EMPLOYMENT AGREEMENT
Exhibit
10.8
EMPLOYMENT
AGREEMENT, dated as of June 22, 2007, and effective as of May 11, 2007 (this
“Agreement”),
by
and between XXXXXX X. XXXXXX, an individual residing in Los Angeles, California
(the “Employee”),
and
PURE BIOFUELS CORP., a Nevada corporation (the “Company”).
WITNESSETH
WHEREAS,
the Company desires to engage the Employee as the President of the Company
and
such other duties as shall from time to time be assigned to him in the
reasonable discretion of the Board of Directors of the Company consistent with
the duties of an executive officer, and the Employee desires to be so engaged,
subject to the terms and conditions set forth herein.
NOW,
THEREFORE, in consideration of the foregoing and the respective covenants and
agreements herein contained, and for other good and valuable consideration,
the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
intending to be legally bound hereby agree as follows:
1. Engagement.
Subject
to the terms and conditions of this Agreement, the Company hereby agrees to
engage the Employee to render, and the Employee hereby agrees to render, the
duties as shall from time to time be assigned to him in the reasonable
discretion of the Board of Directors of the Company consistent with the duties
of an executive officer. Without limiting the generality of the foregoing
sentence, it is intended by the Company that the Employee will assist management
in operating the business of the Company and provide his knowledge and expertise
with respect thereto. The Employee further agrees to use his commercially
reasonable efforts to promote the interests of the Company and to devote such
business time, energies and skill to the business and affairs of the Company
in
accordance with the reasonable directions and orders of the Company’s management
not inconsistent with this Agreement for the Employment Term of this Agreement.
While the Employee is engaged by the Company, the Employee shall not, directly
or indirectly, engage or participate in any business which is in competition
whatsoever with the business of the Company.
2. Term.
The
term of this Agreement is one year, from May 11, 2007, until May 11, 2008 (the
“Employment
Term”).
This
Agreement (unless earlier terminated pursuant to the terms set forth in Section
9 below), will be renewable automatically each year for a one year term unless
terminated by giving notice to the Employee at least three (3) months prior
to
the expiration date above. In such case, any discussions or negotiations the
Employee may elect to entertain concerning a subsequent renewal or extension
of
this Agreement shall not create any binding obligation on the Company unless
a
written employment
agreement renewing or extending this Agreement beyond the aforementioned one
year term has been signed by both parties.
Page
1
3. Performance
of duties out of the Company.
This
Agreement shall not prohibit the Employee from making passive personal
investments nor will it prevent the Employee from conducting private business
affairs provided those activities do not interfere with the services required
under this Agreement nor conflict with the interest of the Company. The
expenditure of reasonable amounts of time for educational, charitable, or
industry activities shall not be deemed a breach of this Agreement if those
activities do not interfere with the services assigned by the Board of Directors
of the Company. The parties acknowledge that the Employee is at present a
Managing Director and Partner of ARC Investment Partners, LLC and an affiliate
of SGM Capital, LLC.
4. Board
of Directors.
The
Employee may, at the discretion of the Company, during the term of
this
Agreement, hold a seat on the Board of Directors of the Company and other
positions on management, and shall serve in such capacities as the Board shall
from time to time determine.
5. Place
of Employment.
The
Employee’s place of services shall be Los Angeles County, California which can
be changed only with the Employee’s consent.
6. Compensation.
6.1 Base
Salary.
The
Company shall pay, or shall cause to be paid, to the Employee an annual base
salary of One Hundred Thousand Dollars ($100,000) per year, payable in
accordance with the usual practices of the Company, but not less often than
twice monthly (the “Base
Salary”).
The
Base Salary will be payable in substantially equal installments and adjusted
on
a prorated basis for any fraction of the year or month during which the Employee
is not so engaged. Increases to the existing Base Salary package may be
considered and subject to review and approval by the Board of Directors of
the
Company. For avoidance of doubt, Employee’s Base Salary shall be paid
retroactively to February 6, 2007, the date he became a director of the
Company.
