Exhibit 10.3
 
CONFEDERATE MOTORS, INC.
 

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Employment Agreement for H. Matthew Chambers
 

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THIS EMPLOYMENT AGREEMENT (this “Agreement”), by and between CONFEDERATE MOTORS,
INC. a Delaware corporation (the “Company”), and H. Matthew Chambers
(“Executive”), is hereby entered into as of February 15, 2012.

W I T N E S S E T H

WHEREAS, Executive is currently an employee of the Company;

WHEREAS, the Company desires to continue to employ Executive in his capacity as
Chief Executive Officer in connection with the conduct of its business, and
Executive desires to accept such employment on the terms and conditions herein
set forth; and

WHEREAS, the Company and Executive desire to set forth the terms upon which
Executive shall be so employed.

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein, and other good and valuable consideration the receipt and
adequacy of which the Company and Executive each hereby acknowledge, the Company
and Executive hereby agree as follows:

 
1.
Employment.

The Company hereby agrees to employ Executive as its Chief Executive Officer,
and Executive hereby agrees to accept such employment and serve in such
capacities, during the Term (as defined in Section 2) and upon the terms and
conditions set forth in this Agreement.

 
2.
Term.

The term of employment of Executive under this Agreement (the “Term”) shall,
unless this Agreement is terminated in accordance with Section 6 or 7, be a
five-year period commencing on the Effective Date.  At each anniversary of the
Effective Date, the Term shall automatically be extended by one year, unless the
Company notifies the Executive in writing prior to such anniversary (the
“Termination Notice Date”) that the Term shall not be so extended and, in such
case, the Term shall terminate on the second anniversary of such Termination
Notice Date.  As used herein, “Effective Date” shall mean February 15, 2012.
 
 
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3.
Offices and Duties.

The provisions of this Section 3 will apply during the Term:

(a)          Generally.  Executive shall serve as the Chief Executive Officer of
the Company.  Executive shall have and perform such duties, responsibilities and
authorities as are customary for the Chief Executive Officer of a publicly held
corporation of the size, type, and nature of the Company as they may exist from
time to time and consistent with such position and status and as the Company’s
Board of Directors (the “Board”) shall from time to time direct, but in no event
shall such duties, responsibilities, and authorities be reduced from those of
Executive prior to the Effective Date.  Executive shall devote such business
time and attention as is necessary to appropriately and efficiently discharge
his duties and responsibilities as set forth herein.

(b)          Place of Employment.  Executive’s principal place of employment
shall be the current corporate offices of the Company in Birmingham,
Alabama.  In no event shall the Executive’s principal place of employment be
relocated to any other location without his prior written consent.

 
4.
Salary and Annual Incentive Compensation.

As partial compensation for the services to be rendered hereunder by Executive,
the Company agrees to pay to Executive during the Term the compensation set
forth in this Section 4.

(a)          Base Salary and Guaranteed Cash Bonus.  The Company will pay to
Executive during the Term a base salary at the initial annual rate of $180,000
payable in cash in accordance with the Company’s usual payroll practices with
respect to senior executives.  The base salary shall be determined at least
annually by the Committee (as defined herein); provided that the base salary may
be increased, but not decreased, from that in effect for the prior
year.  “Committee” means the Compensation Committee of the Board, or, if the
Company does not then have a Compensation Committee, the Board.  In addition,
the Company will pay to Executive during the Term a guaranteed annual cash bonus
equal to 25% of the annual base salary, which bonus shall be paid in four
substantially equal quarterly installments.  Each quarterly installment shall be
paid no later than the end of the quarter in which the installment is
earned.  Notwithstanding the foregoing, if the annual base salary increases
during any calendar year, then the guaranteed annual cash bonus payments in that
year shall be increased accordingly so that the total guaranteed annual cash
bonus paid for that year is equal to 25% of the total base salary for that year.

(b)          Annual Incentive Compensation.  The Company will pay to Executive
during the Term annual cash incentive compensation, if any, in amounts
determined each calendar year by the Committee.  Any such annual cash incentive
compensation payable to Executive for a calendar year shall be paid in a single
lump sum payment during the period starting on January1, and ending on March 15,
of the calendar year following the calendar year in which the annual cash
incentive compensation is earned.  As used herein, “annual cash incentive
compensation” does not include the guaranteed annual cash bonus contemplated by
Section 4(a).
 
 
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5.
Long-Term Compensation, Benefits and Expense Reimbursement

(a)          Executive Compensation Plans.  Executive shall be entitled during
the Term to participate, without discrimination or duplication, in all executive
compensation plans and programs intended for general participation by senior
executives of the Company, as presently in effect or as they may be modified or
added to by the Company from time to time, subject to the eligibility and other
requirements of such plans and programs, including, without limitation, the
Company’s 2008 Equity Incentive Plan, and any successor to such plan, any other
stock option plans, performance share plans, management incentive plans,
deferred compensation plans and supplemental retirement plans; provided,
however, that such plans and programs, in the aggregate, shall provide Executive
with benefits and compensation and incentive award opportunities substantially
no less favorable than those provided by the Company to Executive under such
plans and programs as in effect on the Effective Date.

