at such earlier time as the Company may request, the Executive will immediately deliver to the Company all property provided to him for the Executive’s use in relation to his employment, including but not limited to all Confidential Information provided to him by the Company, and will immediately deliver a detailed written accounting for any and all property of the Company that was lost, stolen, or destroyed while in the Executive’s possession, care, custody, or control.

 

5.                                      Inventions.

 

(a)                                 “Inventions”

 

In this Agreement, the term “Inventions” means and includes:  all ideas, inventions, patents, copyrights, copyright designs, trade secrets, trademarks, processes, discoveries, enhancements, software, computer source code, catalogues, prints, business applications, plans, writings, works, and other developments or improvements and all other intellectual property and proprietary rights and any derivative work(s) based thereon that are made, conceived, or completed by the Executive, alone or with others, during the Period of Employment, whether or not during normal working hours.

 

(b)                                 Prior Inventions

 

The Executive has identified on Exhibit A attached hereto all Inventions applicable to the business of the Company or relating in any way to the Company’s business or demonstrably anticipated research and development or business, which were conceived, reduced to practice, created, derived, developed or made by the Executive prior to the Executive’s employment with the Company (collectively, the “Prior Inventions”), and the Executive represents and warrants that such list is complete. The Executive further represents and warrants that the Executive has no rights in any Inventions other than those Prior Inventions specified in Exhibit A. If there is no such list on Exhibit A, the Executive represents and warrants that the Executive has neither conceived, reduced to practice, created, derived,

 

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developed nor made any such Prior Inventions at the time of signing this Agreement. Such Prior Inventions are and shall remain the sole and exclusive property of the Executive, and the Executive will not incorporate or use or permit the Company to incorporate any aspect of a Prior Invention as part of his work for the Company unless the Executive discloses such intended use to the Company prior to such use or incorporation and the Company specifically consents to such use or incorporation in writing. Should the Executive fail to obtain such prior written consent of the Company as required in this Section, the Executive will be deemed to have granted the Company a perpetual, royalty-free, transferable, worldwide license to utilize the Prior Invention(s), with rights to sublicense through multiple tiers of sublicenses.

 

(c)                                  Reporting of New Inventions

 

During the Period of Employment, and at the end of the Period of Employment, the Executive will promptly and periodically report in writing to the Company any and all Inventions that were developed and/or were under development by the Executive during the Period of Employment, whether solely or working jointly with others, whether or not during normal working hours.

 

(d)                                 Ownership of New Inventions

 

The Executive agrees that all Inventions:

 

(1)                                 that are developed using the Company’s equipment, supplies, facilities, or trade secret information; or

 

(2)                                 that relate to the Company’s business or actual or demonstrably anticipated research or development; or

 

(3)                                 that result from any work performed by the Executive for the Company

 

will be the sole and exclusive property of the Company.

 

(e)                                  Assistance Regarding Inventions

 

At the request of the Company, the Executive will do all things deemed by the Company to be necessary to perfect the Company’s title to the existing Inventions and the new Inventions that are the Company’s property, including by assisting in obtaining for the Company such title, patents, copyrights or other protection as may be provided under law and desired by the Company, and further including but not limited to executing and delivering any and all relevant applications, assignments, and other instruments. This covenant shall survive the termination of the Period of Employment, provided that the Company, after the termination, will continue to reimburse the Executive for all reasonable expenses that the Executive incurs in performing his continuing obligations under this subsection.

 

To the extent any of the rights, title and interest in and to Company Inventions cannot be assigned by the Executive to the Company, the Executive hereby grants to the Company an exclusive, royalty-free, transferable, irrevocable, worldwide license (with rights to sublicense through multiple tiers of sublicenses) to utilize and practice such non-assignable rights, title and interest. To the extent any of the rights, title and interest in and to Company Inventions can be neither assigned nor licensed by the Executive to the Company, the Executive hereby irrevocably waives and agrees never to assert such non-assignable and non-licensable rights, title and interest against the Company or any of the Company’s successors in interest to such non-assignable and non-licensable rights. The Executive grants to the Company or the Company’s designees a royalty-free, irrevocable, worldwide license (with rights to sublicense through multiple tiers of sublicenses) to utilize and practice all applicable patent, copyright,

 

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moral right, mask work, trade secret and other intellectual property rights relating to any Prior Inventions which the Executive incorporates, or permits to be incorporated, in any Company Inventions. Notwithstanding the foregoing, the Executive agrees that the Executive will not incorporate, or permit to be incorporated, any Prior Inventions in any Company Inventions without the Company’s prior written consent.

 

(f)                                    Future Inventions

 

The Executive recognizes that Inventions or Trade Secrets relating to the Executive’s activities while working for the Company and conceived, reduced to practice, created, derived, developed, or made by the Executive, alone or with others, within twelve (12) months after termination of the Executive’s employment may have been conceived, reduced to practice, created, derived, developed or made, as applicable, in significant part while employed by the Company. Accordingly, the Executive agrees that such Inventions and Trade Secrets shall be presumed to have been conceived, reduced to practice, created, derived, developed, or made, as applicable, during the Executive’s employment with the Company and are to be promptly assigned to the Company unless and until the Executive has established the contrary by written evidence satisfying the clear and convincing standard of proof.

 

6.                                      Trade Secrets and Confidential Information

 

(a)                                 “Trade Secrets”

 

In this Agreement, “Trade Secrets” means and includes business or technical information in the possession of the Company and/or any of its Affiliates, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process, that:

 

(1)                                 derives independent actual or potential commercial value from not being generally known by persons who can obtain economic value from its disclosure or use; and

 

(2)                                 that is subject to reasonable efforts under the circumstances to maintain its secrecy.

