This employment agreement
(“Agreement”), executed as of April 23, 2009, by
and between Kreido Biofuels, Inc., a Nevada corporation located at
1070 Flynn Avenue, Camarillo, California 93012 and Kreido’s
wholly-owned subsidiary, Kreido Laboratories (collectively
“Kreido” or the “Company”) and John M.
Philpott, an individual (“Executive”).
Whereas, Executive currently is employed as
Company’s Chief Financial Officer under an Employment
Agreement dated April 30, 2008 (the “2008
Agreement”);
Whereas, Executive, because of the sale of
substantially all of the assets of the Company, is entitled to
terminate his employment for Good Reason (as defined in the 2008
Agreement); and
Whereas, Kreido wishes to continue to employ
Executive as its Chief Executive Officer and Chief Financial
Officer on an ongoing basis and Executive, subject to the terms of
this Agreement, is willing to be so employed.
Now, therefore, in consideration of good and
valuable consideration, the sufficiency of which is hereby
acknowledged, the parties agree as follows:
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1.
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Waiver . Executive hereby waives his right
to terminate his employment for Good Cause under the 2008
Agreement. This Agreement, from and after its Effective Date shall
replace and supersede the 2008 Agreement. As used herein, the
“Effective Date” shall mean April 15,
2009.
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2.
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Executive’s Duties;
Titles . From
the date hereof to the Effective Date, Executive shall continue to
be employed as the Chief Financial Officer of Kreido and Kreido
Laboratories. Beginning on the Effective Date, Executive shall be
employed as Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”) of Kreido and Kreido
Laboratories. Executive shall not be required to dedicate his full
time or attention to Kreido. Rather, Executive shall dedicate such
amount of his time and attention as shall be reasonably necessary
for him to do and perform all services, acts and things necessary
and advisable to manage and conduct the business of the Company
including, without limitation, the marshalling and sale of its
remaining assets, the settlement of its liabilities and
obligations, the preparation and filing of all reports and
statements to be filed by the Company under any applicable federal
or state law, including the federal securities laws, and the
identification and evaluation of new operating business
opportunities. At all times during his employment, Executive shall
report to and be subject to the direction and policies that are
established from time to time by the Kreido’s Board of
Directors (the “Board”).
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3.
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Term and Termination
. Except as
specifically provided herein, the Term of this Agreement shall
commence as of the date of execution of this Agreement. The Term
shall continue through and including May 31, 2010 unless it is
terminated earlier as provided herein below or extended by
agreement of the parties. The expiration of this Agreement at the
end of its Term shall not constitute a termination of the
employment of Executive.
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4.
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Location .
Executive shall work
from his own office in Camarillo, California. Executive shall not
be required routinely to provide services outside of a reasonable
commuting distance from Camarillo, California except when traveling
on Kreido business and at the expense of Kreido.
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5.1
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Annual Compensation
.
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5.1.1
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Base Salary . From the date hereof to the
Effective Date, Executive shall receive a base salary equal to
$16,250 per month. Commencing on the Effective Date, Executive
shall receive a base salary of $5,000 per month based upon his
dedication of approximately one full day per week to the business
affairs of Kreido, payable monthly through Kreido’s regular
payroll system.
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5.1.2
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Bonus . Executive shall be entitled to
participate in a performance-based executive bonus plan
(“Bonus Plan”), which shall be promulgated by the
Compensation Committee of the Board. The Bonus Plan will set forth
three levels of target performance goals “TPGs” for
fiscal years 2009 and 2010 combined which, if achieved, will
entitle the Executive to a bonus of between $1,000 and $50,000
depending upon the level of TPG achieved. The TPGs will consist of
a combination of goals for the Executive’s individual
performance and the Company’s overall performance in a ratio
of 75% Company performance and 25% individual Executive
performance. Bonuses paid under the Bonus Plan, if any, will be
paid on or before June 30, 2010. The foregoing
notwithstanding, so long as Executive’s employment under this
Agreement is not terminated voluntarily by Executive without Good
Reason (as defined below), Executive’s bonus shall be no less
than $1,000. In the event Executive’s employment is
terminated by the Company Without Cause or by Executive with Good
Reason prior to the end of the applicable fiscal year, Executive
shall be entitled to receive a pro rata portion of the bonus that
would have been earned based on the TPG’s achieved prior to
termination.