(b)          Employee and Executive Benefit Plans.  Executive shall be entitled
during the Term to participate, without discrimination or duplication, in all
employee, executive benefit and special individual plans and programs of the
Company, as presently in effect or as they may be modified or added to by the
Company from time to time, to the extent such plans and programs are available
to other senior executives or employees of the Company, subject to the
eligibility and other requirements of such plans and programs, including,
without limitation, plans providing health and medical insurance, life
insurance, disability insurance and accidental death or dismemberment insurance,
and pension or other retirement plans, savings plans, vacation and time-off
programs, profit-sharing plans, stock purchase plans and stock ownership plans;
provided, however, that such plans and programs, in the aggregate, shall provide
Executive with benefits and compensation and incentive award opportunities
substantially no less favorable than those provided by the Company to Executive
under such plans and programs as in effect on the Effective Date.

(c)          Reimbursement of Expenses.  The Company will promptly reimburse
Executive for all reasonable business expenses and disbursements incurred by
Executive in the performance of Executive’s duties during the Term within 60
days after Executive submits reasonable evidence of such expenses and
disbursements to the Company.
 
 
6.
Termination Due to Death or Disability.

Executive’s employment and the Term shall terminate upon Executive’s death.  The
Company may terminate the employment of Executive as Chief Executive Officer due
to Disability (as defined in Section 8(c)) of Executive, effective upon the
expiration of the 30-day period set forth in Section 8(c), absent the actions
referred to therein being taken by Executive to return to service and
Executive’s presentation to the Company of a certificate of good health.

 
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In the event of Executive’s Termination of Employment due to death or
Disability, all obligations of the Company and Executive under Sections 1
through 5 of this Agreement will immediately cease; provided, however, that the
Company will pay Executive (or, in the case of Executive’s death, his
beneficiaries or estate), and Executive (or, in the case of Executive’s death,
his beneficiaries or estate) will be entitled to receive, the following:

 
(i)
The earned but unpaid portion of annual base salary and guaranteed annual cash
bonus;

 
(ii)
Any annual cash incentive cash compensation earned, but unpaid, for the calendar
year prior to the calendar year in which such Termination of Employment occurs,

 
(iii)
An amount equal to the Severance Annual Incentive Amount, multiplied by a
fraction, the numerator of which is the number of days Executive was employed in
the year of termination and the denominator of which is the total number of days
in the year of termination,

 
(iv)
All vested, nonforfeitable amounts owing or accrued at the date of Executive’s
Termination of Employment under any compensation and benefit plans, programs and
arrangements set forth or referred to in Sections 5(a) and 5(b) in which
Executive theretofore participated, in accordance with the terms and conditions
of the plans, programs and arrangements (and agreements and documents
thereunder); and

 
(v)
Reimbursement of reasonable business expenses and disbursements incurred by
Executive prior to such Termination of Employment, within 60 days after
Executive (or Executive’s representative) submits reasonable evidence of such
expenses and disbursements to the Company.

The Company shall pay the amounts under clauses (i) and (iii) in a single lump
sum payment no later than 30 days after Termination of Employment.  The Company
shall pay the amount under clause (ii) in a single lump sum payment no later
than (A) 30 days after Termination of Employment or (B) such earlier date as
required by Section 4(b).

As used herein, “Severance Annual Incentive Amount” means an amount equal to the
average annual cash incentive compensation paid to Executive for the Most Recent
Years, except that if Executive was not eligible to receive or did not receive
such compensation for any year in the Most Recent Years, then “Severance Annual
Incentive Amount” means the target annual cash incentive compensation for the
year of termination.  As used herein, “Most Recent Years” means the three
calendar years immediately preceding the year of termination; provided, however
that if, at the time of termination Executive has not been employed by the
Company for the entire year in each of the three immediately calendar years,
then “Most Recent Years” means the immediately preceding calendar year(s) (not
to exceed two years) during which Executive was employed for the entire year by
the Company.

 
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In addition, upon a termination of Executive’s employment due to death or
Disability, stock options then held by Executive will be exercisable to the
extent and for such periods indicated in, and otherwise be governed by, the
plans and programs (and agreements and other documents thereunder) pursuant to
which such stock options were granted.  Furthermore, for the period extending
from such termination until Executive reaches age 65, Executive shall continue
to participate in all health, medical and life insurance plans, programs and
arrangements (including those self-funded by the Company) under Section 5(b) in
which Executive was participating immediately prior to termination (“Insurance
Plans”), as if Executive had continued in employment with the Company during
such period.  To the extent that the Insurance Plans do not allow such continued
participation, the Company shall make cash payments to Executive equivalent on
an after-tax basis to the value of the benefits Executive would have received
under the Insurance Plans if  Executive had so continued in the employment of
the Company during such period and had continued to participate in the Insurance
Plans, provided that (i) the value of any insurance-provided benefits (including
under self-funded Insurance Plans) will be based on the premium cost to
Executive, which shall not exceed the highest risk premium charged by a carrier
having an investment grade or better credit rating, and (ii) such cash payments
by the Company shall be made within 60 days after the Executive submits
reasonable evidence to the Company of Executive’s payment of such premiums.

