EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit
10.13
This
Executive Employment Agreement ("Agreement")
is
entered into effective this _____ day of January, 2007
by and
between Hydrogen Engine Center,
Inc.,
an Iowa corporation,
("Company")
and
Xxxxxx X. Xxxxxxxxxxx ("Executive").
WHEREAS,
the
Executive has been employed by the Company as its Vice
President and General Manager
and
possesses certain, skills, knowledge and abilities; and
WHEREAS,
the
Company
has
determined that it is to the advantage and interest of the Company to
employ
the Executive as the Vice
President and General Manager of
the
Company; and
WHEREAS,
the
Executive desires to accept
employment with
the
Company in the capacity of Vice
President and General Manager.
NOW
THEREFORE,
in
consideration thereof the parties hereby agree as follows:
1. EMPLOYMENT
AND TERM.
The
Company will employ the Executive to serve as the Vice
President and General Manager of
the
Company and the Executive agrees to perform such services under the terms and
conditions of this Agreement. The initial term of Executive’s
employment under this
Agreement shall begin on the date first written above (the "Effective
Date")
and
shall continue for a period of three (3) years
(the
“Term”).
Notwithstanding the foregoing, Executive’s
employment under this
Agreement may be terminated prior to the expiration of the Term as provided
in
this Agreement.
2. DUTIES.
Executive shall be responsible for and perform those duties outlined in Exhibit
A, incorporated by reference herein. The Executive will also render such
appropriate and reasonable services as are directed by the President or the
Board. Executive’s duties as the Company’s Vice President and General Manager
shall require Executive’s full productive time and effort and as such, Executive
shall perform his duties on a full-time basis.
Without
the prior written consent of the Company, Executive shall undertake no
activities for compensation from any entity other than the Company.
3. COMPENSATION.
(a) Salary.
Executive’s annualized base salary shall be $105,000.00, subject to withholding
for federal and state income and other applicable taxes or
deductions.
Executive shall be entitled to receive the following bonus payments, subject
to
withholding for federal and state income and other applicable taxes or
deductions:
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$5,000
upon the later of (i) the date when the Company shall have sold and
shipped a total of 100 open power units or the date when the Company
shall
have sold and shipped a total of 50 gensets (ii) the date when the
Executive has finalized his move to Algona, Iowa
and
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The
Company agrees to adopt on or before January 1, 2008, a bonus plan which will
include Executive as a participant. The Company
has the
discretion to increase Executive’s base salary based on performance goals and
expectations as may
be
adopted
by the Company and
revised
from time to time typically on an annual basis based on performance and company
profitability.
(b) Benefits.
Executive will receive all medical, dental, pension, life, disability and any
other employee benefits offered by Company subject to the eligibility terms
of
each individual plan.
(c) Expenses.
The
Company will reimburse the Executive for all reasonable direct out-of-pocket
expenses incurred in connection with the performance of his duties and
responsibilities. Such requests for reimbursement will be made by the Executive
in a timely manner and in conformance with all policies of the Company.
Executive will receive up
to
$15,000
as
reimbursement
for relocation expenses,
$5,000
of which may be paid in advance upon the request of Executive. Payment of
relocation expenses is subject to presentation of receipts evidencing expenses
that constitute qualified moving expenses under the US Internal Revenue Code
or
expenses otherwise approved by the Company.
(d) Vacation.
During
the term of his employment, the Executive will receive fifteen days vacation
in
the first year of this agreement and fifteen days plus one additional day of
vacation every year thereafter. The Executive may carryover to the next year
no
more than one-half of the vacation available in any given year. One-half of
any
vacation not used in excess of this amount will be forfeited. Vacation maybe
taken at anytime during the vacation year so long as it, as determined by the
Company
acting
reasonably, does not materially interfere with the Executive’s duties. The
Executive may not use vacation in lieu of any notice required by this agreement.
In the event this agreement lapses or is terminated, the Executive will be
paid
all vacation available to him at the time of the lapse or termination except
as
otherwise provided for herein.
(e) Stock
Options.
The
Executive will receive options to purchase 85,000
shares
of
common stock of the Company at under the Company’s 2005 Incentive Compensation
Plan, subject to the milestones and benchmarks identified on Exhibit B. The
vesting date, exercise price and other terms will be determined in accordance
with the terms of a separate Stock Option Agreement to be executed by the
Company and Executive.
4. TERMINATION.
(a) Termination
Without Cause.
This
Executive’s
employment under this Agreement
may be terminated, without cause, by either party by giving written notice
to
the other party ninety (90) days prior to the effective date of termination.
(i) Termination
by Executive. The
Executive may not use vacation in lieu of the notice period. If Executive fails
to provide appropriate notice and fully cooperate in any transitional
arrangements, he will forfeit all vacation or PTO benefits available to him
under the terms of the Contract. Executive shall receive no severance pay or
benefit continuation if he terminates the agreement.
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(ii) Termination
by Company. The
Executive shall receive the prorated portion of any incentive compensation
which
would otherwise have been payable to him under the existing plan in the year
of
the termination of employment.
(b) Termination
for Cause.
Executive’s
employment under this Agreement
shall
terminate immediately for cause under the following circumstances:
(i) In
the
event of the death or permanent disability of the Executive. For the purposes
of
this agreement, permanent disability means any physical, mental or emotional
illness, disease or condition which in the opinion of a physician chosen by
the
Company renders the Executive incapable of adequately performing his usual
duties for a period exceeding ninety (90) days.
(ii) The
Executive commits embezzlement, fraud, dishonesty or other acts of misconduct,
or is guilty of conduct in material violation of established ethics,
regulations, law or policy.
(iii) The
Executive is charged with any crime.
(iv) The
Executive is adjudicated as incompetent.
(v) Company
determines, based on action or threatened action, of any federal or state
government agency or in the opinion of Company’s legal counsel that continuance
of the agreement would violate the provisions of any federal or state law or
regulation.
(vi) There
is
a material breach by Executive of this agreement or of one or more obligations
imposed upon him under the agreement.
(vii) Executive
shall have committed any act of gross negligence in the performance of his
duties or obligations hereunder or, without proper cause, shall have willfully
refused or habitually neglected to perform his employment duties or obligations
under this Agreement;
(viii)
Executive
shall have committed any act that constitutes a willful breach of the Company’s
employment policies;
(ix)
Executive
shall have committed any material act of willful misconduct, dishonesty, or
breach of trust against Company;
(c) Mutual
Agreement.
This
Agreement may be terminated by the mutual written agreement of the
parties.
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5. SEVERANCE
PAYMENTS.
In the
event Company terminates
Executive’s employment under
this
Agreement prior to the expiration of the Term, Executive shall receive his
then
current salary (not including any bonus earned after the date of termination
of
Executive's employment, or calculated for any period of time after such date
of
termination) for a period of time following the effective date of termination
equal to: (i) six months if such termination occurs on or before January 1,
2008, or (ii) one year if such termination occurs at any time subsequent to
January 1, 2008; provided, however, that eligibility for any such severance
payments shall not be paid if Executive is terminated for cause in accordance
with this Agreement. Severance payments shall be made in accordance with the
Company’s regular payroll intervals, and such payments shall be due Executive
regardless of whether he secures other employment during the severance period,
except in the event Executive competes with Company or breaches any other
contract, duty or agreement with Company. Company shall make all required
withholdings from Executive’s pay. If
Executive’s employment is terminated as a result of a “Change in Control” while
Executive is employed under this Agreement, Executive shall be entitled to
severance payments in accordance with this Section unless such termination
was
for cause as defined in Section 4(b). Change of Control shall mean the sale
or
disposition of all or substantially all the Company's assets; the merger,
consolidation, or reorganization of the Company with or involving any other
entity; or the liquidation of the Company. In no event shall a Change-in-Control
be deemed to have occurred if Xx. Xxxxxxxxx is part of a purchasing group which
consummates the Change-in-Control transaction.
6. SEVERANCE
BENEFITS.
Executive shall continue to participate during the applicable severance period,
at the Company’s expense, in any group health, dental, life or disability
insurance plan that he was otherwise entitled to on the date of his termination.
However, such insurance benefits may be waived by Executive prior to the end
of
the severance period if he becomes eligible to receive comparable benefits
through subsequent employment. No vacation or paid leave or any other benefits
not specified herein shall accrue following the last day of Executive’s active
employment. The parties agree that termination of Executive’s employment shall
be the “qualifying event” which commences Executive’s right to continuation of
applicable group health insurance under the provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and that once the severance
period is over, Executive will be responsible for paying the premium himself
for
the remainder of the COBRA period. Executive shall be entitled to any accrued
paid time off which is not used prior to the effective date of termination
pursuant to the existing policies of the Company. Executive shall not receive
paid benefits in the event he is terminated for cause.
7. CONFIDENTIALITY.
(a) Confidential
Information.
(i) Executive
acknowledges that in the course of his employment he will have access to
proprietary information, trade secrets, and other Confidential Information,
that
such information is a valuable asset of Company
and that
its disclosure or unauthorized use will cause Company
substantial harm. As used in this Agreement, the term “Confidential
Information”
means:
(1) proprietary information of Company,
and (2)
information described in this Agreement as confidential or designated by
Company
as
confidential or which Executive knows or should know is confidential.
Confidential Information includes software programs, whether in source form
or
object form, scientific, technical, trade, or business information possessed,
obtained by, developed for, or given to Company
that is
treated by Company
as
confidential or proprietary including, without limitation, intellectual
property, research materials and Developments (defined below), formulations,
techniques, methodologies, formulae, procedures, tests, equipment, data,
reports, know-how, sources of supply, patent positioning, relationships with
consultants and employees, business plans and business developments, information
concerning the existence, scope of activities of any research, development,
manufacturing, marketing, or other projects of Company
, and
any other confidential information about or belonging to Company
or its
suppliers, licensors, licensees, partners, affiliates, customers, potential
customers, or others. Confidential Information does not include information
that
(i) was known to Executive at the time it was disclosed, other than by previous
disclosure by Company,
as
evidenced by Executive’s written records at the time of disclosure; (ii) is at
the time of disclosure or later becomes publicly known under circumstances
involving no breach of this Agreement, or (iii) is lawfully and in good faith
made available to Executive by a third party who did not derive it, directly
or
indirectly, from Company.
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(ii) “Developments”
shall
include, without limitation, ideas, concepts, discoveries, inventions,
developments, know-how, trade secrets, techniques, methodologies, modifications,
innovations, improvements, writings, documentation, data, research materials,
and rights (whether or not protectable under state, federal, or foreign patent,
trademark, copyright, license or similar laws) that are conceived, discovered,
invented, developed, created, made, or reduced to practice or tangible medium
by
Executive or under his or her direction (solely or with others) and that relate
directly or indirectly to the development,
sale, marketing, manufacture and support of internal combustion engines capable
of being fueled by alternative fuels such as hydrogen (the “Field”)
or
result from the actual or anticipated business, work, research or investigations
of the
Company
or which
result to any extent from the use of the
Company’s
premises or property.
(b) Ownership.
Executive acknowledges that all Confidential Information is and shall continue
to be the exclusive property of the
Company,
whether
or not prepared in whole or in part by Executive and whether or not disclosed
to
Executive or entrusted to his custody in connection with his employment by
the
Company.
Executive hereby assigns to the
Company
all
right, title and interest he or she may have or acquire in all Developments
and
agrees that all Developments shall be the sole property of the
Company
and its
assigns, and the
Company
and its
assigns shall be the sole owner of all patents, copyrights, licenses and other
rights in connection therewith. Executive further agrees to assist the
Company
in every
proper way (but at the
Company’s
expense) to obtain and from time to time enforce patents, copyrights, licenses
or other rights on said Developments in any and all countries, and to that
end
Executive will execute all documents necessary:
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(i) to
apply
for, obtain and vest in the name of the
Company
alone
(unless the
Company
otherwise directs) letters patent, copyrights, licenses or other analogous
protection in any country throughout the world and when so obtained or vested
to
renew and restore the same; and
(ii) to
defend
any opposition proceedings in respect of such applications and any opposition
proceedings or petitions or applications for revocation of such letters patent,
copyright, license or other analogous protection.
8. NONDISCLOSURE
AND NONUSE.
(a) During
the Term, and thereafter, Executive shall not directly or indirectly publish,
disseminate, or otherwise disclose, deliver, or make available to any third
party any Confidential Information, other than with the prior written consent
of
the
Company.
Executive may disclose the Confidential Information to a governmental authority
or by order of a court of competent jurisdiction, provided that such disclosure
is subject to all applicable governmental or judicial protection available
for
like material and reasonable advance notice is given to the
Company.
Executive agrees to use the Confidential Information only as directed by
the
Company.
In
addition, Executive agrees to use his best efforts to prevent accidental or
negligent loss or release by others to any unauthorized person of the
Confidential Information.
(b) Executive
shall not publish any manuscript or other document, solely or in co-authorship
with others, pertaining to the Confidential Information without the prior
written consent of the
Company.
Executive agrees to submit to the
Company
a copy
of any proposed manuscript or other materials to be published or otherwise
publicly disclosed that contains Confidential Information, or which contains
any
discussion relating to the
Company,
in
sufficient time to enable the
Company
to
determine if patentable Developments or any Confidential Information of
the
Company
would be
disclosed. Executive shall cooperate with the
Company
in this
respect and shall delete from the manuscript or other disclosure any
Confidential Information if requested by the
Company
and
shall assist the
Company
in
filing for patent protection for any patentable Developments prior to
publication or other disclosure.
9. DEVELOPMENTS.
Developments are works made for hire and are and shall remain the exclusive
property of the
Company. The Company
may use
or pursue them without restriction or additional compensation. Executive agrees
to promptly disclose to the
Company,
all
Developments. Executive hereby assigns to the
Company
any and
all right, title and interest he or she may have or acquire in all Developments
and agrees that all Developments shall be the sole property of the
Company
and its
assigns, and the
Company
and its
assigns shall be the sole owner of all patents, copyrights, licenses and other
rights in connection therewith.
10. INTELLECTUAL
PROPERTY RIGHTS.
Executive agrees that the
Company
shall be
the sole owner of all domestic and foreign patent or other rights pertaining
thereto and further agrees to execute all documents which the
Company
reasonably determines to be necessary or convenient for use in applying for,
perfecting or enforcing patents -or other intellectual property rights.
Executive further agrees to assist the
Company
in every
proper way (but at the
Company’s
expense) to obtain and from time to time enforce patents, copyrights, licenses
or other rights on said Developments in any and all countries, and to that
end
Executive will execute all documents necessary:
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(a) to
apply
for, obtain and vest in the name of the
Company
alone
(unless the
Company
otherwise directs) letters patent, copyrights, licenses or other analogous
protection in any country throughout the world and when so obtained or vested
to
renew and restore the same; and
(b) to
defend
any opposition proceedings in respect of such applications and any opposition
proceedings or petitions or applications for revocation of such letters patent,
copyright, license or other analogous protection.
11. TRADE
SECRETS OF OTHERS.
Executive warrants that his employment by the
Company
does not
violate any agreement with any prior employer or other person or firm, that
he
is not subject to any existing confidentiality agreement or obligation, except
as has been fully disclosed in writing to the
Company,
and
that Executive will not use or disclose in connection with his employment by
the
Company
any
trade secrets belonging to any other person or firm.
12. OTHER
OBLIGATIONS. Executive
acknowledges that the
Company
from
time to time may have agreements with other persons or with various governmental
agencies that impose obligations or restrictions on the
Company
regarding inventions or creative works made during the course of work thereunder
or regarding the confidential nature of such work. Executive agrees to be bound
by all such obligations and restrictions of which he is informed by the
Company
and to
take all action necessary to discharge the obligations of the
Company
thereunder.
13. RETURN
OF CONFIDENTIAL INFORMATION.
Executive shall deliver to the
Company
all
Confidential Information provided by the
Company
upon the
termination of
Executive’s employment under this Agreement or
expiration of the Term for any reason. During his employment for the
Company,
Executive will deliver immediately to the
Company
upon its
request all Confidential Information. Executive will retain no excerpts, notes,
photographs, reproductions or copies of any Confidential
Information.
14. NON-COMPETITION
AND NON-SOLICITATION.
(a) Executive
covenants that during the Term and for one
year
commencing upon expiration of the period for which Executive should be entitled
to receive severance payments under Section 5 above,
and
within the geographic area in which the
Company
does
business, Executive shall not in any capacity whether in the capacity as an
employee, officer, director, partner, manager, consultant, agent or owner (other
than a minority shareholder or other equity interest of not more than 1% of
a
company
whose
equity interests are publicly traded on a nationally recognized stock exchange
or over-the-counter):
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(i) directly
or indirectly advise, manage, render or perform any services to or for any
other
person; association or entity which is engaged in, or preparing to engage in,
the Field; or
(ii) call
upon
on behalf of a competing entity any person or entity that is or becomes within
the two year period prior to the termination of
Executive’s employment under this Agreement or
expiration of the Term, a customer of the
Company
for the
purpose of soliciting or selling products or services similar to those offered
by the
Company.;
(b) For
a 12
month period following the termination of
Executive’s employment under this Agreement or
expiration of the Term for any reason, Executive will not solicit, or assist
another person to solicit, any employee, supplier or independent contractor
of
the
Company
to
terminate such employee's employment or terminate or curtail such supplier's
or
independent contractor's business relationship with the
Company
(c) Executive
acknowledges and agrees that the time, scope, geographic area, and other
provisions of this Section 14
have
been specifically negotiated by sophisticated parties and specifically hereby
agrees that such time, scope, geographic area, and other provisions are
reasonable under the circumstances. Executive further agrees that if, at any
time, despite the express agreement of the parties hereto, a court of competent
jurisdiction holds that any portion of this Section 14
is
unenforceable for any reason, the maximum restrictions of time, scope, or
geographic area reasonable under the circumstances, as determined by such court,
will be substituted for any such restrictions held unenforceable
(d) The
right
to the severance payments described in Sections 5 and 6 of this Agreement shall
be forfeited in the event of violation of the terms of this Section
14.
15. GOVERNING
LAW AND RESOLUTION OF DISPUTES:
(a) All
questions concerning the construction, interpretation and validity of this
Agreement, and all matters relating hereto, shall be governed by and construed
and enforced in accordance with the laws of the State of Iowa, without giving
effect to any choice or conflict of law provision or rule (whether in the State
of Iowa or any other jurisdiction) that would cause the application of the
laws
of any jurisdiction other than the State of Iowa.
(b) Each
of
the parties hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the exclusive jurisdiction of any Iowa state court or
federal court of the United States of America sitting in the State of Iowa,
and
any appellate court from any thereof, in any action or proceeding arising out
of
or relating to this Agreement or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in any such Iowa state court or, to the extent permitted by law,
in
such federal court. Each of the parties hereto agrees that a final judgment
in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.
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16. LEGAL
ADVICE:
The
parties agree and acknowledge that they are each responsible for obtaining
their
own tax and legal advice concerning this agreement. Neither party has assumed
nor will assume any responsibility in advising the other party as to the legal
or tax consequences of the agreement.
17. TENDERING
RESIGNATIONS.
The
Executive agrees that after termination of his employment, he will tender his
resignation from any position he may hold as an officer or director of the
Company or its subsidiaries. Doing so will not reduce the obligations of the
Company described herein.
18. DELIVERY
OF RECORDS.
Upon
any termination of employment, the Executive shall, within five (5) business
days, deliver or cause to be delivered to the Company all books, documents,
effects, monies, securities, electronically stored information, or other
property belonging to the Company or its subsidiaries or for which the Company
or its subsidiaries are liable to others, which are in the possession, charge,
control, or custody of the Executive.
19. NOTICES.
Any
notice required to be given by this Agreement shall be in writing and sent
by
certified mail to the Company, at its principal office or to the Executive
at
the Executive's last known address on the books of the Company.
20. ASSIGNMENT.
The
rights and obligations of the Company under this Agreement will inure to the
benefit of and be binding upon the successors and assigns of the Company. This
Agreement is not assignable by the Executive since the Executive's services
under this Agreement are personal.
21. INVALID
PROVISION.
The
invalidity or unenforceability of any particular provision of this Agreement
will not affect other provisions, and this Agreement shall be construed in
all
respects as though such in invalid or unenforceable provisions were
omitted.
22. MERGER.
This
Agreement, including Exhibits and Attachments, if any, represents the entire
understanding between the parties with respect to the subject matter hereof.
Any
prior agreements between the parties as to the subject matter of this Agreement
are hereby expressly terminated.
IN
WITNESS WHEREOF,
this
Agreement has been executed on the day, month, and year written
below.
HYDROGEN
ENGINE CENTER
|
By:
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/s/
Xxxxxxxx
X. Xxxxxxxxx
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/s/
Xxxxxx
X. Xxxxxxxxxxx
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||
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Xxxxxxxx
X. Xxxxxxxxx
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Xxxxxx
X. Xxxxxxxxxxx
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|||
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Its:
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President |
Date:
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1-7-2007
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EXHIBIT
A
SERVICES
TO BE PROVIDED BY EXECUTIVE
10
EXHIBIT
B
MILESTONES/BENCHMARKS
11