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5.2
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Inducement Payment
. As an inducement to
Executive continuing in the employment of the Company and waiving
and releasing his rights under the 2008 Agreement, Kreido agrees to
pay to Executive the gross sum of $252,875.00 less all applicable
withholding and payable taxes and benefits, contributions or
payments that are billed in arrears (the “Inducement
Payment”). The Inducement Payment shall be paid in two or
more installments, the first installment being in the gross amount
equal to one-half of the Inducement Payment shall be paid no later
than April 30, 2009. The balance of the Inducement Payment
shall be paid when and as funds are available to the Company from
the sale of remaining equipment but in all events the unpaid
balance shall be due and payable on March 5, 2010. Executive
acknowledges that the Company’s agreement to make the
Inducement Payment is in consideration of the general release and
other covenants set forth herein below, and such Inducement Payment
is in full satisfaction of all amounts of Severance Pay, Earned
Bonus and reimbursements, if applicable under Section 7.2 of the
2008 Agreement that would have been due and payable to Executive
had Executive terminated his employment for Good Cause.
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5.3
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Restricted Stock
. Kreido hereby waives
and releases its rights to repurchase the 75,000 shares of Company
common stock issued to Executive as Restricted Stock under the 2008
Agreement.
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5.4
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Expense Reimbursement
. Kreido shall
reimburse Executive for all ordinary and necessary expenses
reasonably incurred by Executive on Kreido’s behalf
(“Business Expenses”). Business Expenses (including
travel costs) in excess of $500 individually or $2,500 in the
aggregate shall be approved in advance in writing by a Board
member, except in case of emergency.
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6.
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Proprietary Covenants of
Executive .
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6.1
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No Conflicts of Interest
. Executive
acknowledges that he is bound to use good judgment, to adhere to
the highest ethical standards, and to avoid situations that create
an actual, potential, or apparent conflict of interest. Executive
warrants and represents to Kreido that he is currently unaware of
any actual, potential, or apparent conflicts of interest. He also
agrees to immediately disclose to the Chairperson of Kreido any and
all actual, potential, or apparent conflicts of interest, should
they later arise. In addition, Executive covenants that for so long
as he is employed by the Company, he shall inform the Company of
each and every business opportunity presented to the Executive that
could be reasonably feasible for the Company to
undertake.
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6.2
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Covenant Not to Use or Disclose
Confidential Information .
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6.2.1
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Definition of Confidential
Information .
For purposes of this Agreement, the term Confidential Information
means all and any confidential information and/or trade secrets of
Kreido, including without limitation, scientific discoveries,
recipes, formulations, information encompassed in all advertising
and marketing plans, customer lists, costs, pricing information,
information concerning software and all concepts or ideas, in or
reasonably related to the business of Kreido. Confidential
Information shall not include any Kreido information that has been
voluntarily disclosed to the public by Kreido, independently
developed and disclosed by others, information about Kreido that
Executive did not obtain by virtue of his employment or fiduciary
relationship with the Company, or information which otherwise
enters the public domain through lawful means.
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6.2.2
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Non-disclosure of Confidential
Information .
