EMPLOYMENT AGREEMENT
Exhibit 10.1
This Employment Agreement (the "Agreement") is entered into as of the 11th day of January 2010 between J Xxxxx Xxxxxx ("Employee") and Alternative Energy Development Corporation, a Nevada Corporation, it’s affiliates, predecessors and subsidiaries (the "Company”).
WHEREAS, Employee and the Company desire to enter into this Agreement setting forth the terms and conditions for the employment relationship of Employee with the Company during the Term (as defined below).
NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties to this Agreement hereby agree as follows:
1. Services
1.1. Employment. During the Term (as defined below), the Company hires Employee to perform such services as the Company may from time to time reasonably request consistent with Employee's position with the Company (as set forth in Section 1.5 hereof) and Employee's stature
and experience in the industry (the "Services"). The Services and authority of Employee shall include management and supervision of (A) the general business, affairs, management and operations of the Company, (B) the general business, affairs, management and operations of the Company’s future acquisitions and affiliates, and (C) other principal business activities of the Company and its Affiliates. For purposes of this Agreement, "Affiliates" shall
mean, as to any person, any other person controlled by or under common control with (or, where applicable, controlling), directly or indirectly, such person; and "person" shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof, or any other entity.
1.2. Location. During the Term, Employee's Services shall be performed in the Phoenix metropolitan area of Arizona area or any other area of Employee’s convenience which would in no way impede or interrupt Employee’s ability to perform his obligations under the
terms and conditions of this Agreement and which permits regular communication via telephone, Internet or other popular medium with employees, officers, directors, customers and other affiliates as needed to effectively carry out duties as described herein. Employee acknowledges and understands that the Company’s current headquarters are located in Glendale, Arizona and that officers and other participants critical to the Company’s business are dispersed nationally and internationally, and that such
dispersion could increase substantially as the Company grows. The parties therefore acknowledge and agree that the nature of Employee's duties hereunder may require domestic and international travel from time to time.
1.3. Term. The term of Employee's employment under this Agreement (the "Term") shall commence on the 11th day of January 2010
(the "Effective Date") and shall end on January 10th, 2015.
1.3.1 Beginning January11, 2014 and annually thereafter a new two-year Extension (“Extension”) shall commence . Each Extension to the Term of this Agreement must be agreed upon in writing and executed by the Company and
Employee no later than 5 p.m. Mountain Standard Time on October 10th, 2013 and annually thereafter.
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1.3.2 For purposes of this Agreement, "Employment Year" shall mean each twelve-month period during the Term commencing on January 11th, and ending on January 10th, of the following
year.
1.4. Exclusivity. Employee agrees that his employment hereunder is on an exclusive basis, and that as long as Employee is employed by the Company, Employee shall not engage in any other business activity which is
in conflict with Employee’s duties and obligations hereunder. Employee agrees that during the Employment Term, Employee shall not directly or indirectly engage in or participate as an owner, partner, shareholder, officer, employee, director, agent of or consultant for any business that competes with any of the principal activities of the Company. Provided however, that Employee may acquire and/or retain, as an investment, and take customary actions (including the exercise or conversion
of any securities or rights) to maintain and preserve Employee's ownership of any one or more of the following (provided such actions, other than passive investment activities, do not unreasonably interfere with Employee's Services hereunder): (i) securities of any corporation that are registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and that are publicly traded as long as Employee is not part of any control group of such corporation and, in the
case of public corporations in competition with the Company, such securities do not constitute more than five percent of the voting power of that public corporation; (ii) any ownership interest in a partnership, trust, corporation or other person so long as Employee remains a passive investor in that entity and so long as such entity is not, directly or indirectly, in competition with the Company, (iii) securities or other interests now owned or controlled, in whole or in part, directly or indirectly, by Employee
and (iv) securities of the Company or any of its Affiliates. Nothing in this Agreement shall be deemed to prevent or restrict Employee's ownership interest in the Company and any of its Affiliates or Employee’s ability to render charitable or community services not in competition with the Company.
1.5 Power and Authority.
1.5.1 During the Term, Employee shall be a member of the Board of Directors of the Company (the "Board"), a member of the executive or supervisory committee (or comparable committee) (the "Executive
Committee") of the Board, Chairman of the Board, President and Chief Executive Officer of the Company.
1.5.2 During the Term, all officers and employees of the Company shall report to Employee (directly or through such channels as Employee and the Board shall designate). During the Term, there shall be no officer or employee of the Company whose title, position or authority
with the Company is equal to Employee or superior to that of Employee.
1.5.3 The Company may from time to time during the Term appoint Employee to one or more additional offices of the Company. Employee agrees to accept such offices if consistent with Employee's stature and experience and with the type of offices with the Company held by Employee.
1.5.4 Indemnification. The Company shall indemnify Employee to the fullest extent allowed by applicable law. Without limiting the foregoing, Employee shall be entitled to the benefit of the indemnification provisions contained on the date hereof in the Bylaws of the Company
and any applicable Bylaws of any Affiliate, notwithstanding any future changes therein. In addition, the Company shall provide Employee with directors and officer’s insurance as provided for in Section 3.4 of this Agreement.
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2. Compensation.
