Biogold Fuels Corporation Employment Agreement
Biogold
Fuels Corporation
This
Employment Agreement (AAgreement@)
is made
and entered into this 1st
day of
May, 2008, (the “Effective Date”) by and between Biogold Fuels Corporation, a
Nevada corporation and its subsidiaries (the ACompany@)
and
Xxxxx Xxxxxxxx (AExecutive@).
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A.
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Executive
has the experience to provide services to the Company of an extraordinary
character which gives such services a unique
value.
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B.
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The
Company desires to retain the services of Executive, and Executive
desires
to be employed by the Company for the term of this
Agreement.
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The
Company and Executive, intending to be legally bound, hereby agree as
follows:
1. Employment.
The
Company hereby employs Executive as Chief Financial Officer of the Company.
For
the term of Executive=s
employment, and upon the other conditions set forth in this Agreement, Executive
accepts such employment and agrees to perform services for the Company, subject
always to such resolutions as are established from time to time by the Board
of
Directors of the Company.
2. Term.
The term
of Executive's employment hereunder shall be for a period of three (3) years,
commencing on the Effective Date, and continuing for a period of three years
from the Effective Date, subject to the termination provisions contained herein.
If the parties mutually agree, the term shall be renewed for additional three
year periods.
3.
Position
and Duties.
3.1. Services
with the Company.
During
the term of this Agreement, Executive agrees to perform such duties and exercise
such powers related thereto as may from time to time be assigned to him by
the
Company's Board of Directors (the "Board") or the Chief Executive Officer.
Executive shall duly and diligently perform all duties assigned to him while
in
the employ of the Company. He shall be bound by and faithfully observe and
abide
by all rules and regulations of the Company which are brought to his notice
or
of which he should be reasonably aware.
3.2. No
Conflicting Duties.
Executive shall devote sufficient productive time, ability, and attention to
the
business of the Company during the term of this Agreement in a manner that
will
serve the best interests of the Company. Except for vacations as provided herein
and absences due to temporary illness, under an approved leave, or as required
by applicable law, Executive agrees to devote his best efforts, and energies
on
a full time basis during the Employment Period to the performance of his duties
hereunder and to advance the Company’s interests. Notwithstanding the foregoing,
Executive acknowledges during his employment with the Company, Executive may
engage in any other business activity, whether or not such business activity
is
pursued for profit, or other pecuniary advantage, including, without limitation,
personal investments, conducting private business affairs, participating on
boards of nonprofit foundations and similar activities which, in each such
case,
do not materially interfere with the services rendered by Executive under this
Agreement.
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3.3. Uniqueness
of Executive's Services.
Executive hereby represents and agrees that the services to be performed under
the terms of this Agreement are of a special, unique, unusual, extraordinary,
and intellectual character that gives them a unique value. Executive recognizes
the uniqueness of the services he provides to the Company and realizes the
Company may elect to purchase a life insurance policy to protect against
Executive=s
death
for the benefit of the Company. In such event, Executive shall reasonably
cooperate and take all steps necessary to assist Company in acquiring such
policy or policies.
4. Compensation.
4.1 Base
Salary.
As
compensation for all services to be rendered by Executive under this Agreement,
the Company shall pay according to its normal payroll procedures and policies
to
Executive a base annual salary of (“Base Salary”):
| a) |
Two
Hundred Thousand Dollars ($200,000) until the Company receives at least
$1,000,000 in additional funding after the Effective Date, at which
time
Executive’s salary shall be increased to Two Hundred Fifty Thousand
Dollars ($250,000);
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| b) |
Three
Hundred Fifty Thousand Dollars ($350,000) upon completion and operation
of
the Company’s first waste to energy
plant.
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Executive's
Base Salary shall be reviewed at least annually; however, the Company shall
not
reduce the Executive’s Base Salary at any time during this
Agreement.
