EMPLOYMENT AGREEMENT
EXHIBIT
4.24
THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is made effective as of the 12th
day of October, 2006, by and between ENER1, INC., a Florida corporation with
its
offices at 000 Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xx. Xxxxxxxxxx, Xxxxxxx
00000
(the “Corporation”), and XXXX XXXXX (the “Executive”).
WHEREAS,
the Corporation desires to retain the Executive in the position described
herein, and the Executive desires to assume such position, on the terms and
conditions set forth herein.
NOW,
THEREFORE, in consideration of the premises and the mutual agreements made
herein, and intending to be legally bound hereby, the Corporation and the
Executive agree as follows:
1. Employment;
Duties.
(a) Employment
and Employment Period.
The
Corporation will commence the employment of the Executive beginning October
16,
2006 (the “Commencement Date”) and shall continue to employ the Executive until
October 16, 2011 (the “Initial Term”). Executive’s employment shall then
automatically renew for subsequent one year periods following the termination
of
the Initial Term or any subsequent term, unless either party gives written
notice to the other at least 30 days prior to the termination of such period
of
its intent not to extend or renew this Agreement. The Initial Term and all
subsequent terms are referred to herein as the “Employment Period.”
(b) Offices,
Duties and Responsibilities.
During
the Employment Period, the Executive shall hold the title of Chief Financial
Officer of the Corporation, and shall perform the duties commensurate with
such
position. The Executive’s office shall be at the Corporation’s office in Broward
County or Miami-Dade County, Florida.
(c) Devotion
to Interests of the Corporation.
Except
as expressly authorized by the Corporation, until the earlier to occur of (i)
the effective date of termination of this Agreement by either the Executive
or
the Corporation or (ii) the end of the Employment Period, the Executive shall
devote substantially all of his business services to the performance of his
duties hereunder; provided, however, the Executive shall not be restricted
from
non-executive service to any charitable organization.
2. Base
Compensation and Fringe Benefits.
(a) Base
Compensation.
The
Corporation shall pay the Executive a base salary at the rate of $325,000 per
year (“Base Salary”) paid semi-monthly at the Corporation’s normal payroll
intervals, with deduction of such amounts as may be required to be withheld
under applicable law and regulations. The Base Salary shall not be reduced
during the Employment Period. The Corporation shall consider, in its discretion,
increasing the Executive’s Base Salary on at least an annual basis, with the
first increase being effective January 1, 2008.
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(b) Fringe
Benefits.
The
Executive shall be entitled to eligibility for enrollment in the Corporation’s
medical,
dental, disability and life insurance plans, pension plan, 401(k) and SERP
plans, deferred compensation and incentive compensation plans, and all other
benefits as the Corporation extends to any of its regular employees, pursuant
to
the applicable personnel policies of the Corporation.
Executive shall be entitled to four (4) weeks paid vacation per year. The
Executive shall have a corporate credit/debit card for authorized business
use.
During the Employment Period the Corporation shall provide the Executive a
car
allowance paid monthly. During the Employment Period, upon submission of
reasonable supporting documentation and in specific accordance with such
guidelines as may be established from time to time by the Board, the Executive
shall be reimbursed by the Corporation for all reasonable business expenses
actually and necessarily incurred by the Executive on behalf of the Corporation
in connection with the performance of services under this Agreement, including
without limitation, expenses related to commuting to South Florida for four
(4)
months following the Commencement Date and preceding the Executive’s relocation
to South Florida. At no time during the Employment Term shall Executive’s fringe
benefits as described in this paragraph be reduced without the Executive’s
written consent. The Executive shall be solely responsible for transportation
expenses between his home in South Florida after the earlier of four months
following the Commencement Date or his relocation to South Florida.
(c) Bonus
Compensation.
Executive shall be considered annually by the Board of Directors for the award
of a cash bonus (the “Annual Bonus”), with a target amount equal to one (1)
times the Executive’s then-current Base Salary for reference (such amount, the
“Target Bonus”). The actual amount of the Annual Bonus each year may be greater
than, less than or equal to the Target Bonus in the reasonable discretion of
the
Board, and shall be based upon whether Executive fails to meet, meets or exceeds
the goals the Board and the Executive mutually agree for each fiscal year.
