AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EXHIBIT
10.18
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the
“Agreement”),
dated
April 6, 2007
By
and Between:
XXXXXX
INTERNATIONAL, LTD.,
a
Delaware corporation (the “Company”
or
the
“Employer”),
AND
XXXXX
X. XXXX,
an
individual having an address at 00 Xxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000
(“Executive”)
WHEREAS,
the
Company and the Executive signed on October 18, 2006 (the”Effective
Date”),
an
employment agreement (the “Original
Employment Agreement”);
and
WHEREAS,
the
parties wish to amend and restate the terms of the Original Employment
Agreement,
NOW
THEREFORE THIS AGREEMENT WITNESSETH THAT in
consideration of the premises and the mutual covenants, agreements,
representations and warranties contained herein, and other good and valuable
consideration including a release by the parties of all claims relating to
the
Original Employment Agreement, the receipt and sufficiency of which are hereby
acknowledged, Executive and the Company hereby agree as follows:
Upon
the
effectiveness of this Agreement, the Original Employment Agreement shall become
null and void and of no further effect.
All
compensation provisions of this Agreement shall be subject to the Employer
determining that it has adequate working capital for payment of such
compensation. However, Employer agrees that this provision shall not be used
to
unreasonably withhold payment of compensation to Executive.
ARTICLE
1
EMPLOYMENT
1.1 Employer
hereby hires the Executive as the Treasurer and Chief Financial Officer of
the
Company and Executive hereby affirms and accepts such positions and employment
by Employer for the Term (as defined in Article 3 below), upon the terms and
conditions set forth herein.
1.2 The
Employer shall utilize its best efforts to cause its Board of Directors to
appoint the Executive as a member of the Employer’s Board of Directors
throughout the Term.
ARTICLE
2
DUTIES
During
the Term, Executive shall serve Employer faithfully, diligently and to the
best
of his ability, under the direction and supervision of the Chief Executive
Officer and the Board of Directors of Employer (“Board
of Directors”)
and
the Company’s Chief Executive Officer and shall use his best efforts to promote
the interests and goodwill of Employer and any affiliates, successors, assigns,
parent corporations, subsidiaries, and/or future purchasers of Employer.
Executive shall render such services during the Term at Employer’s principal
place of business or at such other place of business as may be determined by
the
Board of Directors, as Employer may from time to time reasonably require of
him,
and shall devote all of his business time to the performance thereof. Executive
shall have those duties and powers as generally pertain to each of the offices
of which he holds, as the case may be, subject to the control of the Chief
Executive Officer and the Board of Directors.
ARTICLE
3
TERM
The
term
of this Agreement (the “Term”)
shall
have commenced on the Effective Date, and continue thereafter for a term of
three (3) years, as may be extended or earlier terminated pursuant to the terms
and conditions of this Agreement. The Term is renewable upon the agreement
of
the parties hereto.
ARTICLE
4
COMPENSATION
4.1 Compensation
(a) In
consideration of Executive’s services to Employer, Employer shall pay to
Executive an annual salary (the “Salary”)
of One
Hundred and Twenty Five Thousand Dollars ($125,000), payable in equal
installments at the end of each regular payroll accounting period as established
by Employer, or in such other installments upon which the parties hereto shall
mutually agree, and in accordance with Employer’s usual payroll procedures, but
no less frequently than monthly. Notwithstanding the above, except with respect
to amounts to be paid as set forth in this Section 4.1(a), payment of the Salary
will not commence until the point in time that Employer’s projected available
working capital is sufficient, as solely determined by the Board of Directors,
to fund (x) the Company’s operations, and; (y) payment of the salary payments
provided for in this Agreement (the “Payment
Date”).
Until
the Payment Date, the Executive will be paid only the minimum wage, and will
be
entitled only to minimum benefits, both as permissible under applicable
law.
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(b) In
addition to the Salary, Employer shall issue to Executive a Stock Option to
purchase 125,000 shares of the Employer’s common stock, at an exercise price
equal to Employer’s common stock fair market value as of the date of issuance,
as determined by the Board (the “Stock
Option”).