6.2. Bonus
Potential.
The
Company shall pay the Employee a bonus in the amount of up to 150% of the
earned
Base Salary subject to the Company’s Board of Directors approval. This bonus
shall be paid to the Employee no later than the April 30th after the calendar
year to which the bonus relates.
6.3. Benefits.
The
Employee will be entitled to all employee benefits that other United States
corporate executives of the Company or its subsidiaries are entitled to receive,
including any profit sharing plan; 401(k) plan; life, medical, dental, vision
or
disability group insurance plan; other insurance plan or policy; product
award
or discount plan; or other plan or benefit the Company may provide during
the
term of this Agreement (the “Benefits”) in an amount which will be not less than
the most extensive benefit provisions for any United States employee of the
Company. The
Company will
cause no delay in the effective date of benefit coverage for the Employee,
except for delays, if any, imposed by the requirements of the Company’s benefit
plans. The Company will reimburse the Employee for any premiums paid from
the
first day of employment at the Company’s offices to the date the Employee’s
benefits become effective under the Company’s benefit plans. Nothing herein
shall affect the Company’s ability to modify, alter, terminate or otherwise
change any benefit plan it has in effect at any given time, to the extent
permitted by law.
Page
2
6.4. Vacation,
Holidays and Leave.
The
Employee will be entitled to four weeks of paid vacation, and holidays,
sick
leave and other leave time in accordance with the plans, policies, programs
and
practices in effect generally and with respect to other corporate executives
of
the Company in an amount no less than the most extensive such plan, policy,
program or practice offered to any other United States officer of the
Company.
6.5. Expenses.
The
Company will reimburse the Employee for all reasonable business expenses
incurred by the Employee during the term of this Agreement upon presentation
by
the Employee of an itemized account for such expenditures in accordance with
the
Company’s current expense reimbursement policies and practices. The Company will
provide the Employee, at no cost to him, all reasonably necessary workplace
tools to effectively carry out his duties, including, but not limited to,
office
space, computer hardware and software, and communications devices.
6.6. Other.
The
Employee shall not receive any other compensation from the Company, its
subsidiaries or affiliates or participate in or accrue or receive benefits
under
any of the Company’s, its subsidiaries’ or affiliates’ employee benefit programs
or receive any other benefits from the Company, its subsidiaries or affiliates
(including without limitation health, disability, life insurance, retirement,
pension and profit sharing benefits). The Employee shall comply with all
applicable United States and foreign, federal, state and local income taxes
in
connection with any compensation payments in connection with this
Agreement.
7. Stock
Options.
The
Company has granted to the Employee options to purchase 1,750,000 shares of
the
Company’s common stock at an exercise price equal to $0.98, the fair market
value of the shares on the date of grant. The options shall be governed by
the
terms of the Company’s Nonstatutory Stock Option Agreement substantially in the
form attached hereto as Exhibit
A
of this
Agreement and the Pure Biofuels Corp. Stock Incentive Plan (the “Stock Incentive
Plan”).
8. Pre-Financing
Compensation.
The
Employee agrees to defer any and all cash compensation until the Company has
closed its anticipated near-term financing of at least $4.0 million other than
$500 per week. The Company agrees to pay all accrued cash compensation at the
time of the financing from the proceeds provided that the Employee is employed
by the Company on the date of closing of such financing.
9. Termination
Page
3
9.1 Termination
by the Company for “Cause”.
