EXECUTIVE EMPLOYMENT AGREEMENT
This
Executive Employment Agreement is entered into this 4th day of April 2005 and
effective as of April 1, 2005, between Axion Power International, Inc., a
Delaware corporation, having a place of business at 000 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx Xxxxxx (the “Company”) and Xxxxxx Xxxxxxxxx of Buffalo, New York, (the
“Executive”).
WHEREAS, the
Company is engaged in research and development relating to a novel technology
for a supercapacitor/battery hybrid that replaces the lead-based negative
electrode in a lead-acid battery with a highly permeable nanoporous carbon
electrode; and
WHEREAS, the
Company is desirous of making appropriate arrangements for the management of its
business affairs; and
WHEREAS, the
Company is desirous of retaining the Executive to serve as its Chief Executive
Officer on the conditions set forth herein for the entire term of this
Agreement, and
WHEREAS, in such
capacity, the Executive will have access to all of the business methods and
confidential information relating to the Company and its business activities
including, but not limited to, its proprietary techniques and technologies, its
operational and financial matters, its business and financial and development
plans, its personnel training and development programs and its industry
relationships.
NOW
THEREFORE, in
consideration of the promises and of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
1. Pre-existing
Employment Agreement. The
Company has been advised that (1) the Executive is subject to a long-term
employment agreement with Xxxxxxxxx Elevator Co., Buffalo, New York; and (2)
Xxxxxxxxx Elevator is willing to authorize the Executive to accept a position as
the Company’s Chief Executive Officer for a maximum period of two years, but
only on the condition that the Company reimburse Xxxxxxxxx Elevator for the
reasonable cost of hiring a suitable temporary replacement for the Executive.
The Company further acknowledges that as a condition of this Agreement it will
be required to pay the sum of $14,500 per month directly to Xxxxxxxxx Elevator
in satisfaction of the Executive’s ongoing obligations under his prior
employment agreement. With the exception of his obligations to Xxxxxxxxx
Elevator, Executive represents and warrants to the Company that he is free to
accept employment hereunder and that he has no other obligations or commitments
of any kind to anyone that would in any way hinder or interfere with his
acceptance of, or the full, uninhibited and faithful performance of this
Agreement, or the exercise of his best efforts as an executive officer of the
Company.
2. Employment
and Duties. The
Company shall employ the Executive as the Chief Executive Officer of the Company
and its wholly owned subsidiary Axion Power Corporation, a Canadian Federal
corporation, or in such other comparable executive capacity as the Board of
Directors of the Company shall specify from time to time. The Executive shall be
employed by and will work for the Company at Company's office in the Toronto
Metropolitan Area. The
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Executive’s
initial responsibilities shall include all of the duties and responsibilities of
the Chief Executive Officer as described in the By-laws of the Company (as
supplemented by a more detailed job description that will subsequently be
negotiated between the Executive and the Board of Directors), as the same may be
amended from time to time. In addition, the Executive shall, perform such other
mutually agreeable functions and duties as the Board of Directors may entrust or
delegate to him from time to time.
3. Conduct
of Executive. During
the entire Term of this Agreement, the Executive shall devote his full business
time, effort, skill and attention to the affairs of the Company and its
subsidiaries, will use his best efforts to promote the interests of the Company,
and will discharge his responsibilities in a diligent and faithful manner,
consistent with sound business practices. During the entire Term of this
Agreement, the Executive shall agree to serve as a member of the Company’s Board
of Directors if appointed to such position by the board of directors or elected
to such position by the shareholders of the Company. In furtherance of the
foregoing:
(a) The
Executive understands and agrees that he owes the Company a fiduciary duty,
without limiting any other obligations or requirements that are imposed on the
Executive elsewhere in this Employment Agreement or by law. As such, the
Executive shall occupy a position of and commit to the highest degree of trust,
loyalty, honesty and good faith in all of his dealings with and on behalf of the
Company.
(b) The
Executive represents that his employment by the Company will not conflict with
any obligations which he has to any other person, firm or entity. The Executive
specifically represents that he has not brought to the Company (during the
period before the signing of this Agreement) and he will not bring to the
Company any materials or documents of a former or present employer, or any
confidential information or property of any other person, firm or
entity.