The
stock options shall fully vest (i.e., become fully exercisable) as follows:
25,000 stock options on April 30, 2007 and the balance in three equal
installments on October 18, 2007, 2008 and 2009. Executive must be continuously
a full-time employee of the Company through the time he exercises part or all
of
the Stock Option, except, however, in the event this Agreement is
terminated:
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(i)
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prior
to one year from the effective date of this Agreement, by the Employer
without Cause or by Executive for Good Reason, in which cases the
first
tranche of the Stock Option scheduled to vest on October 18, 2007,shall
immediately and fully vest upon such termination;
or
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(ii)
after one year from the effective date of this Agreement, by the Employer
without Cause or by Executive for Good Reason, in which cases the Stock Option
shall immediately and fully vest upon such termination;
provided
further that the events surrounding any such termination have not been the
subject of any claim, proceeding or lawsuit by either the Executive or the
Company in which further case the Stock Option shall only vest upon final
adjudication, determining that such termination was a valid termination by
the
Executive for Good Reason or by the Employer without Cause. The Stock Option
shall be deemed a non-qualified stock option (i.e., not an ISO). The Stock
Option will be issued out of the Employer’s stock incentive plan, and subject to
such incentive plan.
(c) Executive
hereby acknowledges that the Stock Option and the shares issuable upon the
exercise thereof shall be “restricted securities” as such term is defined under
Rule 144, unless and until an effective registration covering these shares
takes
place, promulgated
under the Securities Act of 1933, as amended (the “1933
Act”);
that
the Executive hereby represents that he shall accept such compensation and
has
no present intent to distribute or transfer such securities; that such
securities shall bear the appropriate restrictive legend providing that they
may
not be transferred except pursuant to the registration requirements of the
1933
Act or pursuant to exemptions therefrom, and; the Executive further acknowledges
that he may be required to hold such securities for an indeterminable amount
of
time. Employer agrees to include all shares of its Common Stock reserved for
exercise of stock options under any of its then effective stock option plans
in
any undertaking to register its shares of Common Stock for any other purpose.
4.2 Benefits
Commencing
on the Payment Date and thereafter during the Term, Executive shall be entitled
to participate in all medical and other executive benefit plans, including
vacation, sick leave, retirement accounts and other executive benefits provided
by Employer to any of the other senior officers of Employer on terms and
conditions no less favorable than those offered to such senior officers, other
than the Xxxxxx members of the Xxxxxx family.
Such
participation shall be subject to the terms of the applicable plan documents
and
Employer’s generally applicable policies.
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4.3 Expense
Reimbursement
Employer
shall reimburse Executive for reasonable and necessary expenses incurred by
him
on behalf of Employer in the performance of his duties hereunder during the
Term, including any and all travel and entertainment expenses related to the
Employer’s business in accordance with Employer's then customary policies,
provided that such expenses are adequately documented. Executive shall provide
Employer with an estimate of anticipated travel and entertainment expenses
to be
incurred for approval in advance by the Chief Executive Officer, or his
designee.
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4.4
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Performance
Bonus
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In
addition to the compensation payable under Section 4.1, Executive may be
eligible to receive during the Term an annual discretionary performance bonus,
the amount of which shall be determined by the Board of Directors based on
the
performance of the Executive during the period intended to be covered by such
bonus (the “Performance Bonus”). Employer shall make a determination as to the
sufficiency of its cash flow and profits for purposes of awarding a Performance
Bonus, to Executive in connection with each performance period. Each year’s
Performance Bonus shall be paid to the Executive within 110 days of the
Employer’s fiscal year end.
ARTICLE
5
OTHER
EMPLOYMENT
Until
a
reasonable amount of time after the Payment Date, but in no event more than
three months thereafter, Executive shall devote his business and professional
time and effort, attention, knowledge and skill to the management, supervision
and direction of Employer’s business and affairs in accordance with the
scheduling mutually agreed to between the Employer and Executive (the
“Initial
Employment Period”).