As compensation and consideration for the Services provided by Employee during the Term pursuant to this Agreement, the Company agrees to pay to Employee the compensation set forth below.
2.1. Fixed Annual Compensation. The Company shall pay to Employee a salary ("Fixed Annual Compensation") at the rate of $125,000 per annum beginning on January 11th, 2010.
2.1.1 Fixed Annual Compensation payable to Employee by the Company hereunder shall be paid beginning January 11th of each year during the Term and at such times and in such amounts
as the Company may designate in accordance with the Company’s usual salary practices, but in no event less than twice monthly.
2.2. Additional Annual Compensation. The Company shall pay to Employee "Additional Annual Compensation" during the Term as provided for in Sections 2.2.1 - 2.2.4
herein.
2.2.1 As additional compensation, Employee shall be entitled to receive up to four percent (4%) of gross revenues between zero and $250,000,000.00, plus an additional three percent (3%) of gross revenues between $250,000,000.01 and $500,000,000.00, plus an additional two percent (2%)
of gross revenues between $500,000,000.01 and $750,000,000.00 and 1% of gross revenues over $750,000,000.00 or Ten ($10.00) per unit acutely sold and revenue derived resulting from all e-3 Fuel Saver products including any and all Company owned and or licensed predecessors and successors thereto.
2.2.2 For each Employment Year during the Term, Employee shall receive the difference between the Employee’s then Fixed Annual Compensation for the current Employment Year and the amount ofadditional
compensation, as defined in Section 2.2.1 herein, earned for the same period, as a year-end bonus in accordance with the Company’s usual bonus practices.
2.2.3 For each and every Employment Year during the Term of this Agreement, the combined amount Employee’s then Fixed Annual Compensation for the current Employment Year and the amount of any Additional Compensation,
as defined in Section 2.2.1 herein payed to Employee for the same Employment Year shall determine Employee’s Fixed Annual Compensation for the next Employment Year.
2.3. In addition, Employee shall also be entitled to such additional bonus, if any, as may be granted by the Board (with Employee abstaining from any vote thereon) or compensation or similar committee thereof in the Board's (or such committee's) sole discretion based upon
Employee's performance of his Services under this Agreement.
2.4. Stock. The Company shall grant to Executive 6,000,000 shares of the Company’s common stock upon the effective date of this agreement. The stock shall be fully paid, non-assessable and shall contain other customary rights and privileges, including piggy back registration
rights.
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2.4.1 If Employee voluntarily terminates his employment with the Company or if a petition for Chapter 7 bankruptcy is filed by the Company resulting in an adjudication of bankruptcy within 12 months of the date of this agreement, all shares granted under this
section shall be returned to the Company.
2.4.2 If Employee voluntarily terminates his employment with the Company or if a petition for Chapter 7 bankruptcy is filed by the Company resulting in an adjudication of bankruptcy within 24 months of the date of this agreement, Four Million (4,000,000) shares
granted under this section shall be returned to the Company.
2.4.3 If Employee voluntarily terminates his employment with the Company or if a petition for Chapter 7 bankruptcy is filed by the Company resulting in an adjudication of bankruptcy within 36 months of the date of this agreement, Three Million (3,000,000) shares
granted under this section shall be returned to the Company.
2.4.4 If Employee voluntarily terminates his employment with the Company or if a petition for Chapter 7 bankruptcy is filed by the Company resulting in an adjudication of bankruptcy within 48 months of the date of this agreement, Two Million (2,000,000) shares
granted under this section shall be returned to the Company.
3. Expenses; Additional Benefits
3.1. Vacation. Employee shall be entitled to an aggregate of six weeks of paid vacation during each Contract Year. Employee shall take vacation at times determined by the Employee, however, with the appropriate consideration for the Company’s business needs. In addition,
Employee shall be entitled to holidays generally observed in the United States and State of Arizona.
3.2. Employee Business Expense Reimbursement. Employee shall be entitled to reimbursement of all business expenses for which Employee makes an adequate accounting to the Company beginning on the effective date hereof. The determination of the adequacy of the accounting of
the foregoing expenses shall be within the reasonable discretion of the Company’s independent certified accountants taking into consideration the substantiation requirements of the Internal Revenue Code of 1986, as amended (the "Code"). Employee shall be entitled to cash reimbursement for expense items, including extended travel. Employee shall be entitled to cash or stock reimbursement for ordinary expenses, including phone and local travel, at the
sole option of Employee.
3.3. Stock Option Plan and Agreement. Concurrently with the execution of this Agreement and in consideration for the execution thereof, Employee and the Company shall develop, implement and enter into the Alternative Energy Development Corporation 2010 Stock Option Plan
and Agreement.
3.4. Directors and Officers Liability Insurance. During the Term of this Agreement, Employee shall be entitled to the protection of any insurance policies the Company or any of its Affiliates may elect to maintain generally for the benefit of its directors and officers against
all costs, charges and expenses whatsoever incurred or sustained by Employee in connection with any action, suit or proceeding to which Employee may be made a party by reason of Employee being or having been a director or officer of the Company or any of its Affiliates or Employee serving or having served any other enterprises as a director, officer or employee at the request of the Company. In the event the Company elects to maintain such directors and officers liability insurance, the policy shall be issued
by a reputable and financially-sound insurance carrier of national standing which is acceptable to Employee, and providing coverage in the amount of at least $1,500,000.
