EMPLOYMENT AGREEMENT
EXHIBIT
10.1
This
Employment Agreement dated as of October 6, 2006 (“Agreement”)
is
made by and between Itec
Environmental Group, Inc.,
a
corporation duly organized and existing under the laws of the State of Delaware
(the “Company”),
and
Xxxxx
Xxxxxxxx
(“Executive”)
(referred to collectively herein as the “Parties”).
RECITALS
WHEREAS,
the
Company desires to hire Executive and Executive desires to become employed
by
the Company; and
WHEREAS,
the
Company and Executive have determined that it is in their respective best
interests to enter into this Agreement on the terms and conditions as set forth
herein;
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants and promises contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as
follows:
1. Nature
of Agreement.
Any and
all prior oral understandings, offers, and/or representations (if any) with
respect to the employment of Executive are deemed by the parties to be either
canceled and void and/or are deemed to be superseded by this final written
Agreement.
2. Employment
Terms and Duties.
2.1. Term
of Employment.
The
employment of Executive under this Agreement shall be deemed effective on or
before October 19, 2006 (the “Effective
Date”).
Executive’s employment shall be deemed to have commenced on or before November
6, 2006 and shall continue until terminated in accordance with Section 5 hereof
(the “Employment
Term”).
This
Agreement shall be deemed definitive upon the Effective Date.
2.2.
Position
and Primary Responsibility.
(a) The
Executive shall serve as Chief Operating Officer and Executive Vice President
of
Operations.
(b)
In
connection with the employment of Executive, Company agrees that, during the
Employment Term, neither the Restated Certificate of Incorporation, nor the
Bylaws, of the Company shall at any time be amended in a manner inconsistent
with the foregoing or the additional provisions of this Agreement.
2.3. Exclusivity.
Executive agrees to devote his full time, attention, energies, solely and
exclusively in the performance of his duties under the terms of this Agreement.
However, the expenditure of reasonable amounts of time for educational,
charitable, or professional
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activities
shall not be deemed a breach of this Agreement if those activities do not
materially interfere with the services required under this Agreement, and shall
not require the prior written consent of the Company’s Board of Directors. This
Agreement shall not be interpreted to prohibit Executive from making passive
personal investments or conducting private business affairs, or serving on
the
boards of directors of other companies or other entities, if those activities
do
not materially interfere with the services required under this Agreement and
do
not violate Sections 4, 8 and 10 of this Agreement.
3. Compensation.
3.1. Base
Salary.
In
consideration for the services rendered to the Company hereunder by Executive,
the Company shall, during his employment, pay Executive a salary at the annual
rate of Three Hundred Thousand Dollars ($300,000.00) (as may be adjusted
pursuant to this Section 3.1 and/or Section 3.5, the “Base
Salary”),
less
statutory deductions and withholdings, payable to Executive on a bi-monthly
basis. In the event that the Company hires an executive, for any position other
than the Chief Executive Officer position, with an annual base salary that
exceeds the Base Salary (the “New
Executive Salary”),
then
Executive’s Base Salary shall be increased to a Base Salary equal to a salary no
less than five percent (5%) more than the New Executive Salary. In no event
shall Executive’s Base Salary be (i) decreased pursuant to the preceding
sentence; or (ii) increased to a total dollar amount greater than the Chief
Executive Officer’s base salary.
3.2. Payment.
All
compensation payable to Executive hereunder shall be subject to all applicable
state and federal employment law(s); it being understood that Executive shall
be
responsible for the payment of all taxes resulting from a determination that
any
portion of the compensation and/or benefits paid/received hereunder is a taxable
event to Executive; it being further understood that Executive shall hold the
Company harmless from any governmental claim(s) for Executive’s personal tax
liabilities, including interest or penalties, arising from any failure by
Executive to pay his individual taxes when due.
3.3. Reimbursement
of Expenses.
During
the Employment Term, the Company shall reimburse Executive for all reasonable
and necessary expenses incurred by Executive while performing his duties under
this Agreement in accordance with the Company’s customary practices for its
executive employees, subject to provision by Executive of documentation
reasonably satisfactory to the Board of Directors.
3.4. Cash
Bonuses.
Executive shall be eligible for a bonus entitlement during each calendar year
(or portion thereof) of the Employment Term of no less than fifty percent (50%)
but up to one hundred percent (100%) of his Base Salary for such year (or
portion thereof). Within thirty (30) days of the Effective Date, the Company
and
Executive shall concur, within their respective reasonable discretion, on the
criteria and procedures applicable to establishment of Executive’s entitlement
to such amount for the then current calendar year; and, thereafter, within
thirty (30) days prior to the commencement of each calendar year of the
Employment Term, the Company and Executive shall concur, within their respective
reasonable discretion, on the criteria and procedures applicable to
establishment of Executive’s entitlement to such amount for the ensuing calendar
year. Such criteria shall include, without limitation: (i) specified
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revenue
targets for the Company during the applicable period; (ii) specified EBITDA
targets for the Company during the applicable period (as defined pursuant to
consensus between the Company and Executive); and (iii) such additional
specified targets as the Company and Executive mutually determine. Any such
cash
bonuses shall be paid by the Company no later than March 15th
of the
taxable year commencing after the year in which the Executive’s right to such
payment becomes vested.
3.5. Compensation
Review.
It is
understood and agreed that Executive’s performance will be reviewed by the
Company’s Board of Directors at the end of each calendar year during which this
Agreement is in force for the purpose of determining whether or not Executive’s
Base Salary and/or cash bonuses should be increased; it being further understood
that the decision to increase Executive’s compensation shall be at the sole and
exclusive option of the Board of Directors.
3.6. Equity
Awards.
(a) The
Executive shall be entitled to a combination of (x) restricted grants of common
stock, $0.001 par value (“Common
Stock”),
of
the Company and (y) grants of “incentive stock options” (as defined under
Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)),
exercisable over a period of ten (10) years after grant with respect to shares
of Common Stock, in the aggregate covering five percent (5%) of the Common
Stock
Equivalents (as defined below) (the “Executive
Shares”)
(such
number of shares appropriately adjusted for any subsequent stock dividends,
stock splits, combinations, reclassifications and the like), as required by
this
Section 3.6 and subject to adjustment as set forth in Section 3.6(d) below
on
the first anniversary of the Effective Date (the “True
Up Date”).
For
purposes hereof, “Common
Stock Equivalents”
shall
mean the number of shares of Common Stock then outstanding, plus the total
maximum aggregate number of shares that are issuable pursuant to any rights
to
subscribe for or purchase, and any options or warrants for the purchase of,
shares of Common Stock, plus the total maximum aggregate number of shares that
are issuable pursuant to any stock or securities convertible into or
exchangeable for shares of Common Stock and any options or warrants therefor
(all of the foregoing calculated after giving effect to the operation of any
and
all provisions designed to protect against dilution contained in securities
theretofore issued and other obligations theretofore entered into by the Company
directly or indirectly triggered as a result of consummation of the transactions
contemplated hereunder or any other event or circumstance).
