Employment Agreement



 






Exhibit 10.1




EMPLOYMENT AGREEMENT

(CARL KUKKONEN)




     This Employment Agreement (“Employment Agreement “) is made this 14th day
of October 2004 by and between Direct Methanol Fuel Cell Corporation, a Delaware corporation (the
“Company”), and Carl Kukkonen (“Employee”).



     Whereas, Employee is currently employed by the Company as President and Chief
Executive Officer and the parties desire to enter into this Employment Agreement to modify and
supersede Employee’s current at-will relationship and evidence the terms and conditions of such
employment.



     Now, Therefore, in consideration of the foregoing and the mutual covenants and
promises in this Employment Agreement, the parties agree as follows:



     1. Employment. The Company agrees to employ Employee and Employee agrees to be
employed by the Company upon the terms and conditions of this Employment Agreement. Employee
hereby represents and warrants that neither Employee’s entry into this Employment Agreement nor
Employee’s performance of Employee’s obligations hereunder will conflict with or result in a breach
of the terms, conditions or provisions of any other agreement or obligation of any nature to which
Employee is a party or by which Employee is bound, including, without limitation, any development
agreement, non-competition agreement or confidentiality agreement previously entered into by
Employee.



     2. Term of Employment. The term of Employee’s employment under this Employment
Agreement will commence on the date hereof and will continue until three years thereafter (the
“Initial Employment Term”). The Initial Employment Term and any Renewal Employment Term (as
defined herein) shall automatically be renewed and extended on the same terms and conditions
contained herein for consecutive one year periods (the “Renewal Employment Terms”), unless not
later than ninety (90) days prior to the end of the Initial Employment Term or any Renewal
Employment Term, as the case may be, either party shall give written notice to the other party of
its election to terminate this Employment Agreement. The Initial Employment Term and the Renewal
Employment Terms are hereinafter referred to as the “Employment Term.” Notwithstanding anything to
the contrary contained herein, the Employment Term is subject to termination pursuant to Section 9
below.



     3. Position and Responsibilities. Employee will be employed as Chief Executive
Officer and President. Employee shall report to and be subject to the direction of the Board of
Directors (the “Board”) of the Company. Employee shall perform and discharge such duties and
responsibilities for the Company as the Board may from time to time reasonably assign to Employee.
During the



 









 




Employment Term, Employee shall devote Employee’s full business time, attention, skill and efforts
to the faithful performance of Employee’s duties herein, and shall perform the duties and carry out
the responsibilities assigned to Employee, to the best of Employee’s ability, in a diligent,
trustworthy, businesslike and efficient manner for the purpose of advancing the Company.




     4. Compensation.




     (a) During the Employment Term, the Company shall pay to Employee a base salary at the
rate of $225,000 per year, subject to increase from time to time, solely at the discretion
of the Board, payable at the Company’s regular employee payroll intervals.




     (b) Employee shall be eligible for an annual performance-based bonus of up to 25% of
Employee’s base salary as determined by the Compensation Committee of the Board.




     (c) All compensation payable to Employee hereunder is stated in gross amount and shall
be subject to all applicable withholding taxes, other normal payroll and any other amounts
required by law to be withheld.



     5. Benefit Plans. During the Employment Term, Employee will be entitled to receive
benefits comparable to those provided to the other employees of the Company in similar positions
and with similar responsibilities (subject to any applicable waiting periods and other
restrictions).



     6. Vacation. Employee shall be entitled to vacation and sick days in accordance with
the Company’s vacation policy, but in no event, less than fifteen (15) days of vacation per year.



     7. Confidentiality, Inventions and Non-Solicitation. Employee and the Company have
entered into the Confidentiality, Inventions and Non-Solicitation Agreement attached hereto as
Schedule A.



     8. Equitable Remedies.



     Employee acknowledges and agrees that the agreements and covenants set forth in Sections 7 are
reasonable and necessary for the protection of the Company’s business interests, that irreparable
injury will result to the Company if Employee breaches any of the terms of said covenants, and that
in the event of Employee’s actual or threatened breach of any such covenants, the Company will have
no adequate remedy at law. Employee accordingly agrees that, in the event of any actual or
threatened breach by Employee of any of said covenants, the Company will be entitled to immediate
injunctive and other equitable relief, without bond and without the necessity of showing actual
monetary damages. Nothing in this Section 8 will 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 that it is able to prove.



