Contract
2008
AMENDED EMPLOYMENT AGREEMENT AND PLAN
THIS
2008
AMENDED EMPLOYMENT AGREEMENT AND PLAN (“Agreement”) made and entered into
effective as of July 1, 2008 by and between Solomon Technologies, Inc. (the
“Company”), a Delaware corporation located at 00 Xxxxxxxx Xxxxx, Xxxxxxx , XX
00000, and Xxxx X. Xxxxxxxxx (the “Employee”).
WITNESSETH
THAT:
WHEREAS,
the Company desires to continue to employ Employee for the period and upon
and
subject to the terms herein provided and desires to be assured that Employee
will not compete with the Company for the period and within the areas
hereinafter specified; and
WHEREAS,
Employee is willing to agree to be employed by the Company upon and subject
to
the terms herein provided and is willing to agree not to compete with the
Company on the terms set forth hereinafter; and
WHEREAS,
the Compensation Committee of the Company’s Board of Directors has reviewed the
2008 Employment Agreement and Plan for Employee and has unanimously recommended
changes to this Plan as being in the best interests of the Company.
NOW,
THEREFORE, in consideration of the premises, the parties hereto covenant and
agree as follows:
1.
Term
of Employment; Compensation.
The
Company agrees to employ Employee effective July 1, 2008 until June 30, 2011,
subject to Section
6
below,
in a senior managerial capacity, initially as non-executive Chairman of the
Board, with the responsibilities normally associated with such position. The
Company will pay Employee for his services during the term of the Employee’s
employment hereunder and for prior services for which payment has been accrued
as provided in Exhibit
A
hereto.
Capitalized terms not defined herein shall have the meanings ascribed to them
in
Exhibit
A.
2.
Office
and Duties.
Employee shall have the usual duties of senior managerial personnel and shall
have responsibility, subject to the oversight of the Board of Directors of
the
Company, for participating in the management and direction of the Company’s
business and operations and shall perform such specific other tasks, consistent
with the Employee’s position as a senior manager, as may from time to time be
assigned to the Employee by the Board of Directors. Employee shall devote such
business time, labor, skill, attention and best ability to the performance
of
his duties hereunder in a manner which will faithfully and diligently further
the business and interests of the Company. Employee may pursue other business
opportunities, and nothing herein shall be construed as requiring Employee
to
devote full time to the Company’s business.
3.
Expenses.
Employee shall be entitled to reimbursement for expenses incurred by him in
connection with the performance of his duties hereunder upon receipt of vouchers
therefore in accordance with such procedures as the Company has heretofore
or
may hereafter establish.
4.
Services
as a Director.
Employee shall receive no additional compensation for services provided by
him
as a member of the Company’s Board of Directors.
5.
Additional
Benefits.
Nothing
herein contained shall preclude Employee, to the extent he is otherwise
eligible, from participation in all group insurance programs or other fringe
benefit plans which the Company may hereafter in its sole and absolute
discretion make available generally to its employees, but the Company shall
not
be required to establish or maintain any such program or plan.
6.
Termination
of Employment.
(a)
Notwithstanding
any other provision of this Agreement, Employee’s employment shall be “at will”
and may be terminated:
(i) By
the
Company for Cause as defined below, in which event the Company shall not be
required to pay the to pay the remainder of the Employee’s Salary specified in
Section 1 of Exhibit
A
for the
remaining term of the Agreement set forth in Section 1, but the Company shall
remain obligated to pay the Fixed Fee set forth in Section 2 of Exhibit
A.
(ii) By
the
Company upon thirty (30) days’ notice to Employee if he should be prevented by
illness, accident or other disability (mental or physical) from discharging
his
duties hereunder for three (3) consecutive months or more, provided
that
the
Company’s obligation to pay the Salary and the Fixed Fee set forth in Sections 2
and 3 of Exhibit
A
shall
not be affected.
