EMPLOYMENT AGREEMENT
Exhibit
10.1
THIS
EMPLOYMENT AGREEMENT
(this
“Agreement”),
is
entered into on September 1, 2007, (the “Effective
Date”)
by and
between H2Diesel Holdings, Inc., a Delaware corporation (the “Company”),
and
Xxxxxxx Xxxxxxxx (the “Executive”).
WHEREAS,
the
Company desires to employ Executive, and Executive desires to be employed
by the
Company, upon the terms and conditions hereinafter set forth.
NOW,
THEREFORE,
in
consideration of the covenants herein contained, and other good and valuable
consideration, the receipt and adequacy of which are hereby forever
acknowledged, the parties, with the intent of being legally bound hereby,
agree
as follows:
1. Term.
The
term of this Agreement shall commence on the Effective Date and shall end
on
December 31, 2010 unless the Executive’s employment is terminated earlier in
accordance with this Agreement (the “Initial
Term”);
provided, however, that the term of this Agreement shall automatically be
extended beyond the Initial Term for a one year period, effective January
1,
2011 (the “Renewal
Term”)
unless
either party notifies the other by a date which is two-hundred seventy (270)
days prior to the expiration of the Initial Term that such party desires
not to
extend the Initial Term beyond the third anniversary of the Effective Date.
This
Agreement shall continue for successive one-year Renewal Terms unless and
until
either party gives two-hundred seventy (270) days notice to the other of
its
desire not to extend further the term of this Agreement beyond the end of
the
then-current Renewal Term, or this Agreement is otherwise terminated pursuant
to
Section
5
hereof.
The term of this Agreement, whether during the Initial Term or any Renewal
Term,
shall be referred to as the “Term.”
2. Position
and Responsibilities.
2.1 Position.
Executive will be employed by the Company to render services to the Company
in
the position of Chief Financial Officer. In
that capacity, the Executive shall solely, under supervision of the President
and Chief Executive Officer (the “CEO”),
have
general supervision over the financial and accounting matters of the
Company,
and perform other duties reasonably assigned to the Executive from time to
time
by the CEO provided the duties relate to the business of the Company and
are
consistent with the Executive’s position as Chief Financial Officer, as well as
Executive’s background and experience. The Executive shall diligently perform
all such services.
The
Executive shall report directly to the CEO. Executive shall, in all material
respects, abide by all material and written Company rules, policies, and
practices as adopted or modified, from time to time, in the Company’s sole
discretion; and Executive shall attempt to use his best efforts in the
performance of his duties hereunder.
2.2 Other
Activities.
While
employed by the Company, Executive shall devote substantially all of his
business time, attention, and skill to perform his assigned duties, services,
and responsibilities hereunder, and shall act at all times in the furtherance
of
the Company’s business and interests. Executive shall not, during the term of
this Agreement engage, directly or indirectly, in any other business activity
(whether or not pursued for pecuniary advantage) which could reasonably be
expected to materially interfere with Executive’s duties and responsibilities
hereunder or create a conflict of interest with the Company. The foregoing
limitations shall not prohibit Executive from: (i) serving as a consultant
to
another entity provided that such service would not violate Section 6.1 below
or
(ii) making and managing his personal and family investments in such form
or
manner as will neither require Executive’s services in the operation or affairs
of the companies or enterprises in which such investments are made nor
materially interfere with the performance of the Executive’s duties hereunder.
The Company acknowledges that Executive will from time-to-time serve on the
boards of corporations, advisory committees, trade organizations, philanthropic
organizations or other entities. Accordingly, the foregoing limitations shall
not prohibit Executive from serving on the boards of corporations, advisory
committees, trade organizations, philanthropic organizations or other entities,
provided that such service does not create a material conflict of interest
with
the Company.
2.3 No
Conflict.
Executive represents and warrants that Executive’s execution of this Agreement,
Executive’s employment with the Company, and the performance of Executive’s
proposed duties under this Agreement shall not violate any obligations Executive
may have to any other employer, person, or entity, including but not limited
to
any obligations with respect to not disclosing any proprietary or confidential
information of any other person or entity.
3. Compensation
and Benefits.
3.1 Base
Salary.
In
consideration of the services to be rendered under this Agreement, the Company
shall pay Executive an initial base salary of eighteen thousand seven hundred
fifty ($18,750) dollars per month (“Base
Salary”)
in
accordance with the Company’s standard payroll practices. Such Base Salary shall
be subject to such withholding or deductions as may be mutually agreed between
the Company and Executive or as required by law. Executive’s Base Salary will be
reviewed annually, and may be adjusted (upward, but not downward) at the
discretion of the CEO and the Compensation Committee of the Board.