The
Company may terminate the Employee’s services with the Company for Cause, which
means to a termination for any of the following reasons: (i) the Employee’s
failure or refusal to perform the Employee’s duties within the scope of this
Agreement other than any such failure resulting from the Employee’s incapacity
due to physical or mental illness except after written notice of the same
and
the Employee’s failure to cure the problem within a reasonable time after such
notice; (ii) the Employee’s conviction of, or entry of a plea of no contest to,
a felony involving fraud, embezzlement or financial improprieties, or any
lesser
crime involving the property of the Company or its customers including, but
not
limited to fraud, or embezzlement or other misappropriation of property
belonging to the Company or its customers; (iii) any intentional violation
by
the Employee of governmental laws or regulations applicable to the Company’s
business which has a materially adverse effect on the business or reputation
of
the Company; and (iv) Employee's
pursuit
of activities that are materially contrary to the best interests of the Company,
and which are reasonably likely to result in material harm to the
Company.
In the
event the Company terminates the Employee’s services for Cause, the Company
shall by the date service of the Employee is terminated pay to the Employee
any
accrued but unpaid Base Salary, reimbursable business expenses, and any other
vested benefit due under this Agreement or pursuant to applicable law through
the date service of the Employee is terminated. The Company shall thereafter
have no other obligation to pay the Employee further compensation of any
kind,
including, but not limited to, severance compensation in any form.
9.2. Termination
by the Employee.
In the
event the Employee terminates his services for any reason, the Company shall
by
the termination date, or such later date permitted by applicable law, pay
to the
Employee any accrued but unpaid Base Salary, reimbursable business expenses,
and
any other vested benefit due under this Agreement or pursuant to applicable
law.
The Company shall thereafter have no obligation to pay the Employee further
compensation of any kind, including, but not limited to, severance compensation
in any form.
10. Disability
and Death.
10.1 Termination
due to Employee’s Permanent Disability.
To the
extent permissible under applicable law, in the event the Employee becomes
permanently disabled during employment with the Company, the Company may
terminate Employee’s employment under this Agreement by giving thirty (30) days
notice to the Employee of its intent to terminate Employee’s employment, and
unless the Employee resumes performance of the duties set forth in Section
1
within five (5) days of the date of the notice and continues performance
for the
remainder of the notice period, Employee’s employment shall terminate at the end
of the thirty (30) day period. The Employee will not be entitled to and shall
not receive any compensation or benefits of any type following the effective
date of termination, except for any accrued but unpaid salary, bonuses, or
reimbursable business expenses. "Permanently disabled" for the purposes of
this
Agreement means the inability, due to physical or mental ill health, to perform
the essential functions of Employee’s job, with or without a reasonable
accommodation, for ninety (90) days during any one employment year irrespective
of whether such days are consecutive.
Page
4
10.2 Termination
Due To Employee’s Death.
Employee’s employment under this Agreement will terminate immediately upon the
Employee’s death and the Company shall not have any further liability or
obligation to the Employee, his executors, heirs, assigns or any other person
claiming under or through his estate, except that Employee’s estate shall
receive any accrued but unpaid salary or bonuses.
11. Merger,
Consolidation or Acquisition.
This
Agreement shall not be terminated by any voluntary or involuntary modification
in the ownership of the Company’s capital stock or modification of the Company’s
corporate structure. In the event that of any merger or consolidation or
transfer of assets of the Company or any of its subsidiaries, the Company’s
obligations hereunder shall be assigned to the surviving or resulting
corporation or the transferee of the assets of the Company or the Company’s
subsidiaries.
12. Change
of Control.
In the
event of a “change of control”, as defined in the Stock Incentive Plan, the
Employee is entitled to 100% acceleration of unvested stock options.
13. Termination
without Cause.