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3.5. Medical and Dental Insurance. In the event that the Company, with the approval of the Board of Directors, elects to establish a Medial Insurance Benefit Plan for the benefit of the Company’s employment staff, Employee shall be entitled to participate in such plan which
shall include comprehensive medical and dental insurance (from a reputable and financially-sound insurance carrier of national standing) for himself and his immediate family. Such insurance shall cover at the minimum 100% of all hospitalization costs after payment of deductibles and 80% of other medical costs, with the annual deductible not exceeding $500 per person. There shall be no cap on benefits for the medical insurance, and the annual cap for dental insurance benefits shall not be less than $3,000. The
Company may either provide these benefits directly to Employee or promptly reimburse Employee for the cost of such benefits, at the Company’s election.
3.6 Employee shall have an executive medical physical at intervals appropriate for his age and shall be reimburse for all expenses relating thereto.
3.7. Other Agreements. Concurrently with the execution of this Agreement, Employee and the Company shall enter into other Transaction Documents that have not been previously executed.
3.8. General. Employee shall be entitled to participate in any profit-sharing, pension, health, sick leave, holidays, personal days, insurance or other plans, benefits or policies (not duplicative of the benefits provided hereunder) available to the employees of the Company
or its Affiliates on the terms generally applicable to such employees.
3.9. Asset Sale or Merger. In the event of an ams length transaction sale of all or substantially all of the assets or a merger in which the Company is not the surviving entity in which the total final value of the transaction is Thirty Five Million ($35,000,000) or greater,
Employee shall be entitled to receive and the Company shall issue, an additional amount of shares of common stock in the Company which would equal Five percent (5%) of the final value of the transaction.
3.10. No Reduction of Benefit or Payment. No payment or benefit made or provided under this Agreement shall be deemed to constitute payment to Employee or his legal representative or guardian in lieu of, or in reduction of, any benefit or payment under an insurance, pension or
other benefit plan, and no payment under any such plan shall reduce any payment or benefit due under this Agreement except as set forth in Section 5.2.
3.11. Covenant Not To Solicit. Employee agrees that for a period of two (2) years following any termination of the employment of the Employee with the Company, Employee shall not, directly or indirectly, without the prior written consent of the Company: solicit,
entice, persuade or induce any employee, consultant, agent or independent contractor of the Company or of any of its subsidiaries or Affiliates to terminate his or her employment with the Company or such subsidiary or Affiliate to become employed by any person, corporation or other entity other than the Company or such subsidiary or Affiliate, or approach any such employee, consultant, agent or independent contractor for any of the foregoing purposes, or hire any such employee, consultant, agent or
independent contractor or authorize or assist in the taking of any such actions by any third party.
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3.12. Confidentiality. During the Term of Employment and continuously thereafter, Employee shall keep secret and retain in strictest confidence and not use or disclose, furnish or make accessible to anyone outside the Company and any of its Affiliates, directly
or indirectly, or use for the benefit of Employee or others except in conjunction with the business of the Company and the business of any of its subsidiaries or Affiliates, any Protected Information. The term “Protected Information” shall mean trade secrets, confidential or proprietary information and all other knowledge, technology, know-how, information, documents or materials owned, developed or possessed by the Company or any of its subsidiaries or Affiliates, whether in tangible or
intangible form, pertaining to the business of the Company or any of its subsidiaries or Affiliates, including, but not limited to, research and development, operations, systems, databases, computer programs and software, designs, models, operating procedures, knowledge of the organization, products and services (including prices, costs, sales or content), processes, techniques, contracts, financial information or measures, business methods, future business plans, details of consultant contracts, new
personnel acquisition plans, business acquisition plans, customers and suppliers (including identities of customers and prospective customers and suppliers, identities of individual contacts at business entities which are customers or prospective customers or suppliers, preferences, businesses or habits), and business relationships. Provided however, that Protected Information shall not include information that shall become generally known to the public or the trade without violation of
this Section3.12.
3.13. Company Ownership. The results and proceeds of Employee’s services hereunder, including, without limitation, any works of authorship resulting from Employee’s services during his employment with the Company or any of the Company’s Affiliates including
any works in progress, shall be works-made-for-hire, and the Company shall be the sole owner throughout the universe of any and all rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, with the right to use the same in perpetuity in any manner the Company determines in its sole discretion without any further payment to Employee whatsoever. If, for any reason, any of such results and proceeds shall not legally be a work-for-hire
and/or there are any rights which do not accrue to the Company under the preceding sentence, then Employee hereby irrevocably assigns and agrees to assign any and all of Employee’s right, title and interest thereto, including, without limitation, to any and all copyrights, patents, trade secrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed to the Company, and the Company shall have the right to use the
same in perpetuity throughout the universe in any manner the Company determines without any further payment to Employee whatsoever.
