Document:

XcelMobility Inc.: Exhibit 10.2 - Filed by newsfilecorp.com

BOARD ADVISORY AGREEMENT

     This Board Advisory Agreement
(“Agreement”) is made and entered into as of the 14th day of August, 2012
by and between XcelMobility, Inc., a Nevada corporation (the “Company”),
and Gregory Tse, an individual (“Advisor”). In consideration of the
mutual promises contained herein, the parties agree as follows:

1. Services and Compensation.

          (a)
Advisor has served as a member of the Board of Directors of the Company (the
“Board”) since August 30, 2011.

          (b)
In consideration for serving on the Board, the Company will: (i) issue Advisor
three hundred and sixty thousand (360,000) shares of Company common stock (the
“Restricted Stock”) subject to the conditions hereinafter provided; (ii)
pay Advisor two thousand five hundred dollars ($2,500) per month commencing
September 1, 2011; provided, however, that the monthly cash payment to Advisor
shall be payable once the Company has closed a debt and/or equity financing of
at least two million dollars ($2,000,000) (the “Financing”); and (iii)
provide Advisor with one (1) round trip business class airline ticket per year
to Shenzhen to attend Company meetings. It is expressly agreed and understood
that the cash compensation payable to Advisor pursuant to Section 1(b)(ii) has
accrued and shall accrue on a monthly basis prior to the Financing and that all
such accrued amounts shall be payable to Advisor within thirty (30) days of the
completion of the Financing.

          (c)
Other than as set forth in Section 1(b) above, any and all additional
compensation payable to Advisor shall be as approved by the Company’s Board of
Directors and shall be consistent with compensation provided to other
independent members of the Company’s Board of Directors and in accordance with
Company policy.

2. Provisions Regarding Restricted Stock. 

          (a)
Vesting of Restricted Stock and Stock Certificates.

                    (i)
Vesting. The right to unrestricted ownership in the Restricted Stock
under this Agreement shall vest with respect to one hundred and thirty five
thousand (135,000) shares of Restricted Stock immediately, 45,000 shares on
September 1, 2012, 45,000 shares on January 1, 2013, 45,000 shares on May 1,
2013, 45,000 shares on September 1, 2013, and the remaining 45,000 shares on
January 1, 2014, subject to Advisor’s continuous service, as described in
Section 2(a)(ii) below. All unvested Restricted Stock shall vest immediately
upon a merger, sale or consolidation of the Company (except to a wholly-owned
subsidiary for the purpose of changing domicile or name) or upon Advisor’s
death.

                    (ii)
Permitted Forfeiture of Unvested Restricted Stock. Advisor acknowledges
that if the Restricted Stock has not vested in accordance with Section 2(a)(i)
at such time as Advisor is no longer serving as either a non-employee director
of, an employee of, or active consultant providing services to the Company or
any of its subsidiaries, the Restricted Stock shall immediately be forfeited and
all rights of the Advisor to such Restricted Stock shall terminate without
further obligation on the part of the Company. Upon the forfeiture of any
Restricted Stock, such forfeited Restricted Stock shall be immediately
transferred to the Company without further action by the Company. The Restricted
Stock may not be sold, assigned, pledged, exchanged, hypothecated or otherwise
transferred, encumbered or disposed of to the extent that the Restricted Stock
is subject to vesting and in the event of termination of employment with or
services to the Company or any subsidiary for any reason.

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                    (iii) Deliveries by the Company. A certificate evidencing the Restricted Stock
shall be issued by the Company in Advisor’s name, pursuant to which Advisor
shall have voting rights and shall be entitled to receive all dividends unless and until the shares of Restricted
Stock are forfeited pursuant to this Agreement. The certificate shall bear a
legend evidencing the nature of the Restricted Stock, and the Company may cause
the certificate to be delivered upon issuance to the Secretary of the Company or
to such other depository as may be designated by the Company for safekeeping
until all vesting and forfeiture restrictions lapse pursuant to the terms of
this Agreement. Upon the lapse of the vesting and forfeiture restrictions, the
Company shall cause a new certificate or certificates to be issued without
legend in the name of Advisor.