 

(b)                                 “Confidential Information”

 

In this Agreement, “Confidential Information” means:

 

(1)                                 all Trade Secrets; and

 

(2)                                 all other business or technical information in the possession of the Company and/or any of its Affiliates that is not generally known outside of the Company and its Affiliates that relates to the business of the Company and any of its Affiliates;

 

and includes, without limitation:  lists and information about customers and/or prospective customers (including names, addresses, attributes, requirements, special needs, and other data about customers and prospective customers); lists and information about contractors or subcontractors and/or prospective contractors or subcontractors (including names, addresses, attributes, requirements, special needs, and other data about contractors or subcontractors and prospective contractors or subcontractors); lists and information about vendors and/or prospective vendors (including names, addresses, attributes, requirements, special needs, and other data about vendors and prospective vendors); lists and information

 

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about competitors and potential competitors (including names, addresses, attributes, requirements, special needs, and other data about competitors and potential competitors); historical information about past bids, prices, costs, goods, products, performance, projects and contracts; lists and information about upcoming bids and proposals; lists and information about uncompleted contracts; work schedules; information about business plans and business strategies; unreleased advertising materials; market research and analyses; personnel and hiring information; salary and wage information; bonus information; employment agreements; lists and information about pending and contemplated projects, customer contracts, subcontracts, purchase orders, vendor agreements, joint ventures, and teaming agreements; agreement terms and conditions; cost-to-complete information; completion dates; claims; past litigation; pending litigation; threatened litigation; credit information; financial statements; accounting information; sales projections; licensing agreements and information; pricing information; information about the employees, equipment, properties, and capabilities of the Company and/or its Affiliates; information about research, development, and designs; data, designs, compilations of information, apparatus, computer programs and/or software programing code, programing methods, database information, passwords and user IDs, information about policies and procedures, manufacturing and sales know-how, and any other business information or technical information that has or may have value to the Company and/or any Affiliate, whether or not such information constitutes Trade Secrets.

 

(c)                                  Protection of Trade Secrets and Other Confidential Information

 

The Executive recognizes and acknowledges that, by virtue of, and in the course of his employment with the Company, the Company and/or Affiliates will reveal Trade Secrets and other Confidential Information to the Executive, and the Executive will also help discover, develop, generate, and contribute to the Trade Secrets and other Confidential Information.

 

The Executive agrees that, during the Period of Employment, he will use his best efforts to maintain the confidentiality of the Confidential Information, including without limitation by:

 

(1)                                 storing Confidential Information in secure locations only;

 

(2)                                 not making unnecessary copies or transmittals of Confidential Information;

 

(3)                                 utilizing “firewalls,” “anti-spyware,” and passwords for all computer systems and electronic files that contain Confidential Information;

 

(4)                                 complying with any and all Company policies and procedures for the protection of Confidential Information;

 

(5)                                 promptly reporting to the Company all inadvertent and/or unauthorized disclosures and misappropriations of any Confidential Information, whether known, suspected, or threatened; and

 

(6)                                 promptly reporting to the Company all known and suspected deficiencies in, and opportunities for improvement of, the policies and procedures of the Company and its Affiliates for the protection of Confidential Information.

 

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(d)                                 Return of Trade Secrets and Other Confidential Information

 

The Executive agrees that all Trade Secrets and other Confidential Information, in whatever forms they exist or were created, whether in the Executive’s memory, or in physical or electronic or computerized form, are and will be the sole and exclusive property of the Company.

 

The Executive agrees that upon the termination of the Period of Employment, or at any earlier time(s) that the Company may request, the Executive will immediately return to the Company any and all documents, correspondence, notes, agreements, memoranda, computer files, computer disks, drives and tapes, electronically stored information, and other media and other things in the Executive’s possession, custody, or control that contain or reflect Confidential Information, keeping no copies or extracts of any Confidential Information.

 

(e)                                  Copying, Use and Disclosure of Trade Secrets and Other Confidential Information

 

The Executive agrees that, during the Period of Employment, he will not copy, use, or disclose any Trade Secrets or other Confidential Information, whether directly or indirectly, except to the extent that:

 

(1)                                 the copying, use or disclosure is for the benefit of the Company or one of its Affiliates;

 

(2)                                 the Executive has no reason to believe or suspect that the copying, use, or disclosure will result in or contribute to a loss of secrecy of any of the Trade Secrets or other Confidential Information; and

 

(3)                                 the copying, use, or disclosure is necessary for the Executive to perform his duties as an employee of the Company.

 

The Executive agrees that, at all times after the termination of the Period of Employment, he will not copy, use, or disclose any Trade Secrets or other Confidential Information of the Company and/or any of its Affiliates, except under subpoena or other compulsion of law.

 

Before making any disclosure of any Trade Secrets or other Confidential Information under a subpoena or other compulsion of law, the Executive will first inform the Company of the subpoena or other compulsion of law, and the Executive will cooperate with the Company in deciding the substance and manner of the disclosure, provided that the Company will indemnify the Executive for reasonable costs and expenses incurred with respect to the substance and manner of any disclosure that is made in cooperation with the Company.

 

7.                                      Non-Solicitation of Protected Customers

 

In this Agreement, “Protected Customers” means and includes all of the customers and prospective customers of the Company that the Executive, in the course of his employment, has any material contact with, or acquires any information about, at any time during the last twenty-four (24) months of the Period of Employment.

 

The Executive agrees that during the Period of Employment and, if the Executive’s employment is terminated for any reason other than under Section 4(b) or (c), for the first three hundred sixty-five (365) days thereafter, the Executive will not solicit any of the Protected Customers, whether directly or

 

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indirectly, for the purpose of promoting or selling any goods or services within the Business (as defined below). Nor shall the Executive assist another person or entity to do so.

 

The Executive agrees that during the Period of Employment and, if the Executive’s employment is terminated for any reason other than under Sections 4(b) or (c), for the first three hundred sixty-five (365) days thereafter, the Executive will not perform any services for or accept any business from any of the Protected Customers, even if not solicited by the Executive, that involves goods or services within the Business.

 

8.                                      Non-Solicitation of Protected Employees

 

In this Agreement, “Protected Employees” means and includes all persons who at the time of the Executive’s action are, or within the three months prior to the Executive’s action were, employees of the Company and/or any of its Affiliates.

 

The Executive agrees that during the Period of Employment and, if the Executive’s employment is terminated for any reason other than under Sections 4(b) or (c), for the first three hundred sixty-five (365) days thereafter, the Executive will not directly or indirectly (a) solicit, or assist another person or entity to solicit, any Protected Employees for employment or other work-related engagement (e.g., as an independent contractor or consultant), other than on behalf of the Company or its Affiliates, or (b) encourage, or assist another person or entity to encourage, any Protected Employee to end his or her employment relationship with the Company.

 

9.                                      Non-Solicitation of Protected Contractors

 

In this Agreement, “Protected Contractors” means and includes all persons and companies who were contractors or subcontractors to or of the Company or any of its Affiliates at any time(s) within the twenty-four (24) months prior to the termination of the Period of Employment.

 

The Executive agrees that during the Period of Employment and, if the Executive’s employment is terminated for any reason other than under Sections 4(b) or 4(c), for the first three hundred sixty-five (365) days thereafter, the Executive will not directly or indirectly solicit or encourage, or assist another person or entity to assist or encourage, any Protected Contractor to end or materially reduce its, his or her business relationship with the Company.