(b) The
Company, at its expense, has engaged an independent appraiser to determine
the
fair market value per share (the “Appraised
Value”)
of
Common Stock issuable to Executive under this Section 3.6, at the respective
dates of issuance of the Restricted Shares, the Initial Options and the
Additional Options (as those terms are defined below). As soon as practicable
after determination of the initial Appraised Value, but in any event within
thirty (30) days of the date of this Agreement (such date of issuance, the
“Original
Issue Date”),
the
Company shall issue and deliver to Executive the following equity
awards:
(x) a
number
of shares of Common Stock (the “Restricted
Shares”),
as
determined by Executive with an aggregate Appraised Value of up to
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___________($___________),
such shares to be subject to repurchase by the Company at a purchase price
per
share equal to the Taxable Amount Per Share (as defined below). “Taxable
Amount Per Share”
shall
mean the quotient obtained by dividing (i) the product of (1) the aggregate
amount of income tax that Executive realizes pursuant to applicable federal,
state and local tax laws as a result of receipt of the Restricted Shares
multiplied by (2) Executive¹s marginal tax rate with respect to such income
under applicable federal, state and local tax laws, divided by (ii) the total
number of Restricted Shares issued to Executive (as appropriately adjusted
to
reflect stock splits, stock dividends and the like);
(y) if
the
Restricted Shares do not equal five percent (5%) of the Common Stock Equivalents
outstanding on the Original Issue Date, then the Company shall issue incentive
stock options (the “Initial
Options”)
exercisable, over a period of ten (10) years after grant at a price per share
equal to the Appraised Value per share of Common Stock on the date of grant,
determined by such appraiser as aforesaid, exercisable for that number of shares
of Common Stock (the “Initial
Option Shares”)
equal
to the difference obtained by subtracting (i) the number of Restricted Shares
from (ii) that number of shares equal to five percent (5%) of the Common Stock
Equivalents outstanding on the Original Issue Date. The Initial Options shall
also be subject to such additional terms and conditions (without, however,
any
additional conditions to exercisability as aforesaid) as shall be mutually
acceptable to the Company and Executive, in their respective reasonable
discretion; and
(z) the
Restricted Shares and Initial Options (if any) shall vest on the following
schedule (i) the number of Restricted Shares equal to two and one half percent
(2.5%) of the total number of Common Stock Equivalents outstanding on the
Original Issue Date shall vest immediately upon issuance (the “Initially
Vested Shares”);
(ii)
the number of Restricted Shares (or all of the remaining unvested Restricted
Shares that Executive then holds if such number is less than one and one quarter
percent (1.25%) of the total number of Common Stock Equivalents outstanding
on
such date) plus Initial Options (if the remaining unvested Restricted Shares
that Executive then holds is less than one and one quarter percent (1.25%)
of
the total number of Common Stock Equivalents outstanding on such date), in
the
aggregate, equaling one and one quarter percent (1.25%) of the total number
of
Common Stock Equivalents outstanding on and as of the True Up Date shall vest
on
such date and (iii) any remaining unvested Restricted Shares and Initial Options
as of the True Up Date shall vest on the second anniversary of the Effective
Date (provided that all of the unvested Restricted Shares and Initial Options
shall become fully vested upon a “Change-of-Control” (as defined
below).
(c) The
Restricted Shares other than the Initially Vested Shares shall be subject to
an
irrevocable proxy exercisable by the Board of Directors of the Company (with
Executive abstaining) until the True Up Date.
(d) Subject
to Section 3.6(b) above, on the True Up Date the total number of Executive
Shares shall be adjusted pursuant to this Section 3.6(d) (the “True
Up”)
so
that after giving effect to the True Up the Executive Shares shall represent
five percent (5%) of the Common Stock Equivalents outstanding on the True Up
Date.
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(x)
In
the
event that Executive is entitled to receive additional Executive Shares pursuant
to the True Up, the Company shall grant Executive additional incentive stock
options (the “Additional
Options”)
exercisable, over a period of ten (10) years after grant at a price per share
equal to the fair market value per share of Common Stock on the date of grant
determined by the appraiser as aforesaid, with respect to a number of shares
of
Common Stock (the “Additional
Option Shares”)
equal
to the difference, if any, obtained by subtracting (i) the sum of the number
of
Restricted Shares plus the Initial Option Shares from (ii) a number of shares
that equals five percent (5%) of the Common Stock Equivalents outstanding on
the
True Up Date. The Additional Options shall vest and become exercisable on a
monthly basis such that the Additional Options shall be fully vested on the
second anniversary of the Effective Date (provided that all such options shall
become immediately exercisable upon a Change-of Control), such options to be
subject to such additional terms and conditions as heretofore determined with
respect to the Initial Options, applied mutatis mutandis.
(y) In
the
event that number of Executive Shares are to be reduced pursuant to the True
Up,
Executive shall forfeit Initial Options and/or Restricted Shares representing
the right to purchase the difference obtained from subtracting (i) a number
of
shares that equals five percent (5%) of the Common Stock Equivalents outstanding
on the True Up Date (ii) the sum of the number of Restricted Shares plus the
Initial Option Shares. In the event Executive must forfeit Initial Options
or
Restricted Shares pursuant to clause (c) or (d) of this Section 3.6, Executive
shall first forfeit unexercised Initial Options (pro rata across vested and
unvested Initial Options), then, to the extent additional shares must be
forfeited by the Executive to reach the applicable percentage, the Company
shall
have the right to repurchase from Executive any shares issued upon exercise
of
the Initial Options at a purchase price equal to the exercise price paid by
Executive or Restricted Shares at the Taxable Amount Per Share, as applicable,
and the Executive shall forfeit, waive or forego any claim of right, title
or
interest to such shares.
(e) The
Company shall cooperate with the appraiser selected hereunder in all reasonable
respects and furnish to such appraiser all information and data reasonably
requested thereby. The Company shall further cooperate with Executive in the
making by Executive of a timely election under Section 83(b) of the Code with
respect to the Restricted Shares. Executive shall submit a copy to the Company
of any such election if made.
(f) On
or
prior to the first anniversary of the date hereof (or as soon as reasonably
practicable following a termination for Good Reason or Without Cause), the
Company shall, at its expense, register with the Securities and Exchange
Commission pursuant to one or more effective registration statements under
the
Securities Act of 1933, as amended, in the manner prescribed by Executive,
any
and all shares now owned or hereafter acquired by Executive (the “Registrable
Securities”),
including all Restricted Shares, Initial Option Shares, Additional Option
Shares, and shall maintain the effectiveness and currency of each such
registration statement, including any related prospectus until the resale of
such shares by Executive or any successor thereof; and shall take all such
further action (including, without limitation, any registration of such shares
under applicable state securities laws and the listing of
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such
shares on any and all trading markets or stock exchanges as the Company¹s Common
Shares may trade from time to time) as shall permit the resale of such shares,
or any portion thereof, as aforesaid. The Company shall from time to time
furnish to Executive sufficient copies of any such prospectus, and any
supplements thereto, so as to permit the resale of such shares, or any portion
thereof, in the manner prescribed by Executive. In addition, prior to the grant
of the Initial Options, the Company shall enter into an additional agreement
with Executive extending to Executive incidental registration rights covering
the resale of the Registrable Securities on terms no less favorable to Executive
than have then been extended to any other stockholder of the Company. The
Company shall pay the costs and expenses incurred by Executive in connection
with any such registration, including the reasonable legal fees and expenses
that Executive may incur in connection therewith. The obligations of the Company
pursuant to this Section 3.6(f) are referred to herein as the “Registration
Obligations.”(g)
On
or prior to the True Up Date, the Company and Executive shall have concurred,
in
their respective reasonable discretion, on the terms and conditions of a
long-term equity incentive award program pursuant to which Executive and the
other members of executive management of the Company shall be entitled to grants
of shares of Common Stock based upon achievement of specified performance
objectives.
