EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated this 5th day of March, 1999,
is entered into by and between CLEAN ENERGY TECHNOLOGIES, INC., a Delaware
corporation (the "Company") and XXXX X. XXXXX (the "Executive"), with reference
to the following facts:
RECITALS:
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WHEREAS:
A. The Company desires to employ the Executive as its President in order to
enable the Company to avail itself of the skill, knowledge and experience
of the Executive and to assure the successful management of the Company,
and the Executive desires to become employed in such executive officers
position or positions;
B. The Company and the Executive desire to enter into a written employment
agreement formally documenting their relationship and setting forth the
duties and responsibilities the Company desires the Executive to undertake,
and which the Executive has agreed to undertake.
NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein, and for valuable consideration, the receipt and sufficiency of which are
hereby mutually acknowledged, the parties to this Agreement (collectively
"parties" and individually a "party") agree as follows:
AGREEMENT:
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1. DEFINITIONS
A. Set forth below are definitions of capitalized words or terms which
(together with those common words and terms set forth in section 14.L)
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are generally used throughout this Agreement, or references to
sections or paragraphs containing those definitions (capitalized terms
used only in a specific section or paragraph of this Agreement are
defined in that section or paragraph):
B. "Advance" is defined in section 9.
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C. "Affiliate" means any "Person" (as defined below) controlling,
controlled by, or under common control with a party.
D. "Agreement" means this Agreement, as originally executed and as it may
be: (i) amended, modified, supplemented and/or restated from time to
time (but only to the extent amended, modified, supplemented and/or
restated in accordance with the terms of this Agreement); and/or (ii)
renewed or extended in accordance with its terms.
E. "Applicable Laws" means any federal (both of the United States and
Canada), state, provincial local or foreign laws or regulations as may
be applicable.
F. "Board" means the Board of Directors of the Company, as such body may
be reconstituted from time to time.
G. "Company" means Clean Energy Technologies, Inc., a Delaware
Corporation, and any successor and assign of the Company, as more
particularly described in, or permitted and prescribed pursuant to,
section 16.A.
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H. "Disability" (or the related term "Disabled") means any of the
following:
(1) the receipt of any disability insurance benefits by the
Executive;
(2) a declaration by a court of competent jurisdiction that the
Executive is legally incompetent;
(3) the Executive's material inability due to medically documented
mental or physical illness or disability to fully perform the
Executive's regular obligations of his office and as an employee
of the Company (with reasonable accommodations for such
disability, if then required by Applicable Law), for a six (6)
month continuous period, or for nine (9) cumulative months within
any one (1) year continuous period; or
(4) the reasonable determination by the Board that the Executive will
not be able to fully perform the Executive's regular obligations
of his office and as an employee of the Company (with reasonable
accommodations if then required by Applicable Law) for a six (6)
month continuous period.
If the Board determines that the Executive is Disabled under
subsection (4) above, and the Executive disagrees with the conclusion
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of the Board, then the Company shall engage a qualified independent
physician reasonably acceptable to the Executive to examine the
Executive at the Company's sole expense. The determination of such
physician shall be provided in writing to the parties and shall be
final and binding upon the parties for all purposes of this Agreement.
The Executive hereby consents to examination in the manner set forth
above, and waives any physician-patient privilege arising from any
such examination as it relates to the determination of the purported
disability.
I. "Employee Benefit Plan" is defined in section 4.D.
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J. "Employee Deductions" are defined in section 6.
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K. "Monthly Salary" is defined in section 4.A.
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L. "Performance Bonus" is defined in section 4.C.
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M. "Person" means an individual or natural person, a corporation,
partnership (limited or general), joint-venture, association, business
trust, limited liability company/partnership,
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business trust, trust (whether revocable or irrevocable), pension or
profit sharing plan, individual retirement account, or fiduciary or
custodial arrangement.
N. "Personal Time-Off" is defined in section 7.
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O. "Subsidiary" shall mean any corporation, partnership (limited or
general), joint-venture, association, business trust, limited
liability company/partnership, business trust or rust in which the
Company holds a controlling interest, including but not limited to
Clean Energy Technologies (Canada) Inc., a British Columbia
corporation.
P. "Termination By Company For Cause" means a termination of the
Executive caused by a determination of two-thirds of the Board,
excluding the Executive if then a member of the Board, that one of the
following events has occurred:
(1) Any of the Executive's representations or warranties in this
Agreement is not materially true, accurate and/or complete;
(2) The Executive has intentionally and continually breached or
wrongfully failed and/or refused to fulfill and/or perform:
(a) any of the Executive's material obligations, promises or
covenants under this Agreement, or
(b) any of the material warranties, obligations, promises or
covenants in any agreement (other than this Agreement)
entered into between the Company and the Executive, without
cure, if any, as provided in such agreement;
(3) The Executive has intentionally failed and/or refused to obey any
lawful and proper order or directive of the Board, and/or the
Executive has intentionally interfered with the compliance by
other employees of the Company with any such orders or
directives;
(4) The Executive has intentionally breached the Executive's
fiduciary duties to the Company;
(5) The Executive has intentionally caused the Company to be
convicted of a crime, or to incur criminal penalties in material
amounts;
(6) The Executive has committed: (A) any act of fraud,
misrepresentation, theft, embezzlement or misappropriation,
and/or any other dishonest act against the Company and/or any of
its Affiliates, subsidiaries, joint ventures; or (B) any other
offense involving moral turpitude, which offense is followed by
conviction or by final action of any court of law; or (C) a
felony;
(7) The Executive repeatedly and intemperately used alcohol or drugs,
to the extent that such use (A) interfered with or is likely to
interfere with the Executive's
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ability to perform the Executive's duties, and/or (B) endangered
or is likely to endanger the life, health, safety, or property of
the Executive, the Company, or any other person;
(8) The Executive has intentionally demonstrated or committed such
acts of racism, sexism or other discrimination as would tend to
bring the Company into public scandal or ridicule, or could
otherwise result in material and substantial harm to the
Company's business, reputation, operations, affairs or financial
position; and/or
(9) The Executive engaged in other conduct constituting legal cause
for termination.
