Document:

Exhibit 10.5

Exhibit 10.5

Employment Agreement

This Employment Agreement (“Agreement”) is made and entered into this 8th day of November
2008 (the “Effective Date”) by and between Biogold Fuels Corporation, a Nevada corporation and
its subsidiaries (the “Company”) and James Burchetta (“Executive”).

WHEREAS, Executive has the experience to provide services to the Company of an
extraordinary character which gives such services a unique value; and

WHEREAS, The Company desires to retain the services of Executive, and Executive desires to
be employed by the Company for the term of this Agreement;

NOW, THEREFORE, in consideration of the premises and of the mutual benefits and covenants
contained herein, the parties hereto, intending to be bound, hereby agree as follows:

1. Employment. The Company hereby employs Executive as President of the Company.
For the term of Executive’s employment, and upon the other conditions set forth in this
Agreement, Executive accepts such employment and agrees to perform services for the Company,
subject always to such resolutions as are established from time to time by the Board of
Directors of the Company.

2. Term. The term of this Agreement shall commence on the date hereof (the
“Commencement Date”) and continue for a period of three years (the “Term”). At the end of such
initial Term, this Agreement shall be extended automatically for successive three (3) year Terms
of employment, unless either the Company or the Executive notifies the other party in writing at
least one hundred and eighty (180) days prior to the end of the incumbent Term of any intention
not to renew this Agreement, in which case this Agreement will terminate at the end of such
incumbent Term. All references herein to the “Term” shall refer to both such initial Term and
any such successive Terms. The date upon which the Term of this Agreement expires shall be
referred to herein as the “Expiration Date.”

 

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3. Position and Duties.

3.1. Services with the Company. During the term of this Agreement, Executive
agrees to perform such duties and exercise such powers related thereto as may from time to time
be assigned to him by the Company’s Board of Directors (the “Board”). Executive shall duly and
diligently perform all duties assigned to him while in the employ of the Company. He shall be
bound by and faithfully observe and abide by all rules and regulations of the Company which are
brought to his notice or of which he should be reasonably aware.

3.2. No Conflicting Duties. During Executive’s employment, Executive shall devote
substantially all his business efforts and time to the Company. Except upon the prior written
consent of the Company, Executive will not, during the term of this Agreement, (i) accept any
other employment, or (ii) engage, directly or indirectly, in any other business activity
(whether or not pursued for pecuniary advantage) that might interfere with Executive’s duties
and responsibilities hereunder or create a conflict of interest with the Company, other than as
Chairman of the Board of Debt Resolve, Inc., to which the Company hereby consents. In addition,
other than DRV, the Executive will not serve on the board of directors of any company other than
Biogold Fuels Corporation without the consent of the majority of other board members of Biogold
Fuels Corporation. Notwithstanding the foregoing, Executive may serve on corporate, civic or
charitable boards or committees, deliver lectures, fulfill speaking engagements, teach at
educational institutions, or manage personal investments without such advance written consent,
provided that such activities do not individually or in the aggregate interfere with the
performance of Executive’s duties under this Agreement.

3.3. Uniqueness of Executive’s Services. Executive hereby represents and agrees
that the services to be performed under the terms of this Agreement are of a special, unique,
unusual, extraordinary, and intellectual character that gives them a unique value. Executive
recognizes the uniqueness of the services he provides to the Company and realizes the Company
may elect to purchase a life insurance policy to protect against Executive’s death for the
benefit of the Company. In such event, Executive shall reasonably cooperate and take all steps
necessary to assist Company in acquiring such policy or policies.

 

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4. Compensation.

4.1 Base Salary. As compensation for all services to be rendered by Executive
under this Agreement, the Company shall pay according to its normal payroll procedures and
policies to Executive a base annual salary of Two Hundred Thousand Dollars ($200,000) (the “Base
Salary”).

Executive’s Base Salary shall be reviewed at least annually; however, the Company shall not
reduce the Executive’s Base Salary at any time during this Agreement.