(h)
Prior
to
the issuance of the Executive Shares, the Company shall adopt a new equity
incentive plan (the “Equity
Plan”),
the
terms and scope of which shall be approved by the shareholders of the Company
and sufficient to provide for the issuance to the Executive Shares, the
additional equity awards contemplated by Schedule
C
hereto
and the Additional Options.
(i) The
Restricted Shares shall be issued pursuant to a Restricted Stock Agreement,
a
form of which is attached hereto as Exhibit
A.
3.7 Relocation
Expenses. In
connection with the employment of Executive, the Company shall provide
relocation expenses in the amount of One Hundred Thousand Dollars $100,000
(the
“Relocation
Expenses”)
in
connection with Executive’s move to a new permanent residence. The Relocation
Expenses shall be paid to Executive on June ___, 2007. Executive shall only
receive Relocation Expenses upon completion of Executive’s relocation to a new
permanent residence.
(a) Executive
may, at his discretion, elect to convert, via written notice to the Company
within thirty (30) days of the Effective Date, the full amount of the Relocation
Expenses into six (6) Units, as defined in and pursuant to the terms of the
Company's 2006 Private Placement Memorandum (attached hereto as Exhibit
B).
Each
Unit
shall consist of (a) a ten percent (10%) convertible debenture in the initial
principal amount of Twenty-Five Thousand Dollars ($25,000) and (b) a warrant
to
purchase seventy five thousand (75,000) shares of restricted common stock of
the
Company at an exercise price of Six Cents ($0.06) per share.
(b) In
the
event that Executive is terminated pursuant to Section 5 prior to the first
anniversary of the Effective Date, the Relocation Expenses or the conversion
of
the Relocation Expenses shall be subject to forfeiture.
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3.8 Travel
Expenses. In
connection with the employment of Executive, the Company shall provide travel
expenses in the amount of Two Thousand Dollars ($2,000) (the “Travel
Expenses”)
every
month for Executive’s costs of traveling from Denver, Colorado to the Company’s
offices in Riverbank, California through the duration of the Employment Term.
3.9 Temporary
Housing. The
Company will employ its best efforts to locate and procure temporary housing
(the “Temporary
Housing”),
satisfactory to both the Company and the Executive, at no cost to the Executive
for the exclusive use of the Executive while working at the Company’s Riverbank,
California offices. The Temporary Housing will be made available to the
Executive no later than thirty (30) days beyond the effective date of the
Agreement and will be provided through the duration of the Employment Term.
4. Benefits.
Within
sixty (60) days of the date of this Agreement, the Company and Executive shall
determine, in their respective reasonable discretion, the terms of the
“Welfare
Benefits”
(as
hereinafter defined) to which Executive shall be entitled. For purposes hereof,
“Welfare
Benefits”
shall
mean medical, prescription and dental plans, in no event less favorable than
those applicable to any other executive of the Company, and in all events
extending to (x) paid vacation per annum equal to four (4) weeks (accruing
ratably each year) and eleven (11) paid holidays and (y) a non-accountable
monthly allowance of Fifteen Hundred Dollars ($1,500) (the “Monthly
Allowance”).
5. Termination.
Executive’s employment and this Agreement (except as otherwise provided
hereunder) shall terminate upon the occurrence of any of the following, at
the
time set forth therefor (the “Termination
Date”):
5.1. Death
or Disability.
Immediately upon the death of Executive or after six (6) months of Executive’s
inability to perform the essential functions of his duties, with or without
reasonable accommodation (defined under applicable law), due to a mental or
physical illness or incapacity (“Disability”)
(termination pursuant to this Section 5.1 being referred to herein as
termination for “Death
or Disability”).
Upon
the Death of Executive, Executive’s heirs or assigns shall be entitled to (i)
fifty percent (50%) of the Base Salary and (ii) on pro-rated amount of any
and
all outstanding Executive Shares that Executive is entitled to receive from
the
Effective Date to the date of Death (the “Earnings
Entitlement”).
In
the event Executive commits suicide, Executive’s heirs or assigns shall not be
entitled to the Earnings Entitlement.
5.2. Termination
for Good Reason.
Immediately following notice of termination for “Good
Reason”
(as
defined below), specifying such Good Reason, given by Executive (termination
pursuant to this Section 5.2 being referred to as termination for “Good
Reason”).
As
used herein, “Good Reason” means (i) any reduction in Base Salary or other
benefits specified hereunder; (ii) a substantial diminution or dilution of
the
responsibilities, functions and duties attached to the position with the Company
held by Executive; (iii) the Company fails to provide any of the compensation
or
other benefits required hereunder; (iv) any representation made by the Company
herein is materially untrue or the Company otherwise is in material breach
of
this Agreement; or (v) the Company and Executive fail to effectuate the matters
contemplated by Sections 3.4, 3.6 or 4 within the respective periods
contemplated thereunder.
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5.3. Voluntary
Termination.
Thirty
(30) days following Executive’s written notice to the Company of voluntary
termination of employment other than for Good Reason; provided, however, that
the Company may suspend, with no reduction in pay or benefits (including,
without limitation, bonuses, options and vesting), Executive from his duties
as
set forth herein (including, without limitation, Executive’s position as a
representative and agent of the Company) until the 30th
day
following Notice of Voluntary termination) (termination pursuant to this Section
5.3 being referred to herein as “Voluntary”
termination).
5.4. Termination
For Cause.
Immediately following notice of termination for “Cause”
(as
defined below), specifying such Cause, given by the Company (termination
pursuant to this Section 6.4 being referred to herein as termination for
“Cause”).
As
used herein, “Cause”
means
(i) termination based on Executive’s conviction or plea of “guilty” or “no
contest” to any crime constituting a felony in the jurisdiction in which the
crime constituting a felony is committed, or any other conviction by a court
of
competent jurisdiction for a violation of criminal law involving dishonesty
that
materially injures the Company (whether or not a felony); (ii) Executive’s
substance abuse that in any manner that materially interferes with the
performance of his duties; (iii) Executive’s failure to perform in any material
respect the responsibilities, functions and duties attached to his position
with
the Company or a refusal to perform his duties at all or in a reasonably
acceptable manner; and (iv) Executive’s material breach of this Agreement. The
Board of Directors shall provide Executive thirty (30) days written notice
of
any determination to terminate Executive for Cause and shall afforded Executive
the opportunity to be heard by the full Board of Directors. Notwithstanding
any
other provision in this Agreement, if Executive is terminated pursuant to
subsections (ii), (iii) or (iv) of this Section 6.4 for poor job performance,
excluding refusal to perform his duties, Executive shall have sixty (60) days
to
cure the behavior upon which the threatened termination is based.