 

10.                               Non-Competition

 

The Executive agrees that during the Period of Employment and, if the Executive’s employment is terminated for any reason other than under Sections 4(b) or (c), for the first three hundred sixty-five (365) days thereafter, the Executive will not, anywhere within the Restricted Area (as defined below), compete with the Company, whether directly or indirectly, for (a) the sale of energy efficiency program management and implementation services to utilities or other end-use customers or (b) the sale of any goods or services that are the same as, or that are competitive alternatives to, any other goods or services that the Company marketed, developed or sold, or actively planned to market, develop or sell at any time during the last twenty-four (24) months of the Period of Employment (together, the “Business”).

 

The Executive agrees that throughout the Period of Employment and, if the Executive’s employment is terminated for any reason other than under Sections 4(b) or (c), for the first three hundred sixty-five (365) days thereafter, the Executive will not directly or indirectly provide any support or assistance to, or provided any services to, any person or entity that is engaged or is planning or preparing to engage, in any aspect of the Business, whether as an investor (excluding passive investments

 

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representing less than two percent (2%) of the common stock of a publicly traded company), lender, owner, officer, director, consultant, contractor, employee, agent, salesperson or in any other capacity, whether part-time or full-time.

 

In this Agreement, the “Restricted Area” shall be:  (a) the Eastern United States, (b) the rest of the United States and (c) such other areas in which the Company or its Affiliates conducts business, or is actively planning to conduct business as of the end of the Period of Employment.

 

11.                               Reasonableness of Restrictive Covenants

 

The Executive acknowledges and agrees that by virtue of his employment by the Company, during the Period of Employment, and at the Company’s expense, the Executive will be acquiring goodwill and relationships with, and acquiring special knowledge about, the Company’s customers, employees, contractors and subcontractors that the Executive would not otherwise acquire.

 

The Executive acknowledges and agrees that the Company’s goodwill and relationships and special knowledge concerning its customers, employees, contractors, and subcontractors are valuable, special and unique assets of the Company that the Company has a legitimate interest in protecting.

 

The Executive acknowledges and agrees that the Company engages in business throughout the Restricted Area, and that the geographic scope of the post-employment restrictions in this Agreement are necessary to protect the Company’s legitimate business interests and are reasonable in scope.

 

The Executive acknowledges and agrees that the Executive possesses skills and experience qualifying him for employment in other fields, and that the post-employment restrictions in this Agreement will not unduly impair his ability to earn a living after his employment with the Company ends.

 

12.                               Remedies

 

The Executive acknowledges and agrees that a breach by the Executive of any of the restrictive covenants set forth above in Sections 6, 7, 8, 9 and 10 is likely to cause the Company irreparable harm, and that the legal remedy of money damages will not be adequate to remedy the harm to the Company.

 

The Executive agrees that in the event the Executive breaches or threatens to breach any of the restrictive covenants set forth above in Sections 6, 7, 8, 9, and 10, then the Company will be entitled to the immediate issuance of injunctive relief against the Executive to aid in the enforcement of this Agreement and to protect against irreparable harm, without the necessity of posting any bond, including ex-parte temporary restraining orders, and preliminary and permanent injunctions.

 

In addition to such equitable relief, upon a breach of Sections 6, 7, 8, 9, and/or 10, the Company shall be entitled to (a) monetary damages for any breach in an amount deemed reasonable to cover all actual and consequential losses, (b) all monies earned or received by the Executive as a result of said breach, and (c) all reasonable costs and expenses of litigation that the Company incurs to obtain injunctive relief and/or other enforcement of the restrictive covenants. Additionally, in the event of a material breach of Sections 6, 7, 8, 9 and/or 10 at any time after his separation from employment, the Executive shall forfeit his right to the payments and benefits provided in Section 4(c) (other than Accrued Obligations), and he shall immediately return to the Company all payments previously made to him (other than Accrued Obligations) under Section 4(c), without impacting the validity of the release agreement contemplated therein.

 

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13.                               Prior Restrictive Covenant Agreements

 

The Company respects all valid employee post-separation restrictions, including non-competition and other restrictive covenant agreements, and it strictly prohibits its employees from disclosing or using the confidential information of any third party, including that of a prior employer. The Executive’s employment is therefore contingent on (a) the Executive’s delivery of and satisfactory review by the Company of any restrictive covenant (including non-competition) agreements applicable to the Executive and any other provisions to which the Executive is subject that would in any way preclude the Executive from performing any services for the Company or accepting such employment with the Company, and (b) the Executive honoring such restrictions, including by not, at any time, using or disclosing any third-party confidential information. In the event the Executive believes that anyone at the Company or its Affiliates is asking him to do something that would violate his obligations to a prior employer, the Executive shall so advise the CEO immediately. By signing below, the Executive represents that he accepts employment on the terms outlined in this Agreement without any conflict with, or violation of, the terms of any agreement by which the Executive is bound, and without using the confidential or proprietary information of any third party, including any prior employer of the Executive, which information the Executive is strictly prohibited from using while employed by the Company or any Affiliate. The Executive also agrees that he will not bring onto the Company’s premises or transfer onto the Company’s technology systems any unpublished document or proprietary, confidential or trade secret information belonging to any third party unless such third party has consented to the disclosure of such information to, and its use by, the Company. The Executive shall fully indemnify the Company, its Affiliates, their predecessors and successors, and their respective current and former directors, officers, agents, employees, investors, shareholders, administrators, and assigns for all verdicts, judgments, settlements, and other losses (including reasonable attorneys’ fees) incurred by any of them resulting from the Executive’s alleged or actual breach of his common law or contractual obligations to a third party, except as prohibited by law.

 

14.                               Post-Separation Assistance

 

After his separation from employment, regardless of the reason for such separation and whether caused by the Executive or the Company, the Executive shall, upon reasonable notice, furnish such information and assistance to the Company as may reasonably be requested by the Company in connection with any matter on which he worked while employed by the Company and any litigation in which it or its Affiliates are, or may become, parties. The Company shall reimburse the Executive for all reasonable expenses he incurs in providing such assistance.

 

15.                               Governing Law

 

This Agreement and the relationship contemplated in this Agreement will be governed by and construed under the internal laws of the State of New Jersey.