4.2 Options.
In
addition to the annual base salary set forth in Section 4.1 above, the Board
may, in its sole discretion, award Executive bonus compensation in the form
of
stock options or stock awards under the Company’s then current employee stock
option plan at intervals throughout the term of this Agreement and any renewal
terms.
4.3. Cash
Incentive Bonus.
The
Company shall pay Executive an annual cash bonus (ACash
Bonus@).
The
Board of Directors shall set the Cash Bonus in a fair and reasonable manner.
Said Cash Bonus may be equal to up to seventy percent (70%) of Executive’s Base
Salary. The Cash Bonus is subject to semi-annual review by the Board of
Directors and shall be payable in semi-annual installments.
4.4 Expenses.
The
Company shall reimburse Executive for all reasonable pre-approved business
or
travel expenses and office related expenses incurred by Executive in the
performance of his duties; including but not limited to: airfare, motor vehicle
rental, lodging, meals, telephone, copy costs, and supplies.
4.5
Mobile
Telephone.
The
Company will provide Executive with the exclusive use of a mobile (cellular
and/or digital) telephone. Such use shall be reasonable in nature and will
be
predominately for business purposes.
4.6 Auto
Allowance.
The
Company shall pay Executive a monthly allowance of $850 for a vehicle and
related auto expenses.
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4.7 Stock
and Option Registration Rights.
In the
event the Company conducts a public offering of the Company=s
shares,
the Company shall provide Executive with registration rights to all shares,
warrants and options which Executive then holds or otherwise directly or
constructively owns.
5.
Vacation,
Sick Leave and Insurance
5.1 Annual
Vacation.
Executive shall be entitled to fifteen (15) days vacation time each year without
loss of compensation. In the event that Executive is unable for any reason
to
take the total amount of vacation time authorized herein during any year, any
unused vacation time shall carry over from year to year. Vacation days will
accrue at the rate of one and one quarter (1.25) days per each month of service
rendered, which accrual shall start effective January 1, 2008. Any earned but
unused vacation time will be paid to Executive based upon his annual rate of
all
compensation paid in the previous twelve months (12) upon termination or
expiration of this Agreement.
5.2. Sick
Leave.
Executive
shall be entitled to twelve (12) days sick leave each year without loss of
compensation. In the event that Executive is unable for any reason to take
the
total amount of vacation time authorized herein during any year, any unused
vacation time shall carry over from year to year. Sick leave days will accrue
at
the rate of one (1) day per each month of service rendered. Any earned but
unused sick leave will be paid to Executive based upon his annual rate of all
compensation paid in the previous twelve months upon termination or expiration
of this Agreement.
5.3. Health
Insurance.
The
Company shall use its best efforts to provide Executive and his immediate family
members with comprehensive PPO or POS health insurance benefits which shall
cover medical, dental and vision.
6. Compensation
Upon the Termination of Executive's Employment.
6.1 Compensation
Upon Termination For Good Reason or Not For Cause.
In the
event this Agreement is terminated by Company prior to its expiration for any
reason except for Cause, as defined below, Executive shall be entitled to
receive Executive's then current Base Salary for a period of three years
following the date upon which he was terminated plus a one million dollar
($1,000,000) cash severance payment. Further, Executive shall retain all rights
to vested shares and stock options, and all other rights earned during his
term
of employment under sections 4.2, 4.3, 4.4, 4.5, 4.6, and 4.7 of this Agreement
and any shares and options owned by Executive shall be registered by the Company
with the US Securities and Exchange Commission.
The
benefits provided for in this provision are exclusive of any other rights or
remedies which Executive would possess in the event the Company terminates
the
Agreement without cause. The Company agrees that in the event it terminates
Executive=s
employment without cause, Executive retains all rights and remedies available
under the law, and the Company will not urge or otherwise argue or assert in
any
legal, including judicial or arbitration, proceeding that any provision of
this
Agreement as constitutes a waiver of rights by Executive.
6.2 Compensation
Upon Termination Upon Death.