4.2 Options. In addition to the annual base salary set forth in Section 4.1 above,
the warrant to purchase 9,000,000 shares of the Company’s stock granted to Employee in his
Consulting Agreement, dated August 13, 2008, with the Company are hereby fully vested, and
repriced to $0.01 per share (the closing price on November 6, 2008), and the Board may, in its
sole discretion, award Executive bonus compensation in the form of stock options or stock awards
under the Company’s then current employee stock option plan at intervals throughout the term of
this Agreement and any renewal terms.

4.3. Cash Incentive Bonus. In the sole discretion of the Board of Directors, the
Company may pay Executive an annual cash bonus (“Cash Bonus”). The Board of Directors shall set
the Cash Bonus in a fair and reasonable manner. Said Cash Bonus may be equal to up to seventy
percent (70%) of Executive’s Base Salary.

4.4 Expenses. The Company shall reimburse Executive for all reasonable
pre-approved business or travel expenses and office related expenses incurred by Executive in
the performance of his duties; including but not limited to: airfare, motor vehicle rental,
lodging, meals, telephone, copy costs, and supplies.

 

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4.5 Mobile Telephone. The Company will provide Executive with the exclusive use of
a mobile (cellular and/or digital) telephone. Such use shall be reasonable in nature and will
be predominately for business purposes.

4.7 Stock and Option Registration Rights. In the event the Company conducts a
public offering of the Company’s shares, the Company shall provide Executive with registration
rights to all shares, warrants and options which Executive then holds or otherwise directly or
constructively owns.

5. Vacation, Sick Leave and Insurance

5.1 Annual Vacation. Executive shall be entitled to fifteen (15) days vacation
time each year without loss of compensation. In the event that Executive is unable for any
reason to take the total amount of vacation time authorized herein during any year, any unused
vacation time shall carry over from year to year. Vacation days will accrue at the rate of one
and one quarter (1.25) days per each month of service rendered, which accrual shall start
effective January 1, 2009. Any earned but unused vacation time will be paid to Executive based
upon his annual rate of all compensation paid in the previous twelve months (12) upon
termination or expiration of this Agreement.

5.2. Sick Leave. Executive shall be entitled to twelve (12) days sick leave each
year without loss of compensation. In the event that Executive is unable for any reason to take
the total amount of vacation time authorized herein during any year, any unused vacation time
shall carry over from year to year. Sick leave days will accrue at the rate of one (1) day per
each month of service rendered. Any earned but unused sick leave will be paid to Executive
based upon his annual rate of all compensation paid in the previous twelve months upon
termination or expiration of this Agreement.

5.3. Health Insurance. The Company shall provide Executive and his immediate
family members with comprehensive PPO or POS health insurance benefits which shall cover
medical, dental and vision.

 

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6. Compensation Upon the Termination of Executive’s Employment.

6.1 Compensation Upon Termination Not For Cause or for Good Reason. If, during the term
of this Agreement, the Company terminates Executive’s Employment for any reason other than
Cause, death or Permanent Disability, then, in addition to the amounts payable in accordance
with Section 5(b), the Company shall pay Executive severance pay at a rate equal to your Base
Salary in effect at the time of termination for a period of 12 months following the termination
of Employment (the “Continuation Period”). Such severance pay shall be paid in accordance with
the Company’s standard payroll procedures on the Company’s payroll dates and shall be subject to
all applicable withholdings; provided that, if the Company’s stock becomes is publicly traded on
an established securities market at the time of termination, such severance pay shall be paid in
a single lump-sum cash payment on the 12 month anniversary of the employment termination date to
the extent required by Code section 409A.

Any other provision of this Agreement notwithstanding, subsection 6.1 shall not apply
unless and until (i) Executive has executed (and does not revoke) a full and complete general
release of all claims in a form provided by the Company without alteration and (ii) Executive
has returned all Company property.