 

16.                               Jurisdiction and Venue

 

The exclusive venue for any arbitrations and civil action(s) between the Executive and the Company that arise from or relate to this Agreement or the employment relationship contemplated in this Agreement will be the State of New Jersey. The Company and the Executive hereby submit and consent to the courts located in New Jersey exercising personal jurisdiction over them. Furthermore, the Company and the Executive waive their rights to challenge in another court any judgment that is entered by any court located in New Jersey, or to assert that any civil action instituted against either of them in New Jersey is in an improper venue, or should be transferred to another forum for any reason whatsoever.

 

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17.                               Waiver of Right to Jury Trial

 

The Executive and the Company waive any rights that they or either of them otherwise has or may have to a trial by jury in any action between the Executive and the Company that arises from or relates to this Agreement or the employment relationship that is contemplated in this Agreement.

 

18.                               Severability

 

If any provision of this Agreement is found invalid or unenforceable for any reason, in whole or in part, then such provision will be deemed modified, restricted, or reformulated to the extent and in the manner necessary to render the same valid and enforceable, or will be deemed stricken from this Agreement, as the case may require, and this Agreement will be construed and enforced to the maximum extent permitted by law, as if such provision had been originally incorporated herein as so modified, restricted, or reformulated or as if such provision had not been originally incorporated herein, as the case may be. The parties further agree to seek a lawful substitute for any provision that is found to be unlawful; provided that, if the parties are unable to agree upon a lawful substitute, the parties desire and request that a court or other authority called upon to decide the enforceability of this Agreement modify those restrictions in this Agreement that, once modified, will result in an agreement that is enforceable to the maximum extent permitted by the law in existence at the time of the requested enforcement.

 

19.                               No Inadvertent Waivers or Informal Modifications

 

The failure of the Company or the Executive to assert any of its rights under this Agreement, and/or the delay or partial enforcement of any rights under this Agreement, will not operate or be construed as a waiver of any breach of this Agreement, except as such waiver may be expressly set forth in a writing signed by the Company or the Executive.

 

The waiver by the Company or the Executive of any breach of any provision of this Agreement will not be construed as a waiver of any subsequent breach(es).

 

This Agreement will not be amended, modified, supplemented, or replaced except in a writing signed by the Company and the Executive that expressly refers to this Agreement.

 

20.                               Notices

 

All notices, demands and other communications which may be or are required to be given hereunder or with respect hereto will be given in writing, and delivered by commercial overnight delivery service and will be deemed to have been given or made when delivery is made or refused, addressed as follows:

 

If to the Company, to:

 

Lime Energy Co.

4 Gateway Center, 4th Floor

100 Mulberry Street

Newark, NJ  07102

Attention: Chief Executive Officer

 

or to such other address as the Company may from time to time designate to the Executive in accordance with this Section.

 

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If to the Executive, to:

 

Bruce D. Torkelson

(the address on file with the Company’s Human Resources Department as the Executive’s primary residence)

 

or to such address as the Executive may from time to time designate to the Company in accordance with this Section.

 

No notice, request, demand, instruction, or other document to be given hereunder to any party will be effective for any purpose unless delivered by commercial overnight delivery service. Notices sent via commercial overnight delivery service will be deemed to have been delivered as evidenced by the service’s standard means of confirming the delivery. The address for the purposes of this Section may be changed by giving written notice of such change in the manner herein provided for giving notice.

 

21.                               Compliance with Section 409A

 

(a)                                 Any payments under this Agreement that may be excluded from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), either as separation pay due to an involuntary separation from service or as a short-term deferral, shall be excluded from Code Section 409A to the maximum extent possible.

 

(b)                                 For purposes of Code Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment.

 

(c)                                  Any payments to be made under this Agreement upon a termination of employment shall only be made if such termination of employment constitutes a “separation from service” under Code Section 409A.

 

(d)                                 Notwithstanding any other provision of this Agreement, if at the time of the Executive’s termination of employment, he is a “specified employee,” determined in accordance with Code Section 409A, any payments and benefits provided under this Agreement that constitute “nonqualified deferred compensation” subject to Code Section 409A that are provided to the Executive on account of his separation from service shall not be paid until the first payroll date to occur following the six-month anniversary of the Executive’s termination date (“Specified Employee Payment Date”). The aggregate amount of any payments that would otherwise have been made during such six-month period shall be paid in a lump sum on the Specified Employee Payment Date without interest and, thereafter, any remaining payments shall be paid without delay in accordance with their original schedule. If the Executive dies during the six-month period, any delayed payments shall be paid to the Executive’s estate in a lump sum during the 30-day period following the Executive’s death.

 

(e)                                  All reimbursements for costs and expenses under this Agreement shall be paid in no event later than the end of the taxable year following the taxable year in which Executive incurs such cost or expense. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (ii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year.

 

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(f)                                    This Agreement is intended to comply with Code Section 409A (to the extent applicable) and the parties hereto agree to interpret, apply and administer this Agreement to comply therewith, but without resulting in any increase in the amounts owed hereunder by the Company.

 

(g)                                 In no event whatsoever shall the Company or its affiliates or their respective officers, directors, employees or agents be liable for any additional tax, interest or penalties that may be imposed on Executive by Code Section 409A or for damages for failing to comply with Code Section 409A.

 

22.                               Headings

 

The section and paragraph headings and captions used herein are intended solely for convenience of reference and will not control or effect the interpretation, meaning or construction of any provision of this Agreement.

 

23.                               Arbitration

 

At the Company’s or the Executive’s election, any controversy(ies), claim(s) or dispute(s) between the Executive and the Company (and/or the Company’s Affiliates) shall be resolved by binding arbitration conducted in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, whether or not the controversy(ies), claim(s), or dispute(s) arise from or relate to this Agreement or the relationship that is contemplated in this Agreement. Judgment upon the arbitration award(s) may be entered in any court having jurisdiction thereof. To the maximum extent allowed by law, the arbitrator(s) will be authorized to issue subpoenas, compel discovery, grant equitable relief, and award costs and expenses of the arbitration (including reasonable attorney’s fees) for bad faith, stubborn litigiousness, or unnecessary trouble and expense. This agreement to arbitrate will survive the termination of the Period of Employment. Notwithstanding the foregoing, this Section shall not apply, and the parties shall have no obligation to arbitrate, any action (including any counterclaims) (a) in which one or both parties assert claims under or pursuant to, or claim a breach of, Sections 5, 6, 7, 8, 9 or 10 of this Agreement or (b) in which preliminary, permanent or other injunctive relief is sought by either party.

 

24.                               Third-party Beneficiaries

 

This Agreement is intended solely for the benefit of the Executive, the Company, and the Company’s Affiliates. This Agreement does not and will not be misconstrued to give any other person any cause of action or other rights.