 
7.
Termination of Employment For Reasons Other Than Death or Disability.

(a)          Termination by the Company for Cause and Termination by Executive
Other Than For Good Reason.  In accordance with the provisions of this Section
7(a), the Company may terminate the employment of Executive as Chief Executive
Officer for Cause at any time prior to a Change in Control, and Executive may
terminate his employment as Chief Executive Officer voluntarily for reasons
other than Good Reason (as defined in Section 8(d)) at any time.

Upon Termination of Employment by the Company for Cause or by the Executive for
reasons other than Good Reason, the Term will immediately terminate, and all
obligations of the Company and Executive under Sections 1 through 5 of this
Agreement will immediately cease; provided, however, that the Company shall pay
Executive, and Executive shall be entitled to receive, the following:

 
(i)
The earned but unpaid portion of annual base salary and guaranteed annual cash
bonus;

 
(ii)
Any annual cash incentive cash compensation earned, but unpaid, for the calendar
year prior to the calendar year in which occurs such Termination of Employment.

 
 

 
(iii)
All vested, nonforfeitable amounts owing or accrued at the date of such
Termination of Employment under any compensation and benefit plans, programs and
arrangements set forth or referred to in Sections 5(a) and 5(b) in which
Executive theretofore participated, in accordance with the terms and conditions
of the plans, programs and arrangements (and agreements and documents
thereunder); and

 
 
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(iv)
Reimbursement of reasonable business expenses and disbursements incurred by
Executive prior to such termination of employment, within 60 days after
Executive submits reasonable evidence of such expenses and disbursements to the
Company.

The Company shall pay the amount under clause (i) in a single lump sum payment
no later than 30 days after Termination of Employment. The Company shall pay the
amount under clause (ii) in a single lump sum payment no later than (A) 30 days
after Termination of Employment or (B) such earlier date as required by Section
4(b).

(b)          Termination by the Company Without Cause and Termination by
Executive for Good Reason.  In accordance with the provisions of this Section
7(b), the Company may terminate the employment of Executive without Cause,
including after a Change in Control, upon 90 days’ written notice to Executive,
and Executive may terminate his employment with the Company for Good Reason upon
90 days’ written notice to the Company; provided, however, that the Company
shall have 30 days after receipt of such notice to remedy the basis for such
Good Reason.  Termination of Employment by Executive shall not be a termination
for Good Reason unless such termination occurs during the two (2) year period
following the initial occurrence of one or more events constituting a Good
Reason.  Notwithstanding the foregoing, the Company may terminate Executive
without Cause and without providing 90 days’ written notice to Executive
provided that the Company pays Executive the portion of his then-current annual
base salary under Section 4(a) for such 90-day period in a single lump sum
payment on 30th day following such Termination of Employment and credits
Executive with service for such 90 days for purposes of determining amounts
payable under Sections 7(b)(ii), (iii) and (v).

Upon a Termination of Employment by the Company without Cause, or a Termination
of Employment by Executive for Good Reason, the Term will immediately terminate
and all obligations of the parties under Sections 1 through 5 of this Agreement
will immediately cease, except that the Company shall pay Executive, and
Executive shall be entitled to receive, the following (in addition to any amount
payable under the last sentence of the first grammatical paragraph of this
Section 7(b)):

 
(i)
A cash payment in an amount equal to the product of (x) the sum of (A)
Executive’s annual base salary under Section 4(a) at the annual rate in effect
immediately prior to termination plus (B) the guaranteed annual cash bonus under
Section 4(a) at the annual rate in effect immediately prior to termination, plus
(C) the Severance Annual Incentive Amount (as defined in Section 6 of this
agreement), multiplied by (y) 3;

 
(ii)
The earned but unpaid portion of annual base salary and guaranteed cash bonus;

 
(iii)
Any annual cash incentive cash compensation earned, but unpaid, for the calendar
year prior to the calendar year in which occurs such termination of employment;

 
(iv)
All vested, nonforfeitable amounts owing or accrued at the date of Executive’s
Termination of Employment under any compensation and benefit plans, programs and
arrangements set forth or referred to in Sections 5(a) and 5(b) in which
Executive theretofore participated, in accordance with the terms and conditions
of the plans, programs and arrangements (and agreements and documents
thereunder) pursuant to which such compensation and benefits were granted;

 
 
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(v)
An amount equal to the Severance Annual Incentive Amount, which, unless a
termination occurs during the period beginning on the date of a Change in
Control and ending two years after a Change in Control, shall be multiplied by a
fraction, the numerator of which is the number of days Executive was employed in
the year of termination and the denominator of which is the total number of days
in the year of termination; and

 
(vi)
Reimbursement of reasonable business expenses and disbursements incurred by
Executive prior to such termination of employment, within 60 days after
Executive submits reasonable evidence of such expenses and disbursements to the
Company.

The Company shall pay the amounts under clauses (i), (iii) and (v) in a single
lump sum payment no later than 30 days after Termination of Employment.  The
Company shall pay the amount under clause (ii) in a single lump sum payment no
later than (A) 30 days after Termination of Employment or (B) such earlier date
as required by Section 4(b).