                                 Notwithstanding any other
provisions of this Agreement, the issuance or delivery of the Restricted Stock
under this Agreement (whether vested or unvested) may be postponed for such
period as may be required to comply with applicable requirements of any national
securities exchange or any requirements under any federal or state securities
law or regulation. The Company shall not be obligated to (a) issue or deliver
any Restricted Stock if the issuance or delivery thereof shall constitute a
violation of any provision of any law or regulation of any governmental
authority or any national securities exchange, (b) qualify the issuance of the
Restricted Stock in any jurisdiction, or (c) register the shares of Restricted
Stock with the SEC.

          (b)
Reservation of Shares. The Company agrees that prior to the issuance of
the Restricted Stock represented by this Agreement, there shall be reserved for
issuance such number of the Company’s authorized and unissued shares as shall be
necessary to allow for the issuance of the Restricted Stock issuable
hereunder.

          (c)
Suspension and Cancellation of Stock.

                    (i)
In the event the Company reasonably believes Advisor has committed an act of
misconduct including, but limited to acts specified below, the Company may
suspend Advisor’s right in his unvested Restricted Stock granted hereunder
pending final determination by the Board of the Company (the “Board”). If
Advisor is determined by the Board to have:

                              (1)
committed an act of embezzlement, fraud, dishonesty, breach of fiduciary duty to
the Company or a subsidiary;

                              (2)
deliberately disregarded the rules or policies of the Company or a subsidiary
which resulted in loss, damage or injury to the Company or a subsidiary;

                              (3)
made any unauthorized disclosure of any trade secret or confidential information
of the Company or a subsidiary;

                              (4)
induced any partner, collaborator, client or customer of the Company or a
subsidiary to break any contract with the Company or a subsidiary or induced any
principal for whom the Company or a subsidiary acts as agent to terminate such
agency relations;

                              (5)
engaged in any substantial conduct which constitutes unfair competition with the
Company or a subsidiary; or

                              (6)
violated any requirement of the Foreign Corrupt Practices Act or any analogous
foreign regulations,

neither Advisor nor Advisor’s estate shall be entitled to
shares of unvested Restricted Stock. The determination of the Board shall be
final and conclusive. In making its determination, the Board shall give the
Advisor an opportunity to appear and be heard at a hearing before the full Board
and present evidence on Advisor’s behalf.

          (d)
Advisor Representations.

                    (i)
Purchase for Own Account. Advisor represents that he is acquiring the
Restricted Stock solely for his own account and beneficial interest for
investment and not for sale or with a view to distribution of the Restricted Stock or any part thereof, has no present
intention of selling (in connection with a distribution or otherwise), granting
any participation in, or otherwise distributing the same, and does not presently
have reason to anticipate a change in such intention.

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                    (ii)
Information and Sophistication. Advisor hereby: (x) acknowledges that he
has received all the information he has requested from the Company and he
considers necessary or appropriate for deciding whether to acquire the
Restricted Stock, (y) represents that he has had an opportunity to ask questions
and receive answers from the Company regarding the terms and conditions of the
offering of the Restricted Stock and to obtain any additional information
necessary to verify the accuracy of such information and (z) further represents
that he has such knowledge and experience in financial and business matters that
he is capable of evaluating the merits and risk of this investment.

                    (iii)
Ability to Bear Economic Risk. Advisor acknowledges that investment in
the Restricted Stock involves a high degree of risk, and represents that he is
able, without materially impairing his financial condition, to hold the
Restricted Stock for an indefinite period of time and to suffer a complete loss
of his investment.

                    (iv)
Further Assurances. Advisor agrees and covenants that at any time and
from time to time he will promptly execute and deliver to the Company such
further instruments and documents and take such further action as the Company
may reasonably require in order to carry out the full intent and purpose of this
Agreement and to comply with state or federal laws or other regulatory
approvals.

          (e)
Restricted Securities. Advisor understands that the Restricted Stock are
characterized as “restricted securities” under the Securities Act of 1933, as
amended (“Securities Act”) inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that under the
Securities Act and applicable regulations thereunder such securities may be
resold without registration under the Securities Act only in certain limited
circumstances. Accordingly, the Restricted Stock, absent an effective
registration statement, can only be sold pursuant to an exemption from
registration, such as Rule 701 or Rule 144 of the Securities Act. Advisor
understands that the Company is under no obligation to register any of the
securities sold hereunder.