5.5. Termination
Without Cause.
Notwithstanding any other provisions contained herein, the Company may terminate
Executive’s employment thirty (30) days following notice of termination without
Cause given by the Company; provided, however, that during any such thirty
(30)
day notice period, the Company may suspend, with no reduction in pay or benefits
(including, without limitation, bonuses, options and vesting), Executive from
his duties as set forth herein (including, without limitation, Executive’s
position as a representative and agent of the Company) (termination pursuant
to
this Section 5.5 being referred to herein as termination “Without
Cause”).
5.6. Other
Remedies.
Termination pursuant to Section 5.2 above shall be in addition to and without
prejudice to any other right or remedy to which Executive may be entitled at
law, in equity, or under this Agreement. Termination pursuant to Section 5.4
above shall be in addition to and without prejudice to any other right or remedy
to which the Company may be entitled at law, in equity, or under this
Agreement.
5.7. Salary
Continuation During Disability.
Notwithstanding Section 5.1 above, if Executive suffers any physical or mental
disability that would prevent the performance of his essential job duties,
the
Company agrees to pay Executive one hundred percent (100%) of Executive’s salary
and other benefits (including, without limitation, bonuses, options and
vesting), payable in the same manner as provided for the payment of salary
and
benefits
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(including,
without limitation, bonuses, options and vesting) herein, for the duration
of
the disability, or six (6) months, whichever is less.
6. Severance
and Termination.
6.1. Voluntary
Termination,
Termination
for Cause, Termination for Death or Disability.
In the
case of a termination of Executive’s employment hereunder for Death in
accordance with Section 5.1 above, or Executive’s Voluntary termination of
employment hereunder in accordance with Section 5.3 above, or a termination
of
Executive’s employment hereunder for Cause in accordance with Section 5.4 above,
(i) Executive shall not be entitled to receive payment of, and the Company
shall
have no obligation to pay, any severance or similar compensation attributable
to
such termination, other than the Earnings Entitlement earned but unpaid, accrued
but unused vacation to the extent required by the Company’s policies and any
non-reimbursed expenses pursuant to Section 4 hereof incurred by Executive
as of
the termination date, and (ii) the Company’s obligations under this Agreement
shall immediately cease except (x) as required by law and (y) as provided in
Section 15.1 below. Provided further, in the event of a termination of
Executive’s employment hereunder for Cause in accordance with Section 5.4 above,
Executive shall tender back to the Company all unexercised options granted
to
Executive by the Company in connection with Executive’s employment.
6.2. Termination
for Good Reason, Termination Without Cause.
(a) In
the
case of a termination of Executive’s employment hereunder for Good Reason in
accordance with Section 5.2 above, or Without Cause in accordance with Section
6.4 above, the Company shall, within thirty (30) days of the Termination Date,
pay Executive, in a lump-sum, cash in the amount (the “Severance
Payment”)
of the
sum of fifty percent (50%) of his annual Base Salary; provided, however, that,
in the event such termination of Executive’s employment follows a
“Change-of-Control” (as defined below), the Severance Payment shall be an amount
equal to the sum of one hundred and fifty percent (150%) of his annual Base
Salary. As used herein, “Change-of-Control”
means:
(i) the
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) under the Exchange Act) of beneficial ownership (within
the
meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of the combined voting power of the outstanding voting securities
of the Company entitled to vote generally in the election of directors;
provided, however, that the following acquisitions shall not constitute a
Change-of-Control: (w) any original issuance by the Company, (x) any acquisition
by the Company after which the holders of the Company’s voting securities
entitled to vote generally in the election of directors of the Company (the
“Voting
Stock”)
outstanding immediately prior to consummation of such acquisition continue
to
hold at least fifty percent (50%) of the Company’s Voting Stock after such
acquisition, (y) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company, or (z) any acquisition by any
corporation pursuant to a transaction which complies with clauses (w), (x)
and
(y) immediately preceding; or
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(ii) individuals
who, as of the date hereof, constitute the Board of Directors of the Company
(the “Incumbent
Board”)
cease
for any reason to constitute at least a majority of the Board of Directors
of
the Company unless they are replaced with a slate nominated by at least a
majority of the Incumbent Board and further provided that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company's stockholders, was approved by a vote of at least
a
majority of the directors then comprising the Incumbent Board shall, for
purposes of this sub-paragraph (ii), be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any
such
individual whose initial assumption of office occurs as a result of an actual
or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of an individual, entity or group other than the Board of Directors
of
the Company acting by at least a majority thereof; or
(iii) consummation
of a reorganization, merger or consolidation or sale or disposition of all
or
substantially all of the assets of the Company (a “Business
Combination”),
in
each case, unless, following such transaction: (x) all or substantially all
of
the individuals and entities who were the beneficial owners, respectively,
of
the outstanding voting securities of the Company entitled to vote generally
in
the election of directors immediately prior to such Business Combination
beneficially own, directly or indirectly, more than fifty percent (50%) (20%
in
the case of any Business Combination being proposed and implemented by at least
a majority of the Incumbent Board) of the Voting Stock of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or
more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the outstanding Voting Stock,
(y) no individual, entity or group beneficially owns, directly or indirectly,
twenty percent (20%) or more of the Voting Stock of such corporation except
to
the extent that such ownership existed prior to the Business Combination, and
(z) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board, or were nominated by at least a majority of the members of
the
Incumbent Board, at the time of the execution of the initial agreement, or
by
the action of the Board providing for such Business Combination; or
(iv) approval
by the stockholders of the Company of a complete liquidation or dissolution
of
the Company.
(b) In
addition, in the event Paragraph (a) immediately preceding applies, for six
months after the Termination Date (or such longer period as may be provided
by
the terms of the appropriate plan, program, practice or policy), the Company
shall continue Welfare Benefits to Executive and/or his family at least equal
to
those which would have been provided if Executive’s employment had not been
terminated (provided, however, that such period shall be eighteen months in
the
event such Paragraph (a) applies following a Change-of-Control).
-10-
Notwithstanding
the foregoing, in the event Executive is a “specified employee” as defined in
Section 409A(a)(2)(B)(i) of the Code, the payment of the Severance Payment
under
this Section 6.2 shall be made no earlier than six (6) months after the
Termination Date.
7. Severance
Conditioned on Release of Claims.
The
Company’s obligation to provide Executive with the Severance Payments set forth
in Section 6.2 is contingent upon Executive’s execution of a release of claims
in favor of the Company. Any release of claims shall not include any
independently verifiable criminal acts or civil fraud committed by either the
Company and/or its officers or directors.
8. Non-competition,
Non-solicitation.
8.1 Non-Competition.
Executive agrees that he shall not, during the Employment Term and for twelve
(12) months subsequent thereto, without both the disclosure to and the written
approval of the Board of Directors of the Company, directly or indirectly,
engage or be interested in (whether as a principal, lender, employee, officer,
director, partner, venturer, consultant or otherwise) any business(es) that
is
competitive with the business being conducted by the Company through the
Termination Date, without the express written approval of the Board of
Directors.