Executive expressly acknowledges that in the performance of his
duties and responsibilities with the Company prior to the execution
of this Agreement, he has been exposed to Confidential Information
and that he will continue to be exposed to the Confidential
Information after the execution of this Agreement. During his
employment and for three years thereafter, Executive shall regard
and preserve as confidential all Confidential Information
pertaining to Kreido and its affiliates that have been or may be
obtained by Executive in any way by reason of Executive’s
employment by Kreido. Executive shall not, without the prior and
specific written consent of Kreido, or unless ordered to do so by
court order or subpoena (i) use, publicize, release or
disclose to others, either during or after the period of
employment, Confidential Information or (ii) take, retain or
copy any Kreido executive compensation plans, Executive benefit
plans, business plans, customer lists, costs, pricing information,
documents, reports, information encompassed in advertising and
marketing plans, or other concepts or ideas, in or reasonably
related to the business of Kreido. Executive agrees to notify
Kreido’s Board within two (2) business days of receipt
of any court order or subpoena which calls for information deemed
Confidential under this Agreement and to give Kreido reasonable
opportunity to contest the subpoena. The foregoing notwithstanding,
nothing contained in this Section 6.2.2 shall be construed to
prevent Executive from using or disclosing Confidential Information
when it is necessary for him to do so in the course of conducting
his regular employment duties.
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7.
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Termination Due to Death or
Disability .
If Executive dies during the employment, Executive’s
employment shall automatically cease and terminate as of the date
of Executive’s death. In the event of Executive’s
disability for a period of 120 consecutive days, Company shall
thereafter have the right, upon written notice to Executive, to
terminate this Agreement, in which case the date of termination
shall be the date of such written notice to Executive. As used
herein, “disability” shall have the meaning provided in
the Company’s disability insurance policy.
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In the event of
the termination of Executive’s employment due to his death or
Disability, Executive’s estate and/or Executive shall be
entitled to receive: (i) a lump sum cash payment, payable
within ten (10) business days after the date of death equal to
the sum of the annual salary to the extent not previously paid and
bonus as of the date of death; (ii) any unpaid Inducement Payment,
and (iii) any reimbursements, if any, as to which Executive
may be entitled hereunder. In the event of the termination of
Executive’s employment due to Disability, Executive shall not
be entitled to any severance pay.
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8.
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Termination by Kreido
.
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8.1
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Termination for Cause
.
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8.1.1
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Definition of Cause
. The term
“Cause” for purposes of this Agreement means the
following, which will constitute a material breach of this
Agreement (“Material Breach”): Executive’s
conviction of or plea of nolo contendere to any felony or any
offense involving moral turpitude.
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8.1.2
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Entitlements Upon a Termination for
Cause . In
the event of the termination of the Executive’s employment
hereunder due to a termination by the Company for Cause, on the
date of termination Executive shall be entitled to receive: a lump
sum cash payment, payable immediately upon the termination of
Executive’s employment, equal to the sum of any accrued but
unpaid base salary and bonus as of the date of such termination
plus any unpaid Inducement Payment, and any properly incurred but
unpaid expense reimbursements.
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8.2
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Termination Without
Cause .
Kreido may terminate Executive’s employment hereunder without
Cause at any time by providing Executive written notice of such
termination. If Executive’s employment is terminated without
Cause, the termination shall take effect on the effective date of
written notice of such termination to Executive (pursuant to
Section 13.10).
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8.2.1
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Entitlements Upon a Termination
Without Cause . In the event of the termination of
Executive’s employment hereunder due to a termination by
Kreido without Cause (other than due to Executive’s death),
Executive shall be entitled to: a lump sum cash payment, payable
immediately upon the termination of Executive’s employment,
equal to the sum of the annual base salary to the extent not
previously paid and bonus as of the date of such termination plus
any unpaid Inducement Payment and any properly incurred but unpaid
expense reimbursements.
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9.
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Termination by Executive
.
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9.1
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Termination Without Good
Reason .
Executive shall have the right to terminate Executive’s
employment hereunder at any time without Good Reason (as defined
below) upon written notice of such termination to Kreido. A
voluntary termination by Executive in accordance with this
Section 9.1 shall not be deemed a breach of this
Agreement.
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9.2
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Termination With Good
Reason . The
following events constitute grounds for Executive to terminate his
employment for good reason (“Good Reason”):
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(i)
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removal of Executive from either
position specified in Section 1 without Cause of Executive’s
consent;
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(ii)
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material diminution in
Executive&rs
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