The benefits provided for in this provision are exclusive of any other rights or remedies
which Executive would possess in the event the Company terminates the Agreement without cause.
The Company agrees that in the event it terminates Executive=s employment without cause,
Executive retains all rights and remedies available under the law, and the Company will not urge
or otherwise argue or assert in any legal, including judicial or arbitration, proceeding that
any provision of this Agreement as constitutes a waiver of rights by Executive.

6.2 Compensation Upon Termination Upon Death. In the event that Executive’s employment is
terminated pursuant to section 10.2, Executive’s beneficiary or beneficiary designated by
Executive in writing to the Company, or in the absence of such beneficiary, Executive’s estate,
shall be entitled to receive Executive’s then current Base Salary through three hundred and
sixty-five (365) days after the date of his death.

 

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6.3 Compensation Upon Termination Upon Disability. In the event that Executive’s
employment is terminated pursuant to section 10.1, Executive shall be entitled to receive
Executive’s then current Base Salary through three hundred sixty five (365) days after the date
of his disability, less any amounts received by Employee from State or private disability
insurance.

6.4. Change of Control. If there is a Change of Control (as defined below), and subsequent
thereto the Executive’s employment with the Company terminates at any time within three (3)
years after such Change of Control for reasons other than as provided in Section 7(b)(i), then
the Executive shall be paid pursuant to this Agreement an amount equal to three (3) years’
salary at the Executive’s then current compensation (pursuant to Section 3(a)) at the date of
termination. A Change of Control shall be deemed to have occurred at such time as any person,
other than the Company, its existing shareholders or any of its or their affiliates on the date
hereof, purchases the “beneficial ownership” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of 50% or more of the combined voting power of
voting securities then ordinarily having the right to vote for directors of the Company.

7. Proprietary Matter. Except as permitted or directed by the Company, Executive
shall not during the term of his employment or at any time thereafter divulge, furnish,
disclose, or make accessible (other than in the ordinary course of the business of the Company)
to anyone for use in any way any confidential, secret, or proprietary knowledge or information
of the Company (“Proprietary Matter”) which Executive has acquired or become acquainted with or
will acquire or become acquainted with, whether developed by himself or by others, including,
but not limited to, any trade secrets, confidential or secret designs, processes, formulae,
software or computer programs, plans, devices or material (whether or not patented or
patentable, copyrighted or copyrightable) directly or indirectly useful in any aspect of the
business of the Company, any confidential customer, distributor or supplier lists of the
Company, any confidential or secret development or research work of the Company, or any other
confidential, secret or non-public aspects of the business of the Company. Executive
acknowledges that the Proprietary Matter constitutes a unique and valuable asset of the Company
acquired at great time and expense by the Company, and that any disclosure or other use of the
Proprietary Matter other than for the sole benefit of the Company would be wrongful and would
cause irreparable harm to the Company. Both during and after the term of this Agreement,
Executive will refrain from any acts or omissions that
would reduce the value of Proprietary Matter to the Company. The foregoing obligations of
confidentiality, however, shall not apply to any knowledge or information which is now published
or which subsequently becomes generally publicly known, other than as a direct or indirect
result of the breach of this Agreement by Executive.

 

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8. Ventures. If, during the term of this Agreement, Executive is engaged in or
associated with the planning or implementing of any project, program, or venture involving the
Company and a third party or parties, all rights in the project, program, or venture shall
belong to the Company and shall constitute a corporate opportunity belonging exclusively to the
Company. Except as expressly approved in writing by the Company, Executive shall not be
entitled to any interest in such project, program, or venture or to any commission, finder’s fee
or other compensation in connection therewith, other than the compensation to be paid to
Executive as provided in this Agreement.

9. Solicitation of Employees.

9.1. Agreement Not to Solicit Employees. During his employment by the Company
hereunder and for the one (1) year period following the termination of such employment for any
reason, Executive shall not, either directly or indirectly, on his own behalf or in the service
or on behalf of others solicit, divert or hire away, or attempt to solicit, divert or hire away
any employees, consultants, and customers of the Company.

