MEMORANDUM AGREEMENT
EXHIBIT
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This
Memorandum Agreement made effective as of the 3rd
day of
October, 2006 between Ener1, Inc. (“Ener1”) and Ener1 Group, Inc.
(“Group”).
WHEREAS,
Group on September 22, 2006 elected Xx. Xxxxxx Xxxxxx as Chairman of its Board
of Directors; and
WHEREAS,
the Board of Directors of Ener1 has, effective as of October 3, 2006, elected
Xxxxxx Xxxxxx as a Member of its Board of Directors and as its Chairman and
Chief Executive Officer; and
WHEREAS,
the Ener1 Board’s decision to elect Xx. Xxxxxx and set his annual salary at
$750,000 was made with the understanding that Group would defray, in cash,
$400,000 of such salary cost, along with any employment tax payments and tax
or
other payments required relative to the $400,000 portion and any additional
amounts required to purchase health insurance and other employee benefits for
Xx. Xxxxxx, reflecting that Xx. Xxxxxx will be performing services to Group
as
its Chairman; and
WHEREAS,
in return for such payments, Ener1 would allow Xx. Xxxxxx to perform services
for Group, subject to the terms hereof; and
WHEREAS,
Group and Ener1 wish to memorialize and define the above understandings in
this
Agreement.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
conditions herein, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Group
will wire to Ener1’s account, in time to be included in the ADP draft for
payroll funding for Ener1 (generally, not less than two business days prior
to
each payroll date): (a) an amount sufficient to cover 53% ($400,000/$750,000)
of
the payroll, payroll taxes and other payments required for Xx. Xxxxxx; (b)
amounts sufficient to cover 53% of the payments required from Ener1 to cover
Xx.
Xxxxxx’ health insurance and other employee benefits; and (c) an amount
sufficient to cover all expenses incurred by Xx. Xxxxxx on behalf of Group
to
the extent that such expenses are requested to be paid by Ener1; provided,
with
respect to (b) and (c), that Ener1 identifies to Group the exact amount of
each
such payment with itemized details in writing the day prior to the day such
payment is required. The dollar amounts in (a) and (b) will be adjusted as
necessary to reflect any increments in Xx. Xxxxxx’ salary or benefits. In
return, Ener1 will allow Xx. Xxxxxx’ to perform services for Group, provided
that the amount, type and timing of such services does not adversely affect
Ener1. Group will use any such services at its own risk. Ener1 shall not be
responsible for any failure by Xx. Xxxxxx to perform any such services or for
his failure to perform any such services timely or properly, nor for any results
of such failure; and Group hereby releases Ener1 from any costs, expenses,
claims, damages, suits or investigations (including, without limitation,
attorneys fees, court costs and costs of investigation, or fines or penalties
of
any nature) (“Losses”), resulting from such failure or the services provided to
Group or the results thereof. Likewise, Ener1 hereby releases Group from any
Ener1 Losses resulting from Xx. Xxxxxx providing services to Group, except
to
the extent such Losses result from Xx. Xxxxxx’ negligence, willful misconduct,
violation of law or breach of fiduciary duty.
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2. In
the
event that Group fails to make any of the above-required payments on time,
in
addition to any other remedies available to Ener1 hereunder or at law or in
equity, Group will indemnify and hold Ener1 and its subsidiaries, and the
officers and directors of each of them, harmless, on a dollar-for-dollar basis,
for any costs, expenses, claims, damages, suits or investigations (including,
without limitation, attorneys fees, court costs and costs of investigation,
or
fines or penalties of any nature), resulting from such failure. In addition
to
such indemnification in the event of such payment failure, after notice and
the
opportunity to cure (such cure period to be five days), Ener1 may require Xx.
Xxxxxx to cease his services to Group. In addition, all such amounts that Group
fails to pay to Ener1 shall be offset against any amount owed to Group by Ener1,
first against intercompany advances that have not been documented into
promissory notes, and any excess remaining after exhausting all such
intercompany advances will be offset against such outstanding promissory notes
outstanding from Ener1 to Group as Ener1 shall choose; and all such promissory
notes outstanding shall be deemed modified hereby to so provide. If the amounts
that Group fails to pay shall exceed the total of intercompany advances and
promissory notes outstanding, Group shall execute a demand note payable to
Ener1
for such amounts and increase the principal of such note in the amount of any
subsequent payment failures hereunder.
3. Nothing
in this Agreement shall eliminate or reduce the fiduciary and other
responsibilities that Group and/or Xx. Xxxxxx may have to Ener1.
4. General
Terms.
(a) Notices.