In the
event that Executive's employment is terminated pursuant to section 10.2,
Executive's beneficiary or beneficiary designated by Executive in writing to
the
Company, or in the absence of such beneficiary, Executive's estate, shall be
entitled to receive Executive's then current Base Salary through sixty (365)
days after the date of his death.
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6.3
Compensation Upon Termination Upon Disability.
In the
event that Executive’s employment is terminated pursuant to section 10.1,
Executive shall be entitled to receive Executive’s then current Base Salary
through three hundred sixty five (365) days after the date of his
disability.
7. Proprietary
Matter.
Except
as permitted or directed by the Company, Executive shall not during the term
of
his employment or at any time thereafter divulge, furnish, disclose, or make
accessible (other than in the ordinary course of the business of the Company)
to
anyone for use in any way any confidential, secret, or proprietary knowledge
or
information of the Company ("Proprietary Matter") which Executive has acquired
or become acquainted with or will acquire or become acquainted with, whether
developed by himself or by others, including, but not limited to, any trade
secrets, confidential or secret designs, processes, formulae, software or
computer programs, plans, devices or material (whether or not patented or
patentable, copyrighted or copyrightable) directly or indirectly useful in
any
aspect of the business of the Company, any confidential customer, distributor
or
supplier lists of the Company, any confidential or secret development or
research work of the Company, or any other confidential, secret or non-public
aspects of the business of the Company. Executive acknowledges that the
Proprietary Matter constitutes a unique and valuable asset of the Company
acquired at great time and expense by the Company, and that any disclosure
or
other use of the Proprietary Matter other than for the sole benefit of the
Company would be wrongful and would cause irreparable harm to the Company.
Both
during and after the term of this Agreement, Executive will refrain from any
acts or omissions that would reduce the value of Proprietary Matter to the
Company. The foregoing obligations of confidentiality, however, shall not apply
to any knowledge or information which is now published or which subsequently
becomes generally publicly known, other than as a direct or indirect result
of
the breach of this Agreement by Executive.
8. Ventures.
If,
during the term of this Agreement, Executive is engaged in or associated with
the planning or implementing of any project, program, or venture involving
the
Company and a third party or parties, all rights in the project, program, or
venture shall belong to the Company and shall constitute a corporate opportunity
belonging exclusively to the Company. Except as expressly approved in writing
by
the Company, Executive shall not be entitled to any interest in such project,
program, or venture or to any commission, finder's fee or other compensation
in
connection therewith, other than the compensation to be paid to Executive as
provided in this Agreement.
9. Solicitation
of Employees.
9.1. Agreement
Not to Solicit Employees.
During
his employment by the Company hereunder and for the one (1) year period
following the termination of such employment for any reason, Executive shall
not, either directly or indirectly, on his own behalf or in the service or
on
behalf of others solicit, divert or hire away, or attempt to solicit, divert
or
hire away any person then employed full time by the Company.
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10. Termination
Prior to Expiration of the Term.
10.1
Disability.
Executive's employment shall terminate upon Executive becoming totally or
permanently disabled for a period of six (6) months or more. For purposes of
this Agreement, the term "totally or permanently disabled" or "total or
permanent disability" means Executive's inability on account of sickness or
accident, whether or not job related, to engage in regularly or to perform
adequately his assigned duties under this Agreement. Prior to terminating the
Agreement pursuant to this provision, the Company shall engage and consult
one
or more physicians as may be reasonable.
10.2
Death
of Executive.
Executive's
employment shall terminate immediately upon the death of Execu tive.
10.3 Termination
for Cause.
The
Company may terminate Executive's employment for ACause"
(as hereinafter defined). No termination for ACause@
may be
invoked by Company without first providing Executive with at least thirty (30)
days written notice to correct any breach, default or causation. Such written
notice shall set forth with reasonable specificity the Company's basis for
such
notice of termination and Executive shall have thirty (30) days to correct
the
condition set forth in the notice.
10.3.1. Cause
Defined.