Employee shall, from time to time, as may be requested by the Company, do any and all things which the Company may deem useful or desirable to establish or document the Company’s exclusive ownership of any and all rights in any such results and proceeds, including, without limitation, the execution of appropriate copyright and/or
patent applications or assignments. To the extent Employee has any rights in the results and proceeds of Employee’s services that cannot be assigned in the manner described above, Employee unconditionally and irrevocably waives the enforcement of such rights. This Section 3.13 is subject to, and shall not be deemed to limit, restrict, or constitute any waiver by the Company of any rights of ownership to which the Company may be entitled by operation of law by virtue of the Company’s
being the employer of Employee.
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3.14. Litigation. Employee agrees that, during the Employment Term, for two (2) year thereafter and, if longer, during the pendency of any litigation or other proceeding, (i) Employee shall not communicate with anyone (other than his personal attorney(s) and/or
tax advisor(s)) and, except to the extent necessary in the performance of Employee’s duties hereunder, with respect to the facts or subject matter of any pending or potential litigation, or regulatory or administrative proceeding involving the Company or any of its Affiliates, or any of their officers, directors, shareholders, representatives, agents, employees, suppliers or customers, other than any litigation or other proceeding in which Employee is a party-in-opposition, without giving prior notice to
the Company’s Board of Directors or Company Counsel and receiving a response within 5 days or prior to any judicially required return date, whichever is less and (ii) in the event that any other party attempts to obtain information or documents from Employee with respect to matters possibly related to such litigation or other proceeding, Employee shall promptly so notify the Company’s Board of Directors or Company Counsel and await any response within 5 days or prior to any judicially required
return date, whichever is less
3.15. No right to Give Interviews or to Write Books, Articles, etc. Employee agrees that during the Employment Term and for a period of two (2) years thereafter, except with the Company’s prior written authorization, Employee shall not (i)
give any interviews or speeches, or (ii) prepare or assist any person or entity in the preparation of any books, articles, television or motion picture productions or other creations, in either case, concerning the Company or any of its Affiliates, or any of their officers, directors, shareholders, representatives, agents, employees, suppliers or customers.
3.16. Return of Property. All documents, date books, recordings, or other property, whether tangible or intangible, including all information stored in electronic form, obtained or prepared by or for Employee and/or utilized by Employee in the course of Employee’s
employment with the Company shall remain the exclusive property of the Company. In the event of the termination of Employee’s employment for any reason, Employee shall, within forty-eight (48) hours of the termination of Employee’s employment return any and all property belonging to the Company. The Company reserves the right, to the extent permitted by law and in addition to any other remedy the Company may have, to deduct from any monies otherwise payable to Employee by the
Company, the value of the Company’s property which is retained in Employee’s possession after the termination of Employee’s employment with the Company. In the event that the law of any state or other jurisdiction requires the consent of an employee for such deductions, this Agreement and the Employee’s signature hereon shall serve, and be deemed to serve, as such consent. Employee acknowledges and agrees that the foregoing remedy shall not be the sole and/or exclusive remedy
of the Company with respect to a breach of this Section 3.16.
3.17. Non-Disparagement. Employee agrees that he shall not, during the Employment Term and for a period of two (2) years thereafter, criticize, ridicule or make any statement which disparages or is derogatory of the Company or any of its Affiliates, or of any of
their officers, directors, shareholders, representatives, agents, employees, suppliers or customers.
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3.18. Injunctive Relief/Specific Enforcement. The Company has entered into this Agreement in order to obtain the benefit of Employee’s unique skills, talent, and experience. Employee acknowledges that the services to be rendered by Employee are of a special,
unique and extraordinary character and, in connection with such services, Employee will have access to confidential or proprietary information or trade secret vital to the Company’s business and the businesses of its subsidiaries and Affiliates. By reason of this, Employee acknowledges, consents and agrees that any violation of Sections 1.4 and 3.10 – 3.17 of this Agreement will result in irreparable harm to the Company and its subsidiaries or Affiliates, and that money damages will not provide adequate
remedy to the Company, and that the Company shall be entitled to have those sections specifically enforced by any court having competent jurisdiction. Accordingly, Employee agrees that the Company may obtain injunctive and/or other equitable relief for any breach or threatened breach of those sections, in addition to any other remedies, including the recovery of money damages from Employee available to the Company.
3.20. The provisions of Sections 3.11-3.18 shall, without any limitation as to time, survive the expiration of Employee’s employment hereunder, irrespective of the reason for any termination unless otherwise expressly provided for in Section 5.2 herein.
4. Termination for Cause by the Company
4.1 Reasons and process for Termination for Cause. Executive may be terminated from employment with "Cause." "Cause" shall mean
(i) gross negligence or willful misconduct in the performance of duties to the Company that has resulted or is likely to result in substantial and material damage to the Company,
(ii) repeated unexplained or unjustified absence from the Company,
(iii) a material and willful violation of any federal, state or local law,
(iv) commission of any act of fraud with respect to the Company, or
(v) conviction of a felony or a crime involving moral turpitude causing material harm to the standing and reputation of the Company, in each case as determined in good faith by the Board of Directors of the Company; or
(vi) substantial or continued unwillingness to perform duties as reasonably directed by the Company’s Board of Directors.
