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EXHIBIT 10.18 AMENDED AND
RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(the “ Agreement ”), dated April 6,
2007
By and Between:
COATES INTERNATIONAL, LTD. , a Delaware
corporation (the “ Company ” or the
“ Employer ”),
AND
BARRY C. KAYE , an individual having an address at
15 Susan Drive, Marlboro, New Jersey 07746 (“
Executive ”)
WHEREAS , the Company and the Executive signed on
October 18, 2006 (the” Effective Date
”), an employment agreement (the “ Original
Employment Agreement ”); and
WHEREAS , the parties wish to amend and restate
the terms of the Original Employment Agreement,
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in
consideration of the premises and the mutual covenants, agreements,
representations and warranties contained herein, and other good and
valuable consideration including a release by the parties of all
claims relating to the Original Employment Agreement, the receipt
and sufficiency of which are hereby acknowledged, Executive and the
Company hereby agree as follows:
Upon the effectiveness of this Agreement, the Original Employment
Agreement shall become null and void and of no further effect.
All compensation provisions of this Agreement shall be subject to
the Employer determining that it has adequate working capital for
payment of such compensation. However, Employer agrees that this
provision shall not be used to unreasonably withhold payment of
compensation to Executive.
ARTICLE 1 EMPLOYMENT
1.1 Employer hereby hires the Executive as the Treasurer and
Chief Financial Officer of the Company and Executive hereby affirms
and accepts such positions and employment by Employer for the Term
(as defined in Article 3 below), upon the terms and conditions set
forth herein.
1.2 The Employer shall utilize its best efforts to
cause its Board of Directors to appoint the Executive as a member
of the Employer’s Board of Directors throughout the Term.
ARTICLE 2 DUTIES
During the Term, Executive shall serve Employer faithfully,
diligently and to the best of his ability, under the direction and
supervision of the Chief Executive Officer and the Board of
Directors of Employer (“ Board of Directors
”) and the Company’s Chief Executive Officer and shall
use his best efforts to promote the interests and goodwill of
Employer and any affiliates, successors, assigns, parent
corporations, subsidiaries, and/or future purchasers of Employer.
Executive shall render such services during the Term at
Employer’s principal place of business or at such other place
of business as may be determined by the Board of Directors, as
Employer may from time to time reasonably require of him, and shall
devote all of his business time to the performance thereof.
Executive shall have those duties and powers as generally pertain
to each of the offices of which he holds, as the case may be,
subject to the control of the Chief Executive Officer and the Board
of Directors. ARTICLE 3
TERM
The term of this Agreement (the “ Term
”) shall have commenced on the Effective Date, and continue
thereafter for a term of three (3) years, as may be extended or
earlier terminated pursuant to the terms and conditions of this
Agreement. The Term is renewable upon the agreement of the parties
hereto. ARTICLE 4
COMPENSATION
4.1 Compensation
(a) In consideration of Executive’s services to
Employer, Employer shall pay to Executive an annual salary (the
“ Salary ”) of One Hundred and Twenty
Five Thousand Dollars ($125,000), payable in equal installments at
the end of each regular payroll accounting period as established by
Employer, or in such other installments upon which the parties
hereto shall mutually agree, and in accordance with
Employer’s usual payroll procedures, but no less frequently
than monthly. Notwithstanding the above, except with respect to
amounts to be paid as set forth in this Section 4.1(a), payment of
the Salary will not commence until the point in time that
Employer’s projected available working capital is sufficient,
as solely determined by the Board of Directors, to fund (x) the
Company’s operations, and; (y) payment of the salary payments
provided for in this Agreement (the “ Payment
Date ”). Until the Payment Date, the Executive will
be paid only the minimum wage, and will be entitled only to minimum
benefits, both as permissible under applicable law. 2
(b) In addition to the Salary, Employer shall issue
to Executive a Stock Option to purchase 125,000 shares of the
Employer’s common stock, at an exercise price equal to
Employer’s common stock fair market value as of the date of
issuance, as determined by the Board (the “ Stock
Option ”). The stock options shall fully vest (i.e.,
become fully exercisable) as follows: 25,000 stock options on April
30, 2007 and the balance in three equal installments on October 18,
2007, 2008 and 2009. Executive must be continuously a full-time
employee of the Company through the time he exercises part or all
of the Stock Option, except, however, in the event this Agreement
is terminated:
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(i)
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prior to one year from the effective date of this Agreement, by
the Employer without Cause or by Executive for Good Reason, in
which cases the first tranche of the Stock Option scheduled to vest
on October 18, 2007,shall immediately and fully vest upon such
termination; or
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(ii) after one year from the effective date of this Agreement, by
the Employer without Cause or by Executive for Good Reason, in
which cases the Stock Option shall immediately and fully vest upon
such termination;
provided further that the events surrounding any such termination
have not been the subject of any claim, proceeding or lawsuit by
either the Executive or the Company in which further case the Stock
Option shall only vest upon final adjudication, determining that
such termination was a valid termination by the Executive for Good
Reason or by the Employer without Cause. The Stock Option shall be
deemed a non-qualified stock option (i.e., not an ISO). The Stock
Option will be issued out of the Employer’s stock incentive
plan, and subject to such incentive plan.