For the
purpose of this section, the termination of this Agreement by Company for any
of
the following reasons shall be considered termination for
Cause:
(i)
Conviction
of a criminal act involving fraud, embezzlement or breach of trust or other
act
which would prohibit Executive from holding his position under the rules of
the
Securities and Exchange Commission.
(ii)
Willful, knowing and malicious violation of written corporate policy or
rules
of
the Company.
(iii)
Willful, knowing and malicious misuse, misappropriation, or disclosure
of
any of
the Proprietary Matters.
(iv)
Misappropriation, concealment, or conversion of any money or property
of
the
Company.
(v)
Being: i) under the habitual influence of intoxicating liquors while in the
course
of
employment, or ii) under the influence of any controlled substance
without a valid prescription.
(vi)
Intentional and non-trivial damage or destruction of property of the
Company.
For purposes of this provision non-trivial is defined to mean damage
occurring in the course of a single act or occurrence in an amount exceeding
five thousand dollars ($ 5,000).
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(vii) Reckless
and wanton conduct which endangers the safety of other persons
or property during the course of employment or while on premises
leased or owned by the Company.
(viii)
Continued incapacity for more than 180 days on the part of Executive
to
perform his duties, unless waived by the Company.
(ix)
Intentional or negligent misrepresentation of facts or circumstances
about
the
Executive, the Company, or the Company’s operations to the Board.
10.4 Termination
of Employment By Executive for Good Reason.
Notwithstanding any other provisions of this Agreement, Executive may terminate
his employment immediately, at any time, for any reason on or after a Change
in
Control as defined below, or for good reason. For purposes of this Agreement,
“Good Reason” shall include:
| (i) |
Assignment
by Company to Executive of any duties inconsistent in any substantial
respect with the position, authority or responsibilities associated
with
Executive’s position as set forth in this Agreement, but excluding any
isolated, insubstantial or inadvertent action not taken in bad faith
which
was promptly remedied by Company after receipt of notice by
Executive;
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| (ii) |
Reduction
by Company of Executive’s base salary during the Term from that provided
in paragraph 4.1 of this Agreement;
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| (iii) |
In
the event that there is a successor to Company, the failure of Company
to
obtain an agreement from any such successor that is satisfactory to
Executive to perform the obligations of Company under this
Agreement;
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| (iv) |
Failure
of Company to fulfill any of its other obligations to Executive under
this
Agreement; and
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| (v) |
Inability
of the Executive to fulfill his duties for health
reasons.
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For
purposes of this Agreement, “Change in Control” shall mean (A) the dissolution
or liquidation of the Company; (B) a reorganization, merger or consolidation
of
the Company with one or more corporations as a result of which the Company
is
not the surviving corporation; (C) approval by the stockholders of the Company
of any sale, lease, exchange or other transfer (in one or a series of
transactions) of all or substantially all of the assets of the Company; (D)
approval by the stockholders of the Company of any merger or consolidation
of
the Company in which the holders of voting stock of the Company immediately
before the merger or consolidation will not own fifty percent (50%) or more
of
the voting shares of the continuing or surviving corporation immediately after
such merger or consolidation; or (E) a change of fifty percent (50%) (rounded
to
the next whole person) in the membership of the Board of Directors of the
Company within a twelve (12) month period, unless the election or nomination
for
election by stockholders of each new director within such period was approved
by
the vote of two-thirds (2/3) (rounded to the next whole person) of the directors
then still in office who were in office at the beginning of the twelve (12)
month period.
10.5 Voluntary
Termination of Employment By Executive For Other than Good
Reason.
Executive may voluntarily terminate his employment with the Company upon 30
days
prior written notice for other than Good Reason. Executive shall not be entitled
to any further payments of compensation beyond Executive’s resignation date if
Executive voluntarily resigns under this Section 10.5.
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10.6. Surrender
of Records and Property.