For
any year (other than 2006) that does not fall entirely within the Employment
Period, the Annual Bonus for that year shall be prorated according to the
following formula: (i) the bonus for that entire year, multiplied by (ii) a
fraction, (x) the numerator of which shall be the number of days in that year
that fell within the Employment Period and (y) the denominator of which shall
be
365. The Annual Bonus, if any, shall be paid no later than ninety (90) days
after the end of the Corporation’s fiscal year.
(d) Equity
Interest.
(1) On
the
Commencement Date, the Executive will receive (i) an option (the “Option”) to
purchase 2,500,000 shares of common stock of the Corporation (the “Common
Stock”) at an exercise price equal to fair market value on the date of the
option grant. On each of the first and second anniversary of the Commencement
Date, the Option will vest as to 750,000 shares of Common Stock. On the third
anniversary of the Commencement Date, the Option will vest as to 1,000,000
shares of Common Stock. Executive shall have the right to exercise the Option
as
to some or all of the shares of Common Stock in which he is vested at any date
following vesting.
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(2) During
the Employment Period and for a period of sixty (60) days following the last
day
of the Employment Period, at the time of the Executive’s exercise of any options
in the Corporation, the Corporation shall pay to the Executive a bonus equal
to
the amount of the exercise price for such options being exercised to give effect
to the parties’ intention that the Executive have a right of “cashless exercise”
of the vested Options. All
Options granted hereunder shall be granted pursuant to a stock option agreement
mutually agreeable to the Executive and the Board and delivered to the Executive
within thirty (30) days following the Commencement Date (the “Stock Option
Agreement”). All Options issued under this Agreement and under the Stock Option
Agreement shall be adjusted for mergers, stock splits, stock spin-offs, reverse
stock splits, and similar events. Notwithstanding
anything contained herein to the contrary, the Option shall be fully vested,
and
automatically exercised immediately upon the occurrence of a Liquidity Event
(as
hereinafter defined). “Liquidity Event” means (i) a merger, (ii) initial public
offering, or (iii) a Change In Control (as hereinafter defined). “Change in
Control” shall mean (i) a reorganization, merger, consolidation or other form of
corporate transaction or series of transactions, in each case, with respect
to
which persons who were the shareholders (or beneficial owners of the
shareholders) of the Corporation immediately prior to such reorganization,
merger or consolidation or other transaction do not, immediately thereafter,
own
more than fifty percent (50%) of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated company, (ii) a liquidation or dissolution of the Corporation,
(iii) the sale, lease, exchange or other disposition of all or substantially
all
of the assets of the Corporation (other than any disposition of assets as a
result of the exercise of conversion rights in the Corporation’s financing
documents or that result from actions pursuant to pledge agreements securing
the
Corporation’s debt), or (iv) the acquisition by any person, or any two or more
persons acting as a group, and all affiliates of such person or persons, who
prior to such time owned less than fifty percent (50%) of the combined voting
power entitled to vote generally in the election of directors, of additional
voting power in one or more transactions, or series of transactions, such that
following such transaction or transactions, such person or group and affiliates
beneficially owns fifty percent (50%) or more of the combined voting power
entitled to vote generally in the election of directors.
(3) Except
as
specifically provided herein, to the extent permissible under Xxxxxxx 000 xx
Xxxxxx Xxxxxx Internal Revenue Code (the “Code”) the options shall be incentive
stock options, and the Corporation shall take all actions reasonably necessary
to establish and maintain a qualified option plan pursuant to which the Options
shall be qualified as incentive stock options under the Code.
(e) Payments
for Relocation.
The
Corporation will reimburse the Executive for actual, documented, reasonable
costs associated with relocating to Florida, including without limitation
transportation of household goods, vehicles and persons, import duties, closing
costs, broker fees, and fees for tax preparation and negotiation of this
Agreement, not to exceed an aggregate of $85,000. The Executive must relocate
to
South Florida within ten (10) months of the Commencement Date.