(iii) In
the
event of Employee’s death during the term of his employment, the Company’s
obligation to pay the Salary and the Fixed Fee set forth in Sections 2 and
3 of
Exhibit
A
shall
not be affected.
(iv) By
the
Company without Cause upon written notice, in which event all compensation
payable by the Company as provided in Exhibit
A
shall
remain due and payable to Employee at such times as set forth in Exhibit
A
as
though his employment had not been terminated thereby.
(v) By
Employee for Good Reason as defined below provided that written notice to the
Company is delivered by the Employee prior to such termination and the
termination date is no later than six months following
the initial existence of the first to occur of the events in Section (vi)(b)(i),
(ii) or (iii) below, in which event all compensation payable by the Company
as
provided in Exhibit
A
shall
remain due and payable to Employee at such times as set forth in Exhibit
A
as
though his employment had not been terminated thereby. The parties intend that
Good Reason under this Agreement shall be treated as an involuntary separation
of service within the meaning of IRS Regulation Section 1.409A-1(n)(1) and
(2).
Accordingly the definition of Good Reason set forth in (b) below is intended
to
satisfy the safe harbor definition for when a termination of employment for
Good
Reason will be treated as an involuntary separation of service as set froth
in
IRS Regulation Section 1.409A-1(n)(2)(ii).
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(vi) By
Employee without Good Reason as defined in (b) below, in which event the Company
shall not be required to pay the remainder of the Employee’s Salary specified in
Section 1 of Exhibit
A
for the
remaining term of the Agreement set forth in Section 1, but the Company shall
remain obligated to pay the Fixed Fee set forth in Section 2 of Exhibit
A.
| (b) |
Definitions.
|
(i) “Good
Reason” shall mean the occurrence without the Employee’s express written consent
of any of the following which, after receipt of notice thereof given by Employee
no later than 90 days of the initial existence of the adverse action taken
by
the Company, still remains uncured by the Company after a reasonable period
to
cure by the Company not to exceed (30) days:
(A) a
diminution in Employee's Salary;
(B) any
action by the Company resulting in a material diminution in Employee's
authority, duties or responsibilities including, but not limited to, removal
from the Company’s Board of Directors, and; or
(C) the
relocation of Employee's principal place of business to a facility or a location
more than sixty miles from Employee's then present principal place of
business.
(ii) “Cause”
shall include, without limitation, the occurrence of any of the following by
the
Employee and (other than in the case of a termination under subparagraph (E)
below) the failure of Employee to cure the same within a reasonable period
of
time after written notice and an opportunity to meet with the Board of
Directors:
(A) Gross
negligence or malfeasance by Employee to perform the duties of Employee's
position;
(B) Persistent
failure of Employee to obey orders given by the Board of Directors of the
Company;
(C) Misconduct
in connection with the performance of any of Employee's duties, including,
without limitation, misappropriation of funds or property of the Company,
embezzlement, securing or attempting to secure personally any profit in
connection with any transaction entered into on behalf of the Company,
misrepresentation to the Company, or any violation of law or regulations on
Company premises or to which the Company is subject;
(D) Commission
by Employee of an act involving moral turpitude, dishonesty or
theft;;
(E) Conviction
of or guilty plea of any act of fraud or a felony; or
(F) Incapacity
on the job by reason of the use or abuse of alcohol or drugs.
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7.
Stock
Options.
As an
inducement to Employee to continue his employment with the Company in spite
of
deferred prior compensation in substantial amounts, Employee shall be granted
an
option to purchase shares of the common stock of the Company (“Shares”) as
provided in Section 4 of Exhibit
A.
8.
Notices.
All
notices and other communications under this Agreement shall be in writing and
may be given by any of the following methods: (a) personal delivery; (b)
facsimile transmission; (c) registered or certified mail, postage prepaid,
return receipt requested; or (d) reputable overnight delivery service. Notices
shall be sent to the appropriate party at its address or facsimile number given
below (or at such other address or facsimile number as specified by notice
given
under this Section
8):
if
to the
Company:
Solomon
Technologies, Inc.