Upon
termination of his employment with the Company, Executive shall deliver promptly
to the Company all records, electronic media, manuals, books, blank forms,
documents, letters, memoranda, notes, notebooks, reports, data, tables, and
calculations or copies thereof, which are the property of the Company and which
relate in any way to the business, products, practices or techniques of the
Company, and all other property (keys, office equipment, computers, mobile
phones, credit cards, etc.) of the Company and Proprietary Matter, including
but
not limited to, all documents which in whole or in part contain any trade
secrets or confidential information of the Company, which in any of these cases
are in his possession or under his control.
10.7 Additional
Payments by Company.
In the
event that any payments under this Agreement or any other compensation, benefit
or other amounts payable from the Company for the benefit of Executive are
subject to the tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”) (including any applicable interest and penalties,
the “Excise Tax”), no such payment (“Parachute Payment”) shall be reduced
(except for required tax withholdings) and the Company shall pay to Executive
by
the earlier of the date such Excise Tax is withheld from payments made to
Executive or the date such Excise Tax becomes due and payable by Executive,
an
additional amount (the “Gross-Up Payment”) such that the net amount retained by
Executive (after deduction of any Excise Tax on the Parachute Payments, taxes
based upon the Tax Rate (as defined below) upon the payment provided for by
this
Section 5.3 and Excise Tax upon the payment provided for by this
Section 5.3), shall be equal to the amount Executive would have received if
no Excise Tax had been imposed. A Tax counsel chosen by the Company’s
independent auditors, provided such person is reasonably acceptable to Executive
(“Tax Counsel”), shall determine in good faith whether any of the Parachute
Payments are subject to the Excise Tax and the amount of any Excise Tax, and
Tax
Counsel shall promptly notify Executive of its determination. The Company and
Executive shall file all tax returns and reports regarding such Parachute
Payments in a manner consistent with the Company’s reasonable good faith
determination. For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay taxes at the Tax Rate applicable at the time
of
the Gross-Up Payment. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
a
Parachute Payment is made, Executive shall repay to the Company promptly
following the date that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to such reduction
(without interest). In the event that the Excise Tax is determined to exceed
the
amount taken into account hereunder at the time a Parachute Payment is made
(including by reason of any payment the existence or amount of which cannot
be
determined at the time of the Gross-Up Payment), the Company shall pay Executive
an additional amount with respect to the Gross-Up Payment in respect of such
excess (plus any interest or penalties payable in respect of such excess) at
the
time that the amount of such excess is finally determined. The Company shall
reimburse Executive for all reasonable fees, expenses, and costs related to
determining the reasonableness of any Company position in connection with this
paragraph and preparation of any tax return or other filing that is affected
by
any matter addressed in this paragraph, and any audit, litigation or other
proceeding that is affected by any matter addressed in this Section 5.3 and
an amount equal to the tax on such amounts at Executive’s Tax Rate. For the
purposes of the foregoing, “Tax Rate” means Executive’s effective tax rate based
upon the combined federal and state and local income, earnings, Medicare and
any
other tax rates applicable to Executive, all at the highest marginal rate of
taxation in the country and state of Executive’s residence on the date of
determination, net of the reduction in federal income taxes which could be
obtained by deduction of such state and local taxes.”
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11. Assignment/Successors.
This
Agreement shall not be assignable, in whole or in part, by either party without
the written consent of the other party except that Company may, without the
consent of Executive, assign its rights and obligations under this Agreement
to
any corporation, firm or other business entity (i) with or into which the
Company may merge or consolidate, or (ii) to which the Company may sell or
transfer all or substantially all of its assets or of which fifty percent (50%)
or more of the equity investment and of the voting control is owned, directly
or
indirectly, by, or is under common ownership with, the Company. After any such
assignment by the Company and such written agreement by the assignee, the
Company shall be discharged from all further liability hereunder and such
assignee shall thereafter be deemed to be the Company for the purposes of all
provisions of this Agreement including this section.
This
Agreement shall be binding upon, and inure to the benefit of, both parties
and
their respective successors and assigns, including any corporation or other
entity with which, or into which, the Company may be merged or which may succeed
to its assets or business, provided, however, that the obligations of Executive
are personal and shall not be assigned by Executive.