4.2. Effects of Termination for Cause. In the event this Agreement is terminated for Cause, all of the Company’s obligations under this Agreement shall cease as of the date in which the Employee receives the Notice of Termination. The Company shall pay the Fixed Annual
Compensation up to the date of termination, and have no further obligations to Employee under this Agreement. Additionally, in the event this Agreement is terminated for Cause, the Employee is prohibited from taking employment with a direct competitor of the Company for a period of two years from the date of termination. The Company may also pursue damages and injunctive relief from Employee as compensation for its damages.
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5. Termination for Not-for-Cause by the Company
5.1. Reasons and process for Termination for Not-for-Cause. The Company may terminate this Agreement, for Not-for-Cause (with the ramifications described below), subject to the provisions this Section 5.
5.2. Effects of Termination Not-for-Cause. Employee's obligations to provide Employee’s Services under this Agreement shall cease as of the date in which the Employee receives the Notice of Termination for Not-for-Cause. Employee shall be entitled for a pro-rated Additional
Annual Compensation under Sections 2.1 - 2.2 for the balance of the then current term and all and any unvested stock and options Employee or any of Employee's assignee holds in the Company or its Affiliates shall vest immediately. Employee shall be entitled to the Employee Benefits until the end of the then current term. Employee hall have no restrictions to furnish the Services of the Employee and the Employee shall have no restrictions with respect to accepting other employment (even with companies directly
competing with the Company), except that upon receipt of comparable health and dental insurance through another company, the Company’s obligations to provide these benefits shall end. Employee’s restrictions under Section 3.1.5 shall immediately terminate however, Sections 3.1.2 and 3.1.7 of this Agreement shall remain in full force and effect.
5.3. No Mitigation. In the even of Termination-Not-For-Cause, Employee shall not be required to mitigate the amount of any payment provided for in this Section 5 in any way whatsoever, nor shall the amount of any payment or benefit provided for in this Section 5 be reduced
by any compensation earned by Employee as the result of employment by another employer or by retirement benefits after the termination date. The Company shall not be entitled to any rights to offset, mitigate or otherwise reduce the amounts owing to Employee by virtue of this Section 5 with respect to any rights, claims or damages that the the Company or its Affiliates may have against Employee, including, without limitation, any claims by reason of any breach or alleged breach of this Agreement by Employee.
6. Termination for Disability or Death of Employee
6.1. Employee’s incapacity. If, as a result of Employee's incapacity to materially perform the Services required under this Agreement because of physical or mental illness, as evidenced by Employee having been absent from his duties for three (3) consecutive months
or for more than an aggregate of five (5) months in any Contract Year, the Board may give Employee a Disability Notice, which will be the first step in the parties attempts to terminate or amend this Agreement with mutual consent.
6.2. Mandatory good faith dialogue. Upon the receipt of the Disability Notice by Employee, Employee and the Company shall engage in a good faith dialogue to agree on a resolution to the matter that is sensitive to the Company’s business needs as well as the Employee’s
situation.
6.3. Termination for Disability. In the event the parties after 30 days have not reached an agreement on the necessary amendments to this Agreement or terms for a mutual separation agreement, and the Employee’s incapacity persists, by unanimous decision by the Board
(excluding Employee) the Company shall have the right to terminate the Employee for Disability, by sending Employee a Notice of Termination for Disability.
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6.4. Effects of Termination for Disability. Upon the termination of this Agreement for Disability of Employee, Employee shall be entitled to receive (i) the Fixed Annual Compensation that would otherwise be payable hereunder to the end of the month in which such termination
occurs and for six months thereafter; (ii) any bonus and or Additional Annual Compensation due and earned throughout the then Employment Year; and (iii) any amounts earned pursuant to the terms of this Agreement but unpaid at the time of termination. The payments specified in this Section 6.4 shall commence as soon as practicable but no later than one month after the date of termination. The payments shall be made in cash, company check or certified funds. Whenever compensation is payable to Employee hereunder
during a time when Employee is partially or totally disabled and such disability (except for the provisions hereof) would entitle Employee to disability income or other special compensation according to the terms of any plan now or hereafter provided by the Company or according to any policy of the Company in effect at the time of such disability, the payments to Employee hereunder shall be inclusive of any such disability income or other special compensation and shall not be in addition
thereto. If disability income is payable directly to Employee by an insurance company under an insurance policy paid for by the Company, then any such disability income paid during the twenty four (24) months following the Date of Termination shall be considered to be part of the payments to be made by the Company pursuant to this Section 6.4, and not in addition thereto, and shall be paid to the Company, up to but not to exceed the amount of payments actually made by the Company pursuant to this Section 6.4.
All disability income paid to Employee by said insurance company (i) during the twenty four (24) months following the termination date in excess of the payments actually made by the Company pursuant to this Section 6.4, and (ii) after twenty four (24) months following the termination shall be the sole property of Employee, as the case may be, pursuant to the terms of such insurance policy and shall not be required to be paid to the Company.
6.5 Termination in Case of Death. In case of Employee's death, any and all unvested stock or options granted to Employee under Section 2.4 of this Agreement shall vest in favor of Employee's estate as provided for in this Section(s) 6.51, 6.5.2, 6.5.3, and 6.5.4 herein.
Company shall also continue any health benefits for family for one year.