In addition, upon a Termination of Employment by the Company without Cause, or
Termination of Employment by the Executive for Good Reason, stock options then
held by Executive will be exercisable to the extent and for such periods
indicated in, and otherwise be governed by, the plans and programs (and
agreements and other documents thereunder) pursuant to which such stock options
were granted.  Furthermore, for a period of one (1) year after such termination,
Executive shall continue to participate in the Insurance Plans (as defined in
Section 6) as if Executive had continued in employment with the Company during
such period.  To the extent that the Insurance Plans do not allow such continued
participation, the Company shall make cash payments to Executive equivalent on
an after-tax basis to the value of the benefits Executive would have received
under the Insurance Plans if  Executive had so continued in the employment of
the Company during such period and had continued to participate in the Insurance
Plans, provided that (i) the value of any insurance-provided benefits (including
under self-funded Insurance Plans) will be based on the premium cost to
Executive, which shall not exceed the highest risk premium charged by a carrier
having an investment grade or better credit rating, and (ii) such cash payments
by the Company shall be made within 60 days after the Executive submits
reasonable evidence to the Company of Executive’s payment of such premiums.
 
 
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8.
Definitions.

The definitions in this Section 8 apply for purposes of this Agreement.

(a)          “Cause.”  “Cause” shall mean Executive’s gross misconduct (as
defined below) or willful (as defined below) and material breach of Section 10
of this Agreement.  For purposes of this definition, “gross misconduct” shall
mean (A) a felony conviction in a court of law under applicable federal or state
laws which results in material damage to the Company or its subsidiaries or
materially impairs the value of the Executive’s services to the Company, or (B)
willfully engaging in one or more material acts of misconduct, or willfully
omitting to perform material duties hereunder, which act or omission
demonstrably and materially damages the Company.  For purposes of this
Agreement, a “willful” act or omission by Executive means an act or omission
that is done or omitted to be done by him not in good faith, and does not
include any act or failure to act resulting from any incapacity of
Executive.  Notwithstanding the foregoing, Executive may not be terminated for
Cause unless and until there shall have been delivered to him, within six months
after the Board (A) had knowledge of conduct or an event allegedly constituting
Cause and (B) had reason to believe that such conduct or event could be grounds
for Cause, a copy of a resolution duly adopted by a majority affirmative vote of
the membership of the Board (excluding Executive) (after giving Executive
reasonable notice specifying the nature of the grounds for such termination and
not less than 30 days to correct the acts or omissions complained of, if
correctable, and affording Executive the opportunity, together with his counsel,
to be heard before the Board) finding that, in the good faith opinion of the
Board, Executive was guilty of conduct set forth above in this Section 8(a).

(b)          “Change in Control.”  A “Change in Control” means the happening of
any of the following events:

(i)           An acquisition by any individual, entity or group, within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than fifty percent (50%) of either (1) the then
outstanding shares of Common Stock of the Company (the “Outstanding Common
Stock”) or (2) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Voting Securities”); excluding, however, the
following: (1) any acquisition directly from the Company, other than an
acquisition by virtue of the exercise, exchange or conversion of any Convertible
Securities unless such securities were themselves acquired directly from the
Company, (2) any acquisition by the Company; (3) any acquisition by H. Matt
Chambers or any of his affiliates, or (4) any acquisition by any Person pursuant
to a transaction which complies with clauses (1), (2) and (3) of subsection
(iii) of this Section 8(b); or

(ii)           Within any period of 24 consecutive months, a change in the
composition of the Board such that the individuals who, immediately prior to
such period, constituted the Board (such Board shall be hereinafter referred to
as the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided, however, for purposes hereof, that any individual who
becomes a member of the Board during such period, whose election, or nomination
for election by the Company’s stockholders, was approved by a vote of at least a
majority of those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to this proviso)
shall be considered as though such individual were a member of the Incumbent
Board; but, provided further, that any such individual whose initial assumption
of office occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board shall not be so considered as a
member of the Incumbent Board; or

 
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(iii)           The consummation of a reorganization, merger or consolidation of
the Company or of the sale or other disposition of all or substantially all of
the assets of the Company and its direct and indirect subsidiaries taken as a
whole (a “Corporate Transaction”), excluding, however, a Corporate Transaction
pursuant to which (1) all or substantially all of the individuals and entities
who are the beneficial owners, respectively, of the Outstanding Common Stock and
Outstanding Voting Securities immediately prior to such Corporate Transaction
will beneficially own, directly or indirectly, more than sixty percent (60%) of,
respectively, the outstanding shares of common stock, and the combined voting
power of the outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the entity resulting from such
Corporate Transaction (including, without limitation, an entity which as a
result of such transaction owns the Company or all or substantially all of the
Company’s assets, either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Common Stock and Outstanding Voting
Securities, as the case may be, (2) no Person (other than the Company) will
beneficially own, directly or indirectly, more than twenty-five percent (25%)
of, respectively, the outstanding shares of common stock of the entity resulting
from such Corporate Transaction or the combined voting power of the outstanding
voting securities of such entity entitled to vote generally in the election of
directors, except to the extent that such ownership existed with respect to the
Company prior to the Corporate Transaction, and (3) individuals who were members
of the Board immediately prior to the approval by the stockholders of the
Company of such Corporate Transaction will constitute at least a majority of the
members of the board of directors of the entity resulting from such Corporate
Transaction; or

(iv)           The approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company, other than to an entity pursuant to a
transaction which would comply with clauses (1), (2) and (3) of subsection (iii)
of this Section 8(b), assuming for this purpose that such transaction were a
Corporate Transaction.