If the
Company terminates the Employee without Cause other than due to death, permanent
disability or nonrenewal of this Agreement after the Employment Term, the
Employee shall receive (i) accrued but unpaid Base Salary and bonus pursuant
to
Section 6.2, and reimbursable business expenses, upon termination of this
Agreement; and (ii) payment equivalent to Base Salary for one year (the
“Severance Payment”), which shall be paid out as if Employee’s employment had
continued during the one year severance period. The Employee shall not be
entitled to any Severance Payment unless (i) Employee complies with all
surviving provisions of any non-competition agreement, non-solicitation
agreement, confidentiality agreement or invention assignment agreement signed
by
Employee, and (ii) Employee executes and delivers to the Company after a notice
of termination a release in form and substance acceptable to the Company by
which the Employee releases the Company from any obligations and liabilities
of
any type whatsoever under this Agreement, except for the Company's obligations
with respect to the Severance Payment, which release shall not affect the
Employee’s right to indemnification, if any, for actions taken within the scope
of his employment. Notwithstanding anything herein, no Severance Payment shall
be paid or otherwise provided until all applicable revocation periods have
fully
expired, and the mutual release becomes fully and finally enforceable. The
parties hereto acknowledge that the Severance Payment to be provided under
this
Section is to be provided in part in consideration for the above-specified
release.
14. Confidentiality.
14.1 The
Employee agrees that all Confidential Information that comes or has come into
the Employee’s possession by reason of this Agreement or his employment with the
Company is the property of the Company and shall not be used except for the
Company’s exclusive benefit. Further, the Employee shall not, during the
Employment Term of this Agreement, or thereafter until such Confidential
Information is or becomes public (other than through an unauthorized disclosure
of such Confidential Information by Employee or any other employee of the
Company), disclose or acknowledge the content of any Confidential Information
to
any person who is not an employee or a consultant of the Company authorized
to
possess such Confidential Information. Upon termination of this Agreement,
the
Employee shall deliver to the Company all documents, writings, electronic
storage devices, and other tangible things containing any Confidential
Information and the Employee shall not make or retain copies, excerpts, or
notes
of such Confidential Information.
Page
5
14.2 For
purposes of this Section, “Confidential Information” shall mean all proprietary
and other information relating to the business and operations of the Company,
subsidiaries and its affiliates, which has not been specifically designated
for
release to the public by an authorized representative of the Company,
subsidiaries or any of its affiliates, including, but not limited to the
following: (i) information, observations, procedures, models and data concerning
the business or affairs of the Company, subsidiaries or any of its affiliates;
(ii) products or services; (iii) costs and pricing structures; (iv) marketing
plans or analyses; (v) drawings, photographs and reports; (vi) computer
software, including operating systems, applications and program listings; (vii)
flow charts, manuals and documentation; (viii) data bases; (ix) accounting
and
business methods; (x) inventions, devices, new developments, methods and
processes, whether patentable or un-patentable and whether or not reduced to
practice; (xi) customers, vendors, suppliers and customer, vendor and supplier
lists; (xii) other copyrightable works; (xiii) all production methods,
processes, technology and trade secrets and (xiv) all similar and related
information in whatever form. Confidential Information will not include any
information that has been published in a form generally available to the public
prior to the date the Employee proposes to disclose or use such information.
15. Non-solicitation
/ Non-disparagement.
In the
event of the termination of this Agreement for any reason, the Employee shall
not, for a period of one year thereafter, directly or indirectly: (i) solicit,
induce or encourage any employee or consultant of the Company to terminate
his
or her employment or consulting agreement with the Company; (ii) make any
disparaging public statement concerning the Company; or (iii) use the Company’s
Confidential Information to induce, attempt to induce or knowingly encourage
any
Customer (as defined below) of the Company to divert any business or income
from
the Company, or to stop or alter the manner in which they are then doing
business with the Company. The term “Customer” with respect to the Company shall
mean any individual or business firm that is, or within the prior twenty-four
(24) months was, a customer or client of the Company, or whose business was
actively solicited by the Company at any time, regardless of whether such
Customer was generated, in whole or in part, by the Employee
efforts.
16. Breach
by the Employee.