(c) The
Executive shall not, without disclosure to and approval of the Board of
Directors of the Company, directly or indirectly, assist or have an active
interest in (whether as a principal, stockholder, lender, employee, officer,
director, partner, consultant or otherwise) in any person, firm, partnership,
association, corporation or business organization, entity or enterprise that
competes with or is engaged in a business which is substantially similar to the
business of the Company except that ownership of not more than 1% of the
outstanding securities of any class of any publicly-held corporation shall not
be deemed a violation of this sub-paragraph 3(c).
(d) The
Executive shall promptly disclose to the directors of the Company, in accordance
with the Company’s policies, full information concerning any interests, direct
or indirect, he holds (whether as a principal, stockholder, lender, Executive,
director, officer, partner, consultant or otherwise) in any business which, as
reasonably known to the Executive purchases or provides services or products to
the Company or any of its subsidiaries, provided that the Executive need not
disclose any such interest resulting from ownership of not more than 1% of the
outstanding securities of any class of any publicly-held
corporation.
Employment
Agreement—Page 2
(e) The
Executive shall not disclose to any person or entity (other than to the
Company’s Board of Directors or to others as required, in his judgment, in the
due performance of his duties under this Agreement) any confidential or secret
information with respect to the business or affairs of the Company or any of its
subsidiaries or affiliates.
For a
period of one year after termination for cause, the Executive shall not engage
in any business or activity that is directly competitive with the business of
the Company, including the activities described above. Notwithstanding the
generality of the foregoing, nothing in this Agreement shall be deemed to
preclude the Executive from participating in other business opportunities if and
to the extent that (i) such business opportunities are not directly competitive
with the business of the Company, (ii) the Executive’s activities with respect
to such opportunities do not have a material adverse effect on the performance
of the Executive’s duties hereunder, and (iii) the Executive’s activities with
respect to such opportunity have been fully disclosed in writing to the
Company’s Board of Directors.
4. Conditions
of Employment.
(a) Term
of Employment. Unless
terminated earlier in accordance with the provisions of this Agreement, the
Company will employ the Executive for a two-year period commencing on April 1,
2005 and terminating on March 31, 2007 (the “Term”). Not less than 90 days
before the termination of this Agreement, the Company and the Executive shall
open negotiations for a suitable contract renewal. In the absence of a renewal
contract, this agreement shall be automatically renewed for an additional
two-year term.
(b) Place
of Employment. The
Executive shall occupy offices at the Company’s principal executive office in
the Toronto Metropolitan Area (or at such other Company office as the Company
and the Executive may agree from time to time) which will be maintained for his
use by the Company at the Company’s expense. The Executive shall not be required
during the Term of this Agreement to relocate from the Toronto Metropolitan Area
to any other business location maintained by the Company although the Executive
expressly agrees that regular travel shall be necessary as part of his
duties.
(c) Ownership
of Company Records and Reports. The
Executive shall not, except in the performance of his duties hereunder, at any
time or in any manner make or cause to be made any copies, pictures, duplicates,
facsimiles, or other reproductions or recordings or any abstracts or summaries
of any reports, studies, memoranda, correspondence, manuals, records, plans or
other written or otherwise recorded materials of any kind whatever belonging to
or in the possession of the Company, or of any subsidiary or affiliate of the
Company, including but not limited to materials describing or in any way
relating to the Company’s business activities including, but not limited to, its
proprietary techniques and technologies, its operational and financial matters,
its business and financial and development plans, its personnel training and
development programs and its industry relationships. The Executive shall have no
right, title or interest in any such material, and the Executive agrees that,
except in the performance
Employment
Agreement—Page 3
of his
duties hereunder, he will not, without the prior written consent of the Company
remove any such material from any premises of the Company, or any subsidiary or
affiliate of the Company, and immediately upon the termination of his employment
for any reason whatsoever Executive shall return to the Company all such
material in his possession.
(d) Company's
Trade Secrets. Without
the prior written consent of the Company, the Executive shall not at any time
(whether during or after his employment with the Company) use for his own
benefit or purposes or for the benefit or purposes of any other person, firm,
partnership, association, corporation or business organization, entity or
enterprise, or disclose in any manner to any person, firm, partnership
association, corporation or business organization, entity or enterprise, except
in the performance of his duties hereunder, any trade secrets, or any
information data, know-how or knowledge constituting trade secrets belonging to,
or relating to the affairs of the Company, or any subsidiary, former subsidiary,
or affiliate of the Company.