3.2 Stock
Options.
In
consideration of the services to be rendered under this Agreement:
(a)
The
Company hereby grants to the Executive options to purchase 300,000 shares
of the
Company’s Common Stock at a price of $6.00 per share, of which 75,000 shares
shall vest on the date hereof and the remainder shall vest in annual tranches
as
follows (collectively, the “Time Based Options”):
75,000
shares shall vest on the first anniversary of the Effective Date;
75,000
shares shall vest on the second anniversary of the Effective Date;
and
75,000
shares shall vest on the third anniversary of the Effective Date.
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(b)
The
Company hereby grants to the Executive options to purchase 450,000 shares
of the
Company’s Common Stock at a price of $6.00 per share which shall vest in annual
tranches if certain annual performance targets (the “Performance
Targets”) to be established by the CEO and the Compensation Committee of the
Board (the “Compensation Committee”) are met, as more fully set forth
below (collectively, the “Performance Options”):
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75,000
shares if the Performance Options shall vest in respect of the
fiscal year
ending December 31, 2007 if the Performance Targets for such year
are
met;
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125,000
shares shall vest in respect of the fiscal year ending December
31, 2008
if the Performance Targets for such year are met;
and
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125,000
shares shall vest in respect of the fiscal year ending December
31, 2009
if the Performance Targets for such year are met;
and
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125,000
shares shall vest in respect of the fiscal year ending December
31, 2010
if the Performance Targets for such year are
met.
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Commencing
with the fiscal year ending December 31, 2008, the Performance Targets for
each
fiscal year shall be established by the Compensation Committee not later
than
February 28 of such fiscal year. The Compensation Committee shall determine
whether the Performance Targets for the preceding fiscal year have been met
not
later than seven days after the date that the Company’s audited financial
statements in respect of such fiscal year become available, and if such
Performance Targets are determined to have been met, the Performance Options
in
respect of such fiscal year shall be deemed to be vested as of such date
of
determination. The Time Based Options and the Performance Options shall be
more
fully documented in one or more Stock Option Agreement(s) containing customary
terms and conditions and shall expire on the tenth (10th)
anniversary of the Effective Date.
3.3 Equity
Compensation.
To the
extent that the Board and the stockholders of the Company approve an equity
compensation or incentive plan (the “Plan”),
the
Executive shall be eligible to participate in such plan. The amount of any
equity awards to the Executive and terms and conditions thereof shall be
determined not less frequently than annually by a committee of the Board
appointed pursuant to the Plan, or by the Board, and the Chief Executive
officer
in each of its discretion and pursuant to the Plan.
3.4 Benefits.
Executive shall be entitled to participate in the pension and health and
welfare
benefit plans and perquisites that the Company generally makes available
to its
employees or other executives, at a level commensurate with his position
(the
“Executive
Benefits”).
3.5 Vacation.
During
the Term, Executive shall be entitled to vacation each year in accordance
with
the Company’s policies in effect from time to time, but in no event less than
four (4) weeks paid vacation per calendar year. The Executive shall also
be
entitled to such periods of sick leave as is customarily provided by the
Company
for its senior executive employees. In addition, Company acknowledges and
agrees
that Executive will not work (either at the office or remotely) during Jewish
holidays.
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3.6 Business
Expenses.
Throughout the term of Executive’s employment hereunder, the Company shall
reimburse Executive for all reasonable and necessary travel, entertainment,
promotional, and other business expenses that may be incurred by Executive
in
the course of performing Executive’s duties. Authorized expenses shall be
reimbursed by the Company in accordance with policies and practices adopted,
from time to time, by the Company concerning expense reimbursement for employees
and shall be reimbursed upon timely presentation to the Company of an itemized
expense statement with respect thereto, including substantiation of expenses
incurred and such other documentation as may be required by the Company’s
reimbursement policies from time to time and in accordance with Internal
Revenue
Service guidelines.
3.7 Bonus
Plan The
Executive shall be eligible to participate in an annual cash bonus plan
established by the Compensation Committee (the “Bonus
Plan).
The
Executive’s bonus will be targeted at 50% of the Executive’s Base Salary,
subject to achieving certain performance targets (the “Bonus
Plan Targets”).
The
Executive’s bonus with respect to the fiscal year ending December 31, 2007 shall
be not less than 22% of the Executive’s Base salary, prorated for the number of
days the Executive is actually employed by the Company. The Executive’s bonus
with respect to the fiscal year ending December 31, 2008 shall be not less
than
22% of the Executive’s Base salary. Commencing with the fiscal year ending
December 31, 2008, the Bonus Plan and the performance targets for each fiscal
year shall be established by the Compensation Committee not later than February
28 of such fiscal year. The Compensation Committee shall determine whether
the
Bonus Plan Targets for the preceding fiscal year have been met not later
than
seven days after the date that the Company’s audited financial statements in
respect of such fiscal year become available and the bonus in respect of
such
fiscal year, if earned, shall be payable promptly after such determination.