          (f)
Restrictive Legends and Stop-Transfer Orders.

                    (i)
Legends. Advisor understands and agrees that the Company will place the
legend set forth below, as applicable, or similar legends on any stock
certificate(s) evidencing the Restricted Stock, together with any other legends
that may be required by state or federal securities laws, the Company’s Articles
of Incorporation or Bylaws, any other agreement between Advisor and the Company
or any agreement between Advisor and any third party:

	
      THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933
      ACT”). THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
      INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
      DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
      AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
      COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
      UNDER THE 1933 ACT. 

	
         

	
      THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
      VESTING AND FORFEITURE RESTRICTIONS AS SET FORTH IN THAT CERTAIN BOARD
      ADVISORY AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF
      WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
    RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES. 

Page 3

                    (ii)
Stop Transfer Instructions. Advisor agrees that, to ensure compliance
with the restrictions imposed by this Agreement, the Company may issue
appropriate “stop-transfer” instructions to its transfer agent, if any, and if
the Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.

                    (iii)
Refusal to Transfer. The Company will not be required (i) to transfer on
its books any Restricted Stock that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement, or (ii) to treat as owner
of such Restricted Stock, or to accord the right to vote or pay dividends, to
any purchaser or other transferee to whom such Restricted Stock have been so
transferred.

          (g)
Securities Law And Other Regulatory Compliance. The Company shall not be
obligated to issue any Restricted Stock with respect to this Agreement unless
such shares are at that time effectively registered or exempt from registration
under the federal securities laws and the offer and sale of the shares are
otherwise in compliance with all applicable securities laws. Advisor may be
required to furnish representations or undertakings deemed appropriate by the
Company to enable the offer and sale of the shares or subsequent transfers of
any interest in such shares to comply with applicable securities laws. Evidences
of ownership of shares acquired with respect to this Agreement shall bear any
legend required by, or useful for purposes of compliance with, applicable
securities laws or this Agreement.

3. Confidentiality.

          (a)
“Confidential Information” means any Company proprietary information,
technical data, trade secrets or know-how, including, but not limited to,
research, services, current and prospective clients, client lists, markets,
processes, financial information, marketing, or other business information
developed by the Advisor pursuant to this Agreement or disclosed by the Company
either directly or indirectly in writing, orally or by drawings.

          (b)
Advisor will not, during or subsequent to the term of this Agreement, use the
Company’s Confidential Information for any purpose whatsoever other than the
performance of the Services on behalf of the Company or disclose the Company’s
Confidential Information to any third party. It is understood that said
Confidential Information shall remain the sole property of the Company. Advisor
further agrees to take all reasonable precautions to prevent any unauthorized
disclosure of such Confidential Information. Confidential Information does not
include information which (i) is known to Advisor at the time of disclosure to
Advisor by the Company as evidenced by written records of Advisor, (ii) has
become publicly known and made generally available through no wrongful act of
Advisor, or (iii) has been rightfully received by Advisor from a third party who
is authorized to make such disclosure. Without the Company’s prior written
approval, Advisor will not directly or indirectly disclose to anyone the
contents of this Agreement.

          (c)
Advisor recognizes that the Company has received and in the future will receive
from third parties their confidential or proprietary information subject to a
duty on the Company’s part to maintain the confidentiality of such information
and to use it only for certain limited purposes. Advisor agrees that Advisor
owes the Company and such third parties, during the term of this Agreement and
thereafter, a duty to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out the Services for
the Company consistent with the Company’s agreement with such third party.

Page 4

          (d)
Upon the termination of this Agreement, or upon the Company’s earlier request,
Advisor will deliver to the Company all of the Company’s property or
Confidential Information that Advisor may have in Advisor’s possession or
control.

4. Ownership. Advisor agrees that all copyrightable
material, notes, records, drawings, designs, inventions, improvements,
developments, discoveries and trade secrets conceived, made or discovered by
Advisor, solely or in collaboration with others, during the period of this
Agreement which relate in any manner to the business of the Company that Advisor
may be directed to undertake, investigate or experiment with, or which Advisor
may become associated with in work, investigation or experimentation in the line
of business of Company in serving on the Board are the sole property of the
Company.

