EMPLOYMENT AGREEMENT
Exhibit
10.4
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into by and between INTERNATIONAL
FUEL TECHNOLOGY, INC., a Nevada corporation (the “Company”), and XXXXXXXX X. BURST (the
“Employee”), and is dated as of the first day of January, 2002.
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the best
interests of the Company and its shareholders to employ the Employee in the position set forth
below, and the Employee desires to serve in that capacity.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and promises
herein contained, and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company and Employee hereby agree as follows:
| 1. | Employment Period. The Company shall employ the Employee, and the Employee shall serve the Company, on the terms and conditions set forth in this Agreement, for the period commencing on January 1, 2002 and ending on December 31, 2004 (“Employment Period”). |
2. Position and Duties.
(a) The Employee shall serve as President and Chief Executive Officer of the Company,
reporting to the board of directors, with such duties and responsibilities as are customarily
assigned to such position, and such other duties and responsibilities not inconsistent therewith as
may be assigned to him from time to time by the board.
(b) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Employee is entitled, the Employee shall devote his full-time efforts to the business and
affairs of the Company and use his best efforts to carry out such responsibilities faithfully and
efficiently. It shall not be considered a violation of the foregoing for the Employee to (i) serve
on corporate, civic or charitable boards or committees, (ii) deliver lectures or fulfill speaking
engagements or (iii) manage personal investments so long as such activities do not interfere with
the performance of his responsibilities as an employee of the Company in accordance with this
Agreement or violate the provisions of Section 7 of this Agreement.
3. Compensation.
(a) Base Salary. During the Initial Term, the Employee shall receive an annual base salary
(the “Annual Base Salary”) at the minimum rate of $250,000.00. In the event of any Renewal Term,
the Annual Base Salary shall be renegotiated by the parties hereto, but in no event shall the
Annual Base Salary during any such Renewal Term be less than $250,000.00. The Annual Base Salary
shall be payable in accordance with the Company’s payroll practices as in effect from time to time.
The Board of Directors of the Company may increase the Annual Base Salary above the foregoing
amounts at its discretion.
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(b) Bonus. In addition to the Annual Base Salary, the Employee shall be awarded
bonuses (the “Bonus”) at such times and in such amounts as are deemed appropriate by the Board of
Directors of the Company.
(c) Stock Options. Employee shall receive 250,000 options to purchase shares of the
Company’s common stock at $0.14 per share (the “Stock Compensation”). The 250,000 options for the
first year of this Employment Agreement shall vest on the last day of the first year of the
Employment Period, unless the Employee is terminated by the Company for Cause (as hereinafter
defined) or the Employee terminates his employment without Good Reason (as hereinafter defined), in
which case Employee shall be entitled to only that portion of Stock Compensation which has accrued
hereunder as of the Date of Termination. The 250,000 options for 2003 and 2004 shall vest on the
last day of this Employment Period.
(d) Insurance. The Company will provide Employee, subject to applicable waiting
periods, with term life insurance in the amount of Two Million Dollars ($2,000,000.00); Employee
will cooperate with the Company in obtaining such policies.
(e) Other Benefits. During the Employment Period: (i) the Employee shall be entitled
to participate in all benefit programs of the Company, including, but not limited to, health
insurance coverage or reimbursement of the Employee’s cost to maintain same; and (ii) the Employee
and/or the Employee’s family, as the case may be, shall be eligible for participation in, and shall
receive all benefits under, all welfare benefit plans, practices, policies and programs provided by
the Company, including, but not limited to any comprehensive dental plan, retirement plans and
profit sharing programs the Company may provide to any other employees from time to time.
(f) Expenses. During the Employment Period, the Employee shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the Employee in carrying out
the Employee’s duties under this Agreement, provided that the Employee complies with the policies,
practices and procedures of the Company for submission of expense reports, receipt and similar
documentation of such expenses.
(g) Fringe Benefits. During the Employment Period, the Employee shall be entitled to
paid vacation and other fringe benefits, in each case on such terms and conditions as are
determined by the Board of Directors of the Company.
4. Termination of Employment.
(a) Death or Disability. The Employee’s employment shall terminate automatically upon the
Employee’s death during the Employment Period. The Company shall be entitled to terminate the
Employee’s employment because of the Employee’s Disability during the Employment Period.
“Disability” means that (i) the Employee has been unable, for a period of six months, or for a
total of 90 days in any given period, to perform the Employee’s duties under this Agreement, as a
result of physical or mental illness or injury, and (ii) a physician selected by the Company or its
insurers, and acceptable to the Employee or the Employee’s guardian or legal
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representative, has determined that the Employee’s incapacity is total and permanent. A termination
of the Employee’s employment by the Company for Disability shall be communicated to the Employee by
written notice, and shall be effective on the 30th day after receipt of such notice by the Employee
(the “Disability Effective Date”), unless the Employee is able to, and does, return to full-time
performance of the Employee’s duties before the Disability Effective Date.