(10) No act, nor failure to act, on the Executive's part shall be
considered "intentional" unless the Executive has acted, or
failed to act, with a lack of good faith and with a lack of
reasonable belief that the Executive's action or failure to act
was in the best interests of the Company. In the event the
Executive is both Disabled and the provisions of subsection (7)
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of this subsection P are applicable, the Company shall
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nevertheless have the right to deem such event as a Termination
By Company For Cause.
Q. Termination By Executive For Good Reason" means the Executive's
termination of this Agreement based on his reasonable determination
that one of the following events has occurred:
(1) Any of the Company's representations or warranties in this
Agreement is not materially true, accurate and/or complete;
(2) The Company intentionally and continually breached or wrongfully
failed to fulfill or perform:
(a) its material obligations, promises or covenants under this
Agreement; or
(b) any material warranties, obligations, promises or covenants
of the Company in any agreement (other than this Agreement)
entered into between the Company and the Executive, without
cure, if any, as provided in such agreement;
(3) The Company terminated this Agreement and the Executive's
employment hereunder, and such termination does not constitute
Termination By Company For Cause;
(4) Without the consent of the Executive, the Company:
(a) substantially altered or materially diminished the position,
nature, status, prestige or responsibilities of the
Executive from those in effect by mutual agreement of the
parties from time-to-time;
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(b) assigned additional duties or responsibilities to the
Executive which were wholly and clearly inconsistent with
the position, nature, status, prestige or responsibilities
of the Executive then in effect; or
(c) removed or failed to reappoint or re-elect the Executive to
the Executive's offices under this Agreement (as they may be
changed or augmented from time-to-time with the consent of
the Executive), or as a director of the Company, except in
connection with the Disability of the Executive;
(5) Without the consent ratification (express or implied) of the
Executive, the Executive was removed from the Board without his
consent; or the Company failed to nominate or reappoint the
Executive to the Board (unless the Executive is deceased or
Disabled, or such removal or failure is attributable to an event
which would constitute Termination By Company For Cause), or if
the Executive was so nominated, the stockholders of the Company
failed to re-elect the Executive to the Board;
(6) The Company intentionally required the Executive to commit or
participate in any felony or other serious crime; and/or
(7) The Company engaged in other conduct constituting legal cause for
termination.
In the event any of the events described above in this subsection Q
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occurs, and such event is reasonably susceptible of being cured, the
Company shall be entitled to a grace period of thirty (30) days
following receipt of written notice of such event. If the Executive
determines, in his sole discretion, that such event is not reasonably
susceptible of being cured within a period of thirty (30) days), the
Executive may grant a longer cure period to the Company to cure such
event to the reasonable satisfaction of the Executive, provided the
Company promptly commences and diligently pursues such cure. The noted
grace periods shall not apply to any other event described in this
subsection Q.
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2. EMPLOYMENT OBLIGATIONS
A. Engagement; Duties. The Company hereby engages the Executive as its
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President, and the Executive accepts such position, upon the terms and
conditions set forth herein. As the Company's President, the Executive
shall do and perform all services, acts, or things necessary or
advisable to discharge his duties as the Company's President under
this Agreement and the Company's Bylaws including, but not limited to,
the following:
(1) Managing, conducting and supervising the day-to-day
administrative business of the Company (and/or its Subsidiaries)
such as, by way of example and not limitation, hiring and firing
employees and consultants and establishing compensation levels
for such employees and consultants; and negotiating and entering
into contracts on behalf of the Company (and/or its Subsidiaries)
with respect to the ordinary operations of the business of the
Company (and/or its
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Subsidiaries) such as, by way of example and not limitation,
exploration, equipment, purchase and lease contracts.
(2) On behalf of the Company, negotiating and entering into
agreements, contracts and/or joint ventures with third parties
relating to the exploitation of the Company's products and
technologies;
(3) Acting as the Company's liaison with its attorneys, certified
public accountants, bankers, joint venture partners, market
makers for the Company's securities and the investment community;
and
(4) Developing and implementing long-term strategic, business and
fiscal planning for the Company (and/or its Subsidiaries) and
their businesses, including but not limited to plans or capital
requirements for financing, the commercial exploitation of the
Company's products and technologies, finance, and positioning the
Company's securities in the various capital markets.
The Executive shall report only to the Board, and any significant
employment decisions and/or agreements, contracts and/or joint
ventures negotiated by the Executive shall be subject to the review
and approval/ratification by any of such parties. The Executive's
responsibilities with respect to the Company and each of its
Subsidiaries may be changed or supplemented by the Board from time-to-
time, in their discretion. The Executive shall also hold such offices
with the Subsidiaries and/or joint ventures of the Company as the
Board may, in its discretion and with the consent of the Executive,
from time-to-time determine. The Board shall determine the amount of
the Executive's total remuneration which will be allocated to and paid
by the Company and by each of its Subsidiaries. The Executive shall be
reasonably available to travel as the needs of the Company's business
may require.
The Executive acknowledges and agrees that he understands that the
Company in the near future to hire a Chief Executive Officer, in which
case the Executive's position shall be President and Chief Operating
Officer.
B. Performance. The Executive shall devote the Executive's entire and
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undivided business time, energy, abilities and attention solely and
exclusively to the performance of the Executive's duties hereunder and
the business of the Company (and/or its Subsidiaries); provided,
however, the foregoing shall not be construed to prohibit the
Executive from attending to personal matters from time-to-time as
needed during business hours to the extent reasonably necessary to
address such matters. The Executive shall at all times faithfully,
loyally, conscientiously, diligently and, to the best of the
Executive's ability, perform all of the Executive's duties and
obligations under this Agreement, and otherwise promote the interests
and welfare of the Company (and/or its Subsidiaries), all consistent
with the highest and best standards of the Company's industry. The
Executive shall, in all cases:
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(1) strictly comply with and adhere to all Applicable Laws, and the
Company's Articles of Incorporation, Bylaws and policies;
(2) obey all reasonable rules and regulations and policies now in
effect or as subsequently modified governing the conduct of
employees of the Company, and
(3) not commit any acts of gross negligence, willful misconduct,
dishonesty, fraud or misrepresentation, racism, sexism or other
discrimination, or any other acts which would tend to bring the
Company (and/or its Subsidiaries) into public scandal or
ridicule, or would otherwise result in material harm to the
Company's business or reputation.