All
notices, demands or other communications given under this Agreement shall be
in
writing and shall be mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or transmitted by hand delivery (including
delivery by courier), telegram, telex, or facsimile transmission, addressed
as
follows:
| If to ENER1: | Xxxxxx Xxxxxx | ||
| Ener1, Inc. | |||
| 000 X. Xxxxxxx Xxxxx Xx., Xxxxx 000 | |||
| Xx. Xxxxxxxxxx, XX 00000 | |||
| Facsimile: 000-000-0000 | |||
| With a copy to: | Xxxxxx Xxxxxxx | ||
| Ener1, Inc. | |||
| 000 X. Xxxxxxx Xxxxx Xx., Xxxxx 000 | |||
| Xx. Xxxxxxxxxx, XX 00000 | |||
| Facsimile: 000-000-0000 | |||
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| If to ENER1: | Xxxxxx Xxxxxx | ||
| Ener1, Inc. | |||
| 000 X. Xxxxxxx Xxxxx Xx., Xxxxx 000 | |||
| Xx. Xxxxxxxxxx, XX 00000 | |||
| Facsimile: 000-000-0000 | |||
| With a copy to: | Xxxxxx Xxxxx | ||
| Ener1, Inc. | |||
| 000 X. Xxxxxxx Xxxxx Xx., Xxxxx 000 | |||
| Xx. Xxxxxxxxxx, XX 00000 | |||
| Facsimile: 000-000-0000 | |||
or
to
such other address which each Party may designate by notice in writing. Each
such notice, demand or other communication which shall be mailed, delivered
or
transmitted in the manner described above shall be deemed given for all purposes
at such time as it is delivered to the addressee (with the return receipt,
the
delivery receipt, the affidavit of messenger or (with respect to a telex) the
answer back being deemed conclusive (but not exclusive) evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
(b) Governing
Law.
The
construction and interpretation of this Agreement and the rights of the Parties
shall be governed by the laws of the State of Florida, without regard to its
conflicts of laws provisions. The state and federal courts located in Florida
shall have exclusive jurisdiction over any dispute arising from or in connection
with this Agreement not otherwise submitted to arbitration. Each Party hereby
consents to the personal jurisdiction of the state and federal courts in Florida
in any such dispute arising from or relating to this Agreement. Each Party
further agrees that services of process may be made, in addition to any other
method permitted by law, by certified mail, return receipt requested, sent
to
the applicable address set forth herein. Any award or injunctive relief granted
in any dispute may be enforced by either Party in either the courts of the
State
of Florida or in the United States District Courts located in Broward County,
Florida. The Parties hereby expressly waive their rights to trial by
jury.
(c) Assignment.
This
Agreement shall be binding upon and shall inure to the benefit of the Parties
hereto and their respective successors and assigns as permitted hereunder.
No
person or entity other than the Parties hereto is or shall be entitled to bring
any action to enforce any provision of this Agreement against any of the Parties
hereto, and the covenants and agreements set forth in this Agreement shall
be
solely for the benefit of, and shall be enforceable only by, the Parties hereto
or their respective successors and assigns as permitted hereunder.
(d) Entire
Agreement; Amendment.
This
Agreement constitutes the entire agreement between the Parties with respect
to
the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the Parties with respect to
such
matters. No amendment to this Agreement shall be made except by an instrument
in
writing signed on behalf each Party.
(e) Severability.
If any
court or arbiter of applicable jurisdiction determines that any of the
agreements, covenants and undertakings set forth herein, or any part thereof,
is
invalid or unenforceable, the provision shall, to the extent possible, be
restated to reflect the original intention of the Parties, and the remainder
of
this Agreement shall be given full effect, without regard to the invalid or
restated portions.
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(f) Waiver.
The
failure of either Party to assert a right hereunder or to insist upon compliance
with any term or condition of this Agreement shall not constitute a waiver
of
that right or excuse a similar subsequent failure to perform any such term
or
condition by the other Party.
(g) Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed to be an original, but all of which together shall constitute one and
the
same agreement.
(h) Compliance
with Laws.
In
performing under this Agreement, both Parties agree to comply with all
applicable laws, rules, and regulations of any governmental entity.
(i) Term.
This
Agreement shall remain in force until Xx. Xxxxxx is no longer employed by Ener1
and all Group obligations to Ener1 hereunder have been paid in
full.
WHEREFORE,
the parties hereto have caused their duly authorized officers to execute this
Agreement on their behalf, effective as of the date first written
above.
ENER1,
INC. ENER1
GROUP, INC.
By: __/s/
Xxxxxx
Stewart_________
By: __/s/
Xxxxxx Wolfe______
Name: Xxxxxx
Xxxxxxx
Name: Xxxxxx
Xxxxx
Title: General
Counsel and
Secretary Title: General
Counsel
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