Both
parties recognize that the services to be rendered under this Agreement by
the
Employee are special, unique and extraordinary in character, and that in the
event of a breach by the Employee of the material terms and conditions of
Section 14 and Section 15 of this Agreement, the Company and its affiliates
shall be entitled, if it so elects, to institute and prosecute proceedings
in
any court of competent jurisdiction, either in law or in equity, to obtain
damages for any breach of such Sections, or to enforce the specific performance
thereof by the Employee. Without limiting the generality of the foregoing,
the
parties acknowledge that a breach by the Employee of his material obligations
under Section 14 and Section 15 of this Agreement could Cause the Company,
subsidiaries and/or its affiliates irreparable harm for which no adequate remedy
at law would be available in respect thereof and that therefore upon proof
of
the same the Company, subsidiaries and/or its affiliates would be entitled
to
seek injunctive relief with respect thereto, as well as to seek reasonable
attorneys’ fees and other costs it incurred in its efforts to obtain enforcement
of the Agreement.
Page
6
17. Conflicting
Agreements.
The
Employee hereby represents and warrants to the Company that (i) neither the
execution of this Agreement by the Employee nor the performance by the Employee
of any of his obligations or duties under this Agreement will conflict with
or
violate or constitute a breach of the terms of any employment or other agreement
to which the Employee is a party or by which the Employee is bound, and (ii)
the
Employee is not required to obtain the consent of any person, firm, corporation
or other entity in order to enter into this Agreement or to perform any of
his
obligations or duties under this Agreement. The Employee agrees to indemnify
and
hold harmless the Company for any liability the Company may incur as the result
of the existence of any such obligations, duties or agreements.
18. Further
Assurances.
The
Employee hereby agrees to execute and deliver such agreements, certificates
or
other documents as may be reasonably requested by the Company which may be
necessary or are required under this Agreement.
19. Miscellaneous.
19.1 Arbitration.
Any and
all disputes or controversies arising out of or relating to this Agreement,
other than injunctive relief pursuant to Section 16, shall be resolved by
arbitration at the American Arbitration Association at its Los Angeles offices
before one arbitrator (mutually selected by the Company and the Employee or,
if
the Company and Employee cannot agree on one arbitrator, then as selected under
the rules of the American Arbitration Association) under the then existing
commercial rules and regulations of the American Arbitration Association. The
parties agree that in any such arbitration, the arbitrator shall not have the
power to reform or modify this Agreement in any way and to that extent their
powers are so limited. The determination of the arbitrator shall be final and
binding on the parties hereto and judgment on it may be entered in any court
of
competent jurisdiction. Except as required by law, neither the Company nor
the
Employee shall issue any press release or make any statement which is reasonably
foreseeable to become public with respect to any arbitration or dispute between
the parties without receiving the prior written consent of the other party
to
the content of such press release or statement.
19.2 Successors;
Binding Agreement.
This
Agreement and all rights of the Employee hereunder shall inure to the benefit
of
the parties hereto and their respective heirs, personal representatives,
successors and assigns; provided,
that
the duties of the Employee hereunder are personal to the Employee and may not
be
delegated or assigned by him.
Page
7
19.3 Notices.
All
notices and other communications under this Agreement shall be in writing and
shall be deemed given if delivered personally, by facsimile or other electronic
transmission (with confirmation) or by overnight courier to the parties at
the
following addresses (or at such other address for a party as shall be specified
by like notice):
|
(i)
|
If
to the Company, one copy to:
|
|
0000
Xxxxxx Xxxxx Xxxxxx Xxxx., Xxxxx 000
|
|
|
Xxxxxxx
Xxxxx, XX 00000
|
|
|
Attention:
Xxxx Xxxxxxxx
|
|
|
with
a simultaneous copy to (which copy shall
|
|
|
not
be deemed notice):
|
|
|
DLA
Piper US LLP
|
|
|
1251
Avenue of the Americas
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000-0000
|
|
|
Fax:
(000) 000-0000
|
|
|
Attention:
Xxxxxx X. Xxxxxxxx, Esq.