 

25.                               Assignments

 

This Agreement creates personal rights and obligations on the part of the Executive, and the rights and obligations of the Executive under this Agreement will not be assignable without the express prior written consent of the Company, and the Company will have the authority to withhold its consent to any proposed assignment, in its sole and absolute discretion. The Company will have the right to assign its rights and obligations under this Agreement, in whole or in part, without obtaining any additional consent from the Executive.

 

26.                               Complete and Final Agreement

 

This Agreement nullifies and supersedes any and all earlier agreements and communications between the Executive and the Company, whether oral or written, including written or oral offers of employment (except as incorporated herein). This Agreement sets forth the complete and final agreement

 

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between the Executive and the Company with respect to the employment relationship contemplated in this Agreement. Neither party is entering into this Agreement in reliance upon any representation, promise or inducement by the other party that is not set forth in writing in this Agreement.

 

27.                               Counterparts

 

This Agreement may be executed in separate counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Facsimile and .pdf signatures are of the same force and effect as originals.

 

28.                               The Executive’s Consultation with Independent Legal Counsel

 

The Executive acknowledges and warrants that he has read and fully understands the terms and conditions set forth herein, that he has had time to reflect on and consider the benefits and consequences of entering into this Agreement, that he has had a fair opportunity to review and discuss this Agreement with an attorney before signing it, and that he is entering into this Agreement freely and voluntarily.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first above written.

 

Company:

 

 

	
 
    	
/s/   C. Adam Procell
    
	
 
    	
By:   C. Adam Procell
    
	
 
    	
Title:   President and Chief Executive Officer
    

 

 

Executive:

 

 

	
 
    	
/s/   Bruce D. Torkelson
    
	
 
    	
Bruce   D. Torkelson
    

 

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Exhibit A

 

Prior Inventions

 

Torkelson Auto Housing Index (the “Index”) — The Index was developed and prepared by Executive based on housing industry and economic research conducted by Executive over a 10-year period before the Commencement Date. Executive received from his previous employer an assignment of rights to the Index and reserves the right to publish it in the future.

 

19Exhibit 10.1

 

TROPICANA ENTERTAINMENT INC.

PERFORMANCE INCENTIVE PLAN

 

ADOPTED: APRIL 4, 2016

APPROVED BY THE STOCKHOLDERS: MAY 12, 2016

 

1.         GENERAL

 

This Tropicana Entertainment Inc. Performance Incentive Plan (“Plan”) was adopted by the Board of Directors of Tropicana Entertainment Inc. (the “Company”) on April 4, 2016, subject to the approval by the stockholders of the Company at the 2016 annual meeting of the Company’s stockholders scheduled to occur on May 12, 2016.  If the Plan is not so approved by the Company’s stockholders, the provisions of the Plan will not go into effect and any conditional Awards that have been granted under the Plan conditioned on the receipt of such approval will become null and void.  The Plan is intended to permit the grant of Awards that are intended to qualify as “performance-based compensation” (within the meaning of Section 162(m) of the Code), which is not subject to the deduction limitation rules under Code Section 162(m), as well as Awards that are not intended to so qualify.  Capitalized terms used herein and not defined shall have the meaning ascribed to such terms on Appendix A hereto.

 

2.         ADMINISTRATION

 

The Plan shall be administered by the Plan Administrator.  Among other things, the Plan Administrator will have the authority to select participants in the Plan, to determine the applicable Performance Goals, Award amounts and other terms and conditions of Awards under the Plan. The Plan Administrator also will have the authority to establish and amend rules and regulations relating to the administration of the Plan and to authorize the adoption of sub-plans (including, without limitation, management incentive plans) pursuant to which Awards under the Plan may be issued. All decisions and determinations in connection with the Plan will be made by the Plan Administrator in its sole and absolute discretion and will be final and conclusive. The Plan Administrator will administer the Plan in a manner intended to comply with the requirements for “performance-based compensation” under Section 162(m) of the Code, except in the case of Awards that are not intended to qualify as “performance-based compensation.”

 

The Plan Administrator may delegate to one or more individuals the day-to-day administration of the Plan and any of the functions assigned to it in the Plan, including the power to approve Awards to employees (other than executive officers of the Company) that are not intended to be “performance-based compensation” (within the meaning of Code Section 162(m)).  Such delegation may be revoked at any time. All determinations and decisions of any delegate as to any disputed question arising under the Plan, including questions of construction and interpretation, shall be final, binding and conclusive on all persons, except to the extent that the Plan Administrator provides otherwise.

 

3.         ELIGIBILITY

 

The employees eligible to participate in the Plan with respect to an applicable Performance Period shall be executive officers and other employees of the Company and its Subsidiaries who are designated by the Plan Administrator in its sole and absolute discretion. No executive officer or other employee shall be automatically entitled to participate in the Plan and participation in the Plan for any Performance Period does not guarantee participation in the Plan in respect of any other Performance Period.  Any executive officer or other employee of the Company or any of its Subsidiaries designated by the Plan Administrator as a participant in the Plan with respect to any Performance Period shall be referred to herein as a “Participant.” An employee who is selected to participate in the Plan after the beginning of a Performance Period may be granted an Award under the Plan for such Performance Period on a ratable basis on such terms and conditions as determined by the Plan Administrator in its sole and absolute discretion.

 

 

4.         COMPLIANCE WITH SECTION 162(m)

 

In general, Awards under the Plan that are based on the attainment of one or more Performance Goals (as such term is defined in Section 5) based on the attainment of specified levels of one or more Performance Criteria during a Performance Period are intended to qualify as “performance-based compensation” under Section 162(m) of the Code.  However, Participants may receive Awards under the Plan based on the attainment of corporate or individual performance goals that are not based on one or more of the Performance Criteria and that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

 

5.         PERFORMANCE CRITERIA AND PERFORMANCE GOALS

 

Pursuant to the terms of the Plan, the Plan Administrator may establish in writing one or more objective performance goals (each, a “Performance Goal” and collectively, the “Performance Goals”) based on the attainment of specified levels of one or more Performance Criteria.  The Plan Administrator, in its sole and absolute discretion, shall determine the manner of calculating the specified Performance Goals selected for a Performance Period. With respect to a Performance Period, the Performance Goals may be established on a Company-wide basis or with respect to one or more of the Company’s business units, properties, divisions, Subsidiaries, Affiliates, or business segments, and may be measured in either absolute terms or relative to the performance of one or more comparable companies or a relevant index.