Attention:
President
00
Xxxxxxxx Xxxxx
Xxxxxxx,
XX 00000
if
to
Employee, to the address as set forth on the signature page.
All
such
notices and communications shall be deemed received upon (a) actual receipt
by
the addressee, (b) actual delivery to the appropriate address or (c) in the
case
of a facsimile transmission, upon transmission by the sender and issuance by
the
transmitting machine of a confirmation slip confirming that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously
mail
a copy of the notice to the addressee at the address provided above; however,
that mailing shall not alter the time at which the facsimile notice is deemed
received.
9.
Assignability.
In the
event that the Company shall be merged with, or consolidated into, any other
entity, or in the event that it shall sell and transfer substantially all of
its
assets to another entity, the terms of this Agreement shall inure to the benefit
of, and be assumed by, the entity resulting from such merger or consolidation,
or to which the Company’s assets shall be sold and transferred. This Agreement
shall not be assignable by Employee, but it shall be binding upon, and to the
extent provided in Section 6 shall inure to the benefit of, his heirs,
executors, administrators and legal representatives.
10.
Entire
Agreement.
This
Agreement (which for all purposes shall include Exhibit
A
hereto)
contains the entire agreement between the Company and Employee with respect
to
the subject matter thereof and supersedes any other previous oral or written
agreement relating to the subject matter hereof, and there has been no oral
or
other agreement of any kind whatsoever as a condition precedent or inducement
to
the signing of this Agreement or otherwise concerning this Agreement or the
subject matter hereof.
11.
Expenses.
Each
party shall pay its own expenses incident to the performance or enforcement
of
this Agreement, including all fees and expenses of its counsel for all
activities of such counsel undertaken pursuant to this Agreement, except as
otherwise herein specifically provided.
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12.
Waivers
and Further Agreements.
Any
waiver of any terms or conditions of this Agreement shall not operate as a
waiver of any other breach of such terms or conditions or any other term or
condition, nor shall any failure to enforce any provision hereof operate as
a
waiver of such provision or of any other provision hereof; provided,
however,
that no
such written waiver, unless it, by its own terms, explicitly provides to the
contrary, shall be construed to effect a continuing waiver of the provision
being waived and no such waiver in any instance shall constitute a waiver in
any
other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes
to
require full compliance with such provision. Each of the parties hereto agrees
to execute all such further instruments and documents and to take all such
further action as the other party may reasonably require in order to effectuate
the terms and purposes of this Agreement.
13.
Amendments.
This
Agreement may not be amended, nor shall any waiver, change, modification,
consent or discharge be effected except by an instrument in writing executed
by
or on behalf of the party against whom enforcement of any waiver, change,
modification, consent or discharge is sought.
14.
Severability.
If any
provision of this Agreement shall be held or deemed to be, or shall in fact
be,
invalid, inoperative or unenforceable as applied to any particular case in
any
jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because
of the conflicting of any provision with any constitution or statute or rule
of
public policy or for any other reason, such circumstance shall not have the
effect of rendering the provision or provisions in question, invalid,
inoperative or unenforceable in any other jurisdiction or in any other case
or
circumstance or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or
rule
of public policy, but this Agreement shall be reformed and construed in any
such
jurisdiction or case as if such invalid, inoperative or unenforceable provision
had never been contained herein and such provision reformed so that it would
be
valid, operative and enforceable to the maximum extent permitted in such
jurisdiction or in such case.
15.
Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument, and in pleading or proving any provision of this Agreement, it
shall
not be necessary to produce more than one of such counterparts.
16.
Section
Headings.
The
headings contained in this Agreement are for reference purposes only and shall
not in any way affect the meaning or interpretation of this
Agreement.
17.
Gender.
Whenever used herein, the singular number shall include the plural, the plural
shall include the singular, and the use of any gender shall include all
genders.