C. Facilities and Services. The Company (and/or its Subsidiaries) shall
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provide such support staff, facilities, equipment and supplies as are
reasonably necessary or suitable for the adequate performance of the
Executive's duties and obligations under this Agreement, including
technical and secretarial help.
3. TERM
A. Initial Term. The Company hereby employ the Executive pursuant to the
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terms of this Agreement, and the Executive hereby accepts such
employment with the Company, for the period beginning on the date of
this Agreement and ending on March 5, 2000 (the "Initial Term").
B. Automatic Renewal; Termination by the Company. Unless this Agreement
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is previously terminated by either party as provided in section 10
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below, this Agreement will be automatically renewed for additional and
consecutive one (1) year terms (each, a "Renewal Term") following the
expiration of each Initial or Renewal Term, (each a "Term"), unless
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either party gives written notice to the other party, no later than
sixty (60) days prior to the expiration of the then pending Term, of
its election not to automatically renew this Agreement for an
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additional year.
4. COMPENSATION
A. Monthly Base Salary. The Company shall pay or caused to be paid to the
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Executive a monthly base salary of nine thousand one hundred sixty six
Canadian dollars and sixty seven cents (Cdn. $9,166.67) (the "Monthly
Salary"). The Monthly Salary shall be payable in periodic installments
as agreed from time-to-time by the Executive and the Board, but at
least semi-monthly, and shall be subject to any Tax Withholdings
and/or Employee Deductions that are applicable. In any pay period in
which the Executive shall be employed for less than the entire number
of business days in such pay period, the Monthly Salary for such pay
period shall be prorated on the basis of the number of business days
during which the Executive was actually employed during such pay
period, divided by the actual number of business days in such pay
period.
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B. Automatic Percentage Increase In Monthly Base Salary. Commencing on
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the first annual anniversary date of this Agreement, and on each
annual anniversary date thereafter, the Monthly Salary then effective
shall be increased by an amount equal to five percent (5%) of the
Monthly Salary for the immediately prior year. Additionally,
commencing on or prior to the first annual anniversary date of this
Agreement, and on or prior to each annual anniversary date thereafter,
the Board shall review the Executive's Monthly Salary to determine
whether to increase the Monthly Salary by an amount in excess of said
five percent (5%) increment, without any obligation by the Board to
authorize such increase.
C. Performance Bonus. The Board shall from time-to-time, but not less
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than one (1) time per year, evaluate the performance of the Executive
and award to the Executive a performance bonus (the "Performance
Bonus") in such amount as the Board may determine, in its sole
discretion, to be reasonable, after taking into consideration other
compensation paid or payable to the Executive under this Agreement, as
well as the financial and non-financial progress of the business of
the Company (and/or its Subsidiaries) and the contributions of the
Executive toward that progress. Payment of the Performance Bonus shall
be subject to any applicable Tax Withholdings and/or Employee
Deductions.
D. Participation in Employee Benefit Plans. The Executive shall have the
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same rights, privileges, benefits and opportunities to participate in
any employee benefit plans of the Company which may now or hereafter
be in effect on a general basis for the Company's executive officers
or employees, including without limitation retirement, pension,
profit-sharing, savings and insurance (including, but not limited to,
health, dental, disability and/or group insurance) (collectively,
"Employee Benefit Plans"). In the event the Executive receives
payments from a disability plan maintained by the Company, the Company
(and/or its Subsidiaries) shall have the right to offset such payments
against Monthly Salary otherwise payable to the Executive during the
period for which payments are made by such disability plan.
E. Stock Options.
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(1) The Company agrees to grant to the Executive an option (the
"Option") to purchase up to eighty thousand (80,000) unregistered
shares of the Company's common stock, which right to purchase
shall vest incrementally over a period of five (5) years based
upon continuous employment, with the first increment of sixteen
thousand (16,000) shares vesting one year from the date of this
Agreement. The purchase price per share shall be U.S. $2 per
share.
(2) The term for the Executive to exercise the Option with respect to
any vested share shall expire five (5) years from the date of
vesting of such share provided, however, if the Executive's
employment with the Company has been previously terminated
pursuant to subsection (4) below, the expiration date shall be
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accelerated to two (2) years after the effective date of
termination (if earlier than the option expiration date).
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(3) In the event of the death or Disability of the Executive, all
unvested Options Shares which would have vested within the twelve
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(12) month period following the date of death or Disability will
vest effective as of the date of death or Disability, and the
prospective right to purchase the balance of the remaining
unvested option shares shall lapse.
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(4) In the event the Executive's employment with the Company is
terminated, and such termination is attributable to:
(a) an event defined as Termination By Company for Cause; and/or
(b) termination by the Executive which does not constitute
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Termination By Executive For Good Reason; then
the prospective right to purchase unvested option shares shall
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lapse to the extent such rights do not vest prior to the
effective date of termination.
(5) In the event the Executive's employment with the Company is
terminated, and such termination is attributable to:
(a) an event defined as a Termination by Executive for Good
Reason;
(b) termination by the Company which does not constitute a
Termination By Company for Cause and/or
(c) an event defined as a Change in Control; then
the prospective right to purchase all unvested options shares
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which would have vested within the twelve (12) month period
following the date of such event will vest effective as of the
date of such event, and the prospective right to purchase the
balance of the remaining unvested option shares shall lapse.
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(6) The grant of the Options shall be evidenced by a Stock Option
Certificate reflecting the above terms plus such additional terms
and conditions as required by a Plan established by the Company
and containing such other terms as the Company believes to be
reasonable.
(7) The Executive shall be responsible for all income taxes
(including tax withholdings) attributable to the grant or
exercise of the Option, or the sale of the option shares acquired
by exercise of the Option.
