EMPLOYMENT AND STOCK INCENTIVE AGREEMENT
THIS EMPLOYMENT AND STOCK INCENTIVE AGREEMENT is entered into this
5th day of September, 1996, by and between PACIFIC BAJA LIGHT METALS CORP., a
Wyoming Corporation ("Pacific Baja"), TURBODYNE TECHNOLOGIES, INC., a British
Columbian corporation ("Turbodyne"), and XXXXXXX XXXXX ("Xx. Xxxxx").
POSITION: President/CEO of Pacific Baja and its subsidiaries, Optima
Wheel, Inc. ("Optima"), Baja Pacific Light Metals, Inc. ("Baja Pacific") and
Baja Oriente S.A. de C.V. ("Oriente").
Xx. Xxxxx will report directly to the Board of Pacific Baja.
1. COMPENSATION. Pacific Baja agrees to pay Xx. Xxxxx during the
term of this agreement the following salary and bonus amounts:
a. BASE SALARY. A base salary of $12,500 per month, payable
in accordance with the normal payroll schedule of Optima.
b. CASH BONUS. Xx. Xxxxx will be entitled to an annual cash
bonus based on the consolidated net operating profit (before taxes) of Optima,
Baja Pacific and Oriente. Accordingly, the net operating profit before taxes
for Optima, Baja Pacific and Oriente shall be consolidated in accordance with
generally accepted accounting principles applied in the same manner as used
prior to the acquisition of Pacific Baja by Turbodyne. No expenses shall be
considered in this calculation that are not direct expenses of Pacific Baja,
Baja Pacific, Optima or Oriente, and no Turbodyne overhead will be charged.
Any contracts with Turbodyne or any Turbodyne affiliate will be at arm's length
rates for this calculation. Such consolidated net profit shall be calculated
on a calendar year basis during the term of this agreement except that the
bonus for 1999 shall be calculated on the period January 1, 1999, through
August 31, 1999, if Xx. Xxxxx is employed by Pacific Baja or any of the
subsidiaries on August 31, 1999. If Xx. Xxxxx is employed by Pacific Baja or
any of the subsidiaries as of the last day of the applicable calendar year then
he shall be entitled to a bonus equal to a percentage of his annual base salary
(i.e., $150,000.00). Xx. Xxxxx'x cash bonus shall be determined in accordance
with tile following schedule:
Consolidated Percentage
NET PROFIT BASE SALARY
------------ -----------
$0 or less 0%
$1 - $500,000 25%
$500,001 - $1,000,000 50%
$1,000,001 - $2,500,000 80%
$2,500,001 - $5,500,000 100%
$5,500,001 + 150%
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The cash bonus shall be calculated within thirty (30) days following each
calendar year and paid in full within sixty (60) days following each calendar
year.
2. STOCK OPTIONS. Xx. Xxxxx shall be entitled to options to
acquire 150,000 shares of stock in Turbodyne Technologies, Inc., at the rate of
50,000 shares on the date of this agreement, and 50,000 shares on each of the
next two anniversary dates of this agreement. The option price shall be the
average price of Turbodyne stock on the Vancouver Stock Exchange in the ten-day
period preceding the option date. The options shall be in effect for the three-
year period subsequent to the execution of this Agreement. It is understood
that Turbodyne is acquiring Pacific Baja and this stock option is intended to
give Xx. Xxxxx an incentive to manage Pacific Baja and its subsidiaries to the
benefit of Turbodyne. To the extent Turbodyne registers any stock in the
United States or Canada under any registration statement filed ninety (90) days
or more after the date of closing of the acquisition of Pacific Baja by
Turbodyne, Turbodyne agrees to register sufficient shares to cover the options
herein described. Turbodyne agrees to implement an Incentive Stock Option plan
within twelve (12) months from the date of execution of this Agreement to
conform to Internal Revenue Code Section 422. The options are granted in
consideration of the execution of this contract and will survive Xx. Xxxxx'x
termination.
a. STOCK FREE AND CLEAR. Turbodyne represents that any shares
referred to above will be issued to Xx. Xxxxx free and clear of any liens and
encumbrances.