 

With respect to calculating the attainment of Performance Goals for a Performance Period, the Plan Administrator is authorized to incorporate provisions for disregarding (or adjusting for) any one or more of the following: changes in accounting rules, principles or methodology (or similar items); changes in applicable laws, rules or regulations; changes due to consolidations, acquisitions, divestitures or reorganizations affecting the Company and its Subsidiaries and Affiliates, or other similar changes in the Company’s business; asset write-downs; litigation, claims, judgments, or settlements; national macroeconomic conditions; any other extraordinary, unusual or non-recurring items (or similar items); and other similar type of events or circumstances, and if and only to the extent permitted under Section 162(m) of the Code with respect to Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code.  Notwithstanding the foregoing, the Plan Administrator may establish in writing corporate or individual performance goals that are not based on one or more of the Performance Criteria with respect to Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code.  With respect to each Award granted under the Plan, the Plan Administrator will establish the applicable Performance Period, over which the attainment of one or more Performance Goals (or, in the case of Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the attainment of corporate or individual performance goals that are not based on one or more of the Performance Criteria) will be measured for the purpose of determining a Participant’s entitlement to an Award under the Plan.

 

6.         TERMS OF AWARDS

 

With respect to each Performance Period, the Plan Administrator will establish the applicable Performance Goals for such Performance Period based on some or all of the Performance Criteria (or will establish corporate or individual performance goals that are not based on one or more of the Performance Criteria, in the case of Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code). With respect to Awards under the Plan that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, prior to the earlier of (i) ninety (90) days following the commencement of the applicable Performance Period and (ii) the passage of twenty-five percent (25%) of the duration of such Performance Period and while the outcome is substantially uncertain, the Plan Administrator will establish in writing the Performance Goals for each Award to a Participant under the Plan and the threshold, target and maximum amounts of the Award, as applicable, that may be earned if the Performance Goals are achieved at the levels corresponding to such amounts. The Performance Goals (or corporate or individual performance goals that are not based on one or more of the Performance Criteria, in the case of Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code) established in respect of a Performance Period may differ from those established in respect of other Performance Periods and may differ for each Participant.

 

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After the end of the applicable Performance Period, the Plan Administrator will certify in writing the extent to which the previously established Performance Goals (or, in the case of Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code, such other corporate or individual performance goals) were achieved and will determine the amount of the Award, if any, that is payable to each Participant for such Performance Period. The Plan Administrator will have the sole and absolute discretion to determine that the actual amount paid with respect to a Participant’s Award will be equal to or less than (but not greater than) the maximum payout calculated on the basis of the level of achievement of the applicable Performance Goals (or, in the case of Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code, such other corporate or individual performance goals) with respect to the Performance Period.

 

For a Performance Period that is equal to 12 months or less, the aggregate amount of compensation to be paid to any one Participant in respect of Annual Incentive Awards, and granted to such Participant in respect of any 12-month period, shall not exceed $5 million; provided, however, that with respect to any Annual Incentive Awards subject to a Performance Period shorter than 12 months, the foregoing Annual Incentive Awards limit shall be proportionately adjusted downward; and provided, further, that any Annual Incentive Awards that are cancelled during the year shall be counted against this limit to the extent required by Section 162(m) of the Code.  For a Performance Period that is longer than 12 months but not longer than 36 months, the aggregate amount of compensation to be paid to any one Participant in respect of all Performance Awards, and granted to such Participant in respect of any 36-month period, shall not exceed $15 million; provided, however, that with respect to any Performance Awards subject to a Performance Period shorter than 36 months, the foregoing Performance Awards limit shall be proportionately adjusted downward; and provided, further, that any Performance Awards that are cancelled during the year shall be counted against this limit to the extent required by Section 162(m) of the Code.

 

No right or interest of any Participant in the Plan shall be assignable or transferable, other than by will or pursuant to the laws of descent and distribution, or subject to any lien, directly, by operation of law or otherwise, including, but not limited to, by execution, levy, garnishment, attachment, pledge, or bankruptcy, and any attempt to take any such action shall be null and void.

 

7.         ALTERNATIVE METHOD

As an alternative to establishing and determining Awards pursuant to Section 6, the Plan Administrator may establish one or more Performance Goals for a Performance Period based on one or more of the Performance Criteria (each, a “Threshold Goal”). The Threshold Goal may be established on a Company-wide basis or with respect to one or more of the Company’s business units, properties, divisions, Subsidiaries, Affiliates or business segments, and may be measured either absolutely or relative to a designated group of comparable companies or a relevant index. The Threshold Goal must be established by the Plan Administrator in writing not later than ninety (90) days after the start of the Performance Period, but in no event after twenty-five percent (25%) of the Performance Period has elapsed, provided that the outcome of the Threshold Goal is substantially uncertain at such time.

 

If the Threshold Goal is achieved, each Participant shall be eligible to earn a maximum Award (the “Maximum Award”), the amount of which will be established no later than the time when the Performance Goals applicable to the Performance Period are established. No Awards shall be earned or payable under the Plan unless the Threshold Goal is achieved. If the Threshold Goal is achieved, each Participant’s Maximum Award shall be subject to possible reduction by the Plan Administrator based on such factors as determined by the Plan Administrator, in its sole and absolute discretion, and the actual Award payable to a Participant under the Plan shall be the Maximum Award, or a portion thereof, based on the attainment of the specified Performance Goals and such additional factors as determined by the Plan Administrator, in its sole and absolute discretion.

 

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8.         CONDITIONS TO THE RECEIPT OF PAYMENTS; DISBURSEMENTS

 

Awards, if any, under the Plan will be payable following the end of the applicable Performance Period. A Participant will become eligible to receive an Award or payment only under the following conditions: (i) the Participant must be actively employed for a minimum of three (3) consecutive calendar months during each fiscal year of the Company during the applicable Performance Period and working forty (40) or more hours per week during such Performance Period; (ii) the Participant must have returned to the Company an executed Confidentiality and Restricted Activity Agreement and acknowledged his or her understanding and acceptance of the Company’s policies consistent with the Company’s practices and procedures; (iii) the Participant must be actively employed and in good standing (and otherwise in compliance with the Company’s policies and procedures) on the scheduled date of payment; and (iv) the Participant must have agreed to be subject to all other terms, conditions, restrictions and/or requirements set forth in the Plan and any other documents or agreements governing the terms of such Participant’s Award(s).

 

As a condition of the receipt of an Award or payment under the Plan, the Participant will be required to certify (or will be deemed to have certified) at the time of receipt in a manner acceptable to the Company that the Participant (i) is in compliance with the terms and conditions of the Plan, (ii) has not violated any terms of the Confidentiality and Restricted Activity Agreement, and (iii) has not engaged in, and does not intend to engage in, any behavior that would result in a termination for Cause.