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4. Trade
Secrets.
The
Executive shall not use (except for the benefit of the Corporation while
employed hereunder) or disclose to anyone any of the Corporation’s trade secrets
or other confidential information. The term “trade secrets or other confidential
information” includes, by way of example, matters of a technical nature, such as
scientific, trade and engineering secrets, “know-how,” formulae, secret
processes, recipes or machines, inventions, computer programs (including
documentation of such programs) and research projects, and matters of a business
nature, such as proprietary information about costs, profits, markets, sales,
lists of customers, and other information of a similar nature to the extent
not
available to the public, and plans for future development. After termination
of
this Agreement, the Executive shall not use or disclose trade secrets or other
confidential information unless such information (a) is or becomes a part of
the
public domain other than through a breach of this Agreement or (b) is disclosed
to the Executive by a third party who is entitled to receive and disclose such
information.
5. Return
of Documents and Property.
Upon
the end of the Employment Period or upon the effective date of notice of the
Executive’s or the Corporation’s election to terminate this Agreement, the
Executive or his personal representatives shall deliver to the Corporation
(a) all documents and materials containing trade secrets or other
confidential information relating to the business and affairs of the
Corporation, and (b) all documents, materials and other property belonging
to the Corporation, which in either case are in the possession or under the
control of the Executive (or his heirs or personal
representatives).
6. Discoveries
and Works.
All
discoveries and works made or conceived by the Executive during his employment
by the Corporation, jointly or with others, that relate to the Corporation’s
activities shall be owned by the Corporation. The term “discoveries and works”
includes, by way of example, inventions, computer programs (including
documentation of such programs), technical improvements, processes, drawings
and
works of authorship. The Executive shall (i) promptly notify, make full
disclosure to, and execute and deliver any documents requested by, the
Corporation to evidence or better assure title to such discoveries and works
in
the Corporation, (ii) assist the Corporation in obtaining or maintaining for
itself at its own expense United States and foreign patents, copyrights, trade
secret protection or other protection of any and all such discoveries and works,
and (iii) promptly execute, whether during his employment by the Corporation
or
thereafter, all applications or other reasonably requested endorsements
necessary or appropriate to maintain patents and other rights for the
Corporation and to protect its title thereto. Executive
claims no inventions,
patented or unpatented, conceived or made by him prior to his employment by
the
Corporation and which should excluded from this Agreement.
7. Termination;
Resignation.
(a) Parties’
Rights to Terminate.
The
Executive may terminate this Agreement by resignation at any time, upon sixty
(60) days’ prior written notice (the “Executive’s Notice Period”) or for “Good
Reason,” as described in Section 7(c) below, and the Corporation may terminate
this Agreement with “Cause,” as defined in Section 7(e) below, or without Cause
upon ninety (90) days’ prior written notice (the “Corporation’s Notice Period”).
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(b) Termination
for Cause; Resignation without Good Reason.
In the
event the Corporation terminates this Agreement for “Cause” (as defined in
Section 7(e) below) or the Executive resigns without “Good Reason,” (as defined
in Section 7(d) below), the Executive shall be entitled to payment of all
amounts of Base Salary (if the Corporation gives notice within the first six
months following the Commencement Date, then the Base Salary obligation is
through the end of the six month period from the Commencement Date), accrued
but
unused vacation, reimbursements for appropriate expenses incurred prior to
the
termination date, and any other amounts payable under Corporation policy or
applicable law that are due or accrued as of the termination date. On the
effective date of any termination by the Corporation for “Cause” or the
resignation by the Executive without “Good Reason”, all unvested options shall
immediately expire; provided, however, all vested Options shall remain vested
and subject to exercise; provided, further, that in this case the Executive
shall exercise any vested Options within 60 days from the effective date of
termination. After the first anniversary of the Commencement Date, on the
effective date of any termination by the Corporation without “Cause” or the
resignation by the Executive with “Good Reason,” an additional amount of Options
will vest in an amount calculated according
to the following formula: (i) the amount of Options scheduled at the end of
the
then current anniversary year, multiplied by (ii) a fraction, (x) the numerator
of which shall be the number of days in that year that fell within the
Employment Period and (y) the denominator of which shall be 365.