Any
bonus paid under this Section shall be paid in accordance with the Bonus
Plan
and the Company’s payroll practices.
3.8 Relocation
Expenses.
The
Executive hereby agrees to relocate within 50 miles of the Company’s executive
offices, which will be established at a location to be determined by the
Board,
currently anticipated to be Lake Mary, Florida.
(a) The
Company will provide the Executive with a lump-sum payment of $50,000 (the
“Relocation Payment”) for all reasonable and necessary actual out-of-pocket
relocation expenses paid or incurred by the Executive. The Relocation Payment
will be made within thirty days after the Executive completes the
relocation.
(b) If
this
Agreement is terminated under Section 5(c) or 5(g) then the Executive will
reimburse the Company the full amount of the Relocation Payment
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4. Nondisclosure
of Confidential and Proprietary Information.
At all
times before and for five (5) years after the termination of Executive’s service
(for any reason by the Company or by Executive), Executive agrees to keep
all
Confidential or Proprietary Information in strict confidence and secrecy,
and
not to disclose or use the Confidential or Proprietary Information in any
way
outside of Executive’s assigned responsibilities for the Company. “Confidential
or Proprietary Information” means any non-public information or idea (whether or
not a trade secret) relating to the business of the Company obtained by
Executive in the course of employment by the Company that is not generally
known
outside the Company or not generally known in the industry or by persons
engaged
in businesses similar to that of the Company (including information which
may be
available from sources outside the Company, but not in the form, arrangement,
or
compilation in which it exists within the Company) that should reasonably
be
considered confidential, including, but not limited to: (i) customer lists
and
records of current, former, and prospective customers; (ii) special needs
and
characteristics of current, former, or prospective customers; (iii) present
or
future business plans; (iv) trade secrets, proprietary, or confidential
information of any customer or other entity to which the Company owes an
obligation not to disclose such information; (v) marketing, financing, business
development, or strategic plans; (vi) sales methods, practices, and procedures;
(vii) personnel information; (viii) research and development data and
projections; (ix) information or data concerning the Company’s competitive
position in its various lines of business; (x) existing, new, or envisioned
products, programs, services, methods, techniques, processes, projects, or
systems; and (xi) sales, pricing, billing, costs, and other financial data
and
projections. All documents containing this information will be considered
Confidential or Proprietary Information whether or not marked with any
proprietary or confidential notice or legend. Notwithstanding the foregoing,
nothing herein shall prohibit the Executive from disclosing any information:
(1)
in connection with performance of his duties hereunder as he deems in good
faith
to be necessary or desirable; or (2) if compelled pursuant to the order of
a
court or other governmental or legal body having jurisdiction over such matter;
or (3) if necessary for Executive to defend his rights in a legal or regulatory
proceeding. In the event Executive is compelled by order of a court or other
governmental or legal body to communicate or divulge any such information,
knowledge or data, he shall promptly notify the Company.
5. Termination;
Rights and Obligations on Termination. The
Executive’s employment under this Agreement may be terminated in any one of the
followings ways:
(a) Death.
The
death of Executive shall immediately and automatically terminate the Executive’s
employment under this Agreement. If Executive dies while employed by the
Company, any vested options may be exercised on or before the earlier of
(i) the
option’s expiration date or (ii) twelve months after the Executive’s death. Any
option that remains unexercised after this period shall be forfeited. Upon
the
Executive’s death, the Executive’s legal representative shall receive: (1) any
compensation earned but not yet paid, including and without limitation, any
bonus if declared or earned but not yet paid for a completed fiscal year
(and
also in any event including the guaranteed bonuses for 2007 and 2008, pro
rata,
based on time served during the applicable year through the date of
termination), any amount of Base Salary earned but unpaid, any accrued vacation
payable pursuant to the Company’s policies, and any unreimbursed business
expenses, which amounts shall be promptly paid in a lump sum, and (2) any
other
amounts or benefits owing to the Executive under the then applicable employee
benefit plans, long term incentive plans or equity plans and programs of
the
Company which shall be paid or treated in accordance with the terms of such
plans and programs (subsections (1) and (2) shall be collectively referred
to
as, the “Accrued
Amounts”).
Other
than the benefits described above, no further compensation or benefits shall
be
due or owing upon the Executive’s death.
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(b) Disability.
