Exhibit 10.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated October 18,
2006
By and Between:
COATES
INTERNATIONAL, LTD., a Delaware corporation (the "Company" or
the
"Employer"),
AND
MARK D.
GOLDSMITH, an individual having an address at 34 Luchon Street
Lido
Beach, New York 11561 ("Executive")
WHEREAS, the Company desires to hire the Executive and employ him
in the
position of Chief Executive Officer and Vice President; and
WHEREAS, Executive has agreed to serve as the Company's Chief
Executive Officer
and Vice President, pursuant to the terms and conditions set forth
herein.
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, the receipt and
sufficiency
of which are hereby acknowledged, Executive and the Company hereby
agree as
follows:
ARTICLE 1
EMPLOYMENT
1.1 Employer hereby hires the Executive as the Chief Executive
Officer and Vice
President 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
Board of
Directors of Employer ("Board of Directors") 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 Board of Directors. Employer and Executive also
agree that
Executive shall serve as a member of the Employer's Board of
Directors during
the Term.
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ARTICLE 3
TERM
The term of this Agreement (the "Term") shall commence on the date
hereof (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 Salary and Equity Compensation
(a) In
consideration of Executive's services to Employer, Employer
shall
pay to Executive an annual salary (the "Salary") of Two Hundred
Thousand Dollars
($200,000.00), 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, payment of the Salary will be deferred until the earlier
to occur of:
(I) the closing by the Company of an equity investment of at least
$10,000,000;
or (II) December 31, 2006.
(b) In
addition to the Salary, Employer shall issue to Executive a
Stock
Option to purchase 1,500,000 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 Option
shall vest (i.e., become exercisable) in three equal installments,
as follows:
One third of the Stock Options shall vest on the Effective Date; an
additional
third of the Stock Option shall vest on each of the first and
second
anniversaries of the Effective Date. 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
by the
Executive for a Good Reason, as defined in Article 10.1 and 10.2
below, or by
the Employer without Cause, as defined in Article 10.3 below, 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 pursuant
to the
applicable above referenced articles of this Agreement. 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.
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(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.
Benefits
4.2 Upon the earlier to occur of: (I) the closing by the Company of
an equity
investment of at least $10,000,000; or (II) December 31, 2006, 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 the Employer on terms and conditions no less
favorable than
those offered to such senior officers. Such participation shall be
subject to
the terms of the applicable plan documents and Employer's generally
applicable
policies.
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.
4.4 Bonus
In addition to the compensation payable under Section 4.1,
Executive shall be
entitled to receive during the Term an annual bonus, the amount of
which shall
be determined by the Board of Directors ("Bonus"). Each year's
Bonus shall be
paid to the Executive within 110 days of the Employer's calendar
year end.
4.5 Other Compensation
Employer shall provide Executive with a leased automobile for his
exclusive use
throughout the Term, including costs for gasoline, maintenance and
comprehensive
insurance including an "umbrella" policy.
ARTICLE 5
OTHER EMPLOYMENT
During the Term, 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. Employer shall be entitled to all benefits,
profits or
other remuneration arising from or incidental to all work, services
and advice
performed or provided by Executive. Nothing in this Agreement shall
preclude
Executive from:
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(a) 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;
(b)
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
(c)
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.
ARTICLE 6
CONFIDENTIAL INFORMATION/INVENTIONS
Confidential Information
6.1 Executive shall not, in any manner, for any reasons, either
directly or
indirectly, divulge or communicate to any person, firm or
corporation, any
confidential information concerning any matters not generally known
in the
internal combustion engine industry (the "Engine Industry") or
otherwise made
public by Employer which affects or relates to Employer's business,
finances,
marketing and/or operations, research, development, inventions,
products,
designs, plans, procedures, or other data (collectively,
"Confidential
Information") except in the ordinary course of business or as
required by
applicable law. Without regard to whether any item of Confidential
Information
is deemed or considered confidential, material, or important, the
parties hereto
stipulate that as between them, to the extent such item is not
generally known
in the Engine Industry, such item is important, material, and
confidential and
affects the successful conduct of Employer's business and
goodwil