     9. Termination.



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     (a) The Company may terminate the Employment Term immediately upon written notice to
Employee if there has been a breach of this Employment Agreement by Employee. Without
limiting the generality of the preceding sentence, any material breach by Employee of any of
Employee’s obligations under Section 7 will be deemed a breach of this Employment Agreement,
and any of the following events will also be deemed a material breach of this Employment
Agreement:




	 	(i)	 	Employee’s continued and deliberate neglect of,
willful misconduct in connection with the performance of or refusal to
perform Employee’s duties in accordance with, Section 3 of this
Employment Agreement; or
	 
	 	(ii)	 	Employee’s personally engaging in illegal
conduct which causes material harm to the reputation of the Company or
its affiliates; or
	 
	 	(iii)	 	Employee’s conviction or being found liable
for a felony, misdemeanor or gross misdemeanor relating to, an act of
dishonesty or fraud against, or a misappropriation of property
belonging to, the Company or its affiliates; or
	 
	 	(iv)	 	Employee’s engagement in substance abuse which
substantially impairs his ability to perform the duties and obligations
of your employment or causes material harm to the reputation of the
Company; or
	 
	 	(v)	 	Employee personally engaging in any act of
moral turpitude that causes material harm to the reputation of the
Company; or
	 
	 	(vi)	 	Employee knowingly and intentionally breaching
in any material respect the terms of this Agreement (or any
confidentiality agreement or invention or proprietary information
agreement with the Company).





     If the Employment Term is terminated by the Company pursuant to this Section 9(a) or in
accordance with Section 2, the Company shall have no further obligation hereunder or otherwise with
respect to Employee (except payment of Employee’s base salary under Section 4(a) and benefits under
Section 5 accrued through the date of termination).




     (b) The Employment Term will terminate upon the death or upon written notice from the
Company to Employee upon the Disability (as defined below) of Employee. “Disability” of
Employee will be deemed to have occurred whenever Employee has suffered physical or mental
illness, injury, or infirmity that prevents Employee from performing, with



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or without reasonable accommodation, Employee’s essential job functions under this
Employment Agreement for any ninety (90) days in any one hundred twenty (120) day period and
the Company determines in good faith that such illness or other disability is likely to
continue for at least the next following thirty (30) days. Employee’s salary prior to the
Disability of Employee will be reduced by any benefits Employee receives from disability
insurance provided by the Company or pursuant to a plan providing disability benefits
maintained by the Company (if any such insurance or plan exists). In the event of
termination due to death or Disability, the Employee shall be deemed to have earned the pro
rata portion of any bonus for the then current year based on measuring the performance
standards to the date of death or onset of the applicable illness, injury or infirmity and
then annualizing the same, as determined in the sole discretion of the Company. Except as
set forth in the preceding sentence, if the Employment Term is terminated pursuant to this
Section 9(b), the Company shall have no further obligation hereunder or otherwise with
respect to Employee (except payment of Employee’s base salary under Section 4(a) and
benefits under Section 5 accrued through the date of termination).




     (c) The Company may elect to terminate Employee’s employment hereunder without cause
upon ten (10) days’ prior written notice; provided that if it does so elect the Company
shall continue to pay Employee’s base salary in accordance with Section 4(a) and provide the
benefits to Employee in accordance with Section 5 for six (6) months following such
termination date. Except as specifically set forth in this Section 9(c), if the Employment
Term is terminated pursuant to this Section 9(c), the Company shall have no further
obligation hereunder or otherwise with respect to Employee and no options will vest during
that time.




     (d) Employee has the power to terminate Employee’s employment with the Company without
cause, in which event the Company shall have no further obligation hereunder or otherwise
with respect to Employee (except payment of Employee’s base salary under Section 4(a) and
benefits under Section 5 accrued through the date of termination).




     (e) Employee has the power to terminate Employee’s employment with the Company for good
reason immediately upon written notice to the Company upon the occurrence of any of the
following events:




          (i) the Company’s failure to pay the base salary earned by Employee pursuant to Section
4(a) when such base salary has become due and owing, provided that the Company has previously
been notified in writing by Employee that the Company has failed to pay Employee such base
salary and the Company has failed to cure such violation within thirty (30) days of receiving
such notice; or




          (ii) the Company shall materially reduce Employee’s benefits due hereunder, provided
that the Company has previously been notified in writing by Employee that the Company has
materially reduced Employee’s benefits hereunder and the Company



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has failed to cure such violation within thirty (30) days of receiving such notice; or




     (iii) the Company has assigned Employee duties which are materially inconsistent with
his position as contemplated by this Employment Agreement, provided that the Company has
previously been notified by Employee that the Company has assigned Employee duties which are
materially inconsistent with his position as contemplated by this Employment Agreement and
the Company has failed to cure such violation within thirty (30) days of receiving such
notice.




If Employee terminates his employment pursuant to this Section 9(e), the Company shall
continue to pay Employee’s base salary in accordance with Section 4(a) and provide the
benefits to Employee in accordance with Section 5 for the earlier of (i) six (6) months
following such termination date; or (ii) the expiration of the then current Employment Term
(as provided in Section 2). Except as specifically set forth in this Section 9(c), if the
Employment Term is terminated pursuant to this Section 9(c), the Company shall have no
further obligation hereunder or otherwise with respect to Employee and no options will vest
during that time.