5. Term and Termination. 

          (a)
Either party may terminate this Agreement immediately for breach or upon thirty
(30) days prior written notice for no reason. In addition, this Agreement shall
terminate in the event of the resignation or removal of Advisor from the
Company’s Board of Directors in accordance with the Company’s Bylaws, as
amended.

          (b)
Upon such termination all rights and duties of the parties toward each other
shall cease except: Sections 3 (Confidentiality) and 6 (Independent Contractor)
shall survive termination of this Agreement.

6. Independent Contractor. Advisor shall serve on the
Board as an independent contractor. Advisor acknowledges and agrees that Advisor
is obligated to report as income all compensation received by Advisor pursuant
to this Agreement, and Advisor agrees to and acknowledges the obligation to pay
all self-employment and other taxes thereon. Advisor further agrees to indemnify
the Company and hold it harmless to the extent of any obligation imposed on
Company (i) to pay in withholding taxes or similar items or (ii) resulting from
Advisor’s being determined not to be an independent contractor.

7. Miscellaneous.

          (a)
Entire Agreement. This Agreement is the entire agreement of the parties
and supersedes any prior or contemporaneous agreements whether oral or written
between them with respect to the subject matter hereof. This Agreement may be
changed only if agreed to in writing by both parties.

          (b)
Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same instrument.

          (c)
Severability; Conflicts. If any provision of this Agreement is held to be
unenforceable for any reason, such provision shall be adjusted rather than
voided, if possible, in order to achieve the intent of the parties to the
maximum extent possible. In any event, all other provisions of this Agreement
shall be deemed valid and enforceable to the full extent possible.

          (d)
Waiver. The waiver of any term or condition contained in this Agreement
by any party to this Agreement shall not be construed as a waiver of a
subsequent breach or failure of the same term or condition or a waiver of any
other term or condition contained in this Agreement.

          (e)
Assignment. Neither this Agreement nor any right hereunder or interest
herein may be assigned or transferred by Advisor without the express written
consent of the Company.

          (f)
Governing Law. This Agreement shall be governed by the laws of the State
of Nevada, excluding its conflicts of laws provisions.

[Remainder of Page Intentionally Left Blank; Signature
Page Follows]

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

	 	COMPANY: 
	 	 
	 	XCELMOBILITY INC., a Nevada
      corporation 
	 	 
	 	By: 	/s/
  
	 	 	 
	 	Name: 	Ronald Edward Strauss 
	 	  	Executive Chairman of the Board of 
	 	  	Directors 
	 	  	  
	 	 	 
	 	ADVISOR: 	  
	 	 	 
	 	GREGORY TSE 
	 	 
	 	By: 	/s/
  

Page 6exh10-3_17381.htm

EXHIBIT 10.3

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered  on July 31st,, 2012 __________ (the “Effective Date”), by and between ZAP, a California company  (the “Employer”, also referred to as the “Company”) and Chuck SCHILLINGS (the
“Executive”).

WHEREAS, the Executive is currently employed as Chief Operating Officer of ZAP; and

WHEREAS, the Employer and the Executive desire to enter into this Agreement to set out the terms and conditions for the employment relationship of the Executive as Co-CEO of ZAP effective July 31st, 2012, reporting to the board of directors of ZAP.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows:

1.           Employment Agreement.  On the terms and conditions set forth in this Agreement, the Employer agrees to employ the Executive and the Executive agrees to be employed by the Employer.  Terms used herein with initial capitalization not otherwise defined are defined in Section 22. The scope of responsibilities and reporting structure is described in Attachment 1. The Executive is employed at will, and either the Employer or Executive can terminate employment with 60 days’ notice unless the Executive was
terminated for cause. The Executive is employed as Co-CEO of ZAP responsible for ZAP USA operations and ZAP and Jonway Auto’s international marketing and sales, as well as customer support, reporting to the board.

