This Employment
Agreement (the “Agreement”), made and entered into this
9th day of June 2005, by and between 02Diesel Corporation, a
Delaware corporation (the “Company”), and Richard Roger
(the “Executive”).
WHEREAS ,
the Company desires to hire the Executive and the Executive desires
to become employed by the Company; and
WHEREAS ,
the Company and the Executive have determined that it is in their
respective best interest 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.
Employment . The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to serve the Company,
upon the terms and conditions set forth herein.
2.
Term . The employment of the Executive by the Company
pursuant to this Agreement as provided in Section 1 will
commence on 1 st July, 2005 (the “Effective Date”),
and continue until the Executive’s employment is terminated
as provided in Section 6 (the “Term”). For the
period from 1 st July until 31 st December 2005 the Executive shall work a
minimum of 1 day per week and from the 31
st December the Executive shall, unless otherwise
agreed by the Company, be required to execute his duties on a full
time basis.
3.
Position and Duties . The Executive shall serve as
the President and Chief Operating Officer (“COO”), and
shall have such responsibilities, duties and authority as are
generally associated with such office and as may from time to time
be assigned to the Executive by the Chief Executive Officer
(CEO) that are consistent with such responsibilities, duties
and authority, including, but not limited to, responsibility for
the overall strategic business plan and day-to-day operations of
the Company across all functional areas on a worldwide basis. The
Executive shall perform his duties diligently and faithfully and
shall devote substantially all his working time and efforts to the
business and affairs of the Company and its subsidiaries and
affiliates except as otherwise provided herein. The Executive
shall, at all times during the Term, report directly to the CEO.
Notwithstanding anything in this Section 3 to the contrary,
the Executive shall not be required to perform any duties or
responsibilities that would result in a violation of, or
noncompliance with, any law, regulation, regulatory pronouncement
or any other regulatory requirement applicable to the Company and
the conduct of the Company’s business or to the Executive in
his capacity as the President and COO of the Company.
4.
Compensation and Related Matters .
4.1 Base
Salary . In consideration of the services rendered to the
Company hereunder by the Executive and the Executive’s
covenants hereunder, the Company shall, during the Term, pay to the
Executive an annual base salary at a rate of $250,000 (the
“Base Salary”), less statutory deductions and
withholdings, payable in accordance with the Company’s normal
payroll practices; provided, however , until Executive
commences full time employment the Company shall pay Executive a
salary of $6,000 per month. At least annually, the Company will
review the Base Salary for competitiveness, the stage of
development of the Company and appropriateness in the
industry.
4.2 Annual
Bonus/Special Bonus . For each calendar year during the
Term, the Executive shall be eligible to receive a cash bonus of up
to 100% of the Base Salary (the “Bonus”). The Bonus
shall be determined at the discretion of the Board of Directors on
the basis of Executive’s attainment of goals established by
agreement of the Board and Executive from time to time. In
addition, the Company shall pay Executive a special bonus in the
sum of $75,000 on or before February 15, 2007, in respect of
the reward of the restricted shares to be made on 1
st January 2007. During the period prior to
the Executives full time employment the Executive shall be entitled
to receive a bonus of 3% for any funding that is introduced by the
Executive and accepted by the company provided that such funding is
closed within twelve months of the initial introduction.
4.3
Stock/Stock Options . The option currently held by
Executive to purchase 200,000 shares of the Company’s common
stock shall vest 100% on the Effective Date. As soon as practicable
after the Effective Date, the Company shall (a) grant to the
Executive 500,000 shares of Restricted Stock at par value, to vest
annually in equal amounts over three years commencing on the
1 st
of January 2006, with payment
of the first award of 166,667 shares to be made on 1
st January 2007, the second award of 166,667
shares to be made on January 1 st 2008 and the third award of 166,666 shares to be
made on 1 st
of January 2009 (b) grant to
the Executive an option to purchase 1,000,000 shares of the
Company’s common stock and (c) effect the transfer from
Alan Rae to Executive of an option to purchase 250,000 shares of
the Company’s common stock (collectively the options in the
aforesaid subparagraphs (b) and (c), the “Options”).