18.
Governing
Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
law (other than the law governing conflict of law questions) of the State of
Connecticut.
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19.
Compliance
with Internal Revenue Code Section 409A.
(a)
To
the
extent any amount provided under this Agreement is or will be subject to the
requirements of Section 409A of the Internal Revenue Code (“Code”), then that
amount shall be paid or otherwise provided in a manner that complies in form
and
in operation with the requirements of Section 409A of the Code. The provisions
of this Agreement are intended to comply with all of the applicable requirements
for a nonqualified deferred compensation plan set forth in Section 409A of
the
Code, such that any payment to the Employee is not subject to gross income
inclusion, interest penalties and additional tax under Code Section 409A(a).
In
particular, it is intended that this Agreement comply with Code Section 409A
in
good faith in accordance with IRS Notice 2005-1, and effective January 1, 2008
(or such later date announced by the IRS), in accordance with the final
regulations under Code Section 409A issued by the Department of the Treasury
on
April 10, 2007 (and any subsequent IRS notices or guidance under Code Section
409A), and this Agreement will be interpreted,
administered and operated accordingly. In the event that any provision of this
Agreement is inconsistent with Code Section 409A, the regulations or such other
guidance, then the applicable provisions of Code Section 409A, the regulations
or the guidance shall supersede such provision, and such provision shall be
deemed not to be part of this Agreement and shall not apply hereunder. Nothing
herein shall be construed as an entitlement to or guarantee of any particular
tax treatment to the
Employee.
(b)
The
payment of the Salary specified in Section 1of Exhibit
A
is for
the services the Employee performs during the term of his employment specified
in Section 1 of the Agreement, and is only due and owing while he remains
employed by the Company, or in the event of involuntary separation from service,
as defined in IRS Regulation 1.409A-1(n), death or disability under Section
6
hereof. Accordingly, the compensation represented by his Salary does not
constitute a deferral of compensation within the meaning of IRS Regulation
1.409A-1(b)(1), and therefore will not be considered a plan that provides for
the deferral of compensation that is subject to Section 409A of the Code, except
to the extent it exceeds the limits of IRS Regulation
1.409A-1(b)(9)(iii).
(e)
The
Fixed
Fee specified in Section 2 of Exhibit
A
(which
for this purpose shall include the Gross-up as defined in Section 3 of
Exhibit
A)
constitutes deferred compensation payable from a non-qualified deferred
compensation plan within the meaning of Sections 409A(d)(1) and (3) of the
Internal Revenue Code, and accordingly, the payment of the Fixed Fee shall
comply in form and in operation with the applicable requirements of Section
409A
of the Code. Accordingly, the following rules shall apply to the payment of
the
Fixed Fee to the Employee:
(i)
The
Fixed
Fee is to be paid in twelve equal monthly installments, with the first payment
date on November 1, 2008, and continuing for each of the eleven months
thereafter. The Agreement hereby complies with IRS Regulation 1.409A-2(b) by
designating the time and form of payment of the Fixed Fee in Section 2 of
Exhibit
A
of this
Agreement. Accordingly, this payment schedule reflects a non-elective schedule,
and as such no separate deferral election from the Employee is required under
this Agreement.
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(ii)
In
no
event shall the Fixed Fee be paid to the Employee earlier
than the
payment date set forth in (i) above in accordance with Section 409A(a)(2)(A)(iv)
of the Code.
(iii)
This
Agreement shall not
permit
the acceleration of the time or schedule of any payment of the Fixed Fee under
this Agreement, except as otherwise provided by regulations or the guidance
issued by the Secretary of Treasury, in accordance with Section 409A(a)(3)
of
the Code.