6.5.1 If the Employee's death occurs within 12 months of the date of this agreement, One Million (1,000,000) shares granted under Section 2.4 shall immediately vest in favor of Employee's estate and Five Million (5,000,000) shall be returned to the Company;
6.5.2 If the Employee's death occurs within 24 months of the date of this agreement, Two Million (2,000,000) shares granted under Section 2.4 shall immediately vest in favor of Employee's estate and Four Million (4,000,000) shall be returned to the Company;
6.5.3 If the Employee's death occurs within 36 months of the date of this agreement, Three Million (3,000,000) shares granted under Section 2.4 shall immediately vest in favor of Employee's estate and Three Million (3,000,000) shall be returned to the Company;
6.5.4 If the Employee's death occurs within 48 months of the date of this agreement, Four Million (4,000,000) shares granted under Section 2.4 shall immediately vest in favor of Employee's estate and Two Million (2,000,000) shall
be returned to the Company;
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6.5.6 Any unvested additional shares granted for past performance under Sections 2.3 and 3.3 shall immediately vest in favor of Employee’s estate.
7. Termination by Employee for Material Breach
7.1. Employee shall have the right to terminate this Agreement only in the event of a verifiable Material Breach by the Company. For purposes of this Agreement, "Material Breach" shall mean any of the following:
(A) The breach by the Company of a material term, condition or covenant of this Agreement;
(B) The assignment to Employee of any duties inconsistent in any material respect with his status set forth in Sections 1.1 and 1.5 hereof;
(C) A reduction by the Company in the Fixed Annual Compensation set forth in Section 2.1;
(D) A unanimous decision by the Board of Directors and a majority vote of the shareholders of all classes of stock in the Company, who are entitle to vote in such matters, that
would result in a significant change to the core business of the Company which having been effectuated without Employee's consent would cause the Company’s business is to fundamentally depart from the purpose in which the Employee was originally contracted for.
7.2. Material Breach Notice by Employee. In the event Employee wishes to pursue a termination of the Agreement on the account of a material breach by the Company as defined in this Section 7.1 (a)(b)( c) and (d), Employee may send to the Board a Notice of Material Breach
describing in detail the nature of the alleged breech and the required corrective action to cure the alleged breach. Unless the Board formally objects to the Notice of Material Breach or responds and cures the breach within sixty (60) days from the receipt thereof, Employee shall have the right to terminate this Agreement by sending a Notice of Termination for Breach to that effect no earlier than the latest date by which the Company could still object or cure the Notice of Material Breach, but no
later than sixty (60) days from the the Company’s receipt of the Notice of Material Breach.
7.3. Effect of the Company’s objection. In the event the Company receives a Notice of Breach from Employee and does not consider the allegations in the notice to be valid, it has the right to object to the contents of the Notice by informing Employee to such effect
in writing within two weeks of receipt of the Notice of Material Breach. In the event of an objection by the Company to a Notice of Material Breach, the following process shall apply:
(a) The Board shall call a special meeting to allow Employee to state Employee's position on the matter and to allow for the parties to resolve the situation. The Employee
shall abstain from voting during such meeting. Employee shall be allowed tohave outside legal counsel present at such meeting.
(b) In the event the parties fail to resolve the matter in such meeting, theparties shall submit the dispute to binding arbitration in accordance with Section12hereunder. In the
event the arbitration does not find that a material breach by theCompany existed, the Company shall not be required to pay the Fixed Annual Compensation for any period during which Employee did not provide the Employee’s Services as called for in this Agreement.
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7.4. Effects of Termination by Employee for Material Breach. An effective termination by Employee resulting from a material breach of the Company shall be considered a Termination Not-for-Cause by the Company.
8. Termination by Employee for Change in Control
8.1. Definition of "Change in Control." For purposes of this Agreement, "Change in Control of the Company” means a
change in control (except Changes in Control effected with the express consent of Employee) of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or not the Company is then subject to such reporting requirement, including, but not limited to (i) a transaction or series of related transactions resulting in a change in beneficial ownership of more than 51% of the outstanding equity securities of the Company; (ii)
or a sale of all or substantially all of the assets of the Company.
8.2. Termination Notice for Change of Control. In the event of an occurrence of Change of Control (as defined above), Employee shall have the right for a 30 day period upon becoming aware of the Change of Control to notify the
Company of Employee's intention to terminate this Agreement based on this occurrence by sending a the Board a Notice of Disputed Change of Control. Unless the Board formally responds to the Notice of Disputed Change in Control with an offer to address the Employee's concerns by amending this Agreement in two weeks from its receipt, Employee shall have the right to terminate this Agreement by sending a Notice of Termination for Change of Control to that effect no earlier than the latest date by which
the Company could still object or cure the Notice of Disputed Change of Control but no later than sixty (60) days from the the Company’s receipt of the Notice of Disputed Change of Control
8.3. In the event the Board has responded to the Notice of Disputed Change in Control with an offer to address Employee's concerns, the parties shall engage in meaningful good faith negotiations for a period of 60 days to amend
or renew this Agreement to the satisfaction of both parties. In the event no agreement has been reached after the 60-day period, Employee shall have the right to terminate this Agreement by sending a Notice of Termination for Change of Control.