During the Initial Employment Period, nothing in this Agreement shall preclude
Executive from pursuing other gainful employment, providing services to others
on a consulting basis, or pursuing any other compensatory or for-profit
activities, provided such other activities do not interfere with Executive’s
performance of his duties hereunder and are not conducted on the Employer’s
premises. Thereafter, Executive shall devote all of his business and
professional time and effort, attention, knowledge, and skill to the management,
supervision and direction of Employer’s business and affairs as Executive’s
highest professional priority. Nothing
in this Agreement shall preclude Executive from:
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(a)
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serving
as a director or member of a committee of any organization or corporation
involving no conflict of interest with the interests of Employer,
provided
that Executive must obtain the prior written approval of the independent
members of the Board of Directors;
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(b)
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serving
as a consultant in his area of expertise (in areas other than in
connection with the business of Employer), to government, industrial,
and
academic panels provided that only de minimis time shall be devoted
thereto and Executive must obtain the prior written approval of the
independent members of the Board of Employer and where it does not
conflict with the interests of Employer, provided that such written
consent shall not be unreasonably withheld, delayed or conditioned;
and
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(c)
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on
his own time, managing his personal investments or engaging in any
other
non-competing business; provided that such activities do not materially
interfere with the regular performance of his duties and responsibilities
under this Agreement.
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ARTICLE
6
CONFIDENTIAL
INFORMATION/INVENTIONS
Confidential
Information
6.1 Executive
shall not, in any manner, for any reasons, either directly or indirectly,
divulge or communicate to any person, firm or corporation, any confidential
information concerning any matters not generally known in the internal
combustion engine industry (the “Engine
Industry”)
or
otherwise made public by Employer which affects or relates to Employer’s
business, finances, marketing and/or operations, research, development,
inventions, products, designs, plans, procedures, or other data (collectively,
“Confidential
Information”)
except
in the ordinary course of business or as required by applicable law. Without
regard to whether any item of Confidential Information is deemed or considered
confidential, material, or important, the parties hereto stipulate that as
between them, to the extent such item is not generally known in the Engine
Industry, such item is important, material, and confidential and affects the
successful conduct of Employer’s business and goodwill, and that any breach of
the terms of this Section 6.1 shall be a material and incurable breach of this
Agreement. Confidential Information shall not include: information in the public
domain other than because of a breach of this Agreement.
Documents
6.2 Executive
further agrees that all documents and materials furnished to Executive by
Employer and relating to Employer’s business or prospective business are and
shall remain the exclusive property of Employer. Executive shall deliver all
such documents and materials, and all copies thereof and extracts therefrom,
to
Employer upon demand therefore and in any event upon expiration or earlier
termination of this Agreement. Any payment of sums due and owing to Executive
by
Employer upon such expiration or earlier termination shall be conditioned upon
returning all such documents and materials, and Executive expressly authorizes
Employer to withhold any payments due and owing pending return of such documents
and materials.
Inventions
6.3 All
ideas, inventions, and other developments or improvements conceived or reduced
to practice by Executive, alone or with others, during the Term of this
Agreement, whether or not during working hours, that are within the scope of
the
business of Employer or that relate to or result from any of Employer’s work or
projects or the services provided by Executive to Employer pursuant to this
Agreement, shall be the exclusive property of Employer. Executive agrees to
assist Employer, at Employer’s expense, to obtain patents and copyrights on any
such ideas, inventions, writings, and other developments, and agrees to execute
all documents necessary to obtain such patents and copyrights in the name of
Employer.
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Disclosure
6.4 During
the Term, Executive will promptly disclose to the Board of Directors full
information concerning any interest, direct or indirect, of Executive (as owner,
shareholder, partner, lender or other investor, director, officer, executive,
consultant or otherwise) or any member of his immediate family in any business
that is reasonably known to Executive to purchase or otherwise obtain services
or products from, or to sell or otherwise provide services or products to,
Employer or any of their suppliers or customers.