8.2 Non-Solicitation.
Executive agrees that he will not, without the prior written consent of the
Company’s Board of Directors, for a period of twelve (12) months after the
Termination Date, directly or indirectly disturb, entice, or in any other manner
persuade, any employee(s) or consultant(s) of the Company to discontinue that
person’s or firm’s relationship with the Company if the employee(s) and/or
consultant(s) were employed by the Company at any time during the twelve (12)
month period prior to the Termination Date.
8.3 Customers.
Executive agrees that he will not, for a period of twelve (12) months following
the Termination Date, contact or solicit orders, sales or business from any
customer of the Company so as to induce or attempt to induce such customer
to
cease doing business with the Company.
8.4 Public
Investments.
The
provisions of Section 8.1 through 8.3, inclusive, shall not be deemed breached
by reason of Executive’s ownership of five percent (5%) or less of the equities
of any entity with a class of publicly traded securities.
9. Inventions,
Discoveries and Improvements.
Any and
all invention(s), discovery(ies) and improvement(s), whether protectible or
unprotectible by patent, trademark, copyright or trade secret, made, devised,
or
discovered by Executive, whether by Executive alone or jointly with others,
from
the time of entering the Company’s employ until the earlier of the Termination
Date of this Agreement or the actual date of termination of employment, relating
or pertaining in any way to Executive’s employment with the Company, shall be
promptly disclosed in writing to the Board of Directors of the Company, and
become and remain the sole and exclusive property of the Company. Executive
agrees to execute any assignments to the Company, or its nominee, of Executive’s
entire right, title, and interest in and to any such inventions, discoveries
and
improvements and to execute any other instruments and documents requisite or
desirable in
-11-
applying
for and obtaining patents, trademarks or copyrights at the cost of the Company,
with respect thereto in the United States and in all foreign countries, that
may
be requested by the Company. Executive further agrees, whether or not then
in
the employment of the Company, to cooperate to the fullest extent and in the
manner that may be reasonably requested by the Company in the prosecution and/or
defense of any suit(s) involving claim(s) of infringement and/or
misappropriation of proprietary rights relevant to patent(s), trademark(s),
copyright(s), trade secret(s), processes, and/or discoveries involving the
Company’s product(s); it being understood that all reasonable costs and expenses
thereof shall be paid by the Company. The Company shall have the sole right
to
determine the treatment of disclosures received from Executive, including the
right to keep the same as a trade secret, to use and disclose the same without
a
prior patent application, to file and prosecute United States and foreign patent
application(s) thereon, or to follow any other procedure which the Company
may
deem appropriate. In accordance with this provision, Executive understands
and
is hereby further notified that this Agreement does not apply to an invention
which the employee developed entirely on his own time without using the
Company’s equipment, supplies, facilities, or trade secret
information.
10. Confidential
Information and Trade Secrets.
10.1
Non-Disclosure.
Executive hereby acknowledges that all confidential or proprietary trade,
engineering, production, and technical data, information or “know-how”
including, but not limited to, customer lists, sales and marketing techniques,
vendor names, purchasing information, processes, methods, investigations, ideas,
equipment, tools, programs, costs, product profitability, plans, specifications,
patent application(s), drawings, blueprints, sketches, layouts, formulas,
inventions, processes and data, whether or not reduced to writing, used in
the
development and manufacture of the Company’s products and/or the performance of
services, or in research or development, are the exclusive property of the
Company, and shall be at all times, whether after the Effective Date or after
the Termination Date, be kept strictly confidential and secret by Executive;
it
being understood, however, that information which was publicly known, or which
is in the public domain, or which is generally known, shall not be subject
to
this restriction (and Executive’s duties of non-disclosure shall further not
extend to (i) disclosures to other employees, executives, officers and/or
directors of the Company, or as may be required or appropriate in connection
with performance hereunder, and (ii) the requirements of legal process, subpoena
or other court order).
10.2 Return
of Property.
Executive agrees not to remove from the Company’s office or copy any of the
Company’s confidential information, trade secrets, books, records, documents or
customer or supplier lists, or any copies of such documents, without the express
written permission of the Board of Directors of the Company or as may be
required or appropriate in connection with performance hereunder. Executive
agrees, at the Termination Date, to return any property belonging to the
Company, including, but not limited to, any and all records, notes, drawings,
specifications, programs, data and other materials (or copies thereof)
pertaining to the Company’s businesses or its product(s) and service(s),
generated or received by Executive during the course of his employment with
the
Company.
-12-
11.
Information
of Others.
Executive agrees that the Company does not desire to acquire from Executive
any
secret or confidential information or “know-how” of others. Executive,
therefore, specifically represents to the Company that he will not bring to
the
Company any materials, documents, or writings containing any such information.
Executive represents and warrants that from the Effective Date of this Agreement
he is free to divulge to the Company, without any obligation to, or violation
of, the rights of others, information, practices and/or techniques which
Executive will describe, demonstrate or divulge or in any other manner make
known to the Company during Executive’s performance of services. Executive also
agrees to indemnify and hold the Company harmless from and against any and
all
liabilities, losses, costs, expenses, damages, claims or demands for any
violation of the rights of others as it relates to Executive’s misappropriation
of secrets, confidential information, or “know-how” of others. Such
indemnification will not apply in the event action by the Company is
unsuccessful.
12.
Indemnification.
The
Company shall indemnify Executive in his capacity as director, officer and
employee of the Company upon terms no less favorable to him than are contained
under Article 7 of the Restated Certificate of Incorporation of the Company,
and
Article VI of the Bylaws of the Company, as in effect on the date hereof. The
Company shall extend to Executive the benefits of directors’ and officers’
liability insurance upon terms no less favorable than are extended to any other
director or officer of the Company. Upon execution, the Company and Executive
shall enter into an Indemnification Agreement in form and substance acceptable
to Executive providing for the indemnification contemplated hereby.
13.
Notice.
All
notices and other communications under this Agreement shall be in writing and
shall be delivered personally or mailed by registered or certified mail, return
receipt requested, and shall be deemed given when so delivered or mailed, to
a
party at his or its address as follows (or at such other address as a party
may
designate by notice given hereunder):
If
to
Executive:
Xxxxx
Xxxxxxxx
_______________________
_______________________
With
a
copy to:
_______________________
_______________________
_______________________
_______________________
If
to the
Company:
Itec
Environmental Group, Inc.
X.X.
Xxx
000
Xxxxxxxxx,
XX 00000
With
a
copy to:
Xxxxx
X.
Xxxx
The
Xxxx
Law Group, PLLC
000
Xxxxx
Xx., Xxxxx 0000
Xxxxxxx,
XX 00000
-13-
14.
Suit,
Jurisdiction.