10. Termination Prior to Expiration of the Term.

10.1 Disability. Executive’s employment shall terminate upon Executive becoming
totally or permanently disabled for a period of six (6) months or more. For purposes of this
Agreement, the term “totally or permanently disabled” or “total or permanent disability” means
Executive’s inability on account of sickness or accident, whether or not job related, to engage
in regularly or to perform adequately his assigned duties under this Agreement. Prior to
terminating the Agreement pursuant to this provision, the Company shall engage and consult one
or more physicians as may be reasonable.

 

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10.2 Death of Executive. Executive’s employment shall terminate immediately upon
the death of Executive.

10.3 Termination for Cause. The Company may terminate Executive’s employment for
“Cause” (as hereinafter defined). No termination for “Cause” may be invoked by Company without
first providing Executive with at least thirty (30) days written notice to correct any breach,
default or causation. Such written notice shall set forth with reasonable specificity the
Company’s basis for such notice of termination and Executive shall have thirty (30) days to
correct the condition set forth in the notice.

10.3.1. Cause Defined. For all purposes of this agreement, “Cause” shall mean:

(i) the commission, conviction of, or a plea of “guilty” or “no contest” to, a felony under the
laws of the United States or any state by Executive;

(ii) Executive’s failure to perform his duties and responsibilities to the Company;

(iii) Executive’s commission of any act of fraud, embezzlement, dishonesty, misrepresentation,
misappropriation or any other willful misconduct that has caused or is reasonably expected to
result in injury to the Company (or a successor, if appropriate);

(iv) Executive’s unauthorized use or disclosure of any proprietary information or trade secrets
of the Company (or a successor, if appropriate) or any other party to whom Founder owes an
obligation of nondisclosure as a result of Founder’s relationship with the Company (or a
successor, if appropriate);

 

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(v) Executive’s breach of a fiduciary duty owed to the Company;

(vi) Executive’s breach of his duty not to engage in any transaction that represents, directly
or indirectly, self-dealing with the Company which has not been approved by a majority of the
disinterested directors of the Company’s Board of Directors, if such material breach remains

uncured after the lapse of 30 days following the date that the Company has given the Executive
written notice thereof;

(vii) Executive’s violation of any Company policy pertaining to ethics, wrongdoing or conflicts
of interest which would include that Executive cannot provide services to any other entity,
other than as approved by the Company’s Board of Directors, provided that Executive shall have
the right to become an outside advisor to other companies where such a role does not conflict
with Executive’s obligations to the Company;

(viii) Executive’s death or disability; or

(ix) Any other gross or willful misconduct by Executive.

10.5 Voluntary Termination of Employment By Executive For Other than Good Reason.
Executive may voluntarily terminate his employment with the Company upon 30 days prior written
notice for other than Good Reason. Executive shall not be entitled to any further payments of
compensation beyond Executive’s resignation date if Executive voluntarily resigns under this
Section 10.5.

10.6. Surrender of Records and Property. Upon termination of his employment with
the Company, Executive shall deliver promptly to the Company all records, electronic media,
manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, data,
tables, and calculations or copies thereof, which are the property of the Company and which
relate in any way to the business, products, practices or techniques of the Company, and all
other property (keys, office equipment, computers, mobile phones, credit cards, etc.) of the
Company and Proprietary Matter, including but not limited to, all documents which in whole or in
part contain any trade secrets or confidential information of the Company, which in any of these
cases are in his possession or under his control.

 

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11. Assignment/Successors. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party except that Company may,
without the consent of Executive, assign its rights and obligations under this Agreement to any
corporation, firm
or other business entity (i) with or into which the Company may merge or consolidate, or (ii) to
which the Company may sell or transfer all or substantially all of its assets or of which fifty
percent (50%) or more of the equity investment and of the voting control is owned, directly or
indirectly, by, or is under common ownership with, the Company. After any such assignment by
the Company and such written agreement by the assignee, the Company shall be discharged from all
further liability hereunder and such assignee shall thereafter be deemed to be the Company for
the purposes of all provisions of this Agreement including this section.