5. BUSINESS EXPENSES
During the Term of this Agreement the Executive is authorized to incur, and
the Company (and/or its Subsidiaries) shall directly pay or reimburse the
Executive for his or her payment of the Executive's reasonable and
necessary business expenses, duly and actually incurred by the Executive in
connection with the duties and services to be performed by the Executive
under this
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Agreement, including without limitation entertainment, meals, travel,
lodging and other similar out-of-pocket expenses, upon the Executive's
submission to the Company (and/or its Subsidiaries) of itemized expense
statements setting forth the date, purpose and amount of the expense
incurred, together with corresponding receipts showing payment by the
Executive in cases where he or she seeks reimbursement, all in conformity
with business expense payment and/or reimbursement policies as may be
established by the Company (and/or its Subsidiaries) from time to time, all
of which shall comply with the substantiation requirements of the Internal
Revenue Code 0f 1986, as amended, and the Income Tax Act of Canada, as
amended, and any other applicable taxing authorities, and regulations
promulgated by such authorities thereto, pertaining to the deductibility of
such expenses. Direct payment and/or reimbursement shall be made by the
Company (and/or its Subsidiaries) no later than thirty (30) days of the
Executive submission of the foregoing documentation. The Executive shall be
entitled to direct payment and/or reimbursement in full for the aforesaid
business expenses, notwithstanding that the Company is prohibited under the
Code and/or regulations promulgated thereunder from deducting the entire
amount of such expenses. The Company (and/or its Subsidiaries) shall have
the option to pay directly the persons entitled to payment for such
business expenses.
6. TAX WITHHOLDINGS AND EMPLOYEE DEDUCTIONS
The Company (and/or its Subsidiaries) shall be entitled to deduct from any
payments to the Executive pursuant to the terms of this Agreement
(including any payments arising from the early termination of this
Agreement), amounts sufficient to cover applicable federal (United States
and Canada), state, provincial, local and/or foreign income tax
withholdings and/or deductions as may be required in connection with such
payment, including without limitation old-age and survivor's and other
social security payments, state or provincial disability and other
withholdings payment as may be required by law (collectively, the "Tax
Withholdings"), as well as all other elective employee deductions
applicable to such payment such as, for example, deductions relating to any
Employee Benefit Plan in which the Executive participates (collectively,
the "Employee Deductions").
7. PERSONAL TIME-OFF
The Executive shall be entitled each calendar year during the term of this
Agreement to such number of personal time-off days for such purposes,
including vacations and time for personal affairs ("Personal Time-Off") as
are approved by the Board, but not less than the greater of (i) fifteen
(15) business days, or (ii) the number of personal time-off days (including
vacation and personal days) generally given by the Company to its
employees. Personal Time-Off shall be in addition to regular paid legal
holidays provided to all employees of the Company. The Executive's
compensation shall be paid in full with respect to approved Personal Time-
Off days. Should the Executive fail to use all Personal Time-Off days in
any calendar year, the Executive shall have the option of (i) receiving
payment for such days on a pro rata basis, or (ii) "carrying-over" unused
Personal Time-Off days to succeeding years. Personal time-off shall be
taken during a period or periods mutually satisfactory to both the Company
and the Executive.
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8. INSURANCE
If requested by the Company, the Executive shall submit to such physical
examinations and otherwise take such actions and execute and deliver such
documents as may be reasonably necessary to enable the Company, at its
expense and for its own benefit, to obtain disability and/or life insurance
on the life of the Executive. The Executive represents and warrants that
he has no reason to believe that he is not insurable for disability or life
coverage with a reputable insurance company at rates now prevailing in the
city of the Company's principal executive offices, for healthy persons of
the Executive's own age and gender.
9. ADVANCES
A. Provision Of Advances; Offsets Generally. The Company (and/or its
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Subsidiaries) may from time-to-time, upon written consent from the
Chairman of the Board or the Board, and without any obligation to do
so, make advances to the Executive against any compensation or other
amounts to be paid by the Company (and/or its Subsidiaries) to the
Executive (each, an "Advance"). Any amounts due hereunder to the
Executive shall, at the election of the Company, be offset by any then
outstanding Advances.
B. Offset Rights Against Termination Pay. Subject to the terms of any
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written agreement relating to Advances, in the event of termination of
employment of executive, the Executive agrees that the Company (and/or
its Subsidiaries) shall have the right to offset the amount of any and
all outstanding Advance(s) against any salary or wages due, or any
other amounts due to the Executive from the Company, and that any
remaining balance of the Advance(s) shall be repaid by the Executive
within thirty (30) days after the Executive's termination date. If
such Advance(s) are not repaid within said thirty (30) days, simple
interest shall accrue on the unpaid balance at the rate of ten percent
(10%) per annum. The Executive agrees to pay all costs of collection
incurred by the Company (and/or its Subsidiaries) with respect
thereto, including reasonable attorneys' fees and legal costs.
C. Right of Set-Off. The Company's obligation to make payments to the
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Executive hereunder shall not, except with respect to Advance(s) as
provided above, be affected by any circumstance, including without
limitation any set-off, counterclaim, recoupment, defense or other
right which the Company (and/or its Subsidiaries) may have against the
Executive or others.
10. TERMINATION OF AGREEMENT BEFORE EXPIRATION OF TERM
A. Death or Disability. Notwithstanding any other term of this Agreement,
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the applicable Term shall terminate upon the death or Disability of
the Executive, subject to compliance with Applicable Laws.
B. Termination of Agreement by Company for Cause. Subject to compliance
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with Applicable Laws, the Company may terminate this Agreement and the
Executive's employment hereunder at any time in the event such
termination constitutes Termination
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By Company For Cause, upon giving written notice to the
Executive specifying in reasonable detail:
(1) the event which constitutes the cause;
(2) the pertinent facts and circumstances underlying the cause; and
(3) the effective date of the termination (which date may, at the
Company's election, be effective upon receipt of said written
notice by the Executive). Such notice shall also afford the
Executive an opportunity to be heard in person by the Board (with
the assistance of the Executive's legal counsel, if the Executive
so desires). Such hearing shall be held reasonably promptly after
such notice but, in any event, before the effective date of the
prospective termination.
C. Termination of Agreement by Executive for Good Reason. The Executive
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may terminate this Agreement and the Executive's employment hereunder
at any time in the event such termination constitutes Termination By
Executive For Good Reason, upon giving written notice to the Company
specifying in reasonable detail:
(1) the event which constitutes the good reason;
(2) the pertinent facts and circumstances underling the good reason;
and
(3) the effective date of termination (not to exceed ninety {90} days
from the date of such notice, but which date may, at the
Executive's election, be effective upon receipt of said written
notice by the Company).