|
|
|
(ii)
|
If
to the Employee, one copy to:
|
|
Xxxxxx
X. Xxxxxx
|
|
|
ARC
Investment Partners, LLC
|
|
|
0000
Xxxxxx Xxxxx Xxxxxx Xxxx., Xxxxx 000
|
|
|
Xxxxxxx
Xxxxx, XX 00000
|
|
|
Fax:
(000) 000-0000
|
|
|
with
a simultaneous copy to (which copy shall
|
|
|
not
be deemed notice):
|
|
|
Xxxxxxxxxx
Hyatt & Xxxxxx, P.C.
|
|
|
000
Xxxxxxxxxxx Xxxxxx, Xxxxxx-Xxxxxx Xxxxx
|
|
|
Xxxxxx,
XX 00000-0000
|
|
|
Fax:
(000) 000-0000
|
|
|
Attention:
Xxxx Xxxxx
|
19.4 Governing
Law.
This
Agreement shall be governed by and in accordance with the laws of the State
of
California without regard to conflict of law rules thereof.
19.5 Amendment;
Waivers.
This
Agreement may only be amended by written agreement, signed by the parties.
The
waiver of either party hereto of any right hereunder or of any failure to
perform or breach by the other party hereto shall not be deemed a waiver of
any
other right hereunder or of any other failure or breach by the other party
hereto, whether of the same or a similar nature or otherwise. No waiver shall
be
deemed to have occurred unless set forth in a writing executed by or on behalf
of the waiving party. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only
as
to the specific term or condition waived and shall not constitute a waiver
of
such term or condition for the future or as to any act other than that
specifically waived.
Page
8
19.6 Validity;
Legal Fees.
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall otherwise remain in full force and effect. Moreover, if any one
or
more of the provisions contained in this Agreement is held to be excessively
broad as to duration or scope, such provisions shall be construed by limiting
and reducing them so as to be enforceable to the maximum extent compatible
with
applicable law. Except as expressly provided herein, each party shall bear
the
costs of any legal fees and other fees and expenses which may be incurred in
respect of enforcing its respective rights under this Agreement.
19.7 Entire
Agreement.
This
Agreement sets forth the entire agreement and understanding of the parties
in
respect of the subject matter contained herein, and supersedes all prior
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, the Employee or
representative of either party in respect of said subject matter.
19.8 Survivorship. The
respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations. The provisions of this Section
19.8
are in addition to the survivorship provisions of any other section to this
Agreement.
19.9 Headings
Descriptive.
The
headings of the several paragraphs of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or construction
of
any provision of this Agreement.
19.10 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original but all of which together shall constitute one and
the
same instrument.
20. Section
409A.
Notwithstanding anything in this Agreement to the contrary, if the Employee
is a
“specified employee” as described in Internal Revenue Code section 409A and the
Treasury Regulations thereunder (“Section 409A”) and as determined by the
Company in accordance with its procedures, by which determination the Employee
is bound, any amount to which the Employee would otherwise be entitled during
the first six months following the Employee’s separation from service that
constitutes nonqualified deferred compensation within the meaning of Section
409A and that is therefore not exempt from Section 409A as involuntary
separation pay or a short-term deferral, will be accumulated and paid without
interest on the first business day of the seventh month following the date
of
the Employee’s separation from service. For purposes of this Agreement, each
amount to be paid or benefit to be provided shall be construed as a separate
identified payment for purposes of Section 409A.
Page
9
[Remainder
of page intentionally left blank.]
Page
10
IN
WITNESS WHEREOF, the parties have caused this Employment Agreement to be
executed as of the day and year first above written.
| |
|
|
| By: |
/s/
Xxxx Xxxxxxxx
|
|
|
Name: Xxxx Xxxxxxxx |
||
|
Title:
Chief Executive Officer
|
||
|
XXXXXX
X. XXXXXX
|
||
| |
|
|
|
/s/
Xxxxxx Xxxxxx
|
||
|
|
||
Signature
page to the Employment Agreement between Pure Biofuels Corp. and Xxxxxx
Xxxxxx
Page
11