(iv)
In
the
event assets of the Company are set aside in a trust or other funding
arrangement for purposes of paying the Employee the Fixed Fee, such assets
(or
such trust or other funding arrangement) shall at no time be located outside
the
United States, nor shall such assets that are set aside in a trust or other
funding arrangement at any time become restricted to the payment of Employee’s
Fixed Fee where such restriction was in connection with a change in the
Employer’s financial health, within the meaning of Section 409A(b)(1) or (2) of
the Code.
(f)
Notwithstanding
anything in this Agreement to the contrary, if upon the Employee's date of
termination, the Employee is a "specified employee" as defined in Section 409A
and the deferral of the commencement of any payments or benefits otherwise
payable hereunder as a result of such separation from service is necessary
in
order to avoid the imposition on the Employee of any tax or penalty, including
interest, under Section 409A of the Code, then the Company will defer the
commencement of any such payments or benefits hereunder until the date that
is
six (6) months following the Employee's separation from service with the Company
(or the earliest date as is permitted under Section 409A) and the Company will
make all applicable payments that have accrued during such six (6) month period
in a lump sum to the Employee following the expiration of such period.
IN
WITNESS WHEREOF, the parties have executed or caused to be executed this
Agreement on August 15, 2008.
|
SOLOMON
TECHNOLOGIES, INC.
|
|
|
By:
|
/s/
Xxxxx X. XxXxxxxxx, Xx.
|
|
Xxxxx
X. XxXxxxxxx, Xx.
|
|
|
President
|
|
| EMPLOYEE | |
| /s/ Xxxx X. Xxxxxxxxx | |
| Xxxx X. Xxxxxxxxx | |
| Address | |
| c/o Venture Partners Ltd. | |
| 0000 Xxxx Xxxxxx, Xxxxxxxx X | |
| Xxxx Xxxxxx, XX 00000 | |
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Exhibit
A
This
Exhibit
A
constitutes an integral part of the 2008 Amended Employment Agreement and Plan
(“Agreement”) between Solomon Technologies, Inc. (“Solomon”) and Xxxx X.
Xxxxxxxxx (“Employee) dated August 15, 2008 and effective as of July 1,
2008.
Commencing
as provided herein, the Company will pay compensation to Employee during the
term of the Agreement or as otherwise set forth herein:
1.
Salary.
For each
payroll period of the Company that the Employee remains employed by the Company
on or after July 1, 2008, the Company shall pay Employee for his services during
the term of this Agreement a Salary at an annual rate of (i) $250,000 in cash,
payable in arrears in equal installments in accordance with standard Company
practice subject only to such payroll and withholding deductions as are required
by law, or (ii) $400,000, if paid in Shares. The determination of whether the
Company will pay Employee in cash or in Shares, or any combination thereof,
shall be made by the Company in advance of each payroll period and shall apply
to all subsequent payroll periods unless affirmatively changed by the Company
and upon notice to Employee.
The
Shares shall be registered on Form S-8 or equivalent, provided
that
if as of
a Salary payment date, the Company is prohibited from filing a Form S-8 or
its
equivalent due to a third party loan covenant or agreement the Company has
with
such third party lender in effect as of such Salary payment date
(“Prohibition”), then the Shares otherwise due to Employee on such Salary
payment date shall not be paid to him on such date and instead will be paid
to
him in the aggregate in a lump sum payment of Shares on the date the Company
is
able to file a Form S-8 or its equivalent that will allow for such payments
to
him, and provided
further
that
Employee may elect to receive restricted Shares in lieu of S-8 Shares on a
one-for-one basis at any time and from time to time. All Shares shall be issued
at a value equal to their closing price on each Valuation Date (but not less
than $0.03 per share), provided
that
upon any
deferral of the issuance of S-8 shares resulting from a Prohibition in which
the
Employee does not elect to receive restricted Shares, the number of Shares
to be
issued and paid to the Employee shall be determined by reference to the
Valuation Date that would have applied had the Prohibition not existed. The
Valuation Date shall be the last day in which Shares traded preceding the
current Salary payment date.
2.
Additional
Fixed Payment Owed.