(c) Termination
Without Cause or Resignation with Good Reason.
If the
Corporation terminates the Executive’s employment without Cause or the Executive
terminates his employment for Good Reason all vested Options together with
all
Options which would have vested within ninety (90) days of the effective date
of
such termination shall become or remain fully vested, as the case may be, and
subject to exercise; provided, however, that in this case the Executive shall
exercise any vested Options within 60 days from the effective date of
termination. In addition, if the Corporation terminates the Executive’s
employment without Cause or the Executive terminates his employment for Good
Reason, the Corporation shall pay to the Executive the Base Salary (but no
bonus) for a period of six (6) months beginning on the effective termination
date. Other than as set forth in this paragraph, in no event shall the
Corporation pay any severance.
(d) Good
Reason.
“Good
Reason” shall mean (i) a material reduction of the Executive's duties, title,
position, reporting status, or responsibilities; (ii) a reduction of the
Executive's Base Salary as in effect immediately prior to such reduction; (iii)
a material, uncured breach by the Corporation of this Agreement (after receiving
notice of such breach and a period of thirty (30) day to cure such breach (the
“Executive’s Notice Period”); (iv) material failure by the Corporation to
promptly pay Executive’s salary and/or deliver benefits; (v) relocation of
Executive’s office to a location outside of Broward County or Miami-Dade County,
Florida without the Executive’s prior agreement; or (vi) the Corporation’s
failure to maintain D&O insurance having commercially reasonable policy
limits and coverage, while the Corporation is publicly traded. During the
Executive’s Notice Period, the Corporation shall have the right to cure any
action or condition that constitutes Good Reason.
(e) Cause.
“Cause”
shall mean (i) the continued, willful and deliberate failure of the Executive
to
accept and cooperate with the lawful actions and initiatives assigned to the
Executive by the Board from time to time, provided such duties are consistent
with his position, in a manner substantially consistent with the manner
prescribed by the Board (other than any such failure resulting from incapacity
due to physical or mental illness), (ii) the willful and deliberate engaging
by
the Executive in misconduct materially and demonstrably injurious to the
Corporation, (iii) the conviction of the Executive for commission of a felony,
whether or not such felony was committed in connection with the Corporation’s
business, or (iv) the circumstances described in Section 8 hereof, in which
case
the provisions of Section 8 shall govern the rights and obligations of the
parties.
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8. Disability;
Death.
(a)
If,
prior to the expiration or termination of the Employment Period, the Executive
shall be unable to substantially perform his duties by reason of disability
or
impairment of health as determined (by a physician having staff privileges
at a
private hospital located in Dade County or Broward County, Florida) for at
least
three consecutive calendar months, the Corporation shall have the right to
terminate this Agreement by giving written notice to the Executive to that
effect, but only if at the time such notice is given such disability or
impairment is still continuing. After giving such notice, (i) the Employment
Period shall terminate with the payment of the Executive’s Base Salary for the
month in which notice is given and the payment of a pro rata
portion
of any Annual Bonus that would have been payable to Executive under Section
2(c)
had he not become disabled, (ii) all unvested Options (and any other option
or
restricted stock granted to him) shall, immediately upon such effective date,
become fully vested and subject to exercise, and (iii) all of the Executive’s
benefits under this Agreement shall terminate, except that the Executive shall
receive such accidental disability benefits to which the Executive may be
entitled under the plans of the Corporation then in effect. In the event of
a
dispute as to whether the Executive is disabled within the meaning of this
Section 8(a), either party may from time to time request a medical examination
of the Executive by a doctor appointed by the Chief of Staff of a hospital
selected by mutual agreement of the parties, or as the parties may otherwise
agree, and the written medical opinion of such doctor shall establish a
presumption as to whether the Executive has become disabled and the date when
such disability arose. Such presumption shall become binding and conclusive
upon
the parties unless, within 20 days of the date of receipt of such written
medical opinion, the party disputing such opinion provides a contrary written
medical opinion from two doctors appointed by the same Chief of Staff which
appointed the first doctor, in which event the opinions of the latter two
doctors shall become binding and conclusive upon the parties. The cost of any
such medical examinations shall be borne by the Corporation, except that the
Executive shall bear the cost of any medical examinations sought in order to
rebut a presumption of disability.