 

Payments, if any, under the Plan will be paid as soon as administratively feasible after the Plan Administrator certifies in writing the extent to which the Performance Goals (or, in the case of Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code, such other corporate or individual performance goals that are not based on one or more of the Performance Criteria) were achieved for the applicable Performance Period and determines the amount of the Award, if any, payable to each Participant, unless otherwise provided by the Plan Administrator. All payments under the Plan will be subject to applicable tax withholding and other deductions. Notwithstanding the foregoing or anything herein to the contrary, the Plan Administrator may, in its sole and absolute discretion, award an amount less than the amount which otherwise would be payable pursuant to an Award under the Plan based on the level of attainment of the Performance Goals actually achieved. All payments in respect of Awards made under the Plan shall be made in cash.

 

9.         TERM OF THE PLAN

 

The Plan shall first apply to the Company’s 2016 fiscal year.  The Plan shall terminate with respect to such year and all subsequent fiscal years of the Company unless it is approved at the 2016 annual meeting of the Company’s stockholders. Once approved by the Company’s stockholders, the Plan shall continue until terminated under Section 13 of the Plan.

 

10.       CLAWBACK/RECOVERY

 

All payments under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act or as required under other applicable law. In addition, the Plan Administrator may impose such other clawback, recovery or recoupment provisions on Awards granted under the Plan, which terms shall be set forth in the applicable plan document or agreements governing the terms of Awards granted in respect of any Performance Period under the Plan, as the Plan Administrator determines necessary or appropriate.

 

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11.       SECTION 409A OF THE INTERNAL REVENUE CODE

 

Although the Company does not guarantee the particular tax treatment of any Award granted under the Plan, Awards made under the Plan are intended to comply with, or be exempt from, the applicable requirements of Section 409A of the Code and the Plan and any Award agreement hereunder shall be limited, construed and interpreted in accordance with such intent. In no event whatsoever shall the Company or any of its Affiliates be liable for any additional tax, interest or penalties that may be imposed on a Participant by Section 409A of the Code or any damages for failing to comply with Section 409A of the Code.

 

Notwithstanding anything in the Plan or in an Award to the contrary, the following provisions shall apply to any Award granted under the Plan that constitutes “non-qualified deferred compensation” pursuant to Section 409A of the Code (a “409A Covered Award”):

 

(i) a termination of employment shall not be deemed to have occurred for purposes of any provision of a 409A Covered Award providing for payment upon or following a termination of the Participant’s employment unless such termination is also a “Separation from Service” within the meaning of Code Section 409A and, for purposes of any such provision of the 409A Covered Award, references to a “termination,” “termination of employment” or like terms shall mean Separation from Service. Notwithstanding any provision to the contrary in the Plan or the Award, if the Participant is deemed on the date of the Participant’s Separation from Service to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code and using the identification methodology selected by the Company from time to time, or if none, the default methodology set forth in Code Section 409A, then with regard to any such payment under a 409A Covered Award, to the extent required to be delayed in compliance with Section 409A(a)(2)(B) of the Code, such payment shall not be made prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of the Participant’s Separation from Service, and (ii) the date of the Participant’s death. All payments delayed pursuant to this Section 11 shall be paid to the Participant on the first day of the seventh month following the date of the Participant’s Separation from Service or, if earlier, on the date of the Participant’s death.

 

(ii) whenever a payment under a 409A Covered Award specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

12.       UNFUNDED OBLIGATION

 

The Company’s obligations under the Plan will, in every case, be an unfunded and unsecured promise. A Participants’ rights as to any Award payments under the Plan shall be no greater than those of general, unsecured creditors of the Company. The Company will not be obligated to fund its financial obligations under the Plan.

 

13.       AMENDMENT AND TERMINATION

 

The Plan Administrator may amend, modify, suspend or terminate the Plan, in whole or in part, at any time and in any respect, including without limitation, the adoption of amendments deemed necessary in order to (i) comply with Section 162(m) of the Code or (ii) be exempt from Section 409A of the Code. However, in no event may any such amendment, modification, suspension or termination result in an increase in the amount of compensation payable as identified for any Performance Period or cause compensation that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code to fail to so qualify.

 

14.       TAXES.

 

Income, employment and any other applicable taxes will be withheld from any Award payments required under the Plan to the extent determined by the Company in accordance with applicable law.  In addition, in the sole and absolute discretion of the Company, any applicable employment taxes that are a liability of a Participant may be deducted from Awards and transmitted to the appropriate tax authority. A Participant who receives payment hereunder also will be issued a Form W-2 or other report as is required by law, and such report also will be filed with taxing authorities as is required by law.

 

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15.       APPLICABLE LAW

 

The Plan and all rules and determinations made and taken pursuant hereto shall be governed by the laws of the State of New York and as such will be construed under and in accordance with the laws of the State of New York without regard to conflicts of law.

 

16.       MISCELLANEOUS

 

Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular, and the singular shall include the plural.  In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. All obligations of the Company under the Plan shall be binding upon and inure to the benefit of any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.  Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.

 

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APPENDIX A

 

DEFINED TERMS

 

(A)       “Affiliate” means each of the following: (i) any Subsidiary; (ii) any Parent; (iii) any corporation, trade or business (including, without limitation, a partnership or limited liability company) which  directly or indirectly controls fifty percent (50%) or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) of the Company or one of its Affiliates; (iv) any trade or business (including, without limitation, a partnership or limited liability company) which directly or indirectly controls fifty percent (50%) or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) of the Company; and (v) any other entity in which the Company or any of its Affiliates has a material equity interest and which is designated as an “Affiliate” by resolution of the Compensation Committee of the Board.

 

(B)       “Annual Incentive Award” means an annual incentive award (including, without limitation, a “Financial Award” or “Bonus” award under the Company’s annual Management Incentive Plan (which is a sub-plan of the Plan)) granted by the Plan Administrator to a Participant which covers a period of time equal to or less than twelve (12) months.

 

(C)       “Award” means an Annual Incentive Award or a Performance Award, in each case, subject to the terms of this Plan and any other applicable plan document or agreements governing the terms of Awards granted in respect of any Performance Period under the Plan.

 

(D)       “Board” means the Board of Directors of Tropicana Entertainment Inc.

 

(E)       “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934, as amended, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time.