ARTICLE
7
COVENANT
NOT TO COMPETE
7.1
No
Competitive Activities. Except as expressly permitted in Article 5 above, during
the Term, Executive shall not engage in any activities that are competitive
with
the actual or prospective business of the Company, including without limitation:
(a) engaging directly or indirectly in any business substantially similar to
any
business or activity engaged in (or proposed to be engaged in) by Employer,
including and not limited to business that relates to internal combustion
engines; (b) engaging directly or indirectly in any business or activity
competitive with any business or activity engaged in (or proposed to be engaged
in) by Employer; (c) soliciting or taking away any executive, employee, agent,
representative, contractor, supplier, vendor, customer, franchisee, lender
or
investor of Employer, or attempting to so solicit or take away; (d) interfering
with any contractual or other relationship between Employer and any executive,
employee, agent, representative, contractor, supplier, vendor, customer,
franchisee, lender or investor; or (e) using, for the benefit of any person
or
entity other than Employer any Confidential Information of
Employer.
7.2 The
foregoing covenant prohibiting competitive activities shall survive the
termination of this Agreement and shall extend, and shall remain enforceable
against Executive, for the period of two (2) years following the date this
Agreement is terminated. In addition, during the two-year period following
such
expiration or earlier termination, neither Executive nor Employer shall make
or
permit the making of any negative statement of any kind concerning Employer
or
their affiliates, or their directors, officers or agents or
Executive.
ARTICLE
8
SURVIVAL
Except
as
otherwise provided, Executive agrees that the provisions of Articles 6, 7,
8 and
9 shall survive expiration or earlier termination of this Agreement for any
reasons whether voluntary or involuntary, with or without Cause, and shall
remain in full force and effect thereafter.
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ARTICLE
9
INJUNCTIVE
RELIEF
Executive
acknowledges and agrees that the covenants and obligations of Executive set
forth in Articles 6 and 7 with respect to non-competition, non-solicitation,
confidentiality and Employer’s property relate to special, unique and
extraordinary matters and that a violation of any of the terms of such covenants
and obligations will cause Employer irreparable injury for which adequate
remedies are not available at law. Therefore, Executive agrees that if Executive
breaches this Agreement than Employer shall be entitled to apply for an
injunction, restraining order or such other equitable relief as a court of
competent jurisdiction as limited by Section 13.3 may deem necessary or
appropriate to restrain Executive from committing any violation of the covenants
and obligations referred to in this Article 9. Executive shall have the right
to
appeal from such injunction or order and to seek reconsideration. These
injunctive remedies are cumulative and in addition to any other rights and
remedies Employer may have at law or in equity.
ARTICLE
10
TERMINATION
Termination
by Executive
10.1 Executive
may terminate this Agreement for Good Reason at any time upon 30 days’ written
notice to Employer, provided the Good Reason has not been cured within such
period of time. In addition, Executive may terminate this Agreement anytime,
upon providing 60 days’ written notice.
Good
Reason
10.2 In
this
Agreement, “Good Reason” means, without Executive’s prior written consent, the
occurrence of any of the following events, unless Employer shall have fully
cured all grounds for such termination within thirty (30) days after Executive
gives notice thereof:
(i) any
reduction in his then-current Salary or benefits, other than in connection
with
a percentage pay cut that is applicable to all senior executives and which
is
the same percentage for all such persons or in connection with a general
reduction in benefits, other than the Xxxxxx family members;
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(ii)
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any
material failure to timely grant, or timely honor the Stock Option
set
forth in Article 4.1;
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(iii)
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failure
to pay or provide required
expenses;
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(iv)
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any
diminution in authority or responsibility to a non-executive
position;
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The
written notice given for Good Reason by Executive to Employer shall specify
in
reasonable detail the cause for termination, and such termination notice shall
not be effective until thirty (30) days after Employer’s receipt of such notice,
during which time Employer shall have the right to respond to Executive’s notice
and cure the breach or other event giving rise to the termination.