(b) If,
prior
to the expiration or termination of the Employment Period, the Executive shall
die, the Corporation shall pay to the Executive’s estate (or to the revocable
living trust previously specified by the Executive) his base compensation
through the end of the month in which the Executive’s death occurred and a
pro rata
portion
of any bonus (if any) that would have been payable to the Executive under
Section 2(c) had his death not occurred, at which time the Employment Period
shall terminate without further notice. In addition, all of the Executive’s
benefits under this Agreement shall terminate, except that the Executive’s
estate shall receive such accidental death benefits to which the Executive
may
be entitled under the plans of the Corporation then in effect.
9. Intentionally
Omitted.
10. Enforcement.
The
Executive agrees that the Corporation’s remedies at law for any breach or threat
of breach by him of the provisions of Sections 4, 5 and 6 hereof will be
inadequate, and that the Corporation shall be entitled to pursue an injunction
or injunctions (and temporary restraining orders and preliminary injunctions,
as
the case may be) to prevent breaches of the said provisions and to enforce
specifically the terms and provisions thereof, in addition to any other remedy
to which the Corporation may be entitled at law or equity.
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11. Severability.
Should
any provision of this Agreement be determined to be unenforceable or prohibited
by any applicable law, such provision shall be ineffective to the extent, and
only to the extent, of such unenforceability or prohibition without invalidating
the balance of such provision or any other provision of this Agreement, and
any
such unenforceability or prohibition in any jurisdiction shall not invalidate
or
render unenforceable such provision in any other jurisdiction.
12. Assignment.
The
Executive’s rights and obligations under this Agreement shall not be assignable
by the Executive. The Corporation’s rights and obligations under this Agreement
shall be assignable by the Corporation, including as incident to the transfer,
by merger or otherwise, of all or substantially all of the business of the
Corporation. In the event of any such assignment by the Corporation, all rights
of the Corporation hereunder shall inure to the benefit of the
assignee.
13. Notices.
Any
notice required or permitted under this Agreement shall be deemed to have been
effectively made or given if in writing and personally delivered or mailed
properly addressed in a sealed envelope, postage prepaid by certified or
registered mail. Unless otherwise changed by notice, notice shall be properly
addressed to Executive if addressed to:
Xxxx
Xxxxx
0000
Xxx
Xxxxxx Xxxxx XX
Xxxxxxxx,
XX 00000
and
properly addressed to the Corporation if addressed to:
Chairman
Ener1,
Inc.
000
Xxxx
Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xx.
Xxxxxxxxxx, Xxxxxxx 00000
Email:
xxxxxx.xxxxxx@xxxx0xxxxx.xxx
with
a
copy to:
Xxxxxx
Xxxxxxx
General
Counsel
Ener1,
Inc.
000
Xxxx
Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xx.
Xxxxxxxxxx, Xxxxxxx 00000
Email:
xxxxxxxx@xxxx0.xxx
14. Award
to Prevailing Party in Dispute.
In the
event either of the parties to this Agreement commences any action or proceeding
arising out of, or relating in any way to, this Agreement, the prevailing party
shall be entitled to recover, in addition to any other relief awarded to such
party, his or its costs, expenses and reasonable attorneys’ fees.
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15. Additional
Documents to be Executed by the Executive.