(c) Executive hereby acknowledges that the Stock Option and
the shares issuable upon the exercise thereof shall be
“restricted securities” as such term is defined under
Rule 144, unless and until an effective registration covering these
shares takes place, promulgated under the
Securities Act of 1933, as amended (the “ 1933
Act ”); that the Executive hereby represents that he
shall accept such compensation and has no present intent to
distribute or transfer such securities; that such securities shall
bear the appropriate restrictive legend providing that they may not
be transferred except pursuant to the registration requirements of
the 1933 Act or pursuant to exemptions therefrom, and; the
Executive further acknowledges that he may be required to hold such
securities for an indeterminable amount of time. Employer agrees to
include all shares of its Common Stock reserved for exercise of
stock options under any of its then effective stock option plans in
any undertaking to register its shares of Common Stock for any
other purpose. 4.2
Benefits
Commencing on the Payment Date and thereafter during the Term,
Executive shall be entitled to participate in all medical and other
executive benefit plans, including vacation, sick leave, retirement
accounts and other executive benefits provided by Employer to any
of the other senior officers of Employer on terms and conditions no
less favorable than those offered to such senior officers, other
than the Coates members of the Coates family.
Such participation shall be subject to the
terms of the applicable plan documents and Employer’s
generally applicable policies. 3
4.3 Expense
Reimbursement
Employer shall reimburse Executive for reasonable and necessary
expenses incurred by him on behalf of Employer in the performance
of his duties hereunder during the Term, including any and all
travel and entertainment expenses related to the Employer’s
business in accordance with Employer's then customary policies,
provided that such expenses are adequately documented. Executive
shall provide Employer with an estimate of anticipated travel and
entertainment expenses to be incurred for approval in advance by
the Chief Executive Officer, or his designee.
In addition to the compensation payable under Section 4.1,
Executive may be eligible to receive during the Term an annual
discretionary performance bonus, the amount of which shall be
determined by the Board of Directors based on the performance of
the Executive during the period intended to be covered by such
bonus (the “Performance Bonus”). Employer shall make a
determination as to the sufficiency of its cash flow and profits
for purposes of awarding a Performance Bonus, to Executive in
connection with each performance period. Each year’s
Performance Bonus shall be paid to the Executive within 110 days of
the Employer’s fiscal year end.
ARTICLE 5 OTHER EMPLOYMENT
Until a reasonable amount of time after the Payment Date, but in no
event more than three months thereafter, Executive shall devote his
business and professional time and effort, attention, knowledge and
skill to the management, supervision and direction of
Employer’s business and affairs in accordance with the
scheduling mutually agreed to between the Employer and Executive
(the “ Initial Employment Period ”).
During the Initial Employment Period, nothing in this Agreement
shall preclude Executive from pursuing other gainful employment,
providing services to others on a consulting basis, or pursuing any
other compensatory or for-profit activities, provided such other
activities do not interfere with Executive’s performance of
his duties hereunder and are not conducted on the Employer’s
premises. Thereafter, Executive shall devote all of his business
and professional time and effort, attention, knowledge, and skill
to the management, supervision and direction of Employer’s
business and affairs as Executive’s highest professional
priority. Nothing in this Agreement shall preclude Executive
from:
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(a)
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serving as a director or member of a committee of any
organization or corporation involving no conflict of interest with
the interests of Employer, provided that Executive must obtain the
prior written approval of the independent members of the Board of
Directors;
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(b)
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serving as a consultant in his area of expertise (in areas other
than in connection with the business of Employer), to government,
industrial, and academic panels provided that only de minimis time
shall be devoted thereto and Executive must obtain the prior
written approval of the independent members of the Board of
Employer and where it does not conflict with the interests of
Employer, provided that such written consent shall not be
unreasonably withheld, delayed or conditioned; and
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(c)
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on his own time, managing his personal investments or engaging
in any other non-competing business; provided that such activities
do not materially interfere with the regular performance of his
duties and responsibilities under this Agreement.
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ARTICLE 6 CONFIDENTIAL
INFORMATION/INVENTIONS
Confidential Information
6.1 Executive shall not, in any manner, for any reasons,
either directly or indirectly, divulge or communicate to any
person, firm or corporation, any confidential information
concerning any matters not generally known in the internal
combustion engine industry (the “ Engine
Industry ”) or otherwise made public by Employer
which affects or relates to Employer’s business, finances,
marketing and/or operations, research, development, inventions,
products, designs, plans, procedures, or other data (collectively,
“ Confidential Information ”) except
in the ordinary course of business or as required by applicable
law. Without regard to whether any item of Conf
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