11. EFFECT OF TERMINATION
A. Death Or Disability; Termination By Company For Cause; Termination By
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Executive For Good Reason. In the event the Executive's employment
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hereunder is terminated before the expiration of a Term, and such
termination is attributable to:
(1) an event defined as Death or Disability;
(2) an event defined as Termination By Company For Cause; and/or
(3) termination by the Executive which does not constitute
Termination By Executive For Good Reason, then
all rights and obligations of the Company and the Executive under
section 2 [Employment Obligations], section 4 [Compensation],
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section 5 [Business Expenses] and section 7 [ Personal Time-Off]
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shall terminate as of the effective date of the termination;
provided, however:
(a) The Company (and/or its Subsidiaries) shall pay the
Executive's accrued but unpaid Monthly Salary and Personal
Time-Off days through the
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effective date of the termination on or before the close of
business on such effective date; and the Executive shall not
be entitled to Monthly Salary and/or Personal Time-Off days
after the effective date of the termination;
(b) The Company (and/or its Subsidiaries) shall pay any declared
but unpaid Performance Bonus;
(c) The Company (and/or its Subsidiaries) shall reimburse the
Executive for any business expenses incurred prior to the
effective date of the termination, within three (3) business
days after the Executive's submission of the Executive's
expense report to the Company; and
(d) The Executive shall not be entitled to continue to
participate in any Employee Benefit Plans except to the
extent provided in such plans for terminated participants,
or as may be required by Applicable Law. Notwithstanding the
foregoing, amounts which are vested in any Employee Benefit
Plans shall be payable in accordance with such plan.
B. Termination By Executive For Good Reason Or Termination By Company
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Without Cause. In the event the Executive's employment hereunder is
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terminated before the expiration of a Term, and such termination is
attributable to:
(1) an event defined as a Termination by Executive for Good Reason;
and/or
(2) termination by the Company which does not constitute a
Termination By Company for Cause; then
all rights and obligations of the Company and the Executive under
section 2 [Employment Obligations], section 4 [Compensation],
--------- ---------
section 5 [Business Expenses], and section 7 [Personal Time-Off]
--------- ---------
shall terminate as of the effective date of the termination date;
provided, however:
(a) The Company (and/or its Subsidiaries) shall continue to pay
the Executive's then effective Monthly Salary through the
pending Term of this Agreement, on the same basis as
previously paid to the Executive, but subject to such
minimum increases as are described in section 4;
---------
(b) The Company (and/or its Subsidiaries) shall pay the
Executive's declared but unpaid Performance Bonus;
(c) At the election of the Executive, the Company (and/or its
Subsidiaries) shall (i) permit the Executive to continue to
participate in any Employee Benefit Plans, except to the
extent prohibited in such plans for terminated employees, or
as may be required by Applicable Law; or (ii) provide the
Executive with additional compensation, payable on a monthly
basis, which would approximate the cost to the Executive to
obtain comparable benefits;
-13-
(d) The Company (and/or its Subsidiaries) shall reimburse the
Executive for the Executive's business expenses incurred
through the effective date of the termination, within three
(3) business days of the Executive's submission of the
Executive's expense report to the Company; and
C. Mitigation. The Executive shall not be required to mitigate the amount
----------
of any payment pursuant to this section 11 by seeking other employment
----------
or otherwise, and no such payment shall be offset or reduced by the
amount of any compensation or benefits provided to the Executive in
any subsequent employment. The provisions of this section 11 shall not
----------
be deemed to prejudice the rights of the Company or the Executive to
any remedy or damages to which such party may be entitled by reason of
a breach of this Agreement by the other party, whether at law or
equity.
12. REPRESENTATIONS AND WARRANTIES OF PARTIES
A. By All Parties. Each of the parties to this Agreement hereby represents
--------------
and warrants to each of the other parties to this Agreement, each of
which is deemed to be a separate representation and warranty, as
follows:
(1) Organization, Power and Authority. Such party, if an entity, is
---------------------------------
duly organized, validly existing and in good standing under the
laws of its state, territory or province of incorporation or
organization, and has all requisite corporate or other power and
authority to enter into this Agreement.
(2) Authorization. The execution and delivery of this Agreement by
-------------
such party, and the performance by such party of the transactions
herein contemplated, have, if such party is an entity, been duly
authorized by its governing organizational documents, and are not
prohibited by its governing organization documents, and no
further corporate or other action on the part of such party is
necessary to authorize this Agreement, or the performance of such
transactions.
(3) Validity. This Agreement has been duly executed and delivered by
--------
such party and, assuming due authorization, execution and
delivery by all of the other parties hereto, is valid and binding
upon such party in accordance with its terms, except as limited
by: (1) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to
creditor rights generally; and (2) general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law).
(4) Non-Contravention. Neither the execution or delivery of this
-----------------
Agreement, nor the performance by such party of the transactions
contemplated herein: (1) if such party is an entity, will breach
or conflict with any of the provisions of such party's governing
organizational documents; or (2) to the best of such party's
knowledge and belief, will such actions violate or constitute an
event of default under any agreement or other instrument to which
such party is a party.
-14-
(5) Legal Representation. Such party: (1) had the advice, or
--------------------
sufficient opportunity to obtain the advice, of legal counsel
separate and independent from legal counsel for any other party
hereto; and (2) such party was not represented by the legal
counsel of any other party hereto in connection with the
transactions contemplated by this Agreement, nor was such party
under any belief or understanding that such legal counsel was
representing such party's interests.
(6) Fairness. The terms and conditions of the transactions
--------
contemplated by this Agreement are fair and reasonable to such
party based upon all of the facts and circumstances at the time
this Agreement is entered into; and such party has voluntarily
entered into the transactions contemplated by this Agreement,
without duress or coercion.
B. By Executive. The Executive hereby represents and warrants to the
------------
Company that the Executive is not Disabled at the time of the
execution and delivery of this Agreement by the Executive.