8.4. Effect of termination for Change of Control. An effective termination by Employee resulting from a Change in Control of the Company shall be considered a Termination Not-for-Cause by the Company.
8.5. For the sake of clarity, a Change in Control does not give the Company (or the company acquiring it) any new rights. Anything herein contained to the contrary notwithstanding, in the event the Company experiences
either a “change in control” transaction as defined herein, including, but not limited to, a merger, acquisition or sale of a controlling interest in the corporation as stated above, the terms and conditions of this Agreement shall remain in effect and in full force, all stock, options, warrants and any other consideration due Employee, or Employee's assignee. Employee shall become fully vested and such action the Company shall not in any way diminish, affect or compromise Employee’s rights
under this Agreement.
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9. General
9.1. Governing Law. Venue The laws of the State of Arizona shall govern the interpretation, construction and applicability of this Agreement in any arbitration or judicial proceeding.
9.2. Attorneys’ Fees. In the event that any legal (judicial or arbitral) proceeding is instituted in connection with any controversy arising out of this Agreement or the enforcement of any rights hereunder, the prevailing
party (as defined by the courts of Arizona) shall be entitled to recover, in addition to court and other costs, such sums as the court or arbitrator may decide are reasonable as attorneys’ fees.
9.3. Waiver. Neither party shall, by mere lapse of time, without giving notice be deemed to have waived any breach by the other party of any of this Agreement. Further, the waiver by either party of a particular
breach of this Agreement shall be construed or deemed as a continuing waiver of such breach.
9.4. Entire Agreement. The parties agree that this instrument constitutes and contains the entire agreement between the parties concerning the subject matter and contents of this Agreement, and that this instrument supersedes all
prior negotiations, proposed agreement, or understandings, if any, between the parties concerning any of the provisions or contents of this Agreement. No amendment to this Agreement shall be effective unless it is in writing and signed by a duly authorized representative of each of the parties to this Agreement.
9.5. Fair Meaning. The parties agree that the wording of this Agreement shall be construed as a whole according to its fair meaning, and not strictly for or against the party that drafted this Agreement.
9.6. Counterparts. This Agreement may be executed in any number of counterparts which shall be deemed an original, and all of which taken together constitutes one and the same Agreement.
9.7. Severability. The parties agree that if any provision of this Agreement should ever be declared or determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts,
terms or provisions shall not be affected thereby, and said illegal or invalid part, term or provision shall be automatically conformed to the law, if possible, or if not possible, be deemed to be stricken from this Agreement.
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9.8. Waiver/Estoppel. Any party hereto may waive the benefit of any term, condition or covenant in this Agreement or any right or remedy at law or in equity to which any party may be entitled, but only by an instrument in writing
signed by the parties to be charged. No estoppel may be raised against any party except to the extent the other parties rely on an instrument in writing, signed by the party to be charged, specifically reciting that the other parties may rely thereon. The parties' rights and remedies under and pursuant to this Agreement or at law or in equity shall be cumulative and the exercise of any rights or remedies under any provision hereof or rights or remedies at law or in equity shall not be deemed an election of remedies;
and any waiver or forbearance of any breach of this Agreement or remedy granted hereunder or at law or in equity shall not be deemed a waiver of any preceding or succeeding breach of the same or any other provision hereof or of the opportunity to exercise such right or remedy or any other right or remedy, whether or not similar, at any preceding or subsequent time.
9.9 Notices. Any notice that the Company is required to give or may desire to give to Employee hereunder shall be in writing and may be served by delivering it to Employee, or by sending it to Employee by certified mail, return receipt
requested (effective three days after mailing) or overnight delivery of the same by delivery service capable of providing verified receipt (effective the next business day), or facsimile (effective twenty-four hours after receipt is confirmed by person or machine), at the address set forth below, or such substitute address as Employee may from time to time designate by notice to the Company. Any notice that Employee is required or may desire to serve upon the Company hereunder shall be in writing and may be served
by delivering it personally or by sending it certified mail, return receipt requested or overnight delivery, or facsimile (with receipt confirmed by person or machine) to the address set forth below, or such other substitute address as the Company may from time to time designate by notice to Employee. Such notices by Employee shall be effective at the same times as specified in this Section 9.9 for notices by the Company.
The Company: Alternative Energy Development Corporation
00000 Xxxxx 00xx Xxx. Xxxxx# 000
Xxxxxxxx, XX 00000
Employee: J Xxxxx Xxxxxx
00000 Xxxxx 00xx Xxx. Xxxxx# 000
Xxxxxxxx, XX 00000
9.10. Captions. The paragraph headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
9.11. No Partnership or Joint Venture. Nothing herein contained shall constitute a partnership between or joint venture by the parties hereto.
9.12. Assignability, Successors. The obligations of employee may not be delegated and, except as expressly provided in this Section 9.12 relating to the designation of beneficiaries, Employee may not, without the Company’s prior written consent
thereto, assign, transfer, convey, pledge, encumber, hypothecate or otherwise dispose of this Agreement or any interest herein. Any such attempted delegation or disposition shall be null and void and without effect. Provided however, that Employee may assign all or any portion of his rights to receive compensation hereunder to any corporation at least fifty one percent (51%) of the capital stock of which is owned or controlled by Employee, to any other entity in which Employee owns or controls
at least fifty one percent (51%) of the total ownership interests, to trusts for the benefit of the family of Employee, to charitable trusts or to trusts for the benefit of any charitable purpose, or to any charity or non-profit organization. Notwithstanding any other provision hereof, Employee shall not be permitted to establish loan-out companies to provide his services to the Company and assign this Agreement thereto.