          (f) Termination of the Employment Term in accordance with this Section 9, or expiration of the
Employment Term, will not affect the provisions of this Employment Agreement that survive such
termination, including, without limitation, the provisions in Sections 7 and will not limit either
party’s ability to pursue remedies at law or equity.



          (g) Notwithstanding anything to the contrary herein, no payments shall be due under Section
9(c) above unless and until Employee shall have executed a general release and waiver of claims of
the Company, in form reasonably satisfactory to the Company, and the execution of such general
release and waiver of claims shall be a condition to Employee’s rights under Section 9(c).



     10. Effect of Prior Agreements. This Employment Agreement contains the entire
understanding between the Company and Employee relating to the subject matter hereof and supersedes
any prior employment agreement between Employee and the Company or other agreement relating to the
subject matter hereof between the Company and Employee including the Offer Letter and any
discussions related thereto.



     11. Modification and Waiver. This Employment Agreement may not be modified or amended
except by an instrument in writing signed by the parties. No term or condition of this Employment
Agreement will be deemed to have been waived, except by written instrument of the party charged
with such waiver. No such written waiver will be deemed to be a continuing waiver unless
specifically stated therein, and each such waiver will operate only as to the specific term or
condition waived and shall not constitute a waiver of such term or condition for the future or as
to any act other than that specifically waived.



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     12. Severability. If, for any reason, any provision of this Employment Agreement is
held invalid, such invalidity will not affect any other provision of this Employment Agreement, and
each provision will to the full extent consistent with law continue in full force and effect. If
any provision of this Employment Agreement is held invalid in part, such invalidity will in no way
affect the rest of such provision, and the rest of such provision, together with all other
provisions of this Employment Agreement, will, to the full extent consistent with law, continue in
full force and effect.



     13. Notices. Any notice, consent, waiver and other communications required or
permitted pursuant to the provisions of this Employment Agreement must be in writing and will be
deemed to have been properly given (a) when delivered by hand; (b) when sent by telecopier (with
acknowledgment of complete transmission), provided that a copy is mailed by U.S. certified mail,
return receipt requested; (c) three (3) days after sent by certified mail, return receipt
requested; or (d) one (1) day after deposit with a nationally recognized overnight delivery
service, in each case to the appropriate addresses and telecopier numbers set forth below:



          If to the Company:




Direct Methanol Fuel Cell Corporation

2400 Lincoln Avenue

Altadena, California 91001

Attn: Legal Department

Telecopy No.: (626) 296-6311



          If to Employee:




Carl Kukkonen

                                        

                                        



     Each party will be entitled to specify a different address for the receipt of subsequent
notices by giving written notice thereof to the other party in accordance with this Section 13.



     14. Headings. The headings and other captions in this Employment Agreement are
included solely for convenience of reference and will not control the meaning and interpretation of
any provision of this Employment Agreement.



     15. Governing Law. This Employment Agreement has been executed in the State of
California, and its validity, interpretation, performance, and enforcement will be governed by the
laws of such state, except with respect to conflicts of laws principles. The parties hereby
consent to the exclusive jurisdiction of the Federal or state courts in Los Angeles County,
California in any action or claim arising out of, under or in connection with this Employment
Agreement, or the relationship between the parties hereto.



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     16. Waiver of Jury. The Company and the Employee knowingly and voluntarily waive any
and all right to a trial by jury in any action or proceeding arising out of, under or in connection
with this Employment Agreement, or the relationship between the parties hereto.



     17. Binding Effect. This Employment Agreement will be binding upon and inure to the
benefit of Employee, the Company, and their respective successors and permitted assigns. The
Company will be entitled to assign its rights and duties under this Employment Agreement provided
that the Company will remain liable to Employee should such assignee fail to perform its
obligations under this Employment Agreement.



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     18. No Strict Construction. The language used in this Employment Agreement will be
deemed to be the language chosen by the parties to express their mutual intent, and no rule of
strict construction will be applied against any person.



     In Witness Whereof, the Company has caused this Employment Agreement to be executed
by its duly authorized officer and Employee has signed this Employment Agreement, as of the date
first above written.



	 	 	 	 	 
	 	 	Direct Methanol Fuel Cell Corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ CARL KUKKONEN
	 

	 	 	 	 
	 

	 	 	 	Name: Carl Kukkonen

	 

	 	 	 	Title: CEO
	 
	 	 	 	 
	 

	 	Employee:	 	 
	 

	 	 	 	/s/ CARL KUKKONEN
	 

	 	 	 	 
	 

	 	 	 	Carl Kukkonen







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