Any
controversy between the Company and Executive arising out of or relating to
any
of the terms, provisions or conditions of this Agreement shall be submitted
to
arbitration in accordance with the American Arbitration Association’s National
Arbitration Rules for the Resolution of Employment Disputes. On the written
request of either party for arbitration of such a claim pursuant to this
paragraph, the Company and Executive shall both be deemed to have waived the
right to litigate the claim in any federal or state court. To the extent that
any claim or controversy arising out of this Agreement cannot be submitted
to
arbitration as set forth above, each party hereby agrees that any suit, action
or proceeding with respect to this Agreement, and any transactions relating
hereto, may be brought in the State of California, County of San Francisco,
and
each of the parties hereby irrevocably consents and submits to the jurisdiction
of such Court(s) for the purpose of any such suit, action or proceeding. Each
of
the parties hereby waives and agrees not to assert, by way of motion, as a
defense or otherwise, in any such suit, action or proceeding; any claim that
it
(he) is not personally subject to the jurisdiction of the above-named Court(s);
and, to the extent permitted by applicable law, any claim that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper or that this Agreement or any
replacements hereof or thereof may not be enforced in or by such Court(s).
The
Company shall pay any and all costs associated with arbitration or court
adjudication.
15.
Miscellaneous.
15.1 Post
Termination Obligations.
Notwithstanding the termination of Executive’s employment hereunder, the
provision(s) of Section(s) “3.6(e),” “5,” “6,” “7,” “9,” “10,” “12” and “14”
shall survive the Termination Date.
15.2 Assignment.
This
Agreement shall be assigned to and inure to the benefit of, and be binding
upon,
any successor to substantially all of the assets and business of the Company
as
a going concern, whether by merger, consolidation, liquidation or sale of
substantially all of the assets of the Company or otherwise. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement
in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place; and, as used in this
Agreement, “Company”
shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement
by
operation of law, or otherwise; provided that for purposes of Section 8 hereof,
the term “Company” shall mean the Company as hereinbefore defined and any such
transaction in which this Agreement is assigned to a successor may not expand
or
enlarge the scope of restrictions applicable to Executive pursuant to Section
9
hereof. Executive understands and agrees, however, that this Agreement is
exclusive and personal to him only, and, as such, he will neither assign nor
subcontract all or part of his undertaking(s) or obligation(s) under the terms
of this Agreement.
15.3 Severability.
In the
event that any provision of this Agreement shall be determined to be
unenforceable or otherwise invalid, the balance of the provision(s) shall be
deemed to be enforceable and valid; it being understood that all provision(s)
of
this Agreement
-14-
are
deemed to be severable, so that unenforceability or invalidity of any single
provision will not affect the remaining provision(s).
15.4 Headings.
The
Section(s) and paragraph heading(s) in this Agreement are deemed to be for
convenience only, and shall not be deemed to alter or affect any provision
herein.
15.5 Interpretation
of Agreement.
This
Agreement shall be interpreted in accordance plain meaning of its terms and
under the laws of the State of California.
15.6 Variation.
Subject
to Section 15.8, any changes in the Sections relating to salary, bonus, or
other
material condition(s) after the Effective Date of this Agreement shall not
be
deemed to constitute a new Agreement. All unchanged terms are to remain in
force
and effect.
15.7 Collateral
Documents.
Each
party hereto shall make, execute and deliver such other instrument(s) or
document(s) as may be reasonably required in order to effectuate the purposes
of
this Agreement.
15.8 Non-Impairment.
This
Agreement may not be amended or supplemented at any time unless reduced to
a
writing executed by each party hereto. No amendment, supplement or termination
of this Agreement shall affect or impair any of the rights or obligations which
may have matured thereunder.
15.9 Execution.
This
Agreement may be executed in one or more counterpart(s), and each executed
counterpart(s) shall be considered by the parties as an original.
15.10 Legal
Counsel.
Executive represents to the Company that he has retained legal counsel of his
own choosing, and was given sufficient opportunity to obtain legal counsel
prior
to executing this Agreement. Executive also represents that he has read each
provision of this Agreement and understands its meaning.
15.11 Transition.
In the
event that Executive’s employment with the Company terminates, Executive shall,
through the last day of employment, and at the Company’s request, use
Executive’s reasonable efforts (at the Company’s expense) to assist the Company
in transitioning Executive’s duties and responsibility responsibilities to
Executive’s successor and maintaining the Company’s professional relationship
with all customers, suppliers, etc. Without limiting the generality of the
foregoing, Executive shall cooperate and assist the Company, at the Company’s
direction and instruction, during the transition period between any receipt
of
or giving of notice of the termination of employment and the final day of
employment.
15.12 Section
409A Matters.
It is
the intention of the parties that no payment or entitlement pursuant to this
Agreement will give rise to any adverse tax consequences to the Executive under
26 U.S.C. § 409A (“409A”).
The
Agreement shall be interpreted to that end and, consistent with that objective
and notwithstanding any provision herein to the contrary, the Company shall
indemnify Executive from any adverse tax consequences, penalties and/or interest
thereon that may arise under 409A, and the Company may unilaterally take any
action it
-15-
deems
necessary or desirable to amend any provision herein to avoid the application
of
409A if such action will only benefit the Executive. Should either party
determine that there is a reasonable possibility that the text of this Agreement
could give rise to such adverse tax consequences, the parties agree to negotiate
in good faith to amend the Agreement to obviate the possibility of such
consequences.
If,
at
any time, the Company (or its direct or indirect parent) has a class of stock
that is publicly traded on an established securities market or otherwise, the
Company shall from time to time compile a list of “Specified Employees” as
defined in, and pursuant to, Prop. Reg. § 1.409A-1(i) or any successor
regulation. Notwithstanding any other provision herein, if the Executive is
a
Specified Employee on the date of his termination of employment, no payment
of
compensation under this Agreement shall be made to the Executive during the
period lasting six months from the date of his termination of employment unless
the Executive determines that there is no reasonable basis for believing that
making such payment would cause the Executive to suffer any adverse tax
consequences pursuant to 409A. If any payment to the Executive is delayed
pursuant to the provisions of this paragraph, such payment instead shall be
made
on the first business day following the expiration of the six (6) month period
referred to in the prior sentence.
[Signature
page to follow]
-16-
IN
WITNESS WHEREOF, the parties hereto have set their hands and seals the day
and
year first above written.
THE
COMPANY:
ITEC
ENVIRONMENTAL GROUP, INC.
By:
_________________________________
Its:
_________________________________
EXECUTIVE:
XXXXX
XXXXXXXX
_____________________________________
Xxxxx
Xxxxxxxx
-17-
Exhibit
A
Restricted
Stock Agreement
This
Restricted Stock Agreement (the “Agreement”)
is
made and entered into as of October 6, 2006 (the “Effective
Date”)
by and
between Itec Environmental Group, Inc., a Delaware corporation (the
“Company”),
and
Xxxxx Xxxxxxxx (“Stockholder”).
RECITALS
A.
|
The
Company’s Board of Directors (the “Board”)
has authorized and approved the issuance of shares of the Company’s common
stock to Stockholder subject to the restrictions set forth herein
and
pursuant to the terms hereof.
|
B.
|
The
shares provided for in this Agreement are to be issued pursuant to
and in
connection with Stockholder’s Employment Agreement with the Company dated
as of October 6, 2006 (the “Employment
Agreement”).