If as a
result of incapacity due to physical or mental illness or injury, Executive
shall have been absent from Executive’s duties hereunder for six (6) consecutive
months, then thirty (30) days after receiving written notice (which notice
may
occur before or after the end of such six (6) month period, but which shall
not
be effective earlier than the last day of such six (6) month period), the
Company may terminate Executive’s employment hereunder provided Executive is
unable to substantially perform his duties hereunder at the conclusion of
such
notice period (a “Disability”),
as
determined by a physician mutually selected by the parties hereto. In the
event
the Executive’s employment is terminated as a result of Disability, Executive
shall receive from the Company, in a lump-sum payment due within ten (10)
days
of the effective date of termination, an amount equal to the sum of the Base
Salary and bonus, if any, that would have been paid to Executive through
the end
of the then remaining Term if the Executive were not disabled or for six
(6)
months, whichever is less (assuming that Executive would have received no
further increases in his Base Salary (including for the sake of clarity the
automatic achievement of 2007 and 2008 guaranteed bonuses, pro rata based
on
time that would have been served during the applicable year through the end
of
the Term or the 12 month period described above, as applicable)). The Executive
shall also be entitled to the Accrued Amounts. Additionally, if Executive
is
terminated due to a Disability, the next unvested tranche of Performance
Options
will vest.if the applicable Performance Targets are actually met. Any vested
options may be exercised on or before the option’s expiration date. Any option
that remains unexercised after this period shall be forfeited. Other than
the
benefits described above, no further compensation or benefits shall be due
or
owing upon the Executive’s termination due to a Disability.
(c) Cause.
The
Company may terminate this Agreement immediately upon written notice to
Executive for “Cause,” which shall mean: (i) the Executive’s willful, material,
and irreparable breach of this Agreement; (ii) Executive’s willful misconduct in
the performance of any of his material duties and responsibilities hereunder
that has a material adverse effect on the Company; (iii) Executive’s intentional
and continued non-performance (other than by reason of disability or incapacity)
of any of the Executive’s material duties and responsibilities hereunder or of
any reasonable, lawful instructions from the Board, which continues for ten
(10)
days after receipt by Executive of written notice from the Company; (iv)
Executive’s material and willful dishonesty or fraud with regard to the Company
(other than good faith expense account disputes) that has a material adverse
effect on the Company (whether to the business or reputation of the Company;
or
(v) Executive’s conviction of a felony (other than as a result of vicarious
liability or a traffic related offense). For purposes of this paragraph,
no act,
or failure to act, on Executive’s part shall be considered “willful” unless done
or omitted to be done, by him not in good faith and without reasonable belief
that his action or omission was in the best interests of the Company. In
the
event of the Executive’s termination of employment by the Company for Cause the
Executive shall receive the Accrued Amounts, the Executive shall repay the
Relocation Payment and the Executive may exercise his vested options for
a
period of thirty (30) days following termination for Cause.
Notwithstanding
the foregoing, following the Executive’s receipt of written notice from the
Company of any of the events described in subsections (i) through (iv) above,
the Executive shall have ten (10) days in which to cure the alleged conduct
(if
curable).
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(d) Without
Cause.
At any
time after Executive’s commencement of employment, the Company may, without
Cause, terminate the Executive’s employment, effective thirty (30) days after
written notice is provided to Executive. In the event Executive is terminated
by
the Company without Cause, Executive shall receive from the Company within
ten
(10) days after such termination, in a lump sum payment, an amount equal
to the
sum of the Base Salary and bonus, if any, that would have been paid to Executive
through the end of the then remaining Term if the Executive had not been
terminated or for twelve (12) months, whichever is less (assuming that Executive
would have received no further increases in his Base Salary and assuming
achievement of all applicable Bonus Plan Targets (including for the sake
of
clarity the automatic achievement of 2007 and 2008 guaranteed bonuses, pro
rata
based on time that would have been served during the applicable year through
the
end of the Term (or the renewal term, as applicable) or the 12 month period
described above, as applicable). The Executive shall also receive the Accrued
Amounts. Additionally, if Executive is terminated by the Company without
Cause,
all of the unvested Time Based Options will vest and the next tranche of
unvested Performance Options will vest as if the applicable Performance Targets
had been met. Any vested options may be exercised on or before the option’s
expiration date. Any option that remains unexercised after this period shall
be
forfeited.
(e) Resignation
for Good Reason.
At any
time after Executive’s commencement of employment, the Executive may resign for
Good Reason (as defined below) effective thirty (30) days after written notice
is provided to the Company. Upon the Executive’s termination of employment for
Good Reason, the Executive shall be entitled to all payments and benefits
as if
his employment was terminated by the Company without Cause as provided in
subsection (d) above. For purposes of this Agreement, Good Reason means:
(i) any
adverse change in the Executive’s position, title or reporting relationship or a
material diminution of his duties, responsibilities or authority or the
assignment to Executive of duties or responsibilities that are inconsistent
with
the Executive’s position; (ii) any
reduction in salary or bonus opportunities; (iii) the failure by the Company
to
continue in effect any material compensation or benefit plan or arrangement
in
which Executive participates unless an equitable and substantially comparable
arrangement (embodied in a substitute or alternative plan) has been made
with
respect to such plan or arrangement, or the failure by the Company to continue
Executive’s participation therein (or in such substitute or alternative plan or
arrangement) on a basis not less favorable, both in terms of the amount of
benefits provided and the level of participation relative to other participants,
as existed at the time of the Executive’s commencement of employment;
(iii) any
material breach of this Agreement (or any other written agreement entered
into
between the Executive and the Company) by the Company; (v) failure of any
successor to the Company (whether direct or indirect and whether by merger,
acquisition, consolidation or otherwise) to assume in a writing delivered
to
Executive upon the assignee becoming such, the obligations of the Company
hereunder; or (vi) a requirement by the Company that the Executive relocate
a
second time.
Notwithstanding
the foregoing, following the Company’s receipt of written notice from the
Executive of any of the events described in subsections (i) through (iv)
above,
the Company shall have ten (10) days in which to cure the alleged conduct
(if
curable).
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(f) Change
in Control of the Company.
In the
event that a Change of Control (as defined below) in the Company shall occur
during the Term of this Agreement, and within 12 months thereafter the
Executive’s employment shall be terminated without Cause pursuant to Section
5(d) above or for Good Reason pursuant to Section 5(e) above, then the
Executive’s severance compensation will be as set forth above for termination
without Cause or Good Reason, as the case may be; provided, however, that
all
unvested options (both Perfomance and Time Based) will vest and remain
exercisable for the balance of the option term. The Company shall have no
further liability under this Agreement. (For the sake of clarity, if the
Executive’s employment is not terminated within 12 months after a Change of
Control, the compensation payable to Executive for terminations thereafter
without Cause pursuant to Section 5(d) above or for Good Reason pursuant
to
Section 5(e) above shall remain as stated in those sections.)
For
purposes of this Agreement, the term “Change of Control” shall
mean:
(i) approval
by the stockholders of the Company of (x) a reorganization, merger,
consolidation or other form of corporate transaction or series of transactions
(other than the issuance by the Company of equity securities to investors
whether in private placements or public offerings (an “Equity
Offering”)),
in
each case, with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or consolidation
or
other transaction do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of directors
of
the reorganized, merged or consolidated company’s then outstanding voting
securities, in substantially the same proportions as their ownership immediately
prior to such reorganization, merger, consolidation or other transaction,
or (y)
a liquidation or dissolution of the Company or (z) the sale of all or
substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale is subsequently abandoned);
(ii) individuals
who, as of the Effective Date of this Agreement, constitute the Board (the
“Incumbent
Board”)
cease
for any reason to constitute at least a majority of the Board, provided that
any
person becoming a director subsequent to the Effective Date of this Agreement
whose election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising
the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Company)
shall
be, for purposes of this Agreement, considered as though such person were
a
member of the Incumbent Board; or
(iii) the
acquisition (other than from the Company) by any person, entity or “group”,
within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the “Securities
Exchange Act”),
of
beneficial ownership within the meaning of Rule 13-d promulgated under the
Securities Exchange Act of more than 50% of either the then outstanding shares
of the Company’s common stock or the combined voting power of the Company’s then
outstanding voting securities entitled to vote generally in the election
of
directors (hereinafter referred to as the ownership of a “Controlling
Interest”)
excluding, for this purpose, any acquisitions by (1) the Company or its
subsidiaries, (2) any person, entity or “group” that as of the Effective Date of
this Agreement owns beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act) of a Controlling Interest,
(3)
any employee benefit plan of the Company or its subsidiaries, or (4) any
acquisition in one or more Equity Offerings.
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(g) Resignation
without Good Reason or Retirement by Executive.
The
Executive may resign without Good Reason or retire upon 90 days’ written notice,
and upon such termination of employment he shall receive the Accrued
Amounts.
(h) Superseding
Agreement.
This
Agreement shall be terminated immediately and automatically if the parties
enter
into another employment agreement which supersedes this Agreement. In the
event
the parties enter into a superseding agreement, no severance pay or other
compensation shall be due to Executive with respect to the termination of
this
Agreement.
6. Use
and Return of Company Property.
Executive acknowledges the Company’s proprietary rights and interests in its
tangible and intangible property. Accordingly, Executive agrees that upon
termination of Executive’s employment with the Company, for any reason, and at
any time, Executive shall deliver to the Company all Company property,
including: (a) all documents, contracts, writings, disks, diskettes, computer
files or programs, computer-generated materials, information, documentation,
or
data stored in any medium, recordings and drawings pertaining to trade secrets,
proprietary or confidential information, or other inventions and works of
the
Company; (b) all records, designs, plans, sketches, specifications, patents,
business plans, financial statements, accountings, flow charts, manuals,
notebooks, memoranda, lists, and other property delivered to or compiled
by
Executive, by or on behalf of the Company or any of its representatives,
vendors, or customers which pertain to the business of the Company, all of
which
shall be and remain the property of the Company, and shall be subject, at
all
times, to its discretion and control; (c) all equipment, devices, products,
and
tangible property entrusted to Executive by the Company; and (d) all
correspondence, reports, records, notes, charts, advertisement materials,
and
other similar data pertaining to the business, activities, or future plans
of
the Company, in the possession or control of Executive, shall be delivered
promptly to the Company without request by it. Executive shall certify to
the
Company, in writing, within five (5) days of any request by the Company,
that
all such materials have been returned to the Company. Notwithstanding the
foregoing or anything else to the contrary in this Agreement, the Executive
may
(i) retain and use in his discretion his rolodex and similar address and
telephone directories (whether in writing or electronic format) and (ii)
retain
the personal computer provided to Executive by Company.,
6.1 Non-competition.
At all
times while the Executive is employed by the Company and for a period of:
(i)
two (2) years after any termination of the Executive’s employment for Cause or
the Executive’s termination of his employment without Good Reason; (ii) the
lesser of one (1) year or the remainder of the Term after any termination
of the
Executive’s employment by the Company without Cause or the Executive’s
termination for Good Reason; and (iii) one (1) year following the non-renewal
of
this Agreement or any termination pursuant to Section
5,
the
Executive shall not, directly or indirectly, engage in or have any interest
in
any person (whether as an employee, officer, director, partner, agent, security
holder, creditor, consultant or otherwise) that directly or indirectly (or
through any affiliated entity to the extent the combined entities derive
fifty
percent (50%) or more of their revenues through a business competitive with
the
Company’s Business) competes with the Company’s Business (as defined below);
provided that such provision shall not apply to the Executive’s ownership of
securities of the Company or the acquisition by the Executive, solely as
an
investment, of securities of any issuer that is registered under Section
12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended and that are
listed
or admitted for trading on any United States national securities exchange
or
that are quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system or automated dissemination of
quotations of securities prices in common use, so long as the Executive does
not
control, acquire a controlling interest in or become a member of a group
which
exercises direct or indirect control of, more than five percent of any class
of
capital stock of such issuer. For purposes of this Section
6.1,
the
term “Business” shall mean the biofuels Business and any other business in which
the Company is engaged prior to the delivery of a notice of termination by
the
Company or the Executive hereunder and which business the Company is engaged
at
the date of termination of the Executive’s employment.
9
6.2 Non-Solicitation.
At all
times while the Executive is employed by the Company and for a period of:
(i)
two (2) years after any termination of the Executive’s employment for Cause or
the Executive’s termination of his employment without Good Reason; (ii) the
lesser of one (1) year or the remainder of the Term after any termination
of the
Executive’s employment by the Company without Cause or the Executive’s
termination for Good Reason; and (iii) one (1) year following the non-renewal
of
this Agreement or any termination pursuant to Section
5,
the
Executive shall not, directly or indirectly, for himself or for any other
person
(a) employ or attempt to employ or enter into any contractual arrangement
with
any employee or former employee of the Company, or (b) call on or solicit
any of
the actual or targeted prospective customers or suppliers of the Company
on
behalf of any person in connection with any business that competes with the
Business of the Company nor shall the Executive make known the names and
addresses of such customers or suppliers or any information relating in any
manner to the Company’s trade or business relationships with such customers or
suppliers, other than in connection with the performance of Executive’s duties
under this Agreement.
6.3 Reasonable
Restrictions.
Executive hereby acknowledges and agrees that the limits on his ability to
engage in activities that are competitive with the Company, as defined above,
are warranted in order to protect the Company’s trade secrets and Confidential
or Proprietary Information, and further, are warranted to protect the Company
in
developing and maintaining its reputation, goodwill, and status in the
marketplace. Executive specifically agrees that the time period, geographic
scope, and nature of the restrictions set forth in Sections 6.1
and
6.2
are
reasonable and necessary to protect the Company’s legitimate business interests
and do not impose any limitations greater than those necessary to protect
those
interests.
6.4. Remedies.
Executive hereby acknowledges and agrees that the services Executive has
rendered and will continue to render to the Company are of a special and
unique
character, which gives this Agreement a peculiar value to the Company, and
further acknowledges and agrees that the loss of those services to a direct
competitor or the direct competition by Executive against the Company cannot
be
reasonably or adequately compensated for by damages in an action at law.
Executive further acknowledges and agrees that any material breach by Executive
of any provision of Sections
4
or
6
of this
Agreement shall cause irreparable harm to the Company, which harm cannot
be
reasonably or adequately compensated for by damages in an action at law.
Accordingly, without prejudice to the rights and remedies otherwise available
to
the Company, Executive agrees that, in addition to any other right or remedy
the
Company may have, upon adequate proof of a material breach the Company shall
be
entitled to a temporary restraining order and to a preliminary and permanent
injunction enjoining or restraining the breach of this Agreement by Executive,
without the necessity of proving the inadequacy of monetary damages or the
posting of any bond or security. Executive acknowledges and agrees that the
preceding remedies shall be in addition to any and all other rights available
to
the Company at law or in equity. The failure of the Company to promptly
institute legal action upon any breach of this Agreement shall not constitute
a
waiver of that or any other breach hereof.
10
7. Indemnification;
Insurance.
7.1 Indemnification
of Executive.
Except
as otherwise provided by applicable law, while the Executive is employed
by the
Company and thereafter, in the event Executive is made a party to any
threatened, pending, or contemplated action, suit, or proceeding, whether
civil,
criminal, administrative, or investigative (other than an action by the Company
against Executive), by reason of the fact that Executive is or was performing
services under this Agreement, then the Company shall indemnify Executive
to the
fullest extent permitted by applicable law against all expenses (including
attorneys’ fees), judgments, fines, and amounts paid in settlement, as actually
and reasonably incurred by Executive in connection therewith. In the event
that
both Executive and the Company are made a party to the same third party action,
complaint, suit, or proceeding, the Company will engage competent legal
representation, and Executive will use the same representation, provided
that if
counsel selected by the Company shall have a conflict of interest that prevents
such counsel from representing Executive, then the Company may engage separate
counsel on Executive’s behalf, and subject to the provisions of this
Section
7,
the
Company will pay all attorneys’ fees of such separate counsel..
7.2 Insurance
Provided by Company.
As soon
as practicable after the Effective Date, the Company shall obtain a directors
and officers liability insurance policy covering all directors and officers
of
the Company, including Executive, which insurance policy shall provide adequate
insurance coverage for each of such persons, as shall be approved by the
Board.
The Executive shall be entitled to such coverage while employed and thereafter
while potential liability exists.
8. Assignment;
Binding Effect.
Executive shall have no right to assign this Agreement to another party other
than by will or by the laws of descent and distribution. This Agreement may
be
assigned or transferred by the Company only to an acquirer of all or
substantially all of the assets of the Company, provided such acquirer promptly
assumes all of the obligations hereunder of the Company in a writing delivered
to the Executive and otherwise complies with the provisions hereof with regard
to such assumption. Nothing in this Agreement shall prevent the consolidation,
merger, or sale of the Company or a sale of any or all or substantially all
of
its assets. Subject to the foregoing restriction on assignment by Executive,
this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors, and assigns.
9. Additional
Provisions.
9.1 Damages.
Nothing
contained herein shall be construed to prevent the Company or the Executive
from
seeking and recovering from the other damages sustained by either or both
of
them as a result of its or his breach of any term or provision of this
Agreement. In the event that either party hereto brings suit for the collection
of any damages resulting from, or the injunction of any action constituting,
a
breach of any of the terms or provisions of this Agreement, then the party
found
to be at fault shall pay all reasonable court costs and attorneys’ fees of the
other.
11
9.2 Amendments;
Waivers; Remedies.
This
Agreement may not be amended, and no provision of this Agreement may be waived,
except by a writing signed by Executive and by a duly authorized representative
of the Company. Failure to exercise any right under this Agreement shall
not
constitute a waiver of such right. Any waiver of any breach of this Agreement
shall not operate as a waiver of any subsequent breaches. All rights or remedies
specified for a party herein shall be cumulative and in addition to all other
rights and remedies of the party hereunder or under applicable law.
9.3 Notices.
Any
notice under this Agreement must be in writing and addressed to the Company
or
to Executive at the corresponding address below. Notices under this Agreement
shall be effective upon: (a) hand delivery, when personally delivered; (b)
written verification of receipt, when delivered by overnight courier or
certified or registered mail; or (c) acknowledgment of receipt of electronic
transmission, when delivered via electronic mail or facsimile. Executive
shall
be obligated to notify the Company, in writing, of any change in Executive’s
address. Notice of change of address shall be effective only when done in
accordance with this Section
9.3.
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Company’s
Notice Address:
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H2Diesel,
Inc.
00000
Xxxxx Xxxx 0, Xxxxx 00
Xxxx
Xxxxx, XX 00000
Attn.:
Xxxxx X Xxxxxxxxx
Telephone:
000 000 0000
Facsimile:
000 000 0000
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|
Executive’s
Notice Address:
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Xxxxxxx
Xxxxxxxx
0000
Xxxxxx Xxxx
Xxxxxx,
XX 00000
|
9.4 Severability.
If any
provision of this Agreement shall be held by a court of competent jurisdiction
to be invalid, unenforceable, or void, such provision shall be enforced to
the
fullest extent permitted by law, and the remainder of this Agreement shall
remain in full force and effect. In the event that the time period or scope
of
any provision is declared by a court of competent jurisdiction to exceed
the
maximum time period or scope that such court deems enforceable, then such
court
shall reduce the time period or scope to the maximum time period or scope
permitted by law.
9.5 Taxes.
All
amounts paid under this Agreement (including, without limitation, Base Salary)
shall be reduced by all applicable state and federal tax withholdings and
any
other withholdings required by any applicable jurisdiction.
9.6 Governing
Law.
The
validity, interpretation, enforceability and performance of this Agreement
shall
be governed by and construed in accordance with the laws of the State of
Texas,
without regard to conflict of laws principles that would cause the laws of
another jurisdiction to apply.
12
9.7 Venue.
Each of
the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of Texas, Xxxxxx County and the Federal Courts of the
United
States of America located in Xxxxxx County, Texas for the purposes of any
suit,
action, or other proceeding arising out of this Agreement or any transaction
contemplated hereby.
9.8 Interpretation.
This
Agreement shall be construed as a whole, according to its fair meaning, and
not
in favor of or against any party. Sections and section headings contained
in
this Agreement are for reference purposes only, and shall not affect, in
any
manner, the meaning or interpretation of this Agreement. Whenever the context
requires, references to the singular shall include the plural and the plural
the
singular.
9.9 Survival.
All of
those portions of this Agreement that require performance by either party
following termination of Executive’s employment hereunder shall survive any
termination of this Agreement.
9.10
Counterparts.
This
Agreement may be executed in several counterparts (including by means of
telecopied signature pages), each of which shall be deemed an original but
all
of which shall constitute one and the same instrument.
9.11
Authority.
Each
party represents and warrants that such party has the right, power, and
authority to enter into and execute this Agreement and to perform and discharge
all of the obligations hereunder, and that this Agreement constitutes the
valid
and legally binding agreement and obligation of such party and is enforceable
in
accordance with its terms.
9.12
Additional
Assurances.
The
provisions of this Agreement shall be self-operative and shall not require
further agreement by the parties except as may be herein specifically provided
to the contrary; provided, however, that at the request of the Company,
Executive shall execute such additional instruments and take such additional
acts as the Company may deem necessary to effectuate this
Agreement.
9.13
Entire
Agreement.
This
Agreement is the final, complete, and exclusive agreement of the parties
with
respect to the subject matter hereof and supersedes and merges all prior
or
contemporaneous representations, discussions, proposals, negotiations,
conditions, communications, and agreements, whether written or oral, between
the
parties relating to the subject matter hereof and all past courses of dealing
or
industry custom. No oral statements or prior written material not specifically
incorporated herein shall be of any force and effect, and no changes in or
additions to this Agreement shall be recognized unless incorporated herein
by
amendment, as provided herein (such amendment to become effective on the
date
stipulated therein).
13
9.14 Executive
Acknowledgment.
Executive acknowledges that, before signing this Agreement, Executive was
advised of his right to consult with an attorney of his choice to review
this
Agreement and that Executive had sufficient opportunity to have an attorney
review the provisions of this Agreement and negotiate its terms. Executive
further acknowledges that Executive had a full and adequate opportunity to
review this Agreement before signing it; that Executive carefully read and
fully
understood all the provisions of this Agreement before signing it, including
the
rights and obligations of the parties; and that Executive has entered into
this
Agreement knowingly and voluntarily.
14
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the date first above
written.
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COMPANY:
By:
/s/
Xxxxx X. Xxxxxxxxx
Name:
Xxxxx X Xxxxxxxxx
Title:
President and Chief Executive Officer
EXECUTIVE:
/s/
Xxxxxxx Xxxxxxxx
Xxxxxxx
Xxxxxxxx
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15