In
addition to the payment of the Salary as provided in this Exhibit
A,
and in
settlement of the Employee’s rights and the Company’s obligations with respect
to certain outstanding market-capitalization related compensation, the payment
of such outstanding market-capitalization related compensation the Company
and
Employee intended would qualify as a short-term deferral plan under IRS
Regulation Section 1.409A-1(b)(4), and whether or not the Employee remains
employed by the Company during all or any portion of the term of this Agreement
set forth in Section 1 of the Agreement, the Company shall pay Employee
compensation in the amount of $72,916 per month for 12 months (the “Fixed Fee”)
with the first monthly payment beginning on the first Salary payment date after
December 1, 2008 (the “Fixed Payment Date”). The Fixed Fee shall be paid on each
Fixed Payment Date in Shares registered on Form S-8 or equivalent at a value
equal to their closing price on the Valuation Date (but not less than $0.03
per
share), provided
that
if as of
a Fixed Payment Date, there is a Prohibition, then the Shares otherwise due
the
Employee on such Fixed Payment Date will not be paid to him on such date and
instead will be paid to him in the aggregate in a lump sum payment of Shares
on
the date the Company is able to file a Form S-8 or its equivalent that will
allow for such payments to him, and provided
further
that
Employee may elect to receive restricted Shares in lieu of S-8 Shares on a
one-for-one basis at any time and from time to time. All Shares shall be issued
at a value equal to their closing price on each Valuation Date (but not less
than $0.03 per share), provided
that
upon any
deferral of the issuance of S-8 shares resulting from a Prohibition in which
the
Employee does not elect to receive restricted Shares, the number of Shares
to be
issued and paid to the Employee shall be determined by reference to the
Valuation Date that would have applied had the Prohibition not existed. The
Valuation Date shall be the last day in which Shares traded preceding the
current Salary payment date.
3.
Gross-up
of Payments to Employee in Shares.
In
recognition of the fact that Shares issued to Employee hereunder (regardless
of
whether registered on Form S-8) are likely to be illiquid, the Company shall
pay
to Employee an amount in cash equal to thirty-five percent (35%) of the amount
of compensation paid in Shares pursuant to Section 1 and 2 of this Exhibit
A
(whether
registered on Form S-8 or restricted and including compensation paid after
January 1, 2008 and before the date hereof) as a “gross-up” related to federal
and state taxes that Employee may owe with respect to such compensation
(“Gross-up”). The Gross-up shall be paid to Employee at the same time as the
Shares are issued. Notwithstanding anything to the contrary in Sections 1 and
2
of this Exhibit
A,
if in
any or more months the Company, in the sole determination of its President
concurred in by its Chief Financial Officer, is unable to pay the Gross-up,
the
Company may, subject to the application of Section 409(a) of the Code, elect
to
defer such monthly payment or payments by one month for each month
deferred.
4.
Stock
Options.
The
Company shall grant to Employee a fully vested, non-cancelable, “non-qualified”
option (“Option”) to purchase ten million (10,000,000) Shares substantially in
accordance with a Stock Option Agreement, the form of which is attached hereto.
The principal terms of the Option are an exercise price of $0.03 per Share,
the
right to pay the exercise price on a “cashless” basis, an expiration date of
June 30, 2013, and the right to register the underlying Shares on a piggyback
basis.
5.
Accrued
Compensation.
In
addition to other compensation payable pursuant to this Agreement and
Exhibit
A,
the
Company shall pay to Employee in cash an amount equal to $2,500 per Salary
payment date against total accrued compensation owed to Employee in the amount
of $11,676 until such time as such accrued compensation has been paid in full.
6.
Cash
Payments.
Any
cash payments made under this Agreement shall be applied first pursuant to
Section 5 of Exhibit
A,
then to
Section 3 of Exhibit
A,
then to
Section 1 of Exhibit
A and
then
to Section 2 of Exhibit
A.
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