Capitalized terms used but not defined herein, have the meanings
assigned
to them in the Employment
Agreement.
|
NOW,
THEREFORE, in consideration of the mutual benefits hereinafter provided, and
each intending to be legally bound, the Company and Director hereby agree as
follows:
1. Issuance
of Shares. Subject
to the restrictions, terms and conditions of this Agreement, the Company hereby
issues to Stockholder that amount of shares (the “Shares”) of the Company’s
common stock (“Common Stock”) equal to five percent (5%) of total number of
Common Stock Equivalents (as
defined in the Employment Agreement).
As used
in this Agreement, the term “Shares” refers to the Shares issued hereunder and
includes all securities received (i) in replacement of the Shares,
(ii) as a result of stock dividends or stock splits in respect of the
Shares, and (iii) in replacement of the Shares in a recapitalization,
merger, reorganization or the like.
2.
Delivery.
2.1 Deliveries
by Stockholder.
Stockholder
hereby delivers to the Company (i) this Agreement; and (ii) four (4)
copies of a blank Stock Power and Assignment of Uncertificated Securities in
the
form of Exhibit
A
attached
hereto (the “Stock
Powers”),
all
of which are executed by Stockholder (and Stockholder’s spouse or domestic
partner, if any).
2.2 Deliveries
by the Company.
Upon
its
receipt of all of the documents to be executed and delivered by Stockholder
to
the Company under Section 2.1, the Company will issue the Shares in the name
of
Stockholder on the books and records of the Company and send to Stockholder
any
notice required by the Delaware General Corporation Law for the issuance of
uncertificated shares. At such time as the Shares become Vested Shares (as
defined below), the Company shall issue certificates representing such
Shares.
-18-
3. Repurchase
and Vesting.
3.1 Repurchase
Right for Unvested Shares.
As
of the
Effective Date, all of the Shares are “Unvested
Shares,”
and
shall be restricted and subject to repurchase at the Taxable Amount Per Share
(as
defined in the Employment Agreement) based
on
the following vesting schedule (shares
that have vested are referred to herein as “Vested Shares”):
(i) the
number of Shares equal to two and a half percent (2.5%) of the total number
of
Common Stock Equivalents
outstanding
on the
Original Issue Date (as
defined in the Employment Agreement)
shall
vest immediately upon issuance (the “Initially
Vested Shares”);
(ii)
the number of Shares (or all of the remaining unvested Shares that Stockholder
then holds if such number is less than one and one quarter percent (1.25%)
of
the total number of Common Stock Equivalents
outstanding on such date)
equaling one and one quarter percent (1.25%) of the total number of Common
Stock
Equivalents
outstanding
on and
as of the True Up Date (as defined in the Employment Agreement) shall vest
on
such date and (iii) any remaining unvested Shares as of the True Up Date shall
vest such that all of the remaining unvested Shares shall be fully
vested
on the
second anniversary of the Effective Date (provided that all of the unvested
Shares shall
become
fully vested upon a “Change-of-Control”
as
defined
in the Employment Agreement). Stockholder
agrees not to sell, assign, transfer, pledge, hypothecate, or otherwise dispose
of, by operation of law or otherwise, such Unvested Shares except as permitted
by this Agreement.
3.2 Adjustments.
The
number of Shares that are Vested Shares or Unvested Shares will be equitably
adjusted for any stock split, combination, stock dividend, merger,
consolidation, reorganization, recapitalization, or any other change in
corporate structure or other transaction not involving the receipt of
consideration by the Company occurring after the Effective Date.
4. Accelerated
Vesting.
Stockholder’s
Unvested Shares shall immediately vest upon the occurrence of a
Change-of-Control.
5. Restricted
Securities.
Stockholder
acknowledges and understands that Stockholder may not transfer any Shares unless
such Shares are registered under the Securities Act and qualified under
applicable state securities laws or unless, in the opinion of counsel to the
Company, exemptions from such registration and qualification requirements are
available. Stockholder understands that only the Company may file a registration
statement with the Securities and Exchange Commission (the “SEC”)
and
that the Company is obligated under the Employment Agreement to do
so.
6. Restrictions
on Transfers.
Stockholder agrees not to voluntarily transfer, assign, xxxxx x xxxx or security
interest in, pledge, hypothecate, encumber or otherwise dispose of
(collectively, a “Transfer”)
any of
the Unvested Shares.
7. Rights
as Stockholder; Proxy.
Subject
to the terms and conditions of this Agreement, Stockholder will have all of
the
rights of a holder of Common Stock with respect to the Shares from and after
the
date that Stockholder delivers an executed copy of this Agreement until such
time as Stockholder Transfers the Shares or they are repurchased by the Company.
All Unvested Shares shall be subject to an irrevocable proxy in the form
attached as Exhibit
B
-19-
hereto
exercisable by the Board of Directors of the Company (with Stockholder
abstaining) until such time as the shares become Vested Shares.
8. Tax
Consequences.
STOCKHOLDER
UNDERSTANDS THAT STOCKHOLDER MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT
OF
STOCKHOLDER’S ACQUISITION OR DISPOSITION OF THE SHARES. Stockholder hereby
acknowledges that Stockholder has been informed that, unless an election is
filed by the Stockholder with the Internal Revenue Service (and, if necessary,
the proper state taxing authorities) within
30 days
of the
acquisition of the Shares, electing pursuant to Section 83(b) of the Internal
Revenue Code (and similar state tax provisions, if applicable) to be taxed
currently on the fair market value on the date of acquisition of the Shares,
there will be a recognition of taxable income to the Stockholder equal to the
fair market value of the Shares at the time they are considered transferable
or
no longer subject to substantial risk of forfeiture or repurchase for nominal
consideration. Stockholder
represents that he has consulted any tax adviser(s) that he deems advisable
in
connection with his acquisition of the Shares and the filing of the election
under Section 83(b) and similar tax provisions.
A
form of
Election under Section 83(b) is attached hereto as Exhibit
C
for
reference.
STOCKHOLDER HEREBY ASSUMES ALL RESPONSIBILITY FOR FILING OR NOT FILING SUCH
ELECTION AND PAYING ANY TAXES RESULTING FROM FILING OR FAILING TO FILE SUCH
ELECTION.
9. Compliance
with Laws and Regulations.
The
issuance and transfer of the Shares will be subject to and conditioned upon
compliance by the Company and Stockholder with all applicable state and federal
laws and regulations and with all applicable requirements of any stock exchange
or automated quotation system on which the Company’s securities may be listed or
quoted at the time of such issuance or transfer.
10. Successors
and Assigns.
The
Company may assign any of its rights under this Agreement. This Agreement shall
be binding upon and inure to the benefit of the successors and assigns of the
Company. Subject
to the restrictions on transfer herein set forth, this Agreement will be binding
upon Stockholder and Stockholder’s heirs, executors, administrators, successors
and assigns.
11. Governing
Law; Jurisdiction.