The Options shall vest over 3 years in accordance with the
following vesting schedule: (i) 34% on the first anniversary
of the Effective Date, and (ii) the remaining 66% every six
months thereafter in equal increments of 16.5%. The term of the
Options shall be ten years from the Effective Date. The Options
shall be issued pursuant to the Company’s Stock Incentive
Plan and will be evidenced by a Stock Option Grant Agreement, as
modified to reflect the terms of this Agreement. The strike price
for the Options that are non-qualified options shall be $1.50 and
for incentive stock options shall be 100% of the Fair Market Value,
as defined in the Company’s Stock Incentive Plan, as amended,
of the Company’s common stock on the date of grant.
Irrespective of the date of grant, the vesting commencement date
for any Options issued in accordance with this Section 4.3
will be the Effective Date. The Options will be granted, to the
maximum amount of shares currently permitted by law, in the form of
incentive stock options and the remainder in non-qualified
options.
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Notwithstanding
the foregoing, all Restricted stock grants and Options shall vest
100% immediately upon a Change in Control as defined below. For
purposes of this Section, a “Change in Control” shall
be deemed to occur in the event of a change in ownership or control
of the Company effected through any of the following transactions:
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Company or a person that
immediately before the Change of Control directly or indirectly
controls, or is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended) of outstanding
securities possessing more than fifty percent (50%) of the total
combined voting power of the Company’s outstanding
securities; or (ii) the sale, transfer or other disposition of
all or substantially all of the Company’s assets; or
(iii) the consummation of a merger or consolidation of the
Company with or into another entity or any other corporate
reorganization, if more than fifty percent (50%) of the combined
voting power of the continuing or surviving entity’s
securities outstanding immediately after such merger, consolidation
or other reorganization is owned by persons who were not
stockholders of the Company immediately prior to such merger,
consolidation or other reorganization.
4.4
Expenses . The Executive shall be entitled to receive
prompt reimbursement for all reasonable and customary expenses
incurred by the Executive in performing services hereunder,
provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the
Company. In addition, the Company shall pay Executive an amount
equal to the attorney fees Executive incurs in connection with the
negotiation of this Agreement.
(a) The
Executive shall be entitled to receive full reimbursement for the
premium costs of any medical and dental plans under which Executive
is covered during the Term.
(b) The
Executive shall be entitled to a car allowance of $1,000 per month
of the Term.
(c) The
Executive shall be eligible to participate in any insurance
coverage, including health, dental, life and disability, and
401(k)/profit sharing or pension plans that cover or are
established for similarly situated full-time employees of the
Company. The Executive’s participation in the foregoing
benefits will be subject to the terms of the applicable plan
documents and the Company’s generally applied policies, and
the Company in its sole discretion may from time to time adopt,
modify or interpret such plans or policies.
(d) The
Executive shall be entitled to four weeks vacation each
year.
5.
Director of the Company; D&O Insurance
.
(a) At
the next annual election of directors, or sooner, in the event of a
vacancy in a non-independent director’s seat on the board of
directors, the Company shall use its best efforts to obtain the
nomination of Executive as a candidate and election to the board of
directors of the Company. During the Term the Executive will serve
without additional compensation as a director of the
Company.
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(b) As
an officer of the Company, the Executive will be covered under all
of the Company’s Director’s and Officer’s
liability insurance policies, which are in place and updated over
time. The Company shall indemnify Executive to the full extent
permitted under Delaware law for claims relating to his service as
a director or officer of the Company.
6.