3. SERVICES. Xx. Xxxxx will be hired as President and Chief
Executive Officer of Pacific Baja and Baja Pacific/Optima Wheel/Oriente
Companies. This means that Xx. Xxxxx will have general responsibility for
the supervision and management of day by day operations, subject to the policy
decisions made by the board of directors of Pacific Baja or its parent,
Turbodyne. Xx. Xxxxx agrees to devote his full time and efforts to the
successful development of Pacific Baja's business and not to seek any outside
employment during the term of this agreement.
a. LIMITED LIABILITY. With regard to the services to be
performed by Xx. Xxxxx pursuant to the terms of this Agreement, shall not be
liable to the Pacific Baja, Turbodyne, or any subsidiary, or to any third
party, for any acts or omissions in the performance of the services on the part
of Xx. Xxxxx, as long as said acts or omissions of Xx. Xxxxx are provided or
undertaken in good faith or do not constitute willful misconduct. Xx. Xxxxx
shall be entitled to rely on the items set forth in Corporations Code Section
309(b). The Corporation shall defend, indemnify (to the maximum extent
permitted by California law) and hold Xx. Xxxxx and his agents and successors
free and harmless from any and all obligations, costs, claims, judgments,
attorney's fees, attachments or any other liability arising from or growing out
of the services rendered to the Pacific Baja, Turbodyne, or any subsidiary,
pursuant to the terms of this Agreement or in any way connected with the
rendering of the services specified in this such services are provided or
undertaken in good faith or do not constitute willful misconduct.
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4. TERM. This agreement shall commence as of execution and shall
continue for a term of three (3) years thereafter, unless otherwise terminated
as provided in paragraph 5 below.
5. TERMINATIONS. This agreement shall be terminated upon the
happening of any of the following events:
a. Whenever Pacific Baja and Xx. Xxxxx shall mutually agree in
writing to terminate this agreement;
b. Upon the death of Xx. Xxxxx;
c. At Pacific Baja's option, if Xx. Xxxxx shall suffer
permanent disability. For purposes of this agreement "permanent disability"
shall be defined as Xx. Xxxxx'x inability, by reason of physical or mental
illness or other cause, to perform the majority of his usual duties. Pacific
Baja's option shall be exercised in writing and delivered to Xx. Xxxxx and
shall be effective upon delivery.
d. For cause (i.e. substance abuse, repeated mismanagement,
repeated failure to heed the policy directions of the Board of Directors,
dishonesty, etc.), upon written notice which shall be effective upon delivery.
Upon any such termination, Xx. Xxxxx shall be entitled to receive the
compensation accrued but unpaid as of the date of his termination including a
pro rata bonus, and shall not be entitled to any additional compensation,
except as expressly provided in this agreement.
6. AUTOMOBILE AND EXPENSES. Pacific Baja will provide Xx. Xxxxx
with a new automobile and reimburse him for any reasonable related automobile
expenses incurred on behalf of the business.
7. MEDICAL INSURANCE. Xx. Xxxxx will continue to be insured for
medical purposes under the existing company's insurance policy.
8. COVENANT NOT TO COMPETE. During the term of this agreement, Xx.
Xxxxx agrees not to compete against Turbodyne, Pacific BaJa, Optima, Baja
Pacific or Oriente whether as an officer, shareholder, director, partner, sole
proprietor, employee, or otherwise within a one hundred (100) mile radius of
any current office or manufacturing plant of either Optima or BaJa Pacific. If
Xx. Xxxxx breaches this agreement then Pacific Baja shall have the right to
enjoin Xx. Xxxxx from any further competitive action.
9. ARBITRATION. The parties shall use all reasonable efforts to
resolve amicably any controversy or claim arising out of, relating to this
Agreement, or the breach thereof. However, in the event such controversy or
claim cannot be resolved by agreement of the parties, it shall be settled by
arbitration in Los Angeles County, California, in accordance
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with the then existing rules of the American Arbitration Association, except
that the parties shall be entitled to all discovery to which they would
normally be entitled in civil litigation in the California Superior Court.
California law shall govern. Any judgment upon the award of the arbitrator may
be rendered and enforced in any court having jurisdiction thereof.
10. MISCELLANEOUS. If any party breaches this agreement the
prevailing party shall be entitled to reasonable attorney's fees and costs
incurred in connection with such breach. No amendment of this agreement shall
be valid unless made in writing and signed by all parties hereto. The parties
agree that this supersedes any prior oral or written conversations or
agreements between the parties regarding employment. This agreement shall be
construed in accordance with the laws of the State of California.
This Agreement will be binding on the successors in interest of the
parties.
EMPLOYER: PACIFIC BAJA ACQUISITION CORP.
By
--------------------------------
Xxxx X. Xxxxx, President
EMPLOYEE:
----------------------------------
XXXXXXX XXXXX
Turbodyne Technologies, Inc., hereby agrees to the foregoing and
specifically agrees to the stock option provisions.
TURBODYNE TECHNOLOGIES, INC.
By its authorized signatories
By
-----------------------------
Director
By
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Director
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