--------------------------------------------------------------------------------

 

 FINAL EXECUTION VERSION   Exhibit 10.1 

 

AMENDED AND RESTATED
 
EMPLOYMENT AGREEMENT
 
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), made and
effective as of the 15th day of July, 2011 (the “Effective Date”), is entered
into by Applied Natural Gas Fuels, Inc., having an address at 31111 Agoura Road,
Suite 208, Westlake Village, CA 91361 (the “Company”), and Cem Hacioglu (the
“Executive”).
 
W I T N E S S E T H:

WHEREAS, PNG Ventures, Inc. (“PNG”), the predecessor entity to the Company, and
the Executive entered into that certain Employment Agreement dated February 1,
2009 (the “Original Employment Agreement”); and
 
WHEREAS, as of February 16, 2010, the Company and the Executive entered into an
amendment to the Original Employment Agreement to reflect, among others, certain
modifications to the Original Employment Agreement that the parties believed
were necessary and appropriate in recognition of the Company’s emergence from
bankruptcy proceedings under the terms of a Plan of Reorganization under Chapter
11 of the United States Bankruptcy Code (the “Plan”); and
 
WHEREAS, to reflect the significant contributions of the Executive to the
Company, particularly noting the Company’s recent performance following its
emergence from bankruptcy proceedings, effective as of the Effective Date, the
Board of Directors of the Company (the “Board”) desires to extend the term of
the Executive’s employment with the Company, as reflected by the terms of this
Agreement; and
 
WHEREAS, intending this Agreement to completely and fully amend and restate the
terms of Executive’s employment with the Company, the Company desires to employ
the Executive and the Executive desires to be employed by the Company, on the
terms set forth herein.
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto hereby agree as follows:
 
1.           Term of Employment.  The Company hereby agrees to employ the
Executive because of the unique and extraordinary services the Executive can
render to the Company, and the Executive hereby accepts employment with the
Company, on the terms set forth in this Agreement, for the period (the
“Employment Period”) commencing on the Effective Date (the “Commencement Date”)
and terminating on February 16, 2017, subject to earlier termination in
accordance with the provisions of Section 5.
 
2.           Title; Capacity; Duties.
 
(a)         The Executive shall serve, on a full-time basis, as the President
and Chief Executive Officer of the Company (and its subsidiaries).  In
performing his duties hereunder, the Executive shall report to the Board and, in
addition to the responsibilities and authority
 

 
1

--------------------------------------------------------------------------------

 

provided to the President and/or the Chief Executive Officer of the Company
under the Company’s By-Laws, or as expressly provided by Nevada law, shall have
such the responsibilities and authority as shall be delegated to him by the
Board, commensurate with those of presidents and chief executive officers of
companies of similar size and revenues.
 
(b)         The Executive hereby accepts such employment and agrees, using
diligent efforts, to undertake the duties and responsibilities inherent in such
position and such other duties and responsibilities as the Board shall from time
to time reasonably assign to him, provided that such duties and responsibilities
are substantially similar to those expected of the president and chief executive
officer of a corporation of similar size and in a like or similar business to
that of the Company.  The Executive agrees to devote all of his business time,
attention and energies to discharging his duties hereunder.  The Executive
agrees to abide by the rules, regulations, instructions, personnel practices and
policies of the Company and any changes therein which may be adopted from time
to time by the Company.
 
3.           Compensation.
 
(a)         The Company shall pay the Executive, in regular bi-weekly
installments consistent with the Company’s regular payroll practices, a base
salary at the annual rate of $326,700, commencing on the Commencement Date,
which shall be increased, on each December 31st following the Commencement Date
and any annual anniversary thereof occurring during the Employment Period, by
the greater of (x) 10%, or (y) the percentage increase in the cost of living for
the metropolitan area in which the principal headquarters of the Company is
located over the prior year (but in no event less than the prior year’s
percentage increase) (the “Base Salary”).
 