The
obligations of the Corporation under this Agreement shall be subject to the
execution and delivery, by the Executive, of the Corporation’s Business Code of
Conduct, and other standard in-processing documentation normally required of
all
incoming employees. The obligations of the Executive thereunder shall be
additive and complementary to the Executive’s obligations
hereunder.
16. Indemnification.
(a)
If
the
Executive is made a party or threatened to be made a party to any action, suit
or proceeding, whether civil, criminal, administrative or investigative (a
“Proceeding”), by reason of the fact that the Executive is or was a director or
officer of the Corporation or any subsidiary thereof or is or was serving at
the
request of the Corporation or any subsidiary thereof as a director, officer,
member, employee or agent of another person, the Executive shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by the
appropriate governing law, as the same exists or may hereafter be amended,
against all damages, losses, judgments, liabilities, fines, settlements, and
costs, attorneys' fees and any expenses of establishing a right to
indemnification under this Agreement (“Expenses”) incurred by the Executive in
connection therewith, and such indemnification shall continue after Executive
has ceased to be an officer, director, or agent, or is no longer employed by
the
Corporation and shall inure to the benefit of his heirs, executors and
administrators; provided, however, that the Executive shall not be so
indemnified for any Proceeding which is adjudicated to have arisen out of his
willful misconduct, bad faith, gross negligence or reckless disregard of duty
or
his failure to act in good faith in the reasonable belief that his action was
in
the best interests of the Corporation. Expenses incurred by the Executive in
connection with any Proceeding shall be paid by the Corporation in advance
upon
the Executive's request and Executive's delivery of an undertaking to reimburse
the Corporation for Expenses with respect to which the Executive is not entitled
to indemnification. The right to indemnification and the payment of Expenses
incurred in defending a Proceeding in advance of its final disposition hereunder
shall not be exclusive of any other right which the Executive may have or
hereafter may acquire.
(b) The
Executive shall give the Corporation notice of any claim made against him for
which indemnification could be sought under this Agreement, but the failure
of
the Executive to give such notice shall not relieve the Corporation of any
liability the Corporation may have to the Executive except to the extent that
the Corporation is prejudiced thereby. In addition, the Executive shall give
the
Corporation such information and cooperation as it may reasonably require and
as
shall be within the Executive's power and at such time and places as are
convenient for the Executive.
(c) The
Corporation will be entitled to participate in any Proceeding at its own expense
and, except as otherwise provided below, the Corporation will be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the
Executive. The Executive also shall have the right to employ his own counsel
in
such Proceeding if he reasonably concludes that failure to do so would involve
a
conflict of interest between the Corporation and the Executive, and under such
circumstances the fees and expenses of such counsel shall be at the expense
of
the Corporation.
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(d) The
Corporation shall not be liable to indemnify the Executive for any amounts
paid
in settlement of any claim effected without its written consent. The Corporation
shall not settle any claim in any manner which would not include a full and
unconditional release of the Executive without the Executive's prior written
consent. Neither the Corporation nor the Executive will unreasonably withhold
or
delay their consent to any proposed settlement.
17. Miscellaneous.
This
Agreement constitutes the entire agreement, and supersedes all prior agreements,
of the parties hereto relating to the subject matter hereof, and there are
no
written or oral terms or representations made by either party other than those
contained herein. The validity, interpretation, performance and enforcement
of
this Agreement shall be governed by the laws of the State of Florida. The
headings contained herein are for reference purposes only and shall not in
any
way affect the meaning or interpretation of this Agreement.
18. Press
Releases.
During
the Term of this Agreement, the Executive shall have a right of approval of
all
press releases of the Corporation that mention the Executive and shall have
a
right of approval of all photographs of the Executive that are used in such
press releases, which approvals shall not be unreasonably withheld.
[This
space intentionally blank.]
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IN
WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
effective as of the day and year first above written.
ENER1,
INC. EXECUTIVE
By:
_/s/
Xxxxxx X. Stewart________ _/s/
Ajit
Habbu_______________
Name: Xxxxxx
X.
Xxxxxxx Xxxx
Xxxxx
Title:
General Counsel and Secretary
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