13. NON-LIABILITY FOR EXECUTIVE'S DEBTS
Except as provided under Applicable Laws, the Executive's rights and
obligations under this Agreement shall not be subject to encumbrance or to
the claims of the Executive's creditors (other than the Company), or
subject to the debts, contracts or engagements of the Executive or the
Executive's heirs, successors and assigns, and any attempt to do any of the
foregoing shall be null and void ab initio and without force and effect.
14. INTERPRETATION AND CONSTRUCTION
A. Preparation of Agreement. The parties have participated jointly in the
------------------------
negotiation and drafting of this Agreement and each provision hereof.
In the event any ambiguity, conflict, omission or other question of
intent or interpretation arises, this Agreement shall be construed as
if jointly drafted by the parties, and no presumption or burden of
proof shall be presumed, implied or otherwise construed favoring or
disfavoring any party by virtue of the authorship of this Agreement or
of any provision hereof.
B. Performance on Business Day. In the event the date on which a party is
---------------------------
required is not a business day, the action shall, unless otherwise
provided herein, be deemed to be required to be taken on the next
succeeding business day. For purposes of this section, the term
"business day" shall mean Monday through Friday (excluding any legal
holidays).
C. Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made by any party in connection with any transaction
contemplated by this Agreement shall, irrespective of any
investigation made by or on behalf of any other party hereto, survive
the execution and delivery of this Agreement and the performance or
consummation of any transaction described in this Agreement, and shall
continue in full force and effect forever thereafter (subject to any
applicable statutes of limitation).
-15-
D. Independent Significance. The parties intend that each representation,
------------------------
warranty and covenant shall have independent significance. If any
party has falsely made or breached any representation, warranty or
covenant contained herein in any respect, the fact that there exists
another representation, warranty or covenant relating to the same
subject matter (regardless of the relative levels of specificity)
which the party has not falsely made or breached shall not detract
from or mitigate the fact that the party has falsely made or breached
the first representation, warranty or covenant.
E. Entire Agreement; No Collateral Representations. Each party expressly
------------------------------------------------
acknowledges and agrees that this Agreement:
(1) is the final, complete and exclusive statement of the agreement
of the parties with respect to the subject matter hereof;
(2) supersede any prior or contemporaneous agreements, memorandums,
proposals, commitments, guaranties, assurances, communications,
discussions, promises, representations, understandings, conduct,
acts, courses of dealing, warranties, interpretations or terms of
any kind, whether oral or written (collectively and severally,
the "prior agreements"), and that any such prior agreements are
of no force or effect except as expressly set forth herein; and
(3) may not be varied, supplemented or contradicted by evidence of
prior agreements, or by evidence of subsequent oral agreements.
No prior drafts of this Agreement, and no words or phrases from
any prior drafts, shall be admissible into evidence in any action
or suit involving this Agreement.
F. Amendment; Waiver; Forbearance. Except as expressly provided herein,
------------------------------
neither this Agreement nor any the terms, provisions, obligations or
rights contained herein, may be amended, modified, supplemented,
augmented, rescinded, discharged or terminated (other than by
performance), except by a written instrument or instruments signed by
all of the parties to this Agreement. No waiver of: (i) any breach of
any term, provision or agreement; (ii) the performance of any act or
obligation under this Agreement; and/or (iii) any right granted under
this Agreement, shall be effective and binding unless such waiver
shall be in a written instrument or instruments signed by each party
claimed to have given or consented to such waiver. Except to the
extent that the party or parties claimed to have given or consented to
a waiver may have otherwise agreed in writing, no such waiver shall be
deemed a waiver or relinquishment of any other term, provision,
agreement, act, obligation or right under this Agreement, or of any
preceding or subsequent breach thereof. No forbearance by a party in
seeking a remedy for any noncompliance or breach by another party
hereto shall be deemed to be a waiver by such forbearing party of its
rights and remedies with respect to such noncompliance or breach,
unless such waiver shall be in a written instrument or instruments
signed by the forbearing party.
-16-
G. Remedies Cumulative. The remedies of each party under this Agreement
-------------------
are cumulative and shall not exclude any other remedies to which such
party may be lawfully entitled.
H. Severability. If any term or provision of this Agreement, or the
------------
application thereof to any person or circumstance, shall to any extent
be determined to be invalid, illegal or unenforceable under present or
future laws, then, and in such event:
(1) the performance of the offending term or provision (but only to
the extent its application is invalid, illegal or unenforceable)
shall be excused as if it had never been incorporated into this
Agreement, and, in lieu of such excused provision, there shall be
added a provision as similar in terms and amount to such excused
provision as may be possible and still be legal, valid and
enforceable; and
(2) the remaining part of this Agreement (including the application
of the offending term or provision to persons or circumstances
other than those as to which it is held invalid, illegal or
unenforceable) shall not be affected thereby, and shall continue
in full force and effect to the fullest legal extent.
I. Time is of the Essence. Except and to the extent there is a specific
----------------------
cure provision in this Agreement, each party understands and agrees
that:
(1) time of performance is strictly of the essence with respect to
each and every date, term, condition, obligation and provision
hereof imposed upon such party; and
(2) the failure to timely perform any of the terms, conditions,
obligations or provisions hereof by such party shall constitute a
material breach and a noncurable (but waivable) default under
this Agreement by such party.
J. Parties in Interest. Nothing in this Agreement shall confer any rights
-------------------
or remedies under or by reason of this Agreement on any persons other
than the parties hereto and their respective successors and assigns,
if any, or as may be permitted hereunder; nor shall anything in this
Agreement relieve or discharge the obligation or liability of any
third person to any party to this Agreement; nor shall any provision
give any third person any right of subrogation or action against any
party to this Agreement.
K. No Reliance Upon Prior Representations. Each party acknowledges that:
--------------------------------------
(1) no other party has made any oral representation or promise which
would induce such party, prior to executing this Agreement, to change
such party's position to his, her or its detriment, to partially
perform, or to part with value in reliance upon such representation or
promise; and (2) such party has not so changed its position, performed
or parted with value prior to the time of the execution of this
Agreement, or such party has taken such action at its own risk.