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Termination
by Employer
10.3 Employer
may terminate its employment of Executive under this Agreement with or without
Cause at any time by written notice to Executive. For purposes of this
Agreement, the term Cause for termination by Employer shall be (a) a conviction
of or plea of guilty or nolo
contendere by
Executive to a felony, or any crime involving fraud, securities laws violations,
embezzlement or moral turpitude; (b) the refusal by Executive to perform his
material duties and obligations hereunder or to follow the proper instructions
of the Board of Directors; (c) Executive’s willful or intentional misconduct in
the performance of his duties and obligations; (d) conduct that is known or
that
should have been known by Executive to be detrimental to the best interests
of
the Company, as determined by the independent members of the Board; (e) if
Executive or any member of his family makes any personal profit arising out
of
or in connection with a transaction to which Employer is a party or with which
it is associated without making disclosure to and obtaining the prior written
consent of the independent members of the Board; or (f) the entry by the
Securities and Exchange Commission or a self-regulatory organization of a
consent decree relating to a securities law violation by Executive. The written
notice given hereunder by Employer to Executive shall specify that it is without
Cause or if it is with Cause shall specify in reasonable detail the cause for
termination. For purposes of this Agreement, “family” shall mean “immediate
family” as defined in the rules of the Securities and Exchange Commission. In
the case of a termination for the causes described in (a), (d) and (e) above,
such termination shall be effective upon receipt of the written notice. In
the
case of the causes described in (b) and (c) above, such termination notice
shall
not be effective until thirty (30) days after Executive’s receipt of such
notice, during which time Executive shall have the right to respond to
Employer’s notice and cure (if curable) the breach or other event giving rise to
the termination. In the case of termination without Cause, such termination
notice shall not be effective until thirty (30) days after Executive’s receipt
of such notice.
Severance
10.4 Upon
a
termination of this Agreement with Good Reason by Executive or without cause
by
Employer, Employer shall pay to Executive all accrued and unpaid compensation
and expense reimbursement, as of the date of such termination and, in the case
such termination takes place after the Payment Date, also the “Severance
Payment.” The Severance Payment shall be payable in a lump sum, subject to
Employer’s statutory and customary withholdings. The Severance Payment shall be
paid by Employer within thirty (30) business days of the expiration of any
applicable cure period. The “Severance Payment” shall equal the total amount of
the Salary payable to Executive under Section 4.1 of this Agreement for a period
of one (1) year and shall be paid subject to the Employer’s sufficiency of cash
flow and working capital.
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Termination
Upon Death
10.5 If
Executive dies during the Term of this Agreement, this Agreement shall
terminate, except that Executive’s legal representatives shall be entitled to
receive any earned but unpaid compensation or expense reimbursement due
hereunder through the date of death.
Termination
Upon Disability
10.6
If,
during the Term, Executive suffers and continues to suffer from a “Disability”
(as defined below), then Employer may terminate this Agreement by delivering
to
Executive ten (10) calendar days’ prior written notice of termination based on
such Disability, setting forth with specificity the nature of such Disability
and the determination of Disability by Employer. For purposes hereof,
“Disability” means “permanent and total disability” as defined in Section
22(e)(3) of the Internal Revenue Code. Upon any such termination for Disability,
Executive shall be entitled to receive any earned but unpaid compensation or
expense reimbursement due hereunder through the date of termination and, in
the
case such termination takes place after the Payment Date, also the Severance
Payment.
ARTICLE
11
PERSONNEL
POLICIES, CONDITIONS, AND BENEFITS
Except
as
otherwise provided herein, Executive’s employment shall be subject to the
personnel policies and benefit plans which apply generally to Employer’s
Executives as the same may be interpreted, adopted, revised or deleted from
time
to time, during the Term of this Agreement, by Employer in its sole discretion.
During the Term hereof, Executive shall be entitled to vacation during each
year
of the Term at the rate of four (4) weeks per year. Within 30 days after the
end
of each year of the Term, Employer shall elect to (a) carry over and allow
Executive the right to use any accrued and unused vacation of Executive, or
(ii)
pay Executive for such vacation in a lump sum in accordance with its standard
payroll practices. Executive shall take such vacation at a time approved in
advance by the Board of Directors of Employer, which approval will not be
unreasonably withheld but will take into account the staffing requirements
of
Employer and the need for the timely performance of Executive's
responsibilities.