(b) By the Company.
(i) The Company may terminate the Employee’s employment during the Employment Period for Cause or
without Cause. “Cause” means:
A. any fraud, embezzlement or other dishonesty of the Employee that materially and adversely
affects the Company’s business or reputation; or
B. the Employee’s conviction for a felony or entering into a plea of nolo contendere with
respect to a felony.
(ii) A termination of employment by the Company for Cause shall be effectuated by giving the
Employee written notice (“Notice of Termination for Cause”) of the termination, setting forth the
conduct of the Employee that constitutes Cause. Termination of employment by the Company for Cause
shall be effective on the date when the Notice of Termination for Cause is given, unless the notice
sets forth a later date (which date shall in no event be later than 30 days after the notice is
given).
(iii) A termination of the Employee’s employment by the Company without Cause shall be effected by
giving the Employee written notice of the termination at least thirty (30) days prior to the
termination date.
(c) By the Employee.
(i) The Employee may terminate employment in the event of a Good Reason. “Good Reason” means:
A. the assignment to the Employee of any duties inconsistent in any respect with paragraph
(a) of Section 2 of this Agreement, other than actions that are not taken in bad faith and are
remedied by the Company within fifteen (15) days after receipt of notice thereof from the Employee;
B. any failure by the Company to comply with any provision of Section 3 of this Agreement,
other than failures that are not taken in bad faith and are remedied by the Company within fifteen
(15) days after receipt of notice thereof from the Employee; or
C. the occurrence of a Non-Negotiated Change in Control of the Company (as defined below).
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For purposes of this Agreement, “Non-Negotiated Change in Control” means any one or more of the
following occurrences:
(x) Any individual, corporation (other than the Company, any trustees or other beneficiary holding
securities under any employee benefit plan of the Company, or any Company owned, directly or
indirectly, by the Stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company), partnership, trust, association, pool, syndicate, or any other
entity or any group of persons acting in concert becomes the beneficial owner (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934) of securities of the Company possessing
more than one-half (1/2) of the voting power for the election of directors of the Company;
(y) There shall be consummated any consolidation, merger, or other business combination involving
the Company or the securities of the Company in which holders of voting securities of the Company
immediately prior to such consummation own, as a group, immediately after such consummation, voting
securities of the Company (or, if the Company does not survive such transaction, voting securities
of the entity surviving such transaction) having less than one-half (1/2) of the total voting power
in an election of directors of the Company (or such other surviving corporation); or
(z) There shall be consummated any sale, lease, exchange, or other transfer (in one transaction or
a series of related transactions) of all, or substantially all, of the assets of the Company (on a
consolidated basis) to a party which is not controlled by or under common control with the Company.
(ii) A termination of employment by the Employee for Good Reason shall be effectuated by giving the
Company written notice (“Notice of Termination for Good Reason”) of the termination, setting forth
the conduct of the Company that constitutes Good Reason. A termination of employment by the
Employee for Good Reason shall be effective on the fifth business day following the date when the
Notice of Termination for Good Reason is given, unless the notice sets forth a later date (which
date shall in no event be later than 30 days after the notice is given).
(iii) A termination of the Employee’s employment by the Employee without Good Reason shall be
effected by giving the Company written notice of the termination at least thirty (30) days prior to
the termination date.
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(d) No Waiver. The failure to set forth any fact or circumstance in a Notice of
Termination for Cause or a Notice of Termination for Good Reason shall not constitute a
waiver of the right to assert, and shall not preclude the party giving notice from
asserting, such fact or circumstance in an attempt to enforce any right under or
provision of this Agreement.
(e) Date of Termination. The “Date of Termination” means the date of the
Employee’s death, the Disability Effective Date, the date on which the termination of the
Employee’s employment by the Company for Cause or by the Employee for Good Reason is effective, or
the date on which the Company gives the Employee notice of a termination of employment without
Cause or the Employee gives the Company notice of a termination of employment without Good Reason,
as the case may be.
5. Obligations of the Company upon Termination.
(a) Other Than for Cause, Death or Disability; Good Reason. If, during the
Employment Period, the Company terminates the Employee’s employment, other than for Cause, Death or
Disability, or the Employee terminates his employment for Good Reason, the Company shall (i) pay
the Employee’s accrued but unpaid portion of the Annual Base Salary (the “Accrued Obligations”) to
the Employee in a lump sum in cash within 30 days after the Date of Termination, (ii) continue to
pay the Annual Base Salary for the remainder of the term hereof, (iii) issue the accrued Stock
Compensation (the “Accrued Stock Compensation”), and (iv) issue the Stock Compensation for the
remainder of the term hereof. If the Company does not extend Employee’s contract beyond the terms
of this agreement, Employee shall be paid his current salary over the 1 (one) year period after
this agreement expires. The payments provided pursuant to this paragraph (a) of Section 5 are
intended as liquidated damages for a termination of the Employee’s employment by the Company other
than for Cause or Disability or for the actions of the Company leading to a termination of the
Employee’s employment by the Employee for Good Reason, and shall be the sole and exclusive remedy
therefor.