2.           Compensation; Benefits; Restricted Stock Grant.

(a)           Base Salary.  During the Employment Period, the Employer shall pay to the Executive a base salary (the “Base Salary”), per the attachment.  The Base Salary shall be reviewed by the Compensation Committee of the Board of Directors no less frequently than annually and shall be adjusted in the discretion of the Compensation Committee of the Board of Directors, and any such adjusted Base Salary shall constitute the “Base Salary” for purposes
of this Agreement.  The Base Salary shall be paid in substantially equal installments in accordance with the Employer’s regular payroll procedures.

(b)           Annual Bonus. Upon profitability and contingent on the Company’s successful delivery to forecasted quarterly financial plan, an annual bonus may be granted if proposed by the Compensation Committee of the Board of Directors and approved by the Board of Directors of the Company.

 

(c)           Withholding; Employer Compensation Plans.  All compensation provided to the Executive pursuant to Section 6 shall be (1) in accordance with the Employer’s compensation plans and policies, and (2) less applicable deductions and withholding as determined by the Employer.

 

(d)           Stock Option Grant. Upon his joining into the Company,  the Executive will receive a stock option to purchase 400,000 shares of the Company’s Common Stock at a price per share equal to the fair market value per share of the Common Stock on the date of grant, which is specified as the Executive’s effective date as Co-CEO, subject to board approval.  25% of the shares subject to the option shall vest 12 months after the date vesting begins subject to Executive’s continuing employment with the Company, and the remaining shares shall vest annually over the
next three years in equal annual amounts subject to Executive’s continuing employment with the Company (“Standard Vesting Terms”).  No right to any stock or stock equivalent is earned or accrued until such time that vesting occurs, nor does the grant confer any right to continue vesting or employment.  In addition, contingent on the achievement of certain targets to be determined by the Board of Directors and subject to approval of the Board of Directors, the Executive shall have the right to earn additional options or option equivalents to purchase up to 150,000 shares of the Company’s Common Stock at a price per share equal to the fair market value per share of the Common Stock on the date of grant, as determined by the Company's Board of Directors.  Any such awards will vest on Standard Vesting Terms.  The
Executive’s participation in any employee share or option plan is subject to compliance with the applicable laws and regulations.  The Company reserves the right to alter the terms of any employee share or option plan offered to the Executive to comply with regulatory requirements. This stock option is governed by the Company’s Employee Stock Option Plan.

 

  

  

  

3.           Position and Responsibilities.

(a)           Position.  The Executive shall serve as Co-Chief Executive Officer responsible for ZAP’s US operations and support of ZAP and Jonway Auto’s international sales, marketing and customer support, reporting to the Employer’s Board of Directors, although the Employer may change the Executive’s title and supervisor(s) in its reasonable discretion.  The Executive’s responsibilities shall include those duties designated by the Employer.

(b)           Best Efforts.  The Executive shall devote the Executive’s reasonable best efforts and full business time to the performance of the Executive’s duties hereunder and the advancement of the business and affairs of the Employer and the Company Affiliates.

4.           Place of Performance.  During the Employment Period, the Executive shall be based primarily at an office of the Employer designated by the Employer (currently Santa Rosa, California), except for reasonable travel on the Employer’s business consistent with the Executive’s position.

5.           Compliance with Employer’s Policies.  The Executive agrees to observe and comply with the policies and rules of the Employer unless such compliance is inconsistent with the terms of this Agreement.

 

7.           Expenses.  The Executive is authorized to incur reasonable and necessary expenses in the performance of the Executive’s duties hereunder.  The Employer shall reimburse the Executive for all such expenses reasonably and actually incurred in accordance with policies which may be adopted from time to time by the Employer upon periodic presentation by the Executive of an itemized account, including reasonable substantiation, of such expenses.

8.           Confidentiality, Non-Disclosure and Non-Competition Agreement.  The Employer and the Executive acknowledge and agree that during the Executive’s employment with the Employer, the Executive has had access to, will have access to, and may assist in developing Company Confidential Information.  The Employer and the Executive further acknowledge and agree that the Executive will occupy a position of trust and confidence with respect to the Employer’s affairs and business and the affairs and business of the
Company Affiliates.  The Executive agrees that the following obligations are necessary to preserve the confidential and proprietary nature of Company Confidential Information and to protect the Employer and the Company Affiliates against harmful solicitation of employees and customers, harmful competition and other actions by the Executive that would result in serious adverse consequences for the Employer and the Company Affiliates:

(a)           Non-Disclosure.  During and after the Executive’s employment with the Employer, the Executive will not disclose or transfer to any person or entity or use for the Executive’s or any other person’s or entity’s benefit any Company Confidential Information other than as authorized in writing by the Employer or within the scope of the Executive’s duties with the Employer.  Anything herein to the contrary notwithstanding, the provisions of this Section 8(a) shall not apply when disclosure
is required by law or by any court, arbitrator, or administrative or legislative body (including any committee thereof) with actual or apparent jurisdiction to order the Executive to disclose or make accessible any information.

(b)           Materials.  The Executive will not remove any Company Confidential Information or any other property of the Employer or any Company Affiliate from the Employer’s premises or make copies of such materials except for normal and customary use in the Employer’s business.  The Employer acknowledges that the Executive, in the ordinary course of the Executive’s duties, may use and store Company Confidential Information at home and other locations.  The Executive will return to the Employer or
destroy (at Employer’s election) all Company Confidential Information and copies thereof and all other property of the Employer or any Company Affiliate at any time upon the request of the Employer and in any event immediately upon termination of the Executive’s employment for any reason.  Anything to the contrary notwithstanding, nothing in Section 8(b) shall prevent the Executive from retaining a home computer, papers and other materials of a personal nature, including information relating to compensation or reimbursement of expenses, information that is necessary for tax purposes, and copies of plans, programs and agreements relating to the Executive’s employment.

(c)           Publicity.  During the Employment Period, the Executive hereby grants to the Employer the right to use, in a reasonable and appropriate manner, the Executive’s name and likeness, without additional consideration, on, in and in connection with technical, marketing or disclosure materials, or any combination thereof, published by or for the Employer or any Company Affiliate.

(d)           Non-Disparagement.  After the Executive’s employment with the Employer, the Executive will not make to any person or entity, including without limitation the media, any false, disparaging, or derogatory statements or comments about the Employer, any Company Affiliate, its or their business affairs, or any of its or their current or former employees.

(e)           Acknowledgment.  The Executive acknowledges that the covenants in Section 8 have a unique, very substantial and immeasurable value to the Employer, that the Executive has sufficient assets and skills to provide a livelihood for the Executive and the Executive’s family for the full duration of these covenants, and that, as a result of the foregoing, if the Executive breaches any such covenant, monetary damages would be an insufficient remedy for the Employer and equitable enforcement of such covenant would be
proper.

  

  

  

(f)           Enforcement.  The Executive acknowledges that in the event of any breach or threatened breach by the Executive of any of the covenants in Section 8, the business interests of the Employer will be irreparably injured, the full extent of the damages to the Employer will be impossible to ascertain, monetary damages may not be an adequate remedy for the Employer, and the Employer will be entitled to enforce such covenants by temporary, preliminary, or permanent injunctive relief or other equitable relief, without the necessity of
posting bond or security, which the Executive expressly waives.

(g)           Modification; Severability.  If any of the restrictions contained in Section 8 are determined by any court of competent jurisdiction or other adjudicator to be unenforceable in any respect, then the Executive and the Employer agree that the court or adjudicator shall interpret and modify such restriction(s) to the maximum extent in all respects as to which it/they may be enforceable.  The Executive and the Employer further agree that such modified restriction(s) shall be enforced by the court or
adjudicator.  In the event that modification is not possible, then the Executive and the Employer agree that, because each of the Executive’s obligations in Section 8 is a separate and independent covenant, any unenforceable obligation shall be severed and all remaining obligations shall be enforced.

(h)           Conflicting Obligations and Rights.  The Executive agrees to inform the Employer of any apparent conflicts between the Executive’s work for the Employer and any obligations the Executive may have to preserve the confidentiality of another’s proprietary information or related materials before using the same on the Employer’s behalf.  The Employer shall receive such disclosures in confidence and consistent with the objectives of avoiding any conflict of obligations and rights or the appearance of any
conflict of interest.

9.             Termination of Employment.  Executive’s employment with the Employer is for no specified period and constitutes at will employment.  As a result, Executive is free to resign at any time, for any reason or for no reason.  Similarly, the Employer is free to conclude its employment relationship with Executive at any time, with or without cause, and with or without notice.