(b)         The executive shall receive an annual performance-based bonus.  For
performance years (as defined in Section 3(e) hereof) beginning with or within
the Employment Period, the annual performance-based bonus shall be awarded
provided the Company exceeds its annual EBITDA target for the year (to the
extent EBITDA is defined and used by the Company in its annual financial
statements), with EBITDA targets being set by the Board in its annual budget
meetings taking into account the Company’s projected results for the year
covered by the budget.  Subject to clause (i) below, the Board will discuss the
applicable performance year’s budget numbers with the management in the last
Board meeting of the immediately preceding performance year and agree on an
EBITDA target that will trigger an award for a lump sum cash bonus of 5% of the
Company’s EBITDA and an "equity" bonus in the form of an option to purchase that
number of shares of the Company's common stock equal to 7% of the Company’s
EBITDA (each, a "Bonus Stock Option," and together with the cash bonus, the
“EBITDA Bonus”); provided, however that, the Executive shall abstain from any
determination or vote affecting his own compensation if he then is a member of
the Board.  The cash portion of an applicable EBITDA Bonus shall be paid to the
Executive in a single lump sum within 2 ½ months following the end of the
performance year to which such cash portion relates.  The Bonus Stock Option
portion of an applicable EBITDA Bonus shall be deemed granted to the Executive
as of the date on which the Company completes all corporate action necessary to
effectuate the grant (the “Grant Date”); provided, however, that the Grant Date
shall be the date on which the Board approves such Bonus Stock Option
 

 
2

--------------------------------------------------------------------------------

 

portion, provided that the applicable grant agreement between the Company and
the Executive is executed reasonably soon thereafter.
 
(c)         Each Bonus Stock Option will vest fully on its Grant Date, will be
exercisable at a price per share equal to the “Fair Market Value” (as defined in
the Company’s 2010 Stock Incentive Plan) of a share of the Company’s common
stock, will expire 10 years from its Grant Date and will be subject to such
other terms and conditions as are set forth in the applicable grant
agreement.  Further, notwithstanding any provision of this Agreement to the
contrary, except in the case of adjustments covered by Section 11 of the
Company’s 2010 Stock Incentive Plan, in no event may (i) the exercise price per
share underlying a Bonus Stock Option ever be reduced after the Grant Date to
less than the Fair Market Value per share as of the Grant Date or (ii) the
number of share underlying a Bonus Stock Option ever be changed.  In the event
of any conflict between the terms of this Agreement and the terms of the
applicable grant agreement for a Bonus Stock Option, the terms of this Agreement
shall prevail.
 
(d)         The Board may, in its discretion, grant an annual additional
discretionary cash bonus or option (to purchase shares of the Company’s common
stock) award to the Executive above and beyond any other bonus awards as set
forth herein above.  Any such cash bonus award shall be paid to the Executive in
a single lump sum within 2 ½ months following the performance year in which such
award vests.  Any such option bonus award shall be granted at such times as the
Board shall determine in its sole and absolute discretion, and shall satisfy the
Fair Market Value and exercise price and share adjustment requirements of
Section 3(c) hereof.
 
(e)         For purposes of this Agreement, the “performance year” is the
calendar year beginning with or within each 12-consecutive-month period
comprising the Employment Period.
 
4.           Benefits.
 
(a)         The Executive shall be entitled to participate in the Company’s life
and disability insurance, health benefit insurance (with coverage extended to
the Executive’s family) and retirement plans for its executive employees, in
each case to the extent that the Executive’s tenure, age, health and other
qualifications make him eligible to participate.
 
(b)         The Company shall reimburse the Executive for all reasonable travel
(coach class air and business class hotel accommodations, where possible and
solely as actually used), entertainment and other expenses incurred or paid by
the Executive in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement, upon presentation by the
Executive of documentation, expense statements, vouchers and/or such other
supporting information and compliance with such other procedures as are in
effect from time to time for reimbursement of business expenses for all senior
executive employees.  Such reimbursements shall be reported to the Company
quarterly or more frequently, at the Executive’s election.  For flights in
excess of 3 hours, business class air will be reimbursed.  Additionally, the
Company shall reimburse the Executive or pay directly the Executive’s reasonable
attorney’s fees in connection with this Agreement up to a maximum
 

 
3

--------------------------------------------------------------------------------

 

of $5,000.  Any reimbursement under this Section 4(b) shall satisfy the
following requirements: (i) comply with any and all Company rules and
regulations relating to the same; (ii) apply only to expenses incurred during
the Employment Period (or, in the case of attorney’s fees, expenses incurred
during the year in which this Agreement is executed); (iii) not be made unless
the amount of expenses eligible for reimbursement in one taxable year of the
Executive will not affect the expenses eligible for reimbursement in any
subsequent taxable year of the Executive; (iv) must be made on or before the
last day of the Executive’s taxable year following the taxable year in which the
expense was incurred; and (v) not be subject to liquidation or exchange for
another benefit.
 