(e) Inventions,
Copyrights. Trademarks. The
Executive shall promptly disclose to the Company (and to no one else) all
improvements, discoveries, ideas and inventions that may be of significance to
the Company, or any subsidiary or affiliate of the Company, made or conceived
alone or in conjunction with others (whether or not patentable, whether or not
made or conceived at the request of or upon the suggestion of the Company or any
subsidiary or affiliate of the Company during or out of his usual hours of work
or in or about the premises of the Company or elsewhere) while in the employ of
the Company or of any subsidiary or affiliate of the Company, or made or
conceived within one year after the termination of his employment by the Company
or of any subsidiary or affiliate of the Company if resulting from, suggested by
or relating to such employment. All such improvements, discoveries, ideas and
inventions shall be the sole and exclusive property of the Company and are
hereby assigned to the Company. At the request of the Company and at its cost,
the Executive shall assist the Company, or any person or persons from time to
time designated by it, to obtain the copyright, trademark and/or grant of
patents in the United States and/or in such other country or countries as may be
designated by the Company, covering such improvements, discoveries, ideas and
inventions and shall in connection therewith and in connection with the defense
of any patents execute such applications, statements or other documents, furnish
such information and data and take all such other action (including, but not
limited to, the giving of testimony) as the Company may from time to time
reasonably request.
5. Compensation. The
Company shall compensate the Executive for all services to be rendered by him
during the Term as follows:
(a) The
Executive shall receive total cash compensation of $21,000 per month during the
period commencing on April 1, 2005 and terminating on March 31, 2006. As
specified in Section 1 of this Agreement, $14,500 of the cash compensation that
would otherwise be payable to the Executive will be paid directly to Xxxxxxxxx
Elevator Co. in satisfaction of the Executive’s ongoing obligations under his
prior employment
Employment
Agreement—Page 4
agreement.
The $6,500 balance of the Executive’s cash compensation will be paid directly to
the Executive. The Executive’s Salary shall be reviewed on a bi-annual basis and
the amount of such Salary shall be subject to renegotiation on the basis of the
performance of the Executive and the performance of the Company.
(b) The
Executive shall participate in any executive compensation plans adopted by the
shareholders of the Company; provided, however, that the discretionary authority
to determine the level of the Executive’s participation therein and the terms
and conditions of such participation shall remain vested in the Compensation
Committee of the Board of Directors and the Compensation Committee shall have
the authority to adjust such participation upward or downward from time to time
in its sole discretion.
(c) The
Executive shall participate, without cost to the Executive, in the Company's
standard employee benefit programs, including but not limited to medical and
hospitalization insurance and group life insurance, as in effect from time to
time.
(d) The
Executive shall be entitled to an automobile allowance of $750 per month, plus
reimbursement at the maximum allowable rate under applicable income tax rules
for all reasonable business use of the automobile.
(e) During
the Term of this Agreement, the Company will reimburse the Executive for all
reasonable business expenses incurred by him on behalf of the Company in the
performance of his duties hereunder upon presentation of vouchers, receipts or
other evidence of such expenses in accordance with the policies of the Company,
and provided that the Executive shall incur no costs or expenses that exceed
five thousand dollars without prior authorization of the Company.
(f) Notwithstanding
any other provision of this Agreement, it is agreed that the Executive shall be
entitled to receive such incentive bonuses, stock options and other benefits as
the Compensation Committee of the Board of Directors may grant from time to
time.
(g) Notwithstanding
the general provisions of the Company’s Policy Manual relating to vacations, the
Executive shall be entitled to a total of four (4) weeks of paid vacation per
year. Except for the 4-week time period herein specified, all other provisions
of the Policy Manual relating to vacation scheduling will be applicable to
vacation time allocated to the Executive hereunder.
6. Grant of
Stock Purchase Option. The
Company acknowledges that the Executive has agreed to devote substantially all
of his business time and effort to the Company during the entire Term of this
Agreement. In recognition of the opportunity costs associated with such actions,
the Executive is hereby granted an option to purchase 180,000 shares of the
Company’s common stock at an exercise price of $2.60 (U.S.) per share.
As long
as the Executive remains an employee of the Company, the foregoing options shall
vest at the rate of 7,500 shares per month commencing on May 1, 2005. If the
Executive ceases to be an employee of the
Employment
Agreement—Page 5
Company
before the final vesting date, any vested options that are not exercised within
60 days after the termination of such employment shall be forfeit. From
and after the vesting dates, the vested options may be exercised at any time or
from time to time, in whole or in part, for a period of five years. The option
agreement attached hereto as “Exhibit A” shall be executed concurrently with
this agreement.
7. Termination
of Employment.
(a) This
Agreement and the compensation payable to Executive hereunder shall terminate
and cease to accrue forthwith upon Executive's death.
(b) Upon
termination of this Agreement by the Company prior to the end of the initial
term, except for termination based upon an intentional act on the part of
Executive including, by way of example, the refusal to perform work when the
Executive is physically and mentally able to do so or engaging in competition
with the Company, the Executive shall receive as a complete and total settlement
of all of claims against the Company relating to his employment and termination,
immediately upon termination, a lump sum payment equal to six month’s base
annual salary (said sum shall hereinafter be referred to as "Liquidated
Damages"). If Executive is terminated by reason of an intentional act on his
behalf, Executive shall be due no compensation other than accrued base salary
owing up to the time of termination.
(c) At the
end of the initial term of this agreement, the Executive’s employment may be
terminated by either party for any reason, or for no reason, upon written notice
given not less than 90 days prior to of the termination date.
8. Specific
Performance. If any
portion of this Agreement is found by a court of competent jurisdiction to be
too broad to permit enforcement of such restriction to its full extent, then
such restriction shall be enforced to the maximum extent permitted by law, and
the Executive hereby consents and agrees that such scope may be judicially
modified accordingly in any proceeding brought to enforce such restriction. All
provisions of this Agreement are severable, and the unenforceability or
invalidity of any single provision hereof shall not affect any remaining
provision. The Executive acknowledges and agrees that the Company's remedy at
law for any breach of any of his obligations hereunder would be inadequate, and
agrees and consents that temporary and permanent injunctive relief may be
granted in any proceeding that may be brought to enforce any provision of this
Agreement without the necessity of proof of actual damage and without any bond
or other security being required. Such remedies shall not be exclusive and shall
be in addition to any other remedy which the Company may have.
9. Miscellaneous.
(a) The
failure of a party to insist on any occasion upon strict adherence to any Term
of this Agreement shall not be considered to be a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that Term or any
other Term of this Agreement. Any waiver must be in writing.
Employment
Agreement—Page 6
(b) All
notices and other communications under this Agreement shall be in writing and
shall be delivered personally or mailed by registered mail, return receipt
requested, and shall be deemed given when so delivered or mailed, to a party at
such address as a party may, from time to time, designate in writing to the
other party.
(c) Notwithstanding
the termination of the Executive’s employment hereunder, the provisions of
Paragraphs 6, 8 and 9 shall survive such termination.
(d) This
Agreement shall be assigned to and inure to the benefit of, and be binding upon,
any successor to substantially all of the assets and business of the Company as
a going concern, whether by merger, consolidation, liquidation or sale of
substantially all of the assets of the Company or otherwise.
(e) This
Agreement constitutes the entire Agreement between the parties regarding the
above matters, and each party acknowledges that there are no other written or
verbal Agreements or understandings relating to such subject matter between the
Executive and the Company or between the Executive and any other individuals or
entities other than those set forth herein. No amendment to this Agreement shall
be effective unless it is in writing and signed by both the parties
hereto.
(f) Paragraph
6 of this Agreement shall be construed in accordance with the General
Corporation Law of Delaware. All other provision of this Agreement shall be
construed according to the laws of the Province of Ontario Canada pertaining to
Agreements formed and to be performed wholly within the Province of Ontario. In
the event action is brought to enforce any provisions of this Agreement, the
prevailing party shall be entitled to reasonable legal fees as fixed by the
court. The Executive represents and warrants that he has reviewed this Agreement
in detail with his legal and other advisors, as he considers appropriate, and
that he fully understands the consequences to him of its provisions. The
Executive is relying on his own judgment and the judgment of his advisors with
respect to this Agreement.
(g) In the
event a dispute arises out of, in connection with, or with respect to this
Agreement, or any breach thereof, such dispute shall, on the written request of
one party delivered to the other party, be submitted to and settled by binding
arbitration before a single arbitrator conducted in Xxxxxxx, Xxxxxxx, Xxxxxx in
accordance with Arbitrations Act (Ontario). The award of such arbitrator shall
be final other than appeals under sections 45(2) and 45(3) of the Arbitration
Act of Ontario and may be entered by any party hereto in any court of competent
jurisdiction. The party against whom the arbitrator’s award is rendered shall
pay all costs and expenses of such arbitration, unless the arbitrator shall
specifically allocate costs in a different manner because the award is not
entirely in favor of either party
(h) This
Agreement may be executed in any number of counterparts, which will each be
deemed to be an original for all purposes hereof.
Employment
Agreement—Page 7
IN
WITNESS WHEREOF, the
parties have signed this agreement intending to be bound thereby.
Axion
Power International, Inc. Executive
By:
Xxxx X.
Xxxxxxxx, Chairman Xxxxxx
Xxxxxxxxx
Employment
Agreement—Page 8
NONQUALIFIED
STOCK OPTION AGREEMENT
(The
Options Represented Hereby Are Not Presently Exercisable)
THIS
OPTION AGREEMENT (“Option
Agreement”) is dated and delivered effective as of April 1, 2005, in Xxxxxxx,
Xxxxxxx, Xxxxxx between AXION
POWER INTERNATIONAL, INC., a
Delaware corporation (hereinafter called the “Company”) and XXXXXX
XXXXXXXXX
(hereinafter called “Optionee”):
R
E C I T A L S
The
Company and the Optionee have entered into an employment agreement that requires
the Company to grant the Optionee an option to purchase 180,000 shares of the
Company’s common stock at a price of $2.60 per share as partial consideration
for the services to be rendered under the agreement.
The Board
of Directors (the “Board”) has determined that it would be in the best interests
of the Company and its stockholders to grant the option provided for herein (the
“Option”) as an inducement to serve as an employee of the Company and to provide
Optionee with a proprietary interest in the future of the Company;
NOW
THEREFORE, in
consideration of the mutual covenants hereinafter set forth, the parties hereto
agree as follows:
1. Grant
of the Option. The
Company hereby grants to Optionee the right and option to purchase, on the terms
and conditions hereinafter set forth, all or any part of an aggregate of 180,000
shares (the “Stock”) of the presently authorized but unissued common stock, par
value $.0001 per share, of the Company (the “Common Stock”). The purchase price
of the Stock subject to this Option shall be $2.60 per share.
2. Vesting
of the Option. As long
as the Optionee remains an employee of the Company, the option granted hereby
shall vest at the rate of 7,500 shares per month commencing on May 1, 2005. If
the Optionee ceases to be an employee of the Company before the final vesting
date, any vested options that are not exercised within 60 days after the
termination of such employment shall be forfeit. Notwithstanding the generality
of the foregoing, rights represented by vested options shall not be affected by
the termination of the Optionee’s employment because of the disability or death
of the Optionee.
3. Exercise
of Option.
(a) Vested
Options may only be exercised by the Optionee who shall have the right to
exercise such Option in whole or in part, at any time or from time to time
during the period commencing on a vesting date and terminating on the sixth
anniversary of such vesting date. The Option is not transferable or assignable
by the Optionee other than by will, as a result of the laws of descent and
distribution or pursuant to a Qualified Domestic Relations Order. If the Option
is transferred by will, as a result of the laws of descent and distribution or
pursuant to a Qualified Domestic Relations Order, the transferee shall have all
of the rights, powers and privileges that the Optionee would have had in the
absence of such a transfer.
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(b) This
Option may be exercised by written notice of intent to exercise the Option
delivered to the Company at its principal office no fewer than five days in
advance of the effective date of the proposed exercise. Such notice shall be
accompanied by this Agreement, shall specify the number of shares of Common
Stock with respect to which the Option is being exercised and shall specify the
proposed effective date of such exercise. Such notice shall also be accompanied
by payment in full to the Company at its principal office of the option price
for the number of shares of the Common Stock with respect to which the Option is
then being exercised. The payment of the option price shall be made in cash or
by certified check, bank draft, or postal or express money order payable to the
order of the Company or, with the consent of the Board, in whole or in part in
Common Stock which is owned by the Optionee and valued at its Fair Market Value
on the date of exercise. Any payment in shares of Common Stock shall be effected
by delivery of such shares to the Secretary of the Company, duly endorsed in
blank or accompanied by stock powers duly executed in blank, together with any
other documents or evidence as the Secretary of the Company shall require from
time to time.
(c) Upon the
Company’s determination that the Option has been validly exercised as to any of
the Stock, the Secretary of the Company shall issue a certificate or
certificates in the Optionee’s name for the number of shares set forth in his
written notice. However, the Company shall not be liable to the Optionee for
damages relating to any delays in issuing the certificate(s) to him, any loss of
the certificate(s), or any mistakes or errors in the issuance of the
certificate(s) or in the certificate(s) themselves.
3. Term
of Employment. This
Option shall not grant to Optionee any right to continue serving as an employee
of the Company.
4. Notices;
Deliveries. Any
notice or delivery required to be given under the terms of this Option Agreement
shall be addressed to the Company in care of its Secretary at its principal
office, 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx Xxxxxx X0X 0X0, and any notice or
delivery to be given to Optionee shall be addressed to him at such address as
the Optionee may hereafter designate in writing. Any such notice or delivery
shall be effective as of the date of receipt.
5. Disputes. As a
condition of the granting of the Option hereby, the Optionee and his heirs and
successors agree that any dispute or disagreement which may arise hereunder
shall be determined by the Board in its sole discretion and judgment, and that
any such determination and any interpretation by the Board of the terms of this
Option shall be final and shall be binding and conclusive, for all purposes,
upon the Company, Optionee, his heirs and personal representatives.
6. Legend
on Certificates. The
certificate(s) representing the shares of Stock purchased by exercise of this
Option will be stamped or otherwise imprinted with a legend in such form as the
Company or its counsel may require with respect to any applicable restrictions
on the sale or
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transfer
of such shares and the stock transfer records of the Company will reflect
stop-transfer
instructions with respect to such shares.
7. Miscellaneous.
(a) All
decisions of the Board upon any questions arising under the Plan or under this
Option Agreement shall be conclusive.
(b) Nothing
herein contained shall affect Optionee’s right to participate in and receive
benefits from and in accordance with the then current provisions of any pension,
insurance or other employee welfare plan or program of the Company.
(c) Optionee
agrees to make appropriate arrangements with the Company for satisfaction of any
applicable federal, state or local income tax, withholding requirements or like
requirements, including the payment to the Company at the time of exercise of
the Option of all such taxes and requirements.
(d) Whenever
the term “Optionee” is used herein under circumstances applicable to any other
person or persons to whom this Option, in accordance with the provisions hereof,
may be transferred, the word “Optionee” shall be deemed to include such person
or persons.
(e) Notwithstanding
any of the other provisions hereof, Optionee agrees that he will not exercise
this Option and that the Company will not be obligated to issue any of the Stock
pursuant to this Option Agreement, if the exercise of the Option or the issuance
of such shares of Common Stock would constitute a violation by the Optionee or
by the Company of any provision of any law or regulation of any governmental
authority or na-tional
securities exchange. Upon the acquisition of any Stock pursuant to the exercise
of the Option herein granted, Optionee will enter into such written
representations, warranties and agreements as the Company may reasonably request
in order to comply with applicable securities laws or with this Agreement.
(f) This
Agreement shall be binding upon and inure to the benefit of any successor or
successors of the Company. The interpretation, performance and enforcement of
this Option Agreement shall be governed by the laws of the State of Delaware.
IN
WITNESS WHEREOF, the Company has, as of the date and place first above written,
caused this Agreement to be executed on its behalf and the Optionee has hereunto
set his hand as of the date and place first above written, which date is the
date of grant of this Option.
Axion
Power International, Inc. Optionee
By:
Xxxx X.
Xxxxxxxx, Chairman Xxxxxx
Xxxxxxxxx
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