12.
Indemnification.
The
company shall indemnify Executive as provided in the California Corporations
Code, Company Articles or Company's Bylaws in effect at the commencement of
this
Agreement. The scope of indemnification to which Executive is entitled shall
not
be diminished, but may be expanded by the Company, by amendment of the Company's
Bylaws, Articles of Incorporation or otherwise. Executive shall indemnify and
hold the Company harmless from all liability for loss, damages or injury
resulting from the negligence or misconduct of Executive. The Parties are
concurrently entering into a separate indemnification agreement to provide
indemnification for the Executive, attached hereto at Exhibit
A
(the
“Indemnification Agreement”).
13.
Miscellaneous.
13.1
Governing
Law.
This
Agreement is made under and shall be government by and construed in accordance
with the laws of the State of California.
13.2 Entire
Agreement.
This
Agreement contains the entire agreement of the parties relating to the subject
matter hereof and supersedes all prior agreements and understandings with
respect to such subject matter with the exception of the Indemnification
Agreement which is incorporated by reference, and the parties hereto have made
no agreements, representations or warranties relating to the subject matter
of
this Agreement which are not set forth herein. Any dispute(s) or differences(s)
which arise during the course of this Agreement and which either involve its
interpretation or meaning, or relate to performance required hereunder shall
be
submitted to and resolved by binding arbitration; provided, however, that the
parties are not waiving and are expressly reserving their right to seek
injunctive relief by judicial process. Nevertheless, the parties may, by
subsequent consent, agree to submit requests for injunctive relief to an
arbitrator or arbitration panel. If either party shall, in the opinion of the
other party, be in breach of or default in the performance or observance of
any
term or condition of this Agreement, the non-defaulting party shall notify
the
defaulting party in writing of such fact, and the defaulting party shall have
ten (10) days from the receipt of such notice to remedy or correct such breach
or default. If the non-defaulting party asserts that the breach or default
has
not been timely and properly cured, it may commence arbitration as described
herein and ask the arbitrator to deem this Agreement terminated and/or grant
such relief as is shown appropriate. In the event the parties are unable to
agree upon an arbitrator to hear and resolve their differences (hereinafter
the
ADispute@),
each
party shall designate one person licensed as an attorney in California. Said
two
attorneys shall select the neutral arbitrator. Unless agreed upon by the parties
to the contrary, arbitration shall be by a single, neutral arbitrator
(hereinafter, the AArbitrator@).
If the
two designated attorneys cannot agree on the selection of the Arbitrator, the
attorneys shall each select one arbitrator. The two arbitrators so selected
shall then confer and jointly select a third arbitrator who shall preside over
the parties=
dispute
as Arbitrator. The Arbitrator shall have the full and absolute authority to
interpret this Agreement, to deem conduct by the parties as either in compliance
with or in breach of this Agreement, to terminate this Agreement, and (if a
breach is found) to award appropriate damages or relief. The Dispute shall
be
settled in accordance with then existing substantive law and, to the fullest
extent possible, with California substantive law. While evidence may be
accepted, omitted, considered or excluded in the discretion of the Arbitrator,
the Arbitrator shall be bound by the California rules of evidence and by the
California Arbitration Act (CCP 1280 et seq.). The final decision of the
Arbitrator shall be served on the parties, in writing, within twenty (20) days
after conclusion of the arbitration hearing. The Arbitrator=s
decision shall be binding and conclusive. Neither party shall pursue, prosecute
or otherwise file any legal action or proceeding (other than to seek injunctive
relief as described above). Except as provided in CCP 1286.2, no appeal shall
be
taken from the Arbitrator=s
decision or from any subsequent court order confirming said decision. The
parties shall equally advance the costs incurred by arbitration. The Arbitrator,
however, shall have the discretion to award such costs as well as
attorneys=
fees to
the party prevailing in the arbitration proceedings.
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13.3 Withholding
Taxes.
The
Company may withhold from any benefits payable under this Agreement all federal,
state, city or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
13.4 Amendments.
No
amendment or modification of this Agreement shall be deemed effective unless
made in writing signed by the parties hereto.
13.5 No
Wavier.
No term
or condition of this Agreement shall be deemed to have been waived nor shall
there be any estoppel to enforce any provisions of this Agreement, except by
a
statement in writing signed by the party against whom enforcement of the waiver
or estoppel is sought. Any written waiver shall not be deemed a continuing
waiver unless specifically stated, shall operate only as to the specific term
or
condition waived and shall not constitute a waiver of such term or condition
for
the future or as to any act other than that specifically waived.
13.6 Severability.
To the
extent any provision of this Agreement shall be invalid or unenforceable, it
shall be considered deleted here from and the remainder of such provision and
of
this Agreement shall be unaffected and shall continue in full force and effect.
13.7 Survival.
Sections
4.7, 7, 8, and 9 shall survive termination of this Agreement.
13.8 Notices.
Any and
all notices, requests or other communications required or permitted in or by
any
provision of this Agreement shall be in writing and may be delivered personally
or by certified mail directed to the addressee at such person=s
or
entity=s
last
known post office address, and if given by certified mail, shall be deemed
to
have been delivered when deposited in such, mail postage prepaid.
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13.9 Legal
Proceedings.
In the
event of legal proceedings, including arbitration as set forth in Section 13.2
above, the prevailing party shall be entitled, in addition to such relief as
is
deemed to be appropriate, to recover such costs and reasonable
attorneys=
fees as
are incurred therein.
13.10 Section
409A.
Unless
otherwise expressly provided, any payment of compensation by Company to
Executive, whether pursuant to this Agreement or otherwise, shall be made within
two and one-half months (2½ months) after the later of the end of the calendar
year of the Company’s fiscal year in which Executive’s right to such payment
vests (i.e.,
is not
subject to a “substantial risk of forfeiture” for purposes of Code Section 409A
of the Internal Revenue Code of 1986, as amended (“Code”)). To the extent that
any severance payments (including payments on termination for “good reason”)
come within the definition of “involuntary severance” under Code Section 409A,
such amounts up to the lesser of two times the Executive’s annual compensation
for the year preceding the year of termination or two times the 401(a)(17)
limit
for the year of termination, shall be excluded from “deferred compensation” as
allowed under Code Section 409A, and shall not
be
subject to the following Code Section 409A compliance requirements. All payments
of “nonqualified deferred compensation” (within the meaning of Section 409A) are
intended to comply with the requirements of Code Section 409A, and shall be
interpreted in accordance therewith. Neither party individually or in
combination may accelerate any such deferred payment, except in compliance
with
Code Section 409A, and no amount shall be paid prior to the earliest date on
which it is permitted to be paid under Code Section 409A. In the event that
Executive is determined to be a “key employee” (as defined in Code Section
416(i) (without regard to paragraph (5) thereof)) of Company at a time when
its
stock is deemed to be publicly traded on an established securities market,
payments determined to be “nonqualified deferred compensation” payable following
termination of employment shall be made no earlier than the earlier of (i)
the
last day of the sixth (6th) complete calendar month following such termination
of employment, or (ii) Executive’s death, consistent with the provisions of Code
Section 409A. Any payment delayed by reason of the prior sentence shall be
paid out in a single lump sum at the end of such required delay period in order
to catch up to the original payment schedule. Notwithstanding anything
herein to the contrary, no amendment may be made to this Agreement if it would
cause the Agreement or any payment hereunder not to be in compliance with Code
Section 409A.
This
Agreement is executed on the Effective Date at Los Angeles,
California.
| Company: | Executive: | ||
| By: /s/ Xxxxx Xxxxxxxx | /s/ Xxxxx Xxxxxxxx | ||
|
Title: CEO |
Xxxxx Xxxxxxxx |
||
10
Exhibit
A
Indemnification
Agreement
11