ARTICLE
12
INDEMNIFICATION
Employer
shall indemnify and defend the Executive to the fullest extent permitted by
the
laws of the State of Delaware and the Executive shall be entitled to the
protection of any insurance policies the Employer shall maintain generally
for
the benefit of its directors and officers, against all losses, claims, damages,
costs, charges, expenses, liabilities, judgments, or settlement amounts
whatsoever incurred or sustained by him in connection with any action, suit,
or
proceeding to which he may be made a party by reason of his being or having
been
an officer of the Employer (“D&O Policies”). The Board of Directors of the
Employer and the Chief Executive Officer shall consult the Executive as to
the
terms and extent of coverage under any D&O policies in force. It is
understood and agreed however, that the Employer will only indemnify the
Executive for those matters that are within the scope of the Executive’s
employment with the Employer and not conducted in bad faith, intentionally
or
with gross negligence. The Executive agrees to immediately notify the Employer,
in writing, in the event he becomes aware that he (or the Employer), is a party
to any action, suit or proceeding. The Executive further agrees not to enter
into any settlement agreements concerning any action, suit or proceeding without
the express written consent of the Employer.
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ARTICLE
13
BENEFICIARIES
OF AGREEMENT
This
Agreement shall inure to the benefit of the parties hereto, their respective
heirs, successors and permitted assigns.
ARTICLE
14
GENERAL
PROVISIONS
No
Waiver
13.1 No
failure by either party to declare a default based on any breach by the other
party of any provisions of this Agreement, nor failure of such party to act
quickly with regard thereto, shall be considered to be a waiver of any such
breach, or of any future breach.
Modification
13.2 No
waiver
or modification of this Agreement or of any covenant, condition, or limitation
herein contained shall be valid unless in writing and duly executed by the
parties to be charged therewith.
Submission
to Jurisdiction; Consent to Service of Process.
13.3 Submission
to Jurisdiction; Consent to Service of Process. This Agreement shall be governed
in all respects, by the laws of the State of New Jersey, including validity,
interpretation and effect, without regard to principles of conflicts of law.
The
parties hereto irrevocably and unconditionally consent to submit to the
exclusive jurisdiction of the state and federal courts in the State of New
Jersey for any lawsuits, actions or other proceedings arising out of or related
to this Agreement and agree not to commence any lawsuit, action or other
proceeding except in such courts. The parties hereto further agree that service
of process, summons, notice or document by mail to their addresses set forth
above shall be effective service of process for any lawsuit, action or other
proceeding brought against them in any such court. The parties hereto
irrevocably and unconditionally waive any objection to the laying of venue
of
any lawsuit, action or other proceeding arising out of or related to this
Agreement in such courts, and hereby further irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such lawsuit,
action or proceeding brought in any such court has been brought in an
inconvenient forum.
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Entire
Agreement
13.4 This
Agreement embodies the whole agreement between the parties hereto regarding
the
subject matter hereof and there are no inducements, promises, terms, conditions,
or obligations made or entered into by Employer or Executive other than
contained herein. In
particular, this Agreement restates and amends the Original Employment
Agreement, and the parties confirm that they have no claims or demands from
each
other, regarding payments or other rights or liabilities, except as set forth
in
this Agreement, provided, however, that throughout the Term the Executive shall
be entitled to be indemnified by the Company as the other officers and directors
of the Company, including in the event that it is acknowledged or claimed that
he were, on or after the Effective Time, a consultant rather than an employee
of
the Company.
Severability
13.5
In
the
event a court of competent jurisdiction determines that a term or provisions
contained in this Agreement is overly broad in scope, time geographical location
or otherwise, the parties hereto authorize such Court to modify and reduce
any
such term or provision deemed overly broad in scope, time, geographic location
or otherwise so that it complies with then applicable law.
Headings
13.6 The
headings contained herein are for the convenience of reference and are not
to be
used in interpreting this Agreement.
Independent
Legal Advice
13.7 Employer
and Executive each acknowledge that he or it has obtained legal advice
concerning this Agreement.
No
Assignment
13.8
No
party
may pledge or encumber its respective interests in this Agreement nor assign
any
of its rights or duties under this Agreement without the prior written consent
of the other party.
IN
WITNESS WHEREOF the
parties have executed this Agreement as of the day and year first above
written.
| XXXXXX INTERNATIONAL, LTD. | EXECUTIVE | |||
| By: | /s/ Xxxxxx X. Xxxxxx | /s/ Xxxxx X. Xxxx | ||
|
Xxxxxx
X. Xxxxxx
Chief
Executive Officer
|
Xxxxx
X. Xxxx
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