Termination . The Executive’s employment
hereunder may be terminated under the following
circumstances:
6.1 Death or
Disability . In the event of the Executive’s death or
Disability during the Term of this Agreement, the Executive’s
employment hereunder shall immediately and automatically terminate,
and the Company shall have no further obligation or duty to the
Executive or his estate or beneficiaries other than for the Base
Salary earned under this Agreement to the date of termination,
reimbursement of corporate expenses to which Executive would
otherwise be entitled, and any payments or benefits due under
Company policies or benefit plans which shall be paid within a
reasonable time following death or Disability. For purposes of this
Agreement, “Disability” shall mean the physical or
mental infirmity of Executive (including Executive’s
addiction to, or habitual abuse of, narcotics or controlled
dangerous substances as shall be substantiated medically at the
industry standard for Executive at the time) which infirmity causes
him to be substantially unable to perform his duties hereunder for
any period of one hundred eighty (180) consecutive days;
provided , however, that notwithstanding anything to the
contrary herein and despite any termination of Executive’s
employment under this Section 6, Executive or his estate, as
the case may be, shall be entitled in the event of a termination on
account of death or Disability: (i) to retain his disability
benefits, (ii) to receive his Base Salary until such time as
he has commenced receiving disability payments under the
Company’s policies, (iii) to receive a prorated portion
of the Bonus to which Executive would otherwise have been entitled
for the calendar year through the date of termination (as
determined by the Board), and (iv) accrued but unused
vacation. Executive or his estate, as the case may be, shall have a
period of one (1) year following the termination of his
employment pursuant to this Section 6.1 to exercise any vested
Options. In the event of Executive’s Disability, the Board
may continue to pay Executive his Base Salary at its sole
discretion.
6.2 Cause,
Without Cause Termination by the Executive .
Notwithstanding the provisions of Section 2 of this Agreement,
the Executive’s employment hereunder may terminate under the
following circumstances:
(a)
Termination by the Company for Cause . The Board may
terminate this Agreement for Cause at any time, upon written notice
to the Executive setting forth in reasonable detail the nature of
such Cause. For purposes of this Agreement, Cause is defined as
(i) the Executive’s material breach of Sections 7,
8, 9, 10 or 12 of this Agreement; (ii) the Executive’s
conviction of any felony or any crime involving moral turpitude; or
(iii) gross neglect or willful misconduct by the Executive in
connection with the performance of his material duties hereunder,
or his refusal to perform such material duties reasonably requested
in the ordinary course; provided, however, that the Company shall
give Executive thirty (30) days’ written notice and
opportunity to cure prior to any termination for Cause based on the
grounds specified
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in (i) and
(iii) above. Upon the termination for Cause of
Executive’s employment, the Company shall have no further
obligation or liability to the Executive other than for Base Salary
earned under this Agreement prior to the date of termination,
reimbursement for corporate expenses for which Executive would
otherwise be entitled, and any accrued but unused vacation.
Executive’s vested but unexercised Options shall expire
immediately upon his termination for Cause pursuant to this
Section 6.2(a).
(b)
Termination by the Company Without Cause . The
Executive’s employment hereunder may be terminated without
Cause by the Company upon written notice to the Executive,
provided, however, that if the Company terminates the
Executive’s employment without Cause , or the
Executive terminates his employment for Good Reason, as defined
below, the Company shall, provided that the Executive is executing
his duties on a full time basis (i) continue to pay the
Executive the Base Salary and shall reimburse medical and dental
premiums, under the same conditions as exist at the time of
termination, for a severance period of twelve months, (ii) pay
to the Executive a prorated portion of the Bonus to which Executive
would otherwise have been entitled based on performance through the
calendar quarter in which the termination has occurred,
(iii) cause any unvested Options and Restricted Stock granted
to the Executive to immediately vest, and (iv) pay Executive
for any accrued but unused vacation. In the case of termination
under the terms of this section the Company shall reimburse
Executive for corporate expenses for which Executive would
otherwise be entitled. The Company’s obligations under this
Section 6.2(b) are not sub
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