For purposes this definition of “Change of Control”, a series of transactions
with a common purpose shall be treated as a single transaction that begins on
the date of the first transaction in the series and ends on the date of the last
transaction in the series.

(c)          “Convertible Security.”  “Convertible Security” means any security
convertible into or exchangeable for shares of common stock of the Company, or
any option, warrant or other right to acquire shares of common stock of the
Company.

(d)          “Disability.”  “Disability” means the failure of Executive to
render and perform the services required of him under this Agreement, for a
total of 180 days or more during any consecutive 12 month period, because of any
physical or mental incapacity or disability as determined by a physician or
physicians selected by the Company and reasonably acceptable to Executive,
unless, within 30 days after Executive has received written notice from the
Company of a proposed termination due to such absence, Executive shall have
returned to the full performance of his duties hereunder and a physician or
physicians (selected by the Executive and reasonably acceptable to the Company)
shall have determined that Executive’s health permits him to handle the full
performance of such duties.

 
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(e)          “Good Reason.”  “Good Reason” means, without Executive’s prior
written consent, (A) a material diminution in Executive’s authority, duties or
responsibilities as set forth in Section 3(a), (B) a change in the Company’s
reporting structure whereby Executive is no longer reporting to the Company’s
Board of Directors, (C) a material reduction by the Company in Executive’s
annual base compensation (including base salary and guaranteed bonus) as set
forth in Section 4(a) (in which event, the Executive’s annual base compensation
in effect prior to such reduction shall be treated, for purposes of calculating
amounts payable under Sections 6 and 7, as the annual base compensation in
effect immediately prior to termination), (D) any material breach of this
Agreement by the Company, and (E) a relocation of Executive to an office that is
more than 35 miles from the latest location of Executive’s office prior to the
date of a Change in Control.

(f)          “Termination of Employment.”  “Termination of Employment” means
Executive’s termination of employment from the Company which constitutes a
“separation from service”, as such term is defined under Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”).
 
 
9.
Excise Tax Gross-Up.

If it shall be determined that any payment or benefit received or to be received
by Executive under this Agreement or any other plan, arrangement or agreement of
the Company (all such payments and benefits a “Payment”), would be subject to
the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the
Company shall pay to Executive an additional payment (a “Gross-Up Payment”) in
an amount necessary to reimburse Executive, on an after-tax basis, for the
Excise Tax and for any federal, state and local income tax and excise tax
(including any interest and penalties imposed with respect to such taxes) that
may be imposed by reason of the Payment.  For purposes of determining the amount
of any Gross-Up Payment, Executive shall be deemed to pay federal, state and
local income taxes at the highest applicable marginal rate of taxation in the
calendar year in which the Gross-Up Payment is to be made.  All determinations
required to be made under this Section 9, including whether a Gross-Up Payment
is required and the amount of such Gross-Up Payment, shall be made by a
nationally known independent accounting firm regularly retained by the Company
(the “Accounting Firm”) which shall provide detailed supporting calculations
both to the Company and Executive within 15 business days of the request for
such determination.  Such request may be made by either party.  The Company
shall pay the fees and expenses of the Accounting Firm in connection with any
determinations hereunder.  Any Gross-Up Payment shall be paid by the Company to
Executive within 10 days of the Accounting Firm’s determination of the amount
thereof
 
 
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10.
Executive Covenants.

(a)           Executive’s Acknowledgment.  Executive agrees and acknowledges
that in order to assure the Company that the Company will retain its value as a
going concern, it is necessary that Executive undertake not to utilize his
special knowledge of the Company’s business and his relationships with customers
and suppliers to compete with the Company.  Executive further acknowledges that:

(i)          Executive is one of a limited number of persons who has developed
the Company’s business;

(ii)         Executive has occupied a position of trust and confidence with the
Company prior to the date of this Agreement and, during such period and
Employee’s employment under this Agreement, Employee has acquired and will
acquire an intimate knowledge of proprietary and confidential information
concerning the Company and its business;

(iii)        the agreements and covenants contained in Sections 10(b), (c), (d),
(e), (f) and (g) are essential to protect the Company and the goodwill of its
business;

(iv)        Executive’s employment with the Company has special, unique and
extraordinary value to the Company, and the Company would be irreparably damaged
if Executive were to provide services to any person or entity or otherwise act
in violation of the provisions of this Agreement;

(v)         the scope and duration of the restrictive covenants in Section 10(b)
are reasonably designed to protect a protected interest of the Company and are
not excessive in light of the circumstances; and

(vi)        Executive has a means to support himself and his dependents other
than by engaging in conduct prohibited by the restrictive covenants in Section
10(b), and the provisions of Sections 10(b) will not impair such ability.

(b)         Non-Competition; Non-Solicitation; Non-Interference.  During the
Term and for a period of two years after the termination of Executive’s
employment hereunder, Executive will not by himself or in conjunction with
others, directly or indirectly engage (either as owner, investor, partner,
member stockholder, employer, employee, consultant, advisor, manager or
director) in any business in the United States which, at the time of such
termination, is directly or indirectly in competition with a business then
conducted by the Company or any of its subsidiaries; provided, however, this the
limitation shall not apply if Executive’s employment is terminated as a result
of a termination by the Company without Cause or a termination by Executive for
Good Reason.  During the Term and for a period of three years after the
termination of Executive’s employment hereunder, Executive will not by himself
or in conjunction with others, directly or indirectly (i) induce any customers
of the Company or any of its subsidiaries with whom Executive has had personal
contacts or relationships, during and within the scope of his employment with
the Company, to curtail or cancel their relationship with the Company or its
subsidiaries; or (ii) induce, or attempt to influence, any employee of the
Company or any of its subsidiaries to terminate their employment therewith.  The
provisions of the first sentence of this Section 10(b) and clauses (i) and (ii)
of the immediately preceding sentence are separate and distinct commitments
independent of each other.  It is agreed that the ownership of not more than one
percent of the equity securities of any company having securities listed on an
exchange or regularly traded in an over-the-counter market shall not, of itself,
be deemed inconsistent with the first sentence of this Section 10(b).

 
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(c)          Non-Disclosure.  Executive shall not, at any time during the Term
and thereafter (including following Executive’s termination of employment for
any reason), disclose, use, transfer or sell, except in the course of employment
with, or providing other service to, the Company, any confidential or
proprietary information of the Company and its subsidiaries so long as such
information has not otherwise been publicly disclosed or is not otherwise in the
public domain, except as required by law or pursuant to legal process.

(d)          Return of Company Materials Upon Termination.  Executive
acknowledges that all records and documents containing confidential or
proprietary information of the Company or its subsidiaries prepared by Executive
or coming into his possession by virtue of his employment by the Company are and
will remain the property of the Company and its subsidiaries.  Upon termination
of his employment with the Company, Executive shall immediately return to the
Company all such items and all copies of such items, in his possession.

(e)          Cooperation With Regard to Litigation.  Executive agrees to
cooperate with the Company, during the Term and thereafter (including following
Executive’s termination of employment for any reason), by making himself
available to testify on behalf of the Company or any subsidiary or affiliate of
the Company, in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, and to assist the Company, or any subsidiary or
affiliate of the Company, in any such action, suit or proceeding, by providing
information and meeting and consulting with the Board or its representatives or
counsel, or representatives or counsel to the Company or any subsidiary or
affiliate of the Company, as reasonably requested and at a time mutually
convenient to Executive and the Company.  The Company agrees to reimburse the
Executive, on an after-tax basis, for all expenses actually incurred in
connection with his provision of testimony or assistance.

(f)          Non-Disparagement.  Executive shall not, at any time during the
Term and thereafter, make statements or representations, or otherwise
communicate, directly or indirectly, in writing, orally or otherwise, or take
any action which may, directly or indirectly, disparage or be damaging to the
Company or any of its subsidiaries or affiliates or their respective officers,
directors, employees, advisors, businesses or reputations.  Notwithstanding the
foregoing, nothing in this Agreement shall preclude Executive from making
truthful statements or disclosures that are required by applicable law,
regulation or legal process.

(g)          Inventions.  Executive acknowledges that all inventions,
innovations, discoveries, improvements, developments, methods, know-how,
designs, analyses, drawings, reports and all similar or related information
(whether or not patentable) which (i) relate to the then current business or any
anticipated business of the Company, the Company’s research and development or
the Company’s existing or future services or products and (ii) which are
conceived, developed or made by Executive during and in the scope of his
employment by the Company (“Work Product”) belong to the Company.  Executive
shall promptly disclose such Work Product to the Company and perform all actions
reasonably requested by the Company (whether during or after his period of
employment with the Company) to establish and confirm such ownership (including
the execution of assignments, consents, powers of attorney and other
instruments).

 
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(h)          Remedies.  Executive acknowledges that the agreements and covenants
in Sections 10(b), (c), (d), (e) and (f) are reasonable and necessary for the
protection of the Company’s business interests, that in the event of any actual
or threatened violation of the covenants contained in Sections 10(b), (c), (d),
(e) and (f), the Company will suffer irreparable injury, Company’s damages will
be difficult to ascertain and the Company’s remedy at law will be
inadequate.  Employee accordingly agrees that, subject to applicable law, in the
event of any actual or threatened breach by him of any of the covenants set
forth in Sections 10(b), (c), (d), (e) and (f), the Company shall be entitled to
injunctive and other equitable relief, including immediate temporary injunctive
and other equitable relief.  Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies available to it for
such breach or threatened breach, including the recovery of any damages which it
is able to prove.

(i)          Survival.  The provisions of this Section 10 shall survive the
termination or expiration of this Agreement in accordance with the terms hereof.

 
11.
Governing Law; Disputes; Arbitration.

(a)          Governing Law.  This Agreement is governed by and is to be
construed, administered and enforced in accordance with the laws of the State of
Delaware, without regard to Delaware conflicts of law principles, except insofar
as the Delaware General Corporation Law and federal laws and regulations may be
applicable.  If, under the governing law, any portion of this Agreement is at
any time deemed to be in conflict with any applicable statute, rule, regulation,
ordinance or other principle of law, such portion shall be deemed to be modified
or altered to the extent necessary to conform thereto or, if that is not
possible, to be omitted from this Agreement.  The invalidity of any such portion
shall not affect the force, effect, and validity of the remaining portion
hereof.  If any court determines that any provision of Section 10 is
unenforceable because of the duration or geographic scope of such provision, it
is the parties’ intent that such court shall have the power to modify the
duration or geographic scope of such provision, as the case may be, to the
extent necessary to render the provision enforceable, and, in its modified form,
such provision shall be enforced.

(b)          Reimbursement of Expenses in Enforcing Rights.  All reasonable
costs and expenses (including reasonable fees and disbursements of counsel)
incurred by Executive during the Term and thereafter (including following
Executive’s termination of employment for any reason) in seeking to interpret
this Agreement or enforce rights pursuant to this Agreement shall be paid on
behalf of or reimbursed to Executive promptly by the Company, whether or not
Executive is successful in asserting such rights; provided, however, that no
reimbursement shall be made of such expenses relating to any unsuccessful
assertion of rights if and to the extent that Executive’s assertion of such
rights was in bad faith or frivolous, as determined by independent counsel
mutually acceptable to the Executive and the Company.

 
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(c)          Arbitration.  Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration in Birmingham, Alabama by a panel of three arbitrators in accordance
with the rules of the American Arbitration Association in effect at the time of
submission to arbitration.  Judgment may be entered on the arbitrators’ award in
any court having jurisdiction.  For purposes of entering any judgment upon an
award rendered by the arbitrators, the Company and Executive hereby consent to
the jurisdiction of any or all of the following courts: (i) the United States
District Court for the District of Alabama, (ii) any of the courts of the State
of Alabama, or (iii) any other court having jurisdiction.  The Company and
Executive further agree that any service of process or notice requirements in
any such proceeding shall be satisfied if the rules of such court relating
thereto have been substantially satisfied.  The Company and Executive hereby
waive, to the fullest extent permitted by applicable law, any objection which
they may now or hereafter have to such jurisdiction and any defense of
inconvenient forum.  The Company and Executive hereby agree that a judgment upon
an award rendered by the arbitrators may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Subject to Section
11(b), the Company shall bear all costs and expenses arising in connection with
any arbitration proceeding pursuant to this Section 11.  Notwithstanding any
provision in this Section 11, Executive shall be entitled to seek (in the
arbitration proceeding or in any court proceeding) specific performance of
Executive’s right to be paid during the pendency of any dispute or controversy
arising under or in connection with this Agreement.

(d)          Interest on Unpaid Amounts.  Any amounts that have become payable
pursuant to the terms of this Agreement or any decision by arbitrators or
judgment by a court of law pursuant to this Section 11 but which are not timely
paid shall bear interest at the prime rate in effect at the time such payment
first becomes payable, as quoted in The Wall Street Journal (Midwest
edition).  Any interest payable under this Section 11(d) shall be paid on the
same date as the amounts to which such interest relates are actually paid.

 
12.
Miscellaneous.

(a)          General.  This Agreement cancels and supersedes any and all prior
agreements and understandings between the parties hereto with respect to the
employment of Executive by the Company and its subsidiaries.  This Agreement
constitutes the entire agreement among the parties with respect to the matters
herein provided, and no modification or waiver of any provision hereof shall be
effective unless in writing and signed by the parties hereto.  Executive shall
not be entitled to any payment or benefit under this Agreement which duplicates
a payment or benefit received or receivable by Executive under such prior
agreements and understandings or under any benefit or compensation plan of the
Company.  As used in this Agreement: (1) the terms “including”, “includes” and
words of like import shall be construed broadly as if followed by “without
limitation”; and (2) the terms “herein”, “hereof” and “hereunder” refer to this
Agreement as a whole, not just the particular section where such term appears.

 
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(b)          Non-Transferability.  Neither this Agreement nor the rights or
obligations hereunder of the parties hereto shall be transferable or assignable
by Executive, except in accordance with the laws of descent and distribution or
as specified in Section 12(c).  The Company may assign this Agreement and the
Company’s rights and obligations hereunder, and shall assign this Agreement, to
any Successor (as hereinafter defined) which, by operation of law or otherwise,
continues to carry on substantially the business of the Company prior to the
event of succession, and the Company shall, as a condition of the succession,
require such Successor to assume in writing the Company’s obligations under (and
agree in writing to be bound by) this Agreement.  For purposes of this
Agreement, “Successor” shall mean any person that succeeds to, or has the
practical ability to control (either immediately or with the passage of time),
the Company’s business directly, by merger or consolidation, or indirectly, by
purchase of the Company’s voting securities or all or substantially all of its
assets, or otherwise.

(c)          Beneficiaries.  Executive shall be entitled to designate (and
change, to the extent permitted under applicable law) a beneficiary or
beneficiaries to receive any compensation or benefits payable hereunder
following Executive’s death.

(d)          Notices.  Whenever under this Agreement it becomes necessary to
give notice, such notice shall be in writing, signed by the party or parties
giving or making the same, and shall be deemed to have been duly given (i) upon
actual receipt (or refusal of receipt) if delivered personally; (ii) three
business days following deposit, if sent by certified or registered mail, return
receipt requested, postage prepaid; (iii) one business day following deposit
with a documented overnight delivery service or (iv) upon transmission, if sent
by facsimile (with confirmation receipt and followed by a copy sent by regular
mail), in each case to the appropriate address or number as set forth below or
at such other address as may be designated by such party by like notice:

If to the Company:

Confederate Motors, Inc.
2222 5th Avenue South
Birmingham, Alabama 35233
(205) 324-9888- Phone
(205) 449-9747 - Fax
matt@confederate.com
Attention: H. Matthew Chambers

If to Executive:

Confederate Motors, Inc.
2222 5th Avenue South
Birmingham, Alabama 35233
(205) 324-9888- Phone
(205) 449-9747 - Fax
matt@confederate.com
Attention: H. Matthew Chambers

 
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(e)          Reformation.  The invalidity of any portion of this Agreement shall
not be deemed to render the remainder of this Agreement invalid.

(f)           Headings.  The headings of this Agreement are for convenience of
reference only and do not constitute a part hereof.

(g)          No General Waivers.  The failure of any party at any time to
require performance by any other party of any provision hereof or to resort to
any remedy provided herein or at law or in equity shall in no way affect the
right of such party to require such performance or to resort to such remedy at
any time thereafter, nor shall the waiver by any party of a breach of any of the
provisions hereof be deemed to be a waiver of any subsequent breach of such
provisions.  No such waiver shall be effective unless in writing and signed by
the party against whom such waiver is sought to be enforced.

(h)          No Obligation To Mitigate.  Executive shall not be required to seek
other employment or otherwise to mitigate Executive’s damages upon any
termination of employment; provided, however, that, to the extent Executive
receives from a subsequent employer health or other insurance benefits that are
substantially similar to the benefits referred to in Section 5(c) hereof, any
such benefits to be provided by the Company to Executive following the Term
shall be correspondingly reduced.

(i)           Offsets; Withholding.  The amounts required to be paid by the
Company to Executive pursuant to this Agreement shall not be subject to offset.
The foregoing and other provisions of this Agreement notwithstanding, all
payments to be made to Executive under this Agreement, including under Sections
6 and 7, or otherwise by the Company will be subject to required withholding
taxes and other required deductions.

(j)           Successors and Assigns.  This Agreement shall be binding upon and
shall inure to the benefit of Executive, his heirs, executors, administrators
and beneficiaries, and shall be binding upon and inure to the benefit of the
Company and its successors and assigns.

(k)           Reimbursement of Expenses, Certain Other
Payments.  Notwithstanding any provision to the contrary herein:

(1)           any payment to Executive for reimbursement of expenses or
disbursements pursuant to this Agreement (including pursuant to Section 5(c),
Section 10(e), Section 11(b), clause (v) of Section 6, clause (iv) of Section
7(a) or clause (vi) of Section 7(b)), any payment on Executive’s behalf pursuant
to Section 11(b), and any payment pursuant to Section 9 or the last grammatical
paragraph of Sections 6 and 7(b), shall be made no later than the end of the
Executive’s taxable year following the taxable year in which such expenses and
disbursements (including insurance premiums contemplated by Sections 6 and 7(b))
are incurred;

 
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(2)           any such amount paid during one taxable year shall not affect any
such amount payable the Company during a subsequent taxable year; and

(3)           the right to such payment may not be exchanged or substituted for
other forms of compensation to Executive.

(l)  Section 409A. The parties intend that the payments and benefits under this
Agreement are either exempt from Section 409A of the Code or fully comply with
the payout and other limitations and restrictions imposed under Section 409A of
the Code.  In this connection, the payout timing provisions and any other terms
of this Agreement shall be interpreted to be exempt from Section 409A of the
Code or comply with the payout and other limitations and restrictions imposed
under Section 409A of the Code, to the extent necessary to avoid the penalties
otherwise imposed under Section 409A of the Code.  The Company and Executive
agree to make in good faith such changes to this Agreement, without changing the
basic economics of this Agreement, as are necessary to avoid penalties imposed
under Section 409A of the Code.

13.           Income Tax Treatment.

Executive and the Company acknowl­edge that it is the intention of the Company
to deduct all amounts paid by the Company to Executive pursuant to this
Agreement, including under Sections 6 and 7 as ordinary and necessary business
expenses for income tax purposes.  Executive agrees and represents that he will
treat all such amounts as ordinary income for income tax purposes, and should he
report such amounts as other than ordinary income for income tax purposes, he
will indemnify and hold the Company harmless from and against any and all taxes,
penalties, interest, costs and expenses, including reasonable attorneys’ and
accounting fees and costs, which are incurred by Company directly or indirectly
as a result thereof.

14.            Key Man Life Insurance.

If the Company, in its sole discretion, desires to procure “key man” insurance
covering the life of Executive, Executive shall cooperate with the Company in
procuring such insurance and shall, at the request of the Company, submit to
such medical examinations, supply such information and execute such documents as
may be required by the insurance company to which the Company has applied for
insurance.  Executive shall use his reasonable efforts to qualify for the
standard premium category of such insurance company.  Executive shall have no
interest whatsoever in any “key man” insurance policy procured by the Company.

 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
 

 
CONFEDERATE MOTORS, INC.
           
By:
/s/ Joseph P. Mitchell 
    Name:
Joseph P. Mitchell
    Title: CFO             EXECUTIVE          
/s/ H. Matthew Chambers 
   
H. Matthew Chambers, CEO
 

 
 
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