-17-
L. Rules of Construction. In interpreting the meaning of this Agreement:
---------------------
(i) the term "person" is defined in its broadest sense to include any
individual or natural person, entity (as such term is defined in this
subsection L) and/or fiduciary (as such term is defined in this
------------
subsection L), and their respective successors and assigns; (ii) the
------------
term "entity" means any legal entity, including any corporation,
association, joint stock company, partnership (limited, general or
limited liability), joint-venture, and limited liability company,
business trust, trust (whether revocable or irrevocable), pension or
profit sharing plan, individual retirement account, or fiduciary or
custodial arrangement; (iii) the term "fiduciary" means any person
acting in a fiduciary capacity, including in their capacity as a
trustee or a custodian; (iv) the term "affiliate" means any person
controlling, controlled by, or under common control with a party (for
purposes of the foregoing, the term "control" (including with the
correlative meanings, the terms "controlled by" and "under common
control with") means the possession directly or indirectly of the
power to direct or cause the direction of the management and policies
of a person, whether through the ownership of voting securities or by
contract or otherwise); (v) the term "subsidiary" means any entity in
which a party holds a controlling interest; (vi) the words "herein"
and "hereunder" and other words of similar report refer to this
Agreement as a whole, and not to any particular sections, subsections,
paragraph, subparagraph or other subdivision of this Agreement; (vii)
the words "including," "includes," and "include" shall be deemed to be
followed by the words "including without limitation;" (viii) the word
"or" shall not be deemed to be exclusive unless the context indicates
otherwise; and (ix) the word "all" shall be deemed to include the word
"any," and vice versa. All pronouns and any variation thereof used in
this Agreement shall be deemed to refer to the masculine, feminine, or
neuter (as the case may be), and to the singular or plural (as the
case may be), as the identity of the person or persons or the context
may require for proper interpretation of this Agreement. Any
references in this Agreement to "dollars" shall be deemed to refer to
the currency of Canada, unless such reference specifically references
a dollar-denominated currency of a country other than Canada. The
headings used in this Agreement are for convenience and reference
purposes only, and shall not be used in construing or interpreting the
scope or intent of this Agreement or any provision hereof. Each cross-
references in this Agreement shall, unless specifically directed to
another agreement or document, be construed only to refer to
provisions within this Agreement, and shall not be construed to refer
to the overall transaction or to any other agreement or document. Each
exhibit, addendum, schedule and/or attachment referenced in this
Agreement shall be construed to be incorporated into this Agreement by
such reference and made a part hereof. References to any agreements
(other than this Agreement) shall include all amendments,
modifications, supplements and/or renewals thereof. Unless the context
requires otherwise: (1) any reference herein to any federal, state,
provincial, local or foreign statutes or laws (collectively, the
"Statutes") will be deemed to include all rules and regulations
promulgated thereunder: and (2) any references herein to any Statute
and/or any specific section or provision of any such Statute are
intended to refer to such section or provision thereof as presently
enacted and as subsequently amended, succeeded, recodified or
renumbered.
-18-
15. ENFORCEMENT
A. Governing Law. This Agreement and the rights and remedies of each
-------------
party arising out of or relating to this Agreement (including
equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in accordance with the laws (without regard
to the conflicts of law principles) of the province of British
Columbia, as if this Agreement were made, and as if its obligations
were to be performed in their entirety, within the province of British
Columbia.
B. Recovery of Fees and Costs. If any party institutes, or should any
--------------------------
party otherwise become a party to, any action or proceeding based upon
or arising out of this Agreement, including the enforcement or
interpretation of this Agreement or any provision hereof, or for
damages by reason of any alleged breach of this Agreement or any
provision hereof, or for a declaration of rights in connection
herewith, or for any other relief, including equitable relief, in
connection herewith, the "prevailing party" (as such term is defined
below) in any such action or proceeding, whether or not such action or
proceeding proceeds to final judgment or determination, shall be
entitled to receive from the non-prevailing party as a cost of suit,
and not as damages, all fees, costs and expenses of enforcing any
right of the prevailing party (collectively, "fees and costs"),
including:
(1) reasonable attorneys' fees and costs and expenses;
(2) witness fees (including experts engaged by the parties, but
excluding officers, directors, employees, managers or general
partners of the parties);
(3) accountants' fees;
(4) fees of other professionals and
(5) any and all other similar fees incurred in the prosecution or
defense of the action or proceeding; including the following:
(a) postjudgment motions;
(b) contempt proceedings;
(c) garnishment, levy, and debtor and third party examinations;
(d) discovery; and
(e) bankruptcy litigation.
All of the aforesaid fees and costs shall be deemed to have accrued
upon the commencement of such action, and shall be paid whether or not
such action is prosecuted to judgment. Any judgment or order entered
in such action shall contain a specific provision providing for the
recovery of the aforesaid fees, costs and expenses incurred in
enforcing such judgment and an award of prejudgment interest from the
date
-19-
of the breach at the maximum rate of interest allowed by law. The
term "prevailing party" is defined as the party who is determined to
prevail by the court after its consideration of all damages and
equities in the action or proceeding (the court shall retain the
discretion to determine that no party is the prevailing party, in
which case no party shall be entitled to recover its fees and costs
under this subsection).
