SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (the "Agreement") is made and
entered into effective as of October 19, 2007 (the "Separation Date"), by and
between Momentum Biofuels, Inc., a Colorado corporation formerly known as Tonga
Capital Corporation (the "Company") and Xxxxxx X. Xxxxx (the "Executive").
W I T N E S S E T H:
--------------------
WHEREAS, the Executive and the Company are parties to that
certain Executive Employment Agreement dated as of April 20, 2007 (the
"Employment Agreement"); and
WHEREAS, the parties mutually desire to arrange for a
separation from the Company and its affiliates and subsidiaries under certain
terms; and
WHEREAS, in consideration of the mutual promises contained
herein, the parties hereto are willing to enter into this Agreement upon the
terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises, the terms
and provisions set forth herein, the mutual benefits to be gained by the
performance thereof and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Termination of Employment. Effective as of the Separation Date, the
Executive is removed from his position as Chief Financial Officer of the
Company. The parties agree that the termination of the Executive's employment is
a termination for the convenience of the Company, and is made without Cause
pursuant to the Employment Agreement.
2. Separation Benefits. The Company agrees to pay or provide, and the
Executive agrees to accept, the benefits set forth in this Section 2 in
consideration for the Executive's service through the Separation Date and the
additional consideration provided by the Executive pursuant to this Agreement.
A. Payment of Severance. The Company agrees to pay the Executive the
required severance payment agreed to in the Employment Agreement on the
Separation Date. Payment will be $60,000 due upon execution of the
Separation Agreement with the remainder due in 12 monthly installments of
$7,500 due on the 15th of each month beginning November 15, 2007.
B. Payment of Expenses. Within 10 days following the Separation Date,
the Company will pay to the Executive any outstanding expenses to the
extent not already submitted, the Executive agrees to provide documentation
in reasonable detail of any reimbursement request.
C. Vesting of Option. The parties agree that the option to purchase
2,000,000 shares of the Company's common stock ("Common Stock"), as set
forth on Exhibit A to the Employment Agreement (the "Option"), is currently
exercisable with respect to 375,000 shares of Common Stock. The Option will
remain exercisable until April 20, 2012. The parties agree that a separate
agreement documenting the complete terms of the Option will be executed
contemporaneously herewith in substantially the form attached hereto as
Attachment A.
D. Removal of Lock-Up Restrictions. Effective as of the Separation
Date, the Company agrees to waive the lock-up restrictions described in
Exhibit A to the Employment Agreement with respect to any and all shares of
Common Stock which the Executive has or may acquire in the future.
E. Registration of Outstanding Shares. The Company agrees to cause all
shares of Common Stock currently held by the Executive to be registered on
Form SB-2 along with the shares sold in the Company's private placement
completed on September 4, 2007.
3. Mutual Release of Claims.
A. In consideration of the covenants from the Company to the Executive
set forth herein, the receipt and sufficiency of which is hereby
acknowledged, Executive, on his behalf and on behalf of his heirs,
devisees, legatees, executors, administrators, personal and legal
representatives, assigns and successors in interest, hereby IRREVOCABLY,
UNCONDITIONALLY AND GENERALLY RELEASES, ACQUITS, AND FOREVER DISCHARGES, to
the fullest extent permitted by law, Company and each of Company's
divisions, subsidiaries, successors and assigns, agents, or any of them,
from any and all charges, complaints, claims, damages, actions, causes of
action, suits, rights, demands, grievances, costs, losses, debts, and
expenses (including attorneys' fees and costs incurred), of any nature
whatsoever arising prior to the Separation Date; provided, however, that
nothing contained herein shall operate to release any obligations of
Company, its successors or assigns (x) arising under any claims to amounts
or benefits described in this Agreement or (y) to defend and indemnify
Executive to the maximum extent that directors and officers of corporations
are required to be indemnified under Colorado law or the Company's
Certificate of Incorporation and Bylaws for all costs of litigation and any
judgment or settlement amount paid.
B. In consideration of the covenants from the Executive to Company set
forth herein, the receipt and sufficiency of which is hereby acknowledged,
the Company, its assigns and successors in interest, hereby IRREVOCABLY,
UNCONDITIONALLY AND GENERALLY RELEASES, ACQUITS, AND FOREVER DISCHARGES, to
the fullest extent permitted by law, the Executive, his heirs, devisees,
legatees, executors, administrators, personal and legal representatives, or
any of them, from any and all charges, complaints, claims, damages,
actions, causes of action, suits, rights, demands, grievances, costs,
losses, debts, and expenses (including attorneys' fees and costs incurred),
of any nature whatsoever arising prior to the Separation Date.
4. Restrictive Covenants. The Executive acknowledges that all of the
remaining covenants set forth in Section 7 of the Employment Agreement are
operative and remain in effect in accordance with their terms, including the
Agreement contained in Section 7E.
5. Mutual Nondisparagement; Press Release. The Executive and the Company
and its officers and directors agree to refrain from any criticisms or
disparaging comments, orally or in writing, about each other or in any way
relating to the Executive's employment or separation from employment; provided,
however, that nothing in this Agreement shall apply to or restrict in any way
the communication of information by the Company or the Executive to any state or
federal law enforcement agency or require notice to the Company or the Executive
thereof, and neither the Executive nor the Company will be in breach of the
covenant contained above solely by reason of testimony which is compelled by
process of law. The parties agree that any press release regarding the
Executive's separation will be reviewed and approved by both parties prior to
distribution.
6. Indemnification; D&O Insurance. The Company shall indemnify and hold the
Executive harmless against judgments, fines, amounts paid in settlement, and
reasonable expenses (including attorneys fees) incurred by the Executive in
connection with the defense of any action or proceeding in which he is a party
by reason of his position as an officer or director of the Company or any
affiliated company or entity, so long as the Executive acted in good faith and
in a manner the Executive reasonably believed to be in or not opposed to the
best interests of the Company, and, with respect to any criminal action or
proceeding, Employee had no reasonable cause to believe his conduct was
unlawful; provided, however, that such indemnity shall be consistent with
Colorado law and with the provisions contained as of the date of this Agreement
within the Company's bylaws and charter, or the affiliated company or entity's
bylaws or charter, addressing the indemnification of its directors, officers and
authorized representatives for actions of the nature described herein. Until the
date 6 years following the Separation Date, the Company agrees to maintain
reasonable directors and officers liability insurance covering claims incurred
in respect of the period during which the Executive was a director or officer of
the Company.
7. Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be subject, in any manner, to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, whether voluntary or
involuntary, by operation of law or otherwise, any attempt at such shall be
void; provided, that any such benefit shall not in any way be subject to the
debts, contract, liabilities, engagements or torts of the Executive, nor shall
it be subject to attachment or legal process for or against the Executive.
8. Entire Agreement; Modification. This Agreement sets forth the entire
agreement and understanding of the parties concerning the subject matter hereof,
and supersedes all prior agreements, arrangements and understandings relative to
that subject matter including, without limitation, the Employment Agreement. No
term or provision hereof may be modified or extinguished, in whole or in part,
except by a writing which is dated and signed by the parties to this Agreement.
No waiver of any of the provisions or conditions of this Agreement or of any of
the rights, powers or privileges of a party will be effective or binding unless
in writing and signed by the party claimed to have given or consented to such
waiver. No representation, promise or inducement has been made to or relied upon
by or on behalf of either party concerning the subject matter hereof which is
not set forth in this Agreement.
9. Waiver. No term or condition of this Agreement shall be deemed to have
been waived, nor there an estoppel against the enforcement of any provision of
this Agreement, except by written instrument of the party charged with such
waiver or estoppel.
10. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
Momentum Biofuels, Inc.
Attn: Chairman of the Board
0000 X. Xxxxx Xxxx., Xxxxx 000
Xxxxxx Xxxx, XX 00000
To the Executive:
Xxxxxx X. Xxxxx
00000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
All such notices shall be conclusively deemed to be received and shall be
effective; (i) if sent by hand delivery, upon receipt, (ii) if sent by telecopy
or facsimile transmission, upon confirmation of receipt by the sender of such
transmission, or (iii) if sent by registered or certified mail, on the fifth day
after the day on which such notice is mailed.
11. Source of Payments. All cash payments provided in this Agreement will
be paid from the general funds of the Company. The Executive's status with
respect to amounts owed under this Agreement will be that of a general unsecured
creditor of the Company.
12. Taxes. The Company may withhold from any benefits payable under this
Agreement all federal income or employment taxes that will be required pursuant
to any law or governmental regulation or ruling. The Executive shall be entitled
to receive tax gross-up payments, to the extent required pursuant to the terms
of Exhibit A to the Employment Agreement, which is expressly incorporated
herein. Such payments, if required, will be made no later than the end of the
taxable year in which the Executive remits the underlying taxes. This Agreement
is intended to comply with Section 409A of the Code (to the extent applicable)
and the Company agrees to interpret, apply and administer this Agreement in the
least restrictive manner necessary to comply with such requirements and without
resulting in any diminution in the value of payments or benefits to the
Executive. For purposes of Section 409A of the Code, the right to a series of
installment payments under this Agreement shall be treated as a right to a
series of separate payments, and the payments of severance compensation paid
under Section 2 of this Agreement shall be considered payments upon an
involuntary termination under a "separation pay plan" within the meaning of
Treas. Reg. Section 1.409A-1(b)(9)(iii).
13. Severability. If any provision of this Agreement is held to be invalid,
illegal or unenforceable, in whole or part, such invalidity will not affect any
otherwise valid provision, and all other valid provisions will remain in full
force and effect.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, and all of which
together will constitute one document.
15. Titles. The titles and headings preceding the text of the paragraphs
and subparagraphs of this Agreement have been inserted solely for convenience of
reference and do not constitute a part of this Agreement or affect its meaning,
interpretation or effect.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (except that no effect shall be
given to any conflicts of law principles thereof that would require the
application of the laws of another jurisdiction)
17. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by final and binding
arbitration in Houston, Texas, in accordance with the Employment Arbitration
Rules of the American Arbitration Association ("AAA"). The arbitrator shall be
selected by mutual agreement of the parties, if possible. If the parties fail to
reach agreement upon appointment of an arbitrator within thirty days following
receipt by one party of the other party's notice of desire to arbitrate, the
arbitrator shall be selected from a panel or panels of persons submitted by the
AAA. The selection process shall be that which is set forth in the AAA
Employment Arbitration Rules then prevailing, except that, if the parties fail
to select an arbitrator from one or more panels, AAA shall not have the power to
make an appointment but shall continue to submit additional panels until an
arbitrator has been selected. This agreement to arbitrate shall not preclude the
parties from engaging in voluntary, non-binding settlement efforts including
mediation.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[END OF PAGE]
IN WITNESS WHEREOF, the parties have executed this Agreement
on __________________, 2007, but effective as of the date and year first above
written.
MOMENTUM BIOFUELS, INC.
By:______________________________
[Name]
[Title]
EXECUTIVE
_________________________________
Xxxxxx X. Xxxxx
ATTACHMENT A
MOMENTUM BIOFUELS, INC.
AMENDED AND RESTATED OPTION AWARD AGREEMENT
This award agreement (the "Agreement") is entered into as of
October 19, 2007, by and between Momentum Biofuels, Inc., formerly known as
Tonga Capital Corporation (the "Company"), and Xxxxxx X. Xxxxx (the "Optionee").
This Agreement amends and restates, and supersedes and replaces, the terms of
the option awarded as of April 20, 2007, pursuant to Exhibit A to the Employment
Agreement by and among the Company and Optionee.
Grant; Exercise Price: The Company has granted Optionee a
right (the "Option") to purchase from the Company up to 375,000 shares of common
stock of the Company ("Common Stock") at $1.00 per share (the "Exercise Price"),
which is not less than the fair market value of a share of common stock as of
the grant date. The number of shares of Common Stock subject to the Option and
the Exercise Price are subject to adjustment as provided in Section 7.
Vesting and Exercise of Option: This Option is fully vested
and exercisable as of October 17, 2007.
Termination of Option: Notwithstanding anything in this
Agreement to the contrary, this Option shall terminate and be of no further
force and effect on April 20, 2012.
Notice of Exercise and Payment: Once the Option has become
exercisable, the Optionee may purchase shares of Common Stock pursuant to this
Agreement by (i) giving written notice to the Company of the number of shares of
Common Stock which are to be purchased provided that such number does not exceed
the number of shares of Common Stock which the Optionee is entitled to purchase
at such time pursuant to this Agreement and (ii) delivering a cashier's check or
money order or, at the option of the Optionee, shares of Common Stock
theretofore owned by such Optionee for at least six months (or any combination
of cashier's check, money order or such Common Stock), in an amount equal to the
Exercise Price multiplied by the number of shares of Common Stock which are to
be purchased. For purposes of determining the amount, if any, of the Exercise
Price satisfied by payment in Common Stock, such Common Stock shall be valued at
its fair market value on the date of exercise. Any Common Stock delivered in
satisfaction of all or a portion of the purchase price shall be appropriately
endorsed for transfer and assignment to the Company. If the Company adopts a
broker-assisted cashless exercise program for options issued to executive
officers, the Company agrees to make such program available to Optionee with
respect to the Option.
Delivery of Common Stock by the Company: As soon as
practicable after receipt of all items referred to in Section 4, and subject to
the withholding referred to in Section 8, the Company shall deliver to Optionee
certificates issued in Optionee's name for the number of shares of Common Stock
purchased by exercise of the Option. If delivery is by mail, delivery of shares
of Common Stock shall be deemed effected for all purposes when the Company or a
stock transfer agent of the Company shall have deposited the certificates in the
United States mail, addressed to Optionee. The Optionee shall have no rights of
a shareholder with respect to shares of Common Stock subject to the Option
unless and until such time as the Option has been exercised and ownership of
such shares of Common Stock has been transferred to the Optionee
Assignability: The Option granted under this Agreement shall
not be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated by the Optionee, and during the lifetime of the Optionee, the
Option shall be exercisable only by him, or, if the Optionee becomes mentally
incapacitated, the Option shall be exercisable by his guardian or legal
representative. Any attempted assignment or transfer in violation of this
Section shall be null and void. Upon the Optionee's death, the personal
representative or other person entitled to succeed to the rights of the Optionee
(the "Successor Optionee") may exercise such rights. A Successor Optionee must
furnish proof satisfactory to the Company of his or her right to exercise the
Option under the Optionee's will or under the applicable laws of descent and
distribution.
Adjustments:
The existence of this Option shall not affect in any manner
the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalization, reorganizations or
other changes in the ownership of the Company or its business or any
merger or consolidation of the Company, or any issue of bonds,
debentures, or other obligations, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets
or business, or any other corporate act or proceeding of any kind,
whether or not of a character similar to that of the acts or
proceedings enumerated above.
In the event of any stock distribution or split,
recapitalization, extraordinary dividend, merger, consolidation,
combination or exchange of shares or similar change, or upon the
occurrence of any other similar event that the Board of Directors, in
its sole discretion, deems appropriate, the (i) the number of shares of
Common Stock purchasable under this Option, (ii) the Exercise Price,
and (iii) any other determinations shall be adjusted as the Board of
Directors deems appropriate; provided, however, that (i) the parties to
this Agreement intend that any such adjustment shall only be made to
the extent that it will not result in accelerated taxation or the
imposition of an excise tax under Section 409A of the Internal Revenue
Code of 1986, as amended, and the relevant regulations and other
guidance that may be issued thereunder and (ii) such adjustments shall
be designed to preserve, without increasing or decreasing, the value of
the Option and shall be consistent with the treatment of shares of
Common Stock not subject to this Option.
Withholding: The Company may require the Optionee to remit to
the Company an amount sufficient to satisfy federal, state, local and other
withholding tax requirements, as a condition to the purchase by the Optionee of
shares of Common Stock pursuant to this Agreement. The Optionee may pay all or
any portion of the taxes required to be withheld by the Company or paid by the
Optionee in connection with the exercise of all or any portion of this Option by
delivering cash, or by electing to have the Company withhold shares of Common
Stock, or by delivering previously owned shares of Common Stock, having a fair
market value equal to the amount required to be withheld or paid.
Securities Law Restrictions: The Company shall use
commercially reasonable efforts to register the shares of Common Stock subject
to the Option pursuant to the Securities Act of 1933 on Form S-8 or on such
other form as may be available. Until the Option and shares of Common Stock
covered by this Agreement have been registered under the Securities Act of 1933,
as amended, the Optionee may be required by the Company to give a representation
in writing in form and substance satisfactory to the Company to the effect that
he is acquiring such shares of Common Stock for his own account for investment
and not with a view to, or for sale in connection with, the distribution of such
shares of Common Stock or any part thereof.
Notices: Notice or other communication to the Company with
respect to this Option, including the notice of exercise, must be made by
registered or certified United States mail, postage prepaid or by hand
delivery or otherwise, to Momentum Biofuels, Inc., Attn: Chairman of the
Board, 0000 X. Xxxxx Xxxx., Xxxxx 000, Xxxxxx Xxxx, XX 00000, Attention:
Chairman of the Board.
Notwithstanding the foregoing, in the event that the address
of the Company is changed, any such notice shall instead be made pursuant to the
foregoing provisions at the Company's current address.
Any notices provided for in this Agreement shall be given in
writing and shall be deemed effectively delivered or given upon receipt or, in
the case of notices delivered by the Company to the Optionee, five days after
deposit in the United States mail, postage prepaid, addressed to the Optionee at
the address specified at the end of this Agreement or at such other address as
the Optionee hereafter designates by written notice to the Company.
Governing Law: This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas (except that no
effect shall be given to any conflicts of law principles thereof that would
require the application of the laws of another jurisdiction).
Arbitration: In the event of any dispute, difference or
question arising between the Company and Optionee in connection with this
Agreement shall be governed by the dispute resolution procedures outlined in
Section 17 of the Separation Agreement between the Company and Optionee dated as
of October 19, 2007.
Entire Agreement: Optionee and the Company hereby declare and
represent that no promise or agreement not herein expressed has been made and
that this Agreement contains the entire agreement between the parties hereto
with respect to the Option and replaces and makes null and void any prior
agreements, oral or written, between Optionee and the Company regarding the
Option.
Right of First Refusal: Optionee hereby grants the Company a
Right of First Refusal to purchase the Option, or shares purchased under the
Option, which he plans to sell, upon ten days written notice, with such Notice
specifying such other bona fide offer price and terms, or if such sale is
proposed at market price, then the Company may purchase such shares or Option by
cash tender within ten days after date of notice. If the Option is being sold by
Optionee, under terms other than cash, the Company shall have the right to
purchase on the same terms. Such Right of First Refusal shall extend for 5 years
from date hereof, and may not be modified except in writing.
Counterparts: This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Signature Page Follows]
IN WITNESS THEREOF, the parties hereto have executed this
Agreement as of the day first above written.
MOMENTUM BIOFUELS, INC.
By:
Name:
Title:
OPTIONEE
Xxxxxx X. Xxxxx
00000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