(b) Death or Disability. If the Employee’s employment is terminated by reason of the
Employee’s death or Disability during the Employment Period, (i) the Company shall pay the Accrued
Obligations to the Employee or the Employee’s estate or legal representative, as applicable, in a
lump sum in cash within 30 days after the Date of Termination and (ii) the Company shall issue the
Accrued Stock Compensation to the Employee or the Employee’s estate or legal representative. In
addition, if the Employee’s employment is terminated by reason of Disability, the Company will
continue to pay to Employee until the earlier of: (i) expiration of the Employment Period, or (ii)
the date of Employee’s death, the Annual Base Salary, less any amounts received by Employee under
any disability insurance coverage maintained for Employee by the Company.
(c) Cause; Other than for Good Reason. If the Employee’s employment is terminated
by the Company for Cause during the Employment Period, or if the Employee terminates his employment
during the Employment Period other than for Good Reason, the Company shall pay Employee the Accrued
Obligations and the Company shall issued the Accrued Stock Compensation.
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6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Employee’s continuing or future participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies for which the Employee may qualify, nor, subject to
paragraph (f) of Section 11, shall anything in this Agreement limit or otherwise affect such rights
as the Employee may have under any contract or agreement with the Company or any of its affiliated
companies. Vested benefits and other amounts that the Employee is otherwise entitled to receive
under any plan, policy, practice or program of, or any contract or agreement with, the Company or
any of its affiliated companies on or after the Date of Termination shall be payable in accordance
with such plan, policy, practice, program, contract or agreement, as the case may be, except as
explicitly modified by this Agreement.
7. Confidential Information. The Employee shall hold in a fiduciary capacity for
the benefit of the Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies and their respective businesses that the Employee
obtains during the Employee’s employment by the Company or any of its affiliated companies and that
is not public knowledge (other than as a result of the Employee’s violation of this paragraph (a)
of Section 7) (“Confidential Information”). The Employee shall not communicate, divulge or
disseminate Confidential Information at any time during the Employee’s employment with the Company,
except with the prior written consent of the Company or as otherwise required by law or legal
process.
8. No Mitigation. In no event shall the Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Employee
under any of the provisions of this Agreement and such amounts shall not be reduced, regardless of
whether the Employee obtains other employment.
9. Successors.
(a) This Agreement is personal to the Employee and, without the prior written consent of the
Company, shall not be assignable by the Employee otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Employee’s
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
10. Miscellaneous.
(a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of
Missouri, without reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified except by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
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(b) All notices and other communications under this Agreement shall be in writing and shall
be given by hand delivery to the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If
to the Employee:
Xxxxxxxx X. Burst
0 Xxxxxxxx Xx.
Xx. Xxxxx, Xxxxxxxx 00000
0 Xxxxxxxx Xx.
Xx. Xxxxx, Xxxxxxxx 00000
If
to the Company:
International Fuel Technology, Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
or to such other address as either party furnishes to the other in writing in accordance with this
paragraph (b) of Section 10. Notices and communications shall be effective when actually received
by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement shall not affect
the validity or enforceability of any other provision of this Agreement. If any provision of this
Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision,
together with all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(d) Notwithstanding any other provision of this Agreement, the Company may withhold from
amounts payable under this Agreement all federal, state, local and foreign taxes that are required
to be withheld by applicable laws or regulations.
(e) The failure of the Employee or the Company to insist upon strict compliance with any
provision of, or to assert any right under, this Agreement shall not be deemed to be a waiver of
such provision or right or of any other provision of or right under this Agreement.
(f) The Employee and the Company acknowledge that this Agreement supersedes any other
agreement between them concerning the subject matter hereof.
(g) This Agreement may be executed in one or more counterparts, each of which shall be deemed
an original, and which together shall constitute one instrument.
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IN WITNESS WHEREOF, the Employee has hereunto set the Employee’s hand and, pursuant to the
authorization of its Board of Directors, the Company has caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above written.
| XXXXXXXX X. BURST | ||||||||||
| INTERNATIONAL FUEL TECHNOLOGY, INC. | ||||||||||
| By: | ||||||||||
| Name: | ||||||||||
| Title: | ||||||||||
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