----------
16. ASSIGNMENT AND DELEGATION; SUCCESSORS AND ASSIGNS.
A. Assignment or Delegation. Except as specifically provided in this
-- ------------------------
Agreement, neither party (an "assigning party") may directly or
indirectly sell, license, transfer or assign (whether through a
merger, consolidation, conversion, sale of assets, sale or exchange of
securities, or by operation of law, or otherwise) any of such party's
rights or interests under this Agreement, or delegate any of such
party's duties or obligations under this Agreement, in whole or in
part, including to any subsidiary or to any affiliate, without the
prior written consent of the other party (a "consenting party"), which
consent may be withheld in the consenting party's sole and absolute
discretion; provided, however :
(1) Subject to prior compliance with subsection (3) and subsection (4)
------------- -------------
below, an assigning party may assign all of the rights and
interests and delegate all of the duties and obligations of the
assigning party under this Agreement in connection with a
transaction whose principal purpose is to change the State in
which the assigning party is incorporated, or to form a holding
company, or to effect a similar reorganization as to form of
entity without change of beneficial ownership, including through:
(a) a merger or consolidation or stock exchange or divisive
reorganization (i.e., spin-off, split-off or split-up) or
other reorganization with respect to the assigning party
and/or its stockholders; or
(b) the sale, transfer, exchange or other disposition by the
assigning party of its assets in a single or series of
related transactions, so long as such transferee, purchaser
or surviving person shall expressly assume such obligations
of the assigning party;
(2) Subject to subsection (3) and subsection (4) below, an assigning
------------- -------------
party may, with the prior written consent of the consenting party,
which consent the consenting party may withhold in its sole and
absolute discretion, assign all of the rights and interests and
delegate all of the duties and obligations of the assigning party
under this Agreement to any other person in connection with the
transfer or sale of the entire business of the assigning party
(other than with respect to a sale described in subsection (1)
-------------
above), or the merger or consolidation of the assigning party with
or into any other person (other than with respect to a merger or
consolidation described in subsection (1) above), so long as such
-------------
transferee, purchaser or surviving person shall expressly assume
such obligations of the assigning party;
-20-
(3) Notwithstanding anything in subsection (1) or subsection (2)
-------------- --------------
above to the contrary, no assignment or transfer under subsection
----------
(1) or subsection (2) may be effectuated unless the proposed
--- --------------
transferee or assignee first executes such agreements (including
a restated Employment Agreement) in such form as the consenting
party may deem reasonably satisfactory to:
(a) evidence the assumption by the proposed transferee or
assignee of the obligations of the assigning party; and
(b) to ensure that the consenting party continues to receive
such rights, benefits and protections (both legal and
economic) as were contemplated by the consenting party when
entering into this Agreement; and
(4) Notwithstanding anything in subsection (1) or subsection (2)
-------------- --------------
above to the contrary:
(a) any assumption by a successor or assign under subsection (1)
--------------
or subsection (2) above shall in no way release the
--------------
assigning party from any of its obligations or liabilities
under this Agreement; and
(b) and any merger, consolidation, reorganization, sale or
conveyance under subsection (1) or subsection (2) above
-------------- --------------
shall not be deemed to abrogate the rights of the consenting
party elsewhere contained in this Agreement.
(5) Any purported assignment or transfer in violation of the terms of
this subsection 16.A shall be null and void ab initio and of no
---------------
force and effect, and shall vest no rights or interests in the
purported assignee or transferee.
B. Successors and Assigns. Subject to subsection 16.A above, each and
---------------------- ---------------
every representation, warranty, covenant, condition and provision of
this Agreement as it relates to each party hereto shall be binding
upon and shall inure to the benefit of such party and his, her or its
respective successors and permitted assigns, spouses, heirs,
executors, administrators and personal and legal representatives,
including any successor (whether direct or indirect, or by merger,
consolidation, conversion, purchase of assets, purchase of securities
or otherwise).
17. MISCELLANEOUS
A. Costs and Expenses. Except as expressly set forth in this Agreement,
------------------
each party shall pay all legal and other fees, costs and expenses
incurred or to be incurred by such party in negotiating and preparing
this Agreement; in performing due diligence or retaining professional
advisors; and in complying with such party's covenants, agreements and
conditions contained herein.
-21-
B. Cooperation. Each party agrees, without further consideration, to
-----------
cooperate and diligently perform any further acts, deeds and things,
and to execute and deliver any documents that may be reasonably
necessary or otherwise reasonably required to consummate, evidence,
confirm and/or carry out the intent and provisions of this Agreement,
all without undue delay or expense.
C. Notices. Unless otherwise specifically provided in this Agreement,
-------
all notices, demands, requests, consents, approvals or other
communications (collectively and severally called "notices") required
or permitted to be given hereunder, or which are given with respect to
this Agreement, shall be in writing, and shall be given by:
(1) personal delivery (which form of notice shall be deemed to have
been given upon delivery),
(2) by telegraph or by private airborne/overnight delivery service
(which forms of notice shall be deemed to have been given upon
confirmed delivery by the delivery agency),
(3) by electronic or facsimile or telephonic transmission, provided
the receiving party has a compatible device or confirms receipt
thereof (which forms of notice shall be deemed delivered upon
confirmed transmission or confirmation of receipt), or
(4) by mailing in the Canadian or United States mail (as may be
applicable) by registered or certified mail, return receipt
requested, postage prepaid (which forms of notice shall be deemed
to have been given upon the fifth {5th} business day following
the date mailed.
Notices shall be addressed at the addresses first set forth below, or
to such other address as the party shall have specified in a writing
delivered to the other parties in accordance with this paragraph. Any
notice given to the estate of a party shall be sufficient if addressed
to the party as provided in this subsection C.
------------
If to the Company: Clean Energy Technologies, Inc.
0000 XxxXxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
If to Executive: Xxxx X. Xxxxx
_____________________________________
_____________________________________
D. Counterparts; Electronically Transmitted Documents. This Agreement may
--------------------------------------------------
be executed in counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same
instrument, binding on all parties hereto. Any signature page of this
Agreement may be detached from any counterpart of this Agreement and
reattached to any other counterpart of this Agreement identical in
form
-22-
hereto by having attached to it one or more additional signature
pages. If a copy or counterpart of this Agreement is originally
executed and such copy or counterpart is thereafter transmitted
electronically by facsimile or similar device, such facsimile document
shall for all purposes be treated as if manually signed by the party
whose facsimile signature appears.
E. Execution by All Parties Required to be Binding. This Agreement shall
-----------------------------------------------
not be construed to be an offer Agreement is fully executed and
delivered by all parties hereto pursuant to the terms of section17.D.
-----------
Until such time as all parties fully execute this Agreement, any party
who has previously executed and delivered this Agreement may revoke
such execution and delivery.
F. WHEREFORE, the parties hereto have executed this Agreement in the City
of Burnaby, Province of British Columbia, Canada, as of the date first
set forth above.
COMPANY: Clean Energy Technologies, Inc.
a Delaware Corporation
By: /s/ Xxxx X. Xxxxx
----------------------
Xxxx X. Xxxxx, Chairman
EXECUTIVE: /s/ Xxxx X. Xxxxx
---------------------------
Xxxx X. Xxxxx
-23-