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The Company and Employee agree that this Agreement and each of the Company’s rights and obligations hereunder may be assigned or transferred by the Company to, and shall be assumed by and be binding upon, any Successor to the Company. The term “Successor” shall mean any corporation or other business entity which
succeeds to the assets or conducts the business of the Company, whether directly or indirectly, by purchase, merger, consolidation or otherwise. In the event another corporation or other business entity becomes a Successor of the Company, then the Successor shall, by an agreement in form and substance reasonably satisfactory to Employee, expressly assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if there had been no merger.
9.13. No Mitigation; No Offset. Without limiting any other provision hereof, the Company agrees that any income and other employment benefits received by Employee from any and all sources before, or during this Agreement shall in
no way reduce or otherwise affect the Company's obligation to make payments and afford benefits hereunder.
12. Arbitration.
(a) In the event of any controversy arising from or concerning the interpretation of this Agreement or its subject matter (including, without limitation, the interpretation, application, or enforceability of this Agreement or the arbitrability
of the controversy), the parties agree that such controversy shall be resolved exclusively by binding arbitration by filing a demand for arbitration with the Phoenix regional office of the American Arbitration Association (“AAA”) , before a single neutral arbitrator selected jointly and acceptable to the parties. The arbitrator shall conduct all proceedings pursuant to the then existing Commercial Arbitration Rules of the AAA, to the extent such rules are not inconsistent with the provisions of this
Section 12. The Uniform Rules of Procedure for Arbitration shall not apply to any arbitration proceeding relating to the subject matter or terms of the documents. The Company and Employee shall each be responsible for 50% of the fees and expenses of the arbitrator. Each party shall be responsible for its own attorneys’ fees and any other costs occasioned by the arbitration, without regard to which party thereto prevails. Provided however, that the arbitrator may award attorneys’
fees and costs to a party under the terms of this Agreement. The parties to the arbitration shall have all rights, remedies, and defenses available to them in a civil action before a court.If, for any legal reason, a controversy arising from or concerning the interpretation, application, or enforceability of this Agreement requires judicial intervention, the parties agree that the controversy shall be brought in the Maricopa County Superior Court or the U.S. District Court for the District of Arizona.
(b) The parties hereby waive and agree not to assert (by way of motion, as a defense or otherwise) (a) any and all objections to jurisdiction that they may have under the laws of the State of Arizona or the United States, and (b) any claim
(i) that it or [he/she] is not subject personally to jurisdiction of such court, (ii) that such forum is inconvenient, (iii) that venue is improper, or (iv) that this Agreement or its subject matter may not for any reason be arbitrated or enforced as provided in this Section 12(b).
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(c) Within ten (10) business days after receipt of the notice submitting a dispute or controversy to arbitration, the parties shall attempt in good faith to agree upon an arbitrator to whom the dispute shall be referred and on a joint statement
of contentions. Each party hereby agrees that service of process in such action shall be deemed accomplished and completed when a copy of the documents is sent in accordance with the notice provisions in Section 9.9 hereof.
(d) Discovery shall be conducted in accordance with the Arizona Rules of Civil Procedure regarding discovery. The arbitrator shall establish the discovery schedule promptly following
submission of the joint statement of contentions (or the filing of the answer to the demand for arbitration) which schedule shall be strictly adhered to. To the extent the contentions of the parties relate to custom or practice in the Company’s business model, or the technical industry generally, or to accounting matters, each party may select an independent expert or accountant (as applicable) with substantial experience in the industry segment involved to render an expert opinion or opinions. All decisions
of the arbitrator shall be in writing. The arbitrator shall make all rulings in accordance with Arizona law and shall have authority equal to that of a Superior Court judge, to grant equitable relief in an action pending in Superior Court in which all parties have appeared.
13. Contractual Nomenclature. All references herein to "Dollars" or "$" shall mean Dollars of the United States of America, its legal tender for all debts public and private. Wherever used herein and to the extent appropriate, the masculine, feminine or neuter gender shall
include the other two genders, the singular shall include the plural, and the plural shall include the singular.
14. Publicity. Neither party shall issue any press release or announcement of or relating to the execution of, or any terms, provisions or conditions contained in this Agreement without the other party's prior approval of the
content and timing of any such announcement or announcements.
15. Proof of Right to Work. For purposes of federal immigration law, Employee shall be required to provide the Company with documentary evidence of his identity and eligibility for employment in the United States within three (3) business days of Employee’s
date of hire; otherwise, the Company may terminate the employment relationship and this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
Alternative Energy Development Corporation, a Nevada Corporation
By: XXXXX XXXXXXX
Xxxxx Xxxxxxx, President, Director
Employee
By: J XXXXX XXXXXX
J Xxxxx Xxxxxx, an Individual
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