 

(F)        “Cause” means with respect to any Participant: (i) dishonesty detrimental to the best interests of the Company or any of its Affiliates; (ii) conduct of a Participant involving any immoral acts which is reasonably likely to impair the reputation of the Company or any of its Affiliates; (iii) willful disloyalty to the Company or the Board; (iv) refusal or failure of a Participant to obey the lawful directions of the Board or immediate superiors; (v) neglect of duties and responsibilities assigned to a Participant; (vi) commission of, or indictment for a felony or any crime involving fraud or embezzlement or dishonesty or conviction of, or plea of nolo contendere to a misdemeanor (other than a traffic violation) punishable by imprisonment under federal, state or local law; (vii) the violation, as determined by the Board based on opinion of counsel, by a Participant of any securities or employment laws or regulations; (viii) the use by a Participant of a controlled substance without a prescription or the use of alcohol, which impairs the Participant’s ability to carry out his or her duties and responsibilities; (ix) material violation by a Participant of the Company’s policies and procedures or any breach of any agreement between the Company and a Participant, including, without limitation, the Confidentiality and Restricted Activity Agreement; (x) willful misconduct or negligence resulting in a material economic harm to the Company; (xi) unauthorized contact with a prospective buyer or investor; (xii) refusal to execute the signature page of any Company policy requiring a signature indicating his/her agreement thereto; or (xiii) embezzlement and/or misappropriation of property of the Company or any of its Affiliates, or any act involving fraud with respect to the Company or any of its Affiliates.

 

(G)       “Change in Control” means (i) the consummation of any transaction (including, without limitation, any sale of stock, merger, consolidation or spinoff), the result of which is that any Person, other than Carl Icahn or the Related Parties, becomes that Beneficial Owner, directly or indirectly, of more than 50% of the voting power of the voting securities of the Company (or, if applicable, its parent corporation or entity) or (ii) the acquisition by any Person, other than Carl Icahn or the Related Parties, of all or substantially all of the assets of Company; provided, however, that to the extent the definition of Change in Control is applicable to an Award that constitutes deferred compensation for purposes of Code Section 409A, the transaction or acquisition shall only constitute a Change in Control for purposes of such Award to the extent the transaction or acquisition would constitute a change in control under either (i) or (ii) and would also constitute a change in control event as defined in 26 C.F.R. 1.409A-3(i)(5)(i).

 

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(H)       “Code” means the Internal Revenue Code of 1986, as amended from time to time, and references thereto shall be deemed to include references to any applicable regulations and interpretations thereunder and any successor or similar provision.

 

(I)        “Parent” means any parent corporation of the Company within the meaning of Section 424(e) of the Code.

 

(J)        “Person” means any natural person, corporation, limited liability company or other legal entity.

 

(K)       “Performance Award” means a long-term incentive award granted to a Participant which covers a period of time that is greater than twelve (12) months but not exceeding thirty-six (36) months.

 

(L)       “Performance Criteria” means any one or more of the following performance criteria, or derivations of such performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and/or measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to prior years’ results or to a designated comparison group, in each case as specified by the Plan Administrator: (i) earnings including operating income, net operating income, property net operating income, earnings before or after taxes, earnings before or after interest, depreciation, amortization, bonus accruals, corporate overhead, or extraordinary or special items or book value per share (which may exclude property tax credits, Casino Reinvestment Development Authority (CRDA) reimbursement credits, discontinued operations, reorganization, deal fees/costs or other nonrecurring items) or net earnings; (ii) pre-tax income or after-tax income; (iii) earnings per share (basic or diluted); (iv) operating profit; (v) revenue, revenue growth or rate of revenue growth; (vi) return on assets (gross or net), return on investment (including cash flow return on investment), return on capital (including return on total capital or return on invested capital), or return on equity; (vii) returns on sales or revenues; (viii) operating expenses; (ix) stock price appreciation; (x) cash flow (before or after dividends), free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, cash flow in excess of cost of capital or cash flow per share (before or after dividends); (xi) implementation or completion of critical projects or processes; (xii) economic value created; (xiii) cumulative earnings per share growth; (xiv) operating margin or profit margin; (xv) stock price or total stockholder return; (xvi) cost targets, reductions and savings, productivity and efficiencies; (xvii) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion, customer satisfaction, employee satisfaction, human resources management, supervision of litigation and other legal matters, information technology, and goals relating to contributions, dispositions, acquisitions, development and development related activity, capital markets activity and credit ratings, joint ventures and other private capital activity, and other transactions, and budget comparisons; (xviii) personal professional objectives, including any of the foregoing performance targets, the implementation of policies and plans, the negotiation of transactions, the development of long term business goals, formation and reorganization of joint ventures and other private capital activity, and the completion of other corporate transactions; (xix) funds from operations (FFO) or funds available for distribution (FAD); (xx) economic value added (or an equivalent metric); (xxi) stock price performance; (xxii) improvement in or attainment of expense levels or working capital levels; (xxiii) operating portfolio metrics including leasing and tenant retention, or (xxiv) any combination of, or a specified increase in, any of the foregoing.

 

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(M)      “Performance Period” means, with respect to an Annual Incentive Award, a period of time equal to or less than twelve (12) months and, with respect to a Performance Award, a period of time greater than twelve (12) months and not exceeding thirty-six (36) months.

 

(N)       “Plan Administrator” means the Compensation Committee of the Board or a sub-committee thereof, in either case consisting solely of two or more outside directors of the Company who satisfy the requirements of Code Section 162(m).

 

(O)       “Related Parties”  shall mean (i) Carl Icahn, any spouse and any child, stepchild, sibling or descendant of Carl Icahn; (ii) any estate of Carl Icahn or of any Person referred to in clause (i); (iii) any Person who receives a bequest from or beneficial interest in any estate under clause (ii) to the extent of such interest; (iv) any executor, personal administrator or trustee who holds such beneficial interest in the Company for the benefit of, or as fiduciary for, any Person under clauses (i), (ii) or (iii) to the extent of such interest; (v) any Person directly or indirectly owned or controlled by Carl Icahn or any other Person or Persons identified in clauses (i), (ii) (iii) or (iv); and (vi) any not-for-profit entity not subject to taxation pursuant to Section 501(c)(3) of the Internal Revenue Code or any successor provision to which Carl Icahn or any Person identified in clauses (i), (ii) or (iii) above contributes his beneficial interest in the Company or to which such beneficial interest passes pursuant to such Person’s will.

 

(P)        “Subsidiary” means any subsidiary corporation of the Company within the meaning of Section 424(f) of the Code.

 

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