This Agreement shall be binding upon, and inure to the benefit of, both parties and their
respective successors and assigns, including any corporation or other entity with which, or into
which, the Company may be merged or which may succeed to its assets or business, provided,
however, that the obligations of Executive are personal and shall not be assigned by Executive.

12. Indemnification. The company shall indemnify Executive as provided in the
Nevada Private Corporations Law, Company Articles or Company’s Bylaws in effect at the
commencement of this Agreement. The scope of indemnification to which Executive is entitled
shall not be diminished, but may be expanded by the Company, by amendment of the Company’s
Bylaws, Articles of Incorporation or otherwise. Executive shall indemnify and hold the Company
harmless from all liability for loss, damages or injury resulting from the negligence or
misconduct of Executive. The Parties are concurrently entering into a separate indemnification
agreement to provide indemnification for the Executive, attached hereto at Exhibit A
(the “Indemnification Agreement”).

 

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13. Miscellaneous.

13.1 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New York. Each party
hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough
of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each
party hereby irrevocably waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party at the address
for such notices to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.

13.2 Entire Agreement. This Agreement contains the entire agreement of the parties
relating to the subject matter hereof and supersedes all prior agreements and understandings with
respect to such subject matter with the exception of the Indemnification Agreement which is
incorporated by reference, and the parties hereto have made no agreements, representations or
warranties relating to the subject matter of this Agreement which are not set forth herein.

 

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13.3 Withholding Taxes. The Company may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.

13.4 Amendments. No amendment or modification of this Agreement shall be deemed
effective unless made in writing signed by the parties hereto.

13.5 No Wavier. No term or condition of this Agreement shall be deemed to have
been waived nor shall there be any estoppel to enforce any provisions of this Agreement, except
by a statement in writing signed by the party against whom enforcement of the waiver or estoppel
is
sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated,
shall 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.

13.6 Severability. To the extent any provision of this Agreement shall be invalid
or unenforceable, it shall be considered deleted here from and the remainder of such provision
and of this Agreement shall be unaffected and shall continue in full force and effect.

13.7 Survival. Sections 4.7, 7, 8, and 9 shall survive termination of this
Agreement.

13.8 Notices. Any and all notices, requests or other communications required or
permitted in or by any provision of this Agreement shall be in writing and may be delivered
personally or by certified mail directed to the addressee at such person=s or entity=s last
known post office address, and if given by certified mail, shall be deemed to have been
delivered when deposited in such, mail postage prepaid.

13.9 Legal Proceedings. In the event of legal proceedings, including arbitration
as set forth in Section 13.2 above, the prevailing party shall be entitled, in addition to such
relief as is deemed to be appropriate, to recover such costs and reasonable attorneys= fees as
are incurred therein.

 