10.           Indemnification.  During the Employment Period and thereafter, the Employer shall provide the Executive with coverage under its current directors’ and officers’ liability policy to the same extent that it provides such coverage to other similarly situated executives.

11.           Attorney’s Fees.  In the event of any dispute relating to or arising from this Agreement, the prevailing party in such dispute shall be entitled to recover from the non-prevailing party any and all costs and expenses (including without limitation attorneys’ fees and other charges of counsel) incurred in connection with litigating such dispute.

12.           Severability.  The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which shall remain in full force and effect.

13.           Survival.  It is the express intention and agreement of the parties hereto that certain provisions in this Agreement shall survive according to their terms the termination of the Executive’s employment.

15.           Assignment.  The rights and obligations of the parties to this Agreement shall not be assignable or delegable, except that (i) in the event of the Executive’s death, the personal representative or legatees or distributees of the Executive’s estate, as the case may be, shall have the right to receive any amount owing and unpaid to the Executive hereunder and (ii) the rights and obligations of the Employer hereunder shall be assignable and delegable to any Company Affiliate or in connection with any
subsequent merger, consolidation, sale of all or substantially all of the assets or equity interests of the Employer or similar transaction involving the Employer or a successor corporation.  The Employer shall require any successor to the Employer to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Employer would be required to perform it if no such succession had taken place.

16.           Binding Effect.  Subject to any provisions in this Agreement restricting assignment, this Agreement shall be binding upon the parties hereto and shall inure to the benefit of the parties and their respective heirs, devisees, executors, administrators, legal representatives, successors and assigns.

17.           Amendment; Waiver.  This Agreement shall not be amended, altered or modified except by an instrument in writing duly executed by the party against whom enforcement is sought.  Neither the waiver by either of the parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure of either of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall thereafter be construed as a waiver of any
subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights or privileges hereunder.

18.           Headings.  Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.

  

  

  

19.           Governing Law.  This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of California (but not including any choice of law rule thereof that would cause the laws of another jurisdiction to apply).  With regard to any claims, complaints or proceedings brought related to the parties’ obligations under this Agreement, at all times each party hereto irrevocably submits to the exclusive
jurisdiction of any state or federal court sitting in San Francisco, California.

20.           Entire Agreement.  This Agreement constitutes the entire agreement between the parties respecting the subject matter herein, there being no representations, warranties or commitments except as set forth herein.

21.           Counterparts.  This Agreement may be executed in two counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.

22.           Definitions.

“Company Affiliate” means any entity controlled by, in control of, or under common control with, the Employer.

“Company Confidential Information” means information known to the Executive to constitute trade secrets or proprietary information belonging to the Employer, CapitalSource Inc. or any Company Affiliate or other confidential financial information, operating budgets, strategic plans or research methods, personnel data, projects or plans, or non-public information regarding the terms of any existing or pending lending transaction between the Employer or Company Affiliate and an existing or pending client or customer (as the phrase “client or customer” is defined in Section 8(d), in each case, received by the Executive in the course of the
Executive’s employment by the Employer or in connection with the Executive’s duties with the Employer.  Notwithstanding anything to the contrary contained herein, the general skills, knowledge and experience gained during the Executive’s employment with the Employer, information publicly available or generally known within the industry or trade in which the Employer competes and information or knowledge possessed by the Executive prior to the Executive’s employment by the Employer, shall not be considered Company Confidential Information.

“Date of Termination” means (i) if the Executive’s employment is terminated by the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated by the Employer or the Executive, the date specified in the Notice of Termination; or (iii) if the Executive’s employment ends because of Non-Renewal, the date on which the Initial Term or the Extended Term, as the case may be, expires.  Notwithstanding the foregoing the Executive’s Date of Termination shall mean the date of the Executive’s separation from service as defined in Section 409A.

 

 

 

 

 

 

  

  

  

IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement, or have caused this Agreement to be duly executed and delivered on their behalf.

“EXECUTIVE”

_________________________________

Charles Schillings

“EMPLOYER”

ZAP

By:______________________________

Name:

Title:    Chairman of the Board of ZAP

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