This
Agreement shall be interpreted in accordance with the plain meaning of its
terms
and under the laws of the State of California. Any controversy between the
Company and Stockholder arising out of or relating to any of the terms,
provisions or conditions of this Agreement shall be submitted to arbitration
in
accordance with the American Arbitration Association’s National Arbitration
Rules for the Resolution of Employment Disputes. On the written request of
either party for arbitration of such a claim pursuant to this paragraph, the
Company and Stockholder shall both be deemed to have waived the right to
litigate the claim in any federal or state court. To the extent that any claim
or controversy arising out of this Agreement cannot be submitted to arbitration
as set forth above, each party hereby agrees that any suit, action or proceeding
with respect to this Agreement, and any transactions relating hereto, may be
brought in the State of California, County of San
Francisco,
and
each of the parties hereby irrevocably consents and submits to the jurisdiction
of such Court(s) for the purpose of any such suit, action or proceeding. Each
of
the parties hereby waives and agrees not to assert, by way of motion, as a
defense or otherwise, in any such suit,
-20-
action
or
proceeding, any claim that it (he) is not personally subject to the jurisdiction
of the above-named Court(s), and, to the extent permitted by applicable law,
any
claim that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper or that this
Agreement or any replacements hereof or thereof may not be enforced in or by
such Court(s). The Company shall pay any and all costs associated with
arbitration or court adjudication.
12. Notices.
Any
notice required to be given or delivered to the Company shall be in writing
and
addressed to the Corporate Secretary of the Company at its principal corporate
offices. Any notice required to be given or delivered to Stockholder hereunder
shall be in writing and addressed to Stockholder at the last address Stockholder
provided to the Company. All notices shall be deemed effectively given upon
personal delivery, three (3) days after deposit in the United States mail by
certified or registered mail (return receipt requested), one (1) business day
after its deposit with any return receipt express courier (prepaid), or on
the
business day that it is sent by fax to the fax number last provided by
Stockholder to the Company, but only if (A) the receiving fax device immediately
generates a message, printed by the sending fax device, that confirms receipt,
and (B) receipt of the fax is confirmed by a telephone call between sender
and
recipient.
13. Further
Instruments.
The
parties agree to execute such further instruments and to take such further
action as may be reasonably necessary to carry out the purposes and intent
of
this Agreement.
14. Headings.
The
captions and headings of this Agreement are included for ease of reference
only
and will be disregarded in interpreting or construing this
Agreement. All
references herein to Sections will refer to Sections of this
Agreement.
15. Entire
Agreement.
This
Agreement, the Employment Agreement and the other agreements specifically
referenced herein contain the entire understanding of the parties regarding
the
subject matter of this Agreement and such other agreements and supersede all
prior and contemporaneous negotiations and agreements, whether written or oral,
between the parties with respect to the subject matter of this Agreement and
such other agreements.
(the
remainder of this page left intentionally blank)
-21-
-
SIGNATURE PAGE -
RESTRICTED
STOCK AGREEMENT
IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized representative and Stockholder has executed this Agreement
as of
the Effective Date.
ITEC
ENVIRONMENTAL GROUP, INC.
By:
________________________________
Its:
________________________________
|
STOCKHOLDER
______________________________
Name:
Xxxxx Xxxxxxxx
|
LIST
OF EXHIBITS
Exhibit
A: Stock
Power and Assignment of Uncertificated Securities
Exhibit
B: Irrevocable
Proxy
Exhibit
C: Election
under Section 83(b) of the Internal Revenue Code
-22-
EXHIBIT
A
Stock
Power and Assignment
of
Uncertificated Securities
FOR
VALUE
RECEIVED and pursuant to that certain Restricted Stock Agreement dated as of
October ____, 2006 (the “Agreement”),
the
undersigned hereby sells, assigns and transfers unto ITEC ENVIRONMENTAL GROUP,
INC., a Delaware corporation (the “Company”),
_______________ uncertificated shares of the Common Stock of the Company,
standing in the undersigned’s name on the books of the Company delivered
herewith, and does hereby irrevocably constitute and appoint the Secretary
of
the Company as the undersigned’s attorney-in-fact, with full power of
substitution, to transfer said stock on the books of the Company.
Dated:
_____________________
STOCKHOLDER
__________________________________
(Signature)
__________________________________
(Please
Print Name)
__________________________________
(Spouse’s
or Domestic
Partner’s
Signature)
__________________________________
(Please
Print Spouse’s or
Domestic
Partner’s Name)
Instructions:
Please
do
not
fill in
any blanks other than the signature line. The purpose of this Stock Power and
Assignment of Uncertificated Securities is to enable the Company and/or its
assignee(s) to acquire the shares upon repurchase by the Company as set forth
in
the Agreement without requiring additional signatures on the part of Stockholder
or Stockholder’s Spouse or Domestic Partner.
-23-
EXHIBIT
B
Irrevocable
Proxy
THE
UNDERSIGNED STOCKHOLDER, being the owner of
shares
of common stock (the “Stock”) of ITEC ENVIRONMENTAL GROUP, INC. (the “Company”)
does hereby grant to
an
irrevocable and unlimited proxy (the “Proxy”) and hereby appoints
his
attorney-in-fact to vote the Stock in connection with any shareholder meeting
of
the Company.
IN
WITNESS WHEREOF, I have executed this proxy this __________ day
of
_______________,
2006.
STOCKHOLDER
___________________________________
(Signature)
___________________________________
(Please
Print Name)
-24-
EXHIBIT
C
Section
83(b) Election
The
undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal
Revenue Code, to include in gross income for the taxpayer’s current taxable year
of the fair market value of the property described below at the time of transfer
as compensation for services.
(1)
|
The
taxpayer who performed the services to Itec Environmental Group,
Inc. (the
“Company”):
|
Name:
|
Address:
|
Social
Security No.:
|
(2)
|
The
property with respect to which the election is made is [l]
shares of the Common Stock (the “Shares”)
of the “Company.
|
(3)
|
The
property was transferred on
__________________.
|
(4)
|
The
taxable year for which the election is made is the calendar year
_____.
|
(5)
|
The
Shares are subject to the following restrictions: the shares are
subject
to vesting based upon continued service as an employee of the Company.
The
restrictions described herein are set forth in the Restricted Stock
Agreement between the Company and taxpayer dated
________________.
|
(6)
|
The
fair market value of a Share at the time of transfer (determined
without
regard to any restriction other than a restriction which by its terms
will
never lapse) was $____ per Share.
|
(7)
|
No
consideration was paid by the taxpayer for the
Shares.
|
(8) A
copy of
this statement was furnished to the Company for whom taxpayer rendered the
services underlying the transfer of such shares.
(9)
|
This
statement is executed on
___________________.
|
_______________________________ ___________________________________
Taxpayer Spouse
or
Domestic Partner (if any)
This
election must be filed with the Internal Revenue Service Center with which
the
Stockholder files his or her federal income tax returns and must be filed within
30 days after the date of acquisition. This filing should be made by registered
or certified mail, return receipt requested. The Stockholder must retain two
copies of the completed form for filing with his or her federal and state tax
returns for the current tax year and an additional copy for his or her
records.
-25-
Exhibit
B
Private
Placement Memorandum
-26-
Schedule
C
-27-