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13.10 Section 409A. Unless otherwise expressly provided, any payment of
compensation by Company to Executive, whether pursuant to this Agreement or otherwise, shall be
made within two and one-half months (21/2 months) after the later of the end of the calendar year
of the Company’s fiscal year in which Executive’s right to such payment vests (i.e., is not
subject to a “substantial risk of forfeiture” for purposes of Code Section 409A of the Internal
Revenue Code of 1986, as amended (“Code”)). To the extent that any severance payments
(including payments on termination for “good reason”) come within the definition of “involuntary
severance” under Code Section 409A, such amounts up to the lesser of two times the Executive’s
annual compensation for the year preceding the year of termination or two times the 401(a)(17)
limit for the year of termination, shall be excluded from “deferred compensation” as allowed
under Code Section 409A,
and shall not be subject to the following Code Section 409A compliance requirements.
All payments of “nonqualified deferred compensation” (within the meaning of Section 409A) are
intended to comply with the requirements of Code Section 409A, and shall be interpreted in
accordance therewith. Neither party individually or in combination may accelerate any such
deferred payment, except in compliance with Code Section 409A, and no amount shall be paid prior
to the earliest date on which it is permitted to be paid under Code Section 409A. In the event
that Executive is determined to be a “key employee” (as defined in Code Section 416(i) (without
regard to paragraph (5) thereof)) of Company at a time when its stock is deemed to be publicly
traded on an established securities market, payments determined to be “nonqualified deferred
compensation” payable following termination of employment shall be made no earlier than the
earlier of (i) the last day of the sixth (6th) complete calendar month following such
termination of employment, or (ii) Executive’s death, consistent with the provisions of Code
Section 409A. Any payment delayed by reason of the prior sentence shall be paid out in a single
lump sum at the end of such required delay period in order to catch up to the original payment
schedule. Notwithstanding anything herein to the contrary, no amendment may be made to this
Agreement if it would cause the Agreement or any payment hereunder not to be in compliance with
Code Section 409A.

[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.

	 	 	 	 	 
	Biogold Fuels Corporation:	 	Executive:
	 
	 	 	 	 
	By:

	 	/s/ Steve Racoosin
	 	/s/ James Burchetta
	 

	 	 
	 	 
	 

	 	 	 	James Burchetta
	Name:

	 	Steve Racoosin	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:

	 	CEO	 	 
	 

	 	 	 	 

 

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Exhibit A

Indemnification Agreement

 

15Exhibit 10.1

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), made as of the 8 th day of
April 2009 (the “Effective Date”), is entered into by Ocean Power Technologies, Inc., a New Jersey
corporation with a principal place of business at 1590 Reed Road, Pennington, New Jersey 08534 (the
“Company”), and George W. Taylor, an individual with his primary residence at [address deleted]
(the “Employee”).

WHEREAS, the Company and the Employee entered into an Amended and Restated Employment
Agreement on October 23, 2003 (the “Prior Agreement”); and

WHEREAS, the Company and the Employee desire to amend and restate and supersede the Prior
Agreement in its entirety; and

WHEREAS, the Company desires to continue the employment of the Employee, and the Employee
desires to be employed by the Company pursuant to the terms of this Agreement;

NOW THEREFORE, in consideration of the promises and mutual covenants contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

1. Term of Employment. The Company hereby agrees to employ the Employee, and the
Employee hereby agrees to accept employment with the Company pursuant to the terms and conditions
of this Agreement, for the period commencing on the Effective Date and expiring on the day before
the first anniversary thereof, unless sooner terminated (the “Initial Term”). On the expiration of
the Initial Term and on each anniversary thereof, the Agreement shall renew automatically for
additional one-year periods (the “Renewal Term”), unless sooner terminated or unless either party
notifies the other party in writing of his or its intentions not to renew this
Agreement not less than sixty (60) days prior to the expiration of the then current term
(“Notice of Nonrenewal”). A Notice of Nonrenewal by the Company of its intent not to renew this
Agreement shall constitute “Good Reason” for termination of this Agreement by the Employee,
pursuant to Section 4(d) hereof. Upon a termination by either party for any reason and at any
time, the payments or other benefits stated in Section 5 hereof shall be the exclusive remedy
available to the Employee under this Agreement.

 

 

 