(c)         The Executive shall be entitled to the number of vacation days
customarily accorded senior executive employees of the Company, but in no event
less than four (4) weeks per year.
 
5.           Employment Termination.
 
(a)         The employment of the Executive by the Company pursuant to this
Agreement shall terminate upon the occurrence of any of the following:
 
 
(i)
at the election of the Board without “cause” (as defined herein below),
immediately upon written notice by the Board to the Executive; or at the
election of the Executive, with “good reason” (hereinafter defined); or

 
 
(ii)
at the election of the Board for “cause,” immediately upon -written -notice by
the Company to the Executive; or

 
 
(iii)
upon the Executive’s death or “disability” (as defined herein below),
immediately, in the case of disability, upon written notice by the Board to the
Executive.

 
(b)         For the purposes of this Agreement, “cause” for termination shall be
deemed to exist upon (i) a reasonable and good faith finding by the Board as
determined by it in its sole discretion, of a material and repeated failure of
the Executive to provide his full business time and attention to his reasonably
assigned duties for the Company (including, without limitation, unexcused
failure to report for work) for reasons other than the Executive’s death or
disability, or the Executive’s gross negligence or willful misconduct; which
failure or deficiency remains uncured (if curable) for a period of thirty (30)
days following written notice by the Board to the Executive which specifies the
reasons for the potential cause determination; (ii) the material breach by the
Executive of any of the provisions of this Agreement for reasons other than the
Executive’s death or disability, which breach remains uncured (if curable) for a
period of thirty (30) days following written notice by the Board to the
Executive which specifies the reasons for the potential cause determination;
(iii) the conviction of the Executive of, or the entry of a pleading of guilty
or nolo contendere by the Executive to, any felony; (iv) the Executive having
committed any theft, embezzlement, fraud or other intentional act of dishonesty
involving the business of the Company; or (v) any adjudication in any civil
suit, or written acknowledgment by the Executive in any agreement or stipulation
of
 

 
4

--------------------------------------------------------------------------------

 

the commission of any theft, embezzlement, fraud or other intentional act of
dishonesty involving any other person.
 
For purposes of this Agreement, “good reason” means, without the written consent
of the Executive, (i) a material reduction by the Board in the Executive’s
duties or position, (ii) a reduction of the Executive’s compensation or benefits
as set forth in this Agreement, (iii) the relocation of the Executive’s
principal place of employment, except as set forth herein or (iv) any other
material breach by the Board of this Agreement.  Prior to a termination with
good reason, the Board shall have thirty (30) days to cure the deficiency or
deficiencies related to the potential good reason determination.
 
(c)         For purposes of this Agreement, the term “disability” shall mean (x)
a disability (by reason of accident, illness, mental or physical cause) which in
fact incapacitates the Executive from performing substantially the services
contemplated herein for a period of three (3) consecutive months or for an
aggregate of four (4) months during any twelve (12) month period during the term
of this Agreement, or (y) a disability, the nature of which is such that in the
opinion of a physician selected by the Board (and the Executive hereby agrees to
submit to an examination by such physician), the Executive shall be
incapacitated from performing the services contemplated herein for a period of
three (3) consecutive months or for an aggregate of four (4) months during any
twelve (12) month period during the term of this Agreement.  A termination by
the Company pursuant to the provisions of paragraph 5(a)(iii) above, shall be
treated as a termination without “cause” pursuant to the provisions of paragraph
5(a) (i) above.
 
6.           Effect of Early Termination.
 
(a)         In the event the Executive’s employment is terminated pursuant to
Section 5(a)(i), the Company shall pay to the Executive, in addition to the
“Standard Entitlements” (as hereinafter defined), (i) in a lump sum on the
termination date, the Base Salary otherwise scheduled to be paid to the
Executive for the lesser of: (x) the remainder of the Employment Period (subject
to the percentage increases provided in paragraph 3(a)(x) hereof) and (y) three
years; however, in no event less than one year; plus (ii) upon termination, the
EBITDA Bonus (the cash portion payable in the form of a single lump sum and the
Bonus Stock Option payable in the form of an option grant agreement) paid for
the performance year (as defined in Section 3(e) hereof) immediately preceding
the performance year in which the termination of employment occurs (the
“Termination EBITDA Bonus”), for the lesser of (z) each performance year
remaining in the Employment Period, beginning with the performance year
immediately following the year in which the termination date occurs, and (aa)
three years; however, in no event less than one year, with payment of the cash
portion of each year’s Termination EBITDA Bonus being made in the form of a
single lump sum between January 1st and March 15th of year immediately following
the applicable one-year anniversary of the termination date and payment of the
Bonus Stock Option portion of each year’s Termination EBITDA Bonus being made on
a Grant Date as soon as reasonably practicable after the termination date; plus
(iii) accelerated vesting of all other unvested options granted to the
Executive.
 

 
5

--------------------------------------------------------------------------------

 

For purposes of this Agreement, “Standard Entitlements” means accrued but unpaid
(as of the termination date) Base Salary, accrued but unused (as of the
termination date) vacation pay, approved but unreimbursed (as of the termination
date) expenses, employee benefits that by their terms continue after the
termination of employment, payable in accordance with the Company’s normal
payroll practices, but in no event later than required under applicable law (the
“Standard Entitlements Payment Schedule”); provided, however, that, employee
benefits, if any, provided after the termination date shall be so provided only
in accordance with the terms thereof, which shall for all purposes hereunder be
deemed to be part of the Standard Entitlements Payment Schedule.  The
exercisability of any Bonus Stock Option shall be governed by the terms of
Section 3(c) hereof and the applicable grant agreement.
 
Upon receipt by Executive of such sums payable by the Company as provided in
this Section 6(a), Executive (or his estate, as the case may be) will provide
the Company with a confirmation of receipt of payment and, with respect to
payments other than the Standard Entitlements, a general mutual release of
claims, provided, however, that if the release of claims by the Company would
diminish its rights under any insurance policy covering any related loss by the
Company, then the Company may elect to waive the requirement that the parties
deliver such releases.
 
(b)         In the event the Executive’s employment is terminated, at the
election of the Company pursuant to Section 5(a)(ii), or for any other reason
except as set forth in this Section 6, the Company shall pay to the Executive
only the Standard Entitlements, in accordance with the Standard Entitlements
Payment Schedule.  In such event, the Executive shall forfeit the right to
receive any then ungranted Bonus Stock Options or other options (whether or not
vested); provided, however, that the exercisability of any granted Bonus Stock
Option shall be governed by the terms of Section 3(c) hereof and the applicable
grant agreement.  Upon receipt by Executive of such sums payable by the Company
as provided in this paragraph, Executive will provide the Company with a
confirmation of receipt of payment and, with respect to payments other than the
Standard Entitlements, a general mutual release of claims, provided, however,
that if the release of claims by the Company would diminish its rights under any
insurance policy covering any related loss by the Company, then the Company may
elect to waive the requirement that the parties deliver such releases.
 
(c)         In the event the Executive’s employment is terminated pursuant to
Section 5(a)(iii), the Company shall pay to the estate of the Executive, or to
the Executive, as the case may be, the amounts payable in the case of a
termination pursuant to the provisions of paragraph 6(a) above, with the
Standard Entitlements being paid in accordance with the Standard Entitlements
Payment Schedule.  The exercisability of any Bonus Stock Option shall be
governed by the terms of Section 3(c) hereof and the applicable grant
agreement.  Upon receipt by Executive (or his estate, as the case may be) of
such sums payable by the Company as provided in this paragraph, Executive (or
his estate, as the case may be) will provide the Company with a confirmation of
receipt of payment and, with respect to payments other than the Standard
Entitlements, a general mutual release of claims; provided, however, that if the
release of claims by the Company would diminish its rights under any insurance
policy covering any related loss by the Company, then the Company may elect to
waive the requirement that the parties deliver such releases.
 

 
6

--------------------------------------------------------------------------------

 

(d)         The Executive understands, acknowledges and agrees that he will not
be entitled to receive, and will not receive, payment of any amounts described
in Section 6(a)(i), (ii) or (iii) and shall forfeit any Bonus Stock Option or
other option (even if vested), should he not execute and not revoke the general
release described above, unless the requirement of a general release is waived
by the Company.
 
(e)         Notwithstanding any provision of this Agreement to the contrary,
should any payments contemplated hereunder constitute “excess parachute
payments” within the meaning of Sections 280G and 409A of the “Code” (as
hereinafter defined), such payments shall be reduced such that the remaining
payments do not, either individually or in the aggregate, constitute excess
parachute payments.  Payments of amounts exempt from Section 409A of the Code
(as hereinafter defined), including, without limitation, Bonus Stock Option
payments, shall be cut back first.  No cutback with respect to amounts
constituting deferred compensation within the meaning of Section 409A of the
Code (as hereinafter defined) shall be made if doing so would constitute an
impermissible acceleration of deferred compensation under Section 409A.
 
7.           Breach of Contract by the Executive.
 
(a)         The Executive recognizes that the Company is entering into this
Agreement in order to obtain the exclusive use of his personal services during
the term hereof, that Executive’s services are of a special, unique, unusual,
extraordinary, creative and intellectual character, and that the commercial
success of the enterprise for which the Executive has been hired depends
primarily upon the unique character of his services.  The Executive therefore
agrees that the diversion of the Executive’s services to unrelated business
endeavors during the term of this Agreement, in violation of this Agreement and
without consent of the Company, shall be a material breach of this Agreement
(which is deemed not curable).
 
(b)         The Executive further agrees that, in addition to any other remedies
which may be available, the Company shall have the right to seek specific
performance and injunctive relief, without the need to post a bond or other
security, to enforce any of the rights and privileges of the Company or any of
the covenants or obligations of the Executive hereunder, including, without
limitation, the covenants and obligations of the Executive set forth in this
Section 7.
 
8.           Non-Competition; Non-Solicitation.
 
(a)         During the term of the Executive’s employment by the Company, and
until the latter of (x) one year from the date of termination of employment or
(y) that period following the termination of the Executive’s employment for
which Executive is provided any payments under section 6 of this Agreement (and
for this purpose, all lump sum payments shall be deemed to cover the period
covered by the lump sum payment) (the “Non-Compete Period”), the Executive shall
not, directly or indirectly, as an individual proprietor, partner, stockholder,
officer, executive, director, joint venturer, investor, lender, or in any other
capacity whatsoever (other than as a holder of not more than one percent (1%) of
the total
 

 
7

--------------------------------------------------------------------------------

 

outstanding stock of a publicly held company); engage in a business that
competes with the business of the Company.
 
(b)         During the term of the Executive’s employment by the Company, and
during the Non-Compete Period, the Executive shall not, directly or indirectly:
 
 
(i)
solicit or induce, or attempt to induce, any other person or entity having any
continuing or periodic contractual relationship with the Company to terminate,
reduce or materially alter their relationship with, or otherwise cease
negotiations and/or business activity with, the Company; or

 
 
(ii)
solicit, divert or take away, or attempt to divert or to take away, the business
or patronage of any persons who had a contractual relationship with the Company
or with whom the Company was involved in negotiating any such relationship
within six (6) months of the effective date of termination, and with whom the
Executive, while employed by the Company, had significant personal contacts or
relationships.

 
(c)         The restrictions contained in this Section 8 are necessary for the
protection of the trade secrets, proprietary information and contractual
relationships of the Company, all of which the Executive acknowledges may be
disclosed to the Executive while in the Company’s employ, and are considered by
the Executive to be reasonable for such purpose.  The Executive agrees that any
breach of this Section 8 shall cause the Company substantial and irrevocable
damage and therefore, in the event of any such breach, the Executive agrees that
he will not be entitled to receive, and will not receive, payment of any amounts
described in Section 6(a)(i), (ii) or (iii) and shall forfeit any Bonus Stock
Option or other option (even if vested), and in addition to any other remedies
which may be available, the Company shall have the right to seek specific
performance and injunctive relief, without the need to post a bond or other
security.
 
(d)         If any restriction set forth in this Section 8 is found by a court
of competent jurisdiction to be unenforceable because it extends for too long a
period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic areas as to which it may be
enforceable.
 
9.           Proprietary Information and Developments.
 
(a)         The Executive acknowledges -and agrees that due to the uniqueness of
his position, information is available to him which is of such a highly
confidential and proprietary nature as to constitute a trade secret, and any
conduct by him which makes use of such information (except as part of the
performance of his duties on behalf of the Company) would be a breach of his
fiduciary duty to the Company.  Accordingly, and in furtherance of the terms of
Section 8, the Executive agrees that all information and knowhow, whether or not
in writing, of a private, secret or confidential nature concerning the Company’s
business or financial
 

 
8

--------------------------------------------------------------------------------

 

affairs or business methods received by him from the Company or of which he
became aware during the term of his employment (collectively, “Proprietary
Information”), is and shall be the exclusive property of the Company.  The
Executive shall not disclose any Proprietary Information to others outside the
Company (except as part of the performance of his duties on behalf of the
Company), or use the same for any unauthorized purposes, without written
approval by the Company, either during or after his employment, unless and until
such Proprietary Information has become public knowledge without fault of the
Executive.
 
(b)         The Executive agrees that all tangible material containing
Proprietary Information, whether created by the Executive or others, which shall
come into his custody or possession during the term of his employment, shall be
and is the exclusive property of the Company to be used by the Executive only in
the performance of his duties for the Company, and to be returned to the Company
upon the termination of his employment.
 
(c)         The Executive agrees that he shall not disclose or use information,
know-how and records of the types set forth in paragraphs (a) and (b) above
which constitute Proprietary Information of any third party with whom the
Company has a contractual relationship which obligates the Company to maintain
the confidentiality of such Proprietary Information, except to the extent such
disclosure or use would be during the course of the performance by the Executive
of his duties on behalf of Company and’ such disclosure or use does not
constitute a breach of the contractual relationship between the Company with
such third party.  Without in any way limiting the generality of the foregoing,
the Executive agrees that any breach of this Section 9 shall cause the Company
substantial and irrevocable damage and therefore, in the event of any such
breach, the Executive agrees that he will not be entitled to receive, and will
not receive, payment of any amounts described in Section 6(a)(i), (ii) or (iii)
and shall forfeit any Bonus Stock Option (even if vested), and in addition to
any other remedies which may be available, the Company shall have the right to
seek specific performance and injunctive relief, without the need to post a bond
or other security.
 
10.           Survival.  The provisions of Sections 6, 7, 8, 9, 10, 11, 16, 17,
18, 20, 21, 22 and 23 shall survive the termination of this Agreement for any
reason.
 
11.           Arbitration.  Any controversy or claim arising out of or relating
to this Agreement or the breach of this Agreement (except as otherwise set forth
herein, including without limitation, as set forth in Sections 7, 8 and 9
hereof) that cannot be resolved by the Executive and the Company, including any
dispute as to the calculation of the Executive’s bonuses or any payments
hereunder, shall be submitted to arbitration in Los Angeles, California in
accordance with California law and the procedures of the American Arbitration
Association before a single arbitrator mutually acceptable to the parties.  The
determination of the arbitrator(s) shall be conclusive and binding on the
Company and the Executive and judgment may be entered on the arbitrator(s)’
award in any court having jurisdiction.  Notwithstanding the foregoing, this
Section 11 shall not operate to preclude the Company from proceeding to
adjudicate, in any court of competent jurisdiction, and not in any arbitral
proceeding, any provision of Section 7, 8 or 9 hereof.
 

 
9

--------------------------------------------------------------------------------

 

12.           Notices.  All notices required or permitted under this Agreement
shall be in writing and shall be deemed effective upon delivery personally or to
its address first above written.
 
13.           Entire Agreement.  This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
 
14.           Amendment.  This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Executive.
 
15.           Governing Law.  Except as preempted by applicable federal law,
this Agreement shall be construed, interpreted and enforced in accordance with
the laws of the State of California (without regard to any principles in respect
of conflicts of laws).
 
16.           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors, permitted
assigns, legal representatives and heirs; provided, however, that the Company
may assign this Agreement and all of its rights and obligations hereunder, but
that the obligations of Executive are personal and shall not be assigned by him
and if the assignee of the Company does not honor the Company’s obligations
described hereunder, the Company shall remain liable.
 
17.           Waiver.  No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other
right.  A waiver or consent given by the Company on any one occasion shall be
effective only in that instance and shall not be construed as a bar or waiver of
any right on any other occasion.
 
18.           Severability.  In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable by a tribunal of competent
jurisdiction, the validity, legality and enforceability of the remaining
provisions shall in no way be affected or impaired thereby.
 
19.           Counterparts.  This Agreement may be executed in any number of
counterparts, all of which, when so executed, shall be deemed an original but
all of which together shall constitute one instrument.
 
20.           409A.  This Agreement shall be interpreted by all parties to
comply with any applicable provisions of Section 409A of the Internal Revenue
Code (the “Code”) and the Treasury Regulations promulgated thereunder.  Without
in any way limiting the generality of the foregoing, it is the intent of the
parties that all payments hereunder qualify, to the maximum extent possible, for
exemption from the requirements of said Section 409A by reason of falling under
one or more of the following exemptions from treatment as deferred
compensation:  (i) the exemption for short-term deferrals set forth in Treas.
Reg. Section 1.409A-1(b)(4); (ii) the exemption for certain separation pay plans
set forth in Treas. Reg. Section 1.409A-1(b)(9)(iii); (iii) the exemption for
bona fide vacation leave, sick leave, compensatory time or death benefits set
forth in Treas. Reg. Section 1.409A-1(a)(5) (iv) the exemption for certain stock
rights set forth in Treas. Reg. Section 1.409A-1(b)(5); or (v) the exemption for
amounts excludible from income as described in Treas. Reg. Section
1.409A-1(b)(1).  To the extent that, notwithstanding such intent, it should be
determined that said Section 409A applies to any payment under this
 

 
10

--------------------------------------------------------------------------------

 

Agreement, such payment may not be accelerated other than as permitted by said
Section 409A and the Treasury Regulations promulgated thereunder.  For purposes
of this Agreement, (i) any installment payment of deferred compensation shall
qualify as a separate payment for purposes of said Section 409A; (ii) if said
Section 409A applies to any payment described in Section 6(a)(i), (ii) or (iii)
(each, a “Severance Payment”), such Severance Payment shall not be made unless
the termination of employment described therein qualifies as a “separation from
service” within the meaning of said Section 409A and the Treasury Regulations
promulgated thereunder (applying all of the default rules contained therein);
and (iii) if said Section 409A applies to a Severance Payment, and as of the
date of “separation from service,” the Executive qualifies as a “specified
employee” within meaning of said Section 409A and the Treasury Regulations
promulgated thereunder (applying all of the default rules contained therein),
then the payment of such Severance Payment shall be delayed until the first
business day after the lapse of six months after such date of separation of
separation of service.
 
21.           Non-Disparagement.  Each party hereto agrees it will not during
Executive’s employment with the Company or at any time thereafter, publicly
disparage the other party.  Nothing in this Section 21 should be construed to
preclude either party hereto from making truthful disclosures required by
applicable law, regulation or order of court or governmental agency.
 
22.           Notices.  All notices, requests, consents and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given on the next business day if sent by private
overnight courier service; on the fourth business day after mailing if by
registered or certified mail: postage prepaid (return receipt requested and
received); and on the day of delivery if by facsimile accompanied by facsimile
machine-generated confirmation or delivered personally, to the Company and
Executive at the address set forth in the introduction to this Agreement (or to
such other address as either party shall designate by notice in writing to the
other in accordance herewith).
 
23.           Indemnification.  The Company shall indemnify, defend and hold
harmless Executive against any liability incurred by Executive as an employee of
the Company.  The Company shall be obligated to pay the claims or expenses of
the Executive required under this Section 23 including defense cost, directly to
the third party to whom payment is due and owing, without the necessity of the
Executive making such payment and seeking reimbursement from the Company.  For
the avoidance of doubt, the provisions of this Section 23 shall survive the
termination or expiration of Executive’s employment under this Agreement
irrespective of the reason for such termination.
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above.
 
APPLIED NATURAL GAS FUELS, INC.
 
By:
/s/ W. Phillip Marcum
 
/s/ Cem Hacioglu
Name:
W. Phillip Marcum
 
CEM HACIOGLU
Title:
Chairman of the Board of Directors,
     
by order of the Board of Directors
   

 
11

--------------------------------------------------------------------------------