AE BIOFUELS, INC. PARKASH P. AHUJA EXECUTIVE EMPLOYMENT AGREEMENT JUNE 17, 2008
XXXXXXX
X. XXXXX EXECUTIVE EMPLOYMENT AGREEMENT
JUNE
17, 2008
This
Agreement is made by and between AE Biofuels, Inc., a Nevada corporation (the
“Company”), and Xxxxxxx X. Xxxxx (“Executive”) to be effective as of June 17,
2008 (the “Effective Date”).
1. Duties
and Scope of Employment.
(a) Position;
Employment Commencement Date; Duties.
Executive’s employment with the Company pursuant to this Agreement is effective
as of June 17, 2008 (the “Employment Commencement Date”). On and after the
Employment Commencement Date, the Company shall retain the Executive as
Chief
Operating Officer
reporting to the Chief Executive Officer and President of the Company.
During
the Employment Term (as defined in section 2 herein), Executive shall render
such business and professional services in the performance of his duties as
are
consistent with Executive’s position within the Company, and as shall reasonably
be assigned to him by the Chief Executive Officer and President.
(b) Obligations.
During
the Employment Term and as consideration for the compensation set forth herein,
Executive shall devote his full business efforts and time during normal business
hours to the Company. During the Employment Term the Executive agrees not to
engage in any other employment, occupation or consulting activity for any direct
or indirect remuneration without the prior approval of the Chief Executive
Officer; provided, however, that Executive may serve in any capacity with any
civic, educational or charitable organization.
2. Employment
Term.
It is
intended that the employment arrangement contemplated by this Agreement shall
continue until the third anniversary of the Effective Date (such period being
referred to herein as the “Employment Term”). Notwithstanding the foregoing, the
parties agree that neither this Agreement nor any provision herein is intended
to guarantee the continuation of Executive’s employment for the duration of the
Employment Term. In the event that Executive’s employment with the Company
terminates prior to the expiration of the Employment Term for any reason, the
parties agree that Executive shall be entitled to receive only those benefits
that are expressly provided by this Agreement in such circumstances. Subject
to
Section 6(d)(ix), Executive may terminate his employment for any reason without
notice and without penalty.
3. Employee
Benefits.
During
the Employment Term, Executive shall be eligible to participate in all employee
and fringe benefit plans maintained by the Company (both currently and as may
be
made available from time to time) that are applicable to other senior management
to the full extent provided for under those plans for the position held by
the
Executive.
4. Vacation/Personal
Days.
During
the Employment Term, Executive shall have four weeks of combined paid vacation
and personal days per year. Accrual and use of vacation time shall be governed
by the Company’s employee handbook as in effect from time to time. In the event
of termination for any reason, any accrued unused vacation time shall be paid
in
accordance with the Company’s employee handbook.
5. Expenses.
While
Executive is employed during the Employment Term, the Company will reimburse
Executive for reasonable travel, entertainment or other expenses incurred by
Executive in the furtherance of or in connection with the performance of
Executive's duties hereunder, in accordance with the Company's expense
reimbursement policy as in effect from time to time.
6. Compensation.
(a) Base
Salary.
While
employed by the Company, the Company shall pay the Executive as compensation
for
his services a base salary at the annualized rate of One Hundred Eighty Thousand
Dollars ($180,000) per year (the “Base Salary”). Such salary shall be paid
periodically in accordance with normal Company payroll practices and subject
to
required withholding.
(b) Bonus.
Executive shall receive a signing bonus of $30,000, and shall be entitled to
receive an annual bonus (the “Bonus”) of up to $120,000 based upon Executive’s
performance and the Company’s attainment of objectives established by the
Compensation Committee of the Board. The Bonus for year 2008 shall be 50% of
the
annual Bonus thereafter. The Bonus shall be paid 50% at March 31st
and 50%
at June 30th of the year following the year in which the Bonus is earned. Except
as permitted under Section 7, Executive must be employed by the Company during
the entire applicable bonus period for the payment of the Bonus. With respect
to
any subjective milestones, the determination of whether Executive has attained
the milestones for the Bonus shall be reasonably determined by the Compensation
Committee.
(c) Options.
The
Company shall recommend to the Compensation Committee of the Board of Directors
of the Company that it grant Executive an option to purchase shares of common
stock of the Company in accordance with the Company’s policies and procedures as
they exist from time to time. The terms, including vesting, of any stock option
granted to Executive shall be determined by the Compensation Committee of the
Company’s Board of Directors and shall be governed by the relevant Stock Plan
and Stock Option Agreement entered into between the Company and the
Executive.
(d) Severance.
During
the first ninety days after the date hereof, the terms of this section 6(d)
shall not apply.
(i) Involuntary
Termination Other Than for Cause; Constructive Termination on or Following
Change of Control.
If, on
or following a Change of Control of the Company (as defined in Section 6(v)
below), Executive’s employment with the Company is Constructively Terminated or
involuntarily terminated by the Company other than for Cause, Executive’s death,
or Executive’s Total Disability, then, subject to Executive executing and not
revoking a standard form of mutual release of claims with the Company, the
Executive shall receive, in addition to any other amounts due and owing
hereunder: a) continued salary payments for three months of Base Salary; b)
immediate vesting of 50% of any remaining unvested Option; and c) the medical
benefits described in subsection 6(d)(iii) below.
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(ii) Involuntary
Termination Other Than for Cause; Constructive Termination Prior to Change
of
Control.
If,
prior to a Change of Control, Executive’s employment with the Company is
Constructively Terminated or involuntarily terminated by the Company other
than
for Cause (as defined below), Executive’s death, or Executive’s Total
Disability, then, subject to Executive executing and not revoking a standard
form of mutual release of claims with the Company,
the
Executive shall receive, in addition to any other amounts due and owing
hereunder: a) continued salary payments for three month’s of base salary after
termination, less applicable withholding; b) immediate vesting of 25% of any
remaining unvested option; and c) the medical benefits described in subsection
6(d)(iii) below.
(iii) In
addition to the severance payments and vesting acceleration set forth in
subsections 6(d)(i) and 6(d)(ii) above, Executive shall receive at the Company’s
expense 100% of Company-paid health, dental and vision insurance benefits at
the
same level of coverage as was provided to Executive immediately prior to the
termination of Executive’s employment with the Company (“Company-Paid
Coverage”). If such coverage included Executive’s dependents immediately prior
to Executive’s termination, such dependents shall also be covered at the
Company’s expense. Company-Paid Coverage shall continue until the earlier of (i)
3 months following the date of the termination of Executive’s employment (the
“Benefits Termination Date”), or (ii) the date upon which Executive or
Executive’s dependents become covered under another employer’s group health,
dental and vision insurance benefit plans.
(iv) Cause
Definition.
For the
purposes of this Agreement, “Cause” means (1)
Executive’s material, willful and continuing breach of his obligations to the
Company set forth in the employment agreement after thirty (30) days
written notice from the Company specifying the nature of Executive’s breach and
demanding that such breach be remedied (unless such breach by its nature cannot
be cured, in which case notice and an opportunity to cure shall not be
required); (2) Executive’s conviction of a felony that is injurious to the
Company or its business; or (3) act or acts of dishonesty by Executive that
are materially injurious to the Company or its business.
(v) Constructive
Termination Definition.
For the
purposes of this Agreement,
“Constructive Termination” means, without Executive’s written consent, (1) a
material reduction in Executive’s salary or benefits; provided, however, that a
reduction in Executive’s salary or benefits will not constitute a Constructive
Termination if it is a part of and proportional to a reduction in salary or
benefits of the Company’s executive staff as a whole, (ii) a material diminution
of Executive’s duties, authority or responsibilities as in effect immediately
prior to such diminution.
(vi) Change
of Control Definition.
For the
purposes of this Agreement, “Change of Control” means, in one or a series of
transactions: (1) a reorganization or merger of the Company with or into
any other Company which will result in the Company’s shareholders immediately
prior to such transaction not holding, as a result of such transaction, at
least
50% of the voting power of the surviving or continuing entity or the entity
controlling the surviving or continuing entity; (2) a sale of all or
substantially all of the assets of the Company which will result in the
Company’s shareholders immediately prior to such sale not holding, as a result
of such sale, at least 50% of the voting power of the purchasing entity;
(3) a change in the majority of the Board not approved by at least
two-thirds of the Company’s directors in office prior to such change; or
(4) the adoption of any plan of liquidation providing for the distribution
of all or substantially all of the Company’s assets.
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(vii) Total
Disability Definition.
For the
purposes of this Agreement, “Total Disability” shall mean Executive’s mental or
physical impairment which has or is likely to prevent Executive from performing
the responsibilities and duties of his position for three (3) months or more
in
the aggregate during any six (6) month period. Any question as to the existence
or extent of Executive’s disability upon which the Executive and the Company
cannot agree shall be resolved by a qualified independent physician who is
an
acknowledged expert in the area of the mental or physical impairment, selected
in good faith by the Board and Executive (or his personal
administrator).
(viii) No
Mitigation.
Except
as specifically provided herein, the Executive shall not be required to mitigate
the value of any severance benefits contemplated by this Agreement, nor shall
any such benefits be reduced by any earnings or benefits that the Executive may
receive from any other source.
(ix) Voluntary
Termination other than pursuant to a Constructive Termination; Involuntary
Termination for Cause.
If
during the Employment Term the Executive's employment is terminated by the
Company for Cause, or by Executive for any reason other than death, Total
Disability or pursuant to a Constructive Termination, then all further vesting
of any share option, restricted share award or other Company equity compensation
held by Executive will cease immediately (however, Executive shall be permitted
to exercise vested options for the time period specified in his option
agreements and he shall retain all vested restricted shares) and all payments
of
compensation by the Company to Executive hereunder will terminate immediately
(except as to amounts already earned, including, without limitation, any amounts
owed under Section 4).
(x) Involuntary
Termination on Death.
If
during the Employment Term the Executive's employment is terminated by the
Company as a result of Executive’s death (specifically excluding suicide), then
25% of unvested Options and other equity awards from the Company then held
by
Executive shall immediately accelerate, or if Executive is then holding unvested
shares, the Company’s right to repurchase the then-unvested shares under each
such equity award shall lapse, with respect to 25% of the shares under each
such
award.
(xi) Assignment.
This
Agreement shall be binding upon and inure to the benefit of (a) the heirs,
beneficiaries, executors and legal representatives of Executive upon Executive’s
death and (b) any successor of the Company. Any such successor of the
Company shall be deemed substituted for the Company under the terms of this
Agreement for all purposes. As used herein, “successor” shall include any
person, firm, corporation or other business entity which at any time, whether
by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company.
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7. Notices.
All
notices, requests, demands and other communications called for hereunder shall
be in writing and shall be deemed given if (i) delivered personally or by
facsimile, (ii) one (1) day after being sent by Federal Express or a
similar commercial overnight service, or (iii) three (3) days after being
mailed by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors in interest at the following
addresses, or at such other addresses as the parties may designate by written
notice in the manner aforesaid:
| If to the Company: |
Attn:
Xxxx XxXxxx, Chairman/CEO
00000
Xxxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxxxxx,
XX 00000
|
| If to Executive: |
Xxxxxxx
X. Xxxxx
000
Xxxxxx Xxx.
Xxx
Xxxxx, XX
00000
|
or
at the
last residential address known by the Company.
8. Proprietary
Information Agreement.
Executive agrees to enter into the Company’s standard Employment, Confidential
Information and Invention Assignment Agreement (the “Proprietary Information
Agreement”).
9. Entire
Agreement.
This
Agreement, the Option agreement, the Restricted Share Repurchase Agreement
(if
applicable), the employee benefit plans referred to herein and the Proprietary
Information Agreement represent the entire agreement and understanding between
the Company and Executive concerning Executive’s employment relationship with
the Company, and supersede and replace any and all prior agreements and
understandings concerning Executive’s employment relationship with the
Company.
10. No
Oral Modification, Cancellation or Discharge.
This
Agreement may only be amended, canceled or discharged in writing signed by
Executive and the Chief Executive Officer, the Chairman of the Board or a duly
authorized representative of the majority of the members of the
Board.
11. Withholding.
The
Company shall be entitled to withhold, or cause to be withheld, from payment
any
amount of withholding taxes required by law with respect to payments made to
Executive in connection with his employment hereunder.
12. Governing
Law.
This
Agreement shall be governed by the laws of the State of California without
reference to rules relating to conflict of law.
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SIGNATURES ON NEXT PAGE-----
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of June 17,
2008 at Cupertino, California:
/s/
Xxxx
XxXxxx
Xxxx
XxXxxx
Chairman/CEO
Date:
June 17, 2008
EXECUTIVE:
/s/
Xxxxxxx
Xxxxx
Xxxxxxx
Xxxxx
Date:
June 17, 2008
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ACKNOWLEDGEMENT
OF RECEIPT OF STOCK OPTION
On
June
17, 2008, the Compensation Committee of the Board of Directors of AE Biofuels,
Inc. approved the grant to the undersigned of an option to purchase 480,000
shares of common stock of AE Biofuels, Inc. (the “Option”) at the exercise price
of $3.70 per share, which was equal to the last sale price of one share of
the
Company’s common stock as reported on the Over-the-Counter Bulletin Board on
July 17, 2008.
The
Option is exercisable, in whole or in part, according to the following vesting
schedule:
40,000
shares subject to the Option vest and become exercisable on September 30, 2008
and an additional 40,000 shares subject to the Option vest and become
exercisable on the last day of each calendar quarter thereafter until fully
vested. The Option, to the extent not exercised, shall expire on June 16,
2013.
The
undersigned hereby acknowledges receipt of the foregoing Option and hereby
acknowledges that as of the date hereof there are no other agreements or
understandings, whether oral or in writing, between the Executive and the
Company with respect to the grant of any stock options, restricted stock awards,
restricted stock units, stock appreciation rights, performance units,
performance shares or any other similar right in or with respect to the shares
of the Company.
ACKNOWLEDGED
AND AGREED
/s/
Xxxxxxx
Xxxxx
Xxxxxxx
Xxxxx
Dated:
June 17, 2008
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