2. Position and Duties. The Employee shall serve as Executive Chairman of the
Company. The Employee acknowledges that the Company, with the approval of a majority of the Board
of Directors of the Company (the “Board”), may hire a new Chief Executive Officer and such hiring
shall not constitute a breach of this Agreement by the Company or constitute Good Reason. The
Employee shall be subject to the supervision of, and shall have such authority and duties to the
Company or its subsidiaries or affiliates, as are reasonably delegated to him, by the Board and,
subject to the direction of the Board, such duties and responsibilities shall include
responsibilities for the strategic direction of the Company and its marketing and corporate
development activities. The Employee shall devote his full working time, energy and skill
(reasonable absences for vacations and illness excepted) to the business of the Company during the
term of this Agreement as is necessary to perform the Employee’s duties faithfully, competently and
diligently. The Employee agrees to abide by the rules, regulations, instructions, personnel
practices and policies of the Company and any Company affiliate or subsidiary for or with which the
Employee conducts any business, as they may be changed, amended or adopted from time to time. Upon
approval by the Board, which approval shall not be unreasonably withheld, the Employee may devote
reasonable periods of time to serving on the boards of directors of other companies or
organizations, so long as such service does not unreasonably
interfere with his duties to the Company and does not constitute a conflict of the Company’s
interests.

 

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3. Compensation. During the term of this Agreement, the Employee shall receive, for
all services rendered to the Company hereunder, the following salary, compensation and benefits
(hereinafter referred to as “Compensation”):

(a) Base Salary. Commencing on the Effective Date, the Employee shall be paid a base
salary at the annualized rate of Four Hundred Seventy-Five Thousand Dollars ($475,000). Base
salary will be payable in accordance with the Company’s normal payroll procedures. The Employee’s
base salary shall be reviewed on an annual basis, and positive adjustments may be made by the
Compensation Committee of the Board (the “Compensation Committee”) in its sole discretion. The
base salary shall not be subject to decrease without the written consent of the Employee.

(b) Bonuses. The Employee may be eligible for bonuses pursuant to any bonus program
designed for employees of the Company. Such bonuses, if any, shall be at the sole discretion of
the Compensation Committee.

(c) Incentive Compensation. The Employee may be eligible for incentive compensation,
including stock options and restricted stock grants, pursuant to any incentive compensation program
designed for employees of the Company. Such incentive compensation, if any, shall be determined by
the Compensation Committee in the exercise of its sole discretion.

(d) Benefits. The Employee shall be eligible to participate in all benefits programs,
if any, that the Company establishes and makes available to its employees and executives, in
accordance with and subject to the terms and conditions of such benefits programs. Such programs
may include health and dental insurance plans, long-term disability insurance
plans, life insurance plans, and other benefits made available to the Company’s employees from
time to time.

 

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(e) Reimbursement of Expenses. The Company shall reimburse the Employee for all
reasonable and necessary business-related expenses incurred or paid by the Employee in the
performance of the Employee’s duties, responsibilities or services under this Agreement, provided
that the Employee provides documentation, receipts, vouchers, and/or such other supporting
information as the Company may request.

(f) Deductions. The Company shall deduct and withhold from the Employee’s
compensation all necessary or required taxes, including, but not limited to, social security,
withholding and otherwise, and any other applicable amounts required by law or any taxing
authority, as well as such other deductions properly authorized in writing by the Employee.

(g) Absences. The Employee shall be entitled to a minimum of 20 days of paid vacation
time per calendar year, as well as sick leave, and such other absences in accordance with and
subject to the Company’s current policies and procedures regarding such paid absences. Such
policies may be amended, modified, or rescinded in the Company’s sole discretion.

4. Termination. The employment of the Employee by the Company shall terminate upon
the occurrence of any of the following:

(a) The Company may terminate the Employee’s employment hereunder for Cause immediately and
with prompt notice to the Employee, which Cause shall be determined in good faith by the Board.
The Employee shall be provided a reasonable opportunity to be heard by the Board, before his
employment is terminated for Cause hereunder. “Cause” for termination shall include the following
conduct of the Employee:

(i) Material breach of any provision of this Agreement by the Employee causing a
material detrimental effect on the Company;

 

- 4 -

 

(ii) Material misconduct as an employee which has a material detrimental effect on
the Company, including: misappropriating any funds or property of the Company, or
attempting to willfully obtain any substantial personal profit from any transaction
in which the Employee has an interest which is adverse to the interests of the
Company;

(iii) Gross negligence or knowing refusal to perform the reasonable duties assigned
to the Employee under or pursuant to this Agreement;

(iv) Conviction of a felony or plea of no lo contendre to a felony;

(v) Acts of dishonesty or moral turpitude by the Employee that are materially
detrimental to the Company; or

(vi) Alcohol or drug use which impairs the Employee’s ability to perform his duties
hereunder.

(b) Immediately upon the death of the Employee;

(c) Thirty days after the Disability of the Employee. As used in this Agreement, the term
“Disability” shall mean the inability of the Employee with reasonable accommodation as may be
required by State or Federal law, due to a physical or mental disability, for a period of ninety
(90) days, whether or not consecutive, during any 360-day period to perform the services
contemplated under this Agreement. A determination of Disability shall be made by a physician
satisfactory to both the Employee and the Company, provided that if the Employee
and the Company do not agree on a physician, the Employee and the Company shall each select a
physician and these two together shall select a third physician, whose determination as to
Disability shall be binding on all parties;

 

- 5 -

 

(d) The Employee may terminate his employment hereunder for “Good Reason” if, after written
notice as provided below, the Company fails to cure the following conduct:

(i) Material breach of any provision of this Agreement by the Company;

(ii) Failure to maintain the Employee in a position commensurate with that referred
to in Section 2 of this Agreement, except that the Company’s hiring of a Chief
Executive Officer other than the Employee shall not constitute Good Reason
hereunder; or

(iii) The assignment to the Employee of any duties inconsistent with the Employee’s
position, authority, duties or responsibilities as contemplated by Section 2 of this
Agreement that results in a substantial diminution in the Employee’s duties or
responsibilities;

(iv) Relocation of the Employee’s main office more than 50 miles from Pennington,
New Jersey;

(v) Material reduction in the Employee’s base salary or a material adverse change in
the Employee’s eligibility for incentive compensation; or

(vi) The termination of the Employee’s employment without Cause by the giving by the
Company of a Notice of Nonrenewal, informing the employee of the Company’s intent
not to renew the Initial Term or any Renewal Term.

Notwithstanding the occurrence of any such event or circumstance, such occurrence shall not be
deemed to constitute Good Reason unless (x) the Employee gives the Company written notice of
termination no more than 90 days after the initial existence of such event or circumstance, (y)
such event or circumstance has not been fully corrected within 30
days of the Company’s receipt of such notice and (z) the Employee’s termination of employment
occurs within one year following the Company’s receipt of such notice.

 

- 6 -

 

(e) At the election of the Employee, without Good Reason, upon not less than thirty (30) days
prior written notice of termination to the Company;

(f) At the election of the Company, without Cause, immediately upon thirty (30) days prior
written notice of termination to the Employee.

5. Effect of Termination. Upon termination of this Agreement at any time, the
payments and remedies stated in this Section 5 shall be exclusive and Employee shall not be
eligible for any further payment or other benefits from the Company.

(a) Termination for Cause or at Election of the Employee without Good Reason. In the
event the Employee’s employment is terminated for Cause pursuant to Section 4(a), or at the
election of the Employee pursuant to Section 4(e), the Company shall pay to the Employee the base
salary and benefits due and owing to him under Section 3 through the last day of the Employee’s
actual employment by the Company.

(b) Termination for Death or Disability. If the Employee’s employment is terminated
by death or because of disability pursuant to Section 4(b) or 4(c), the Company shall pay to the
estate of the Employee or to the Employee, as the case may be, the base salary and benefits that
would otherwise be payable to the Employee through the end of the month in which the termination of
employment because of death or disability occurs. In addition, the Company will make a one-time
payment of $10,000.00 to the estate of the Employee or to the Employee, as the case may be. If the
payment is made due to disability, the Employee will be required to sign a release of claims as in
Section 5(c) prior to receiving the payment under this section.

 

- 7 -

 

(c) Termination by the Company Without Cause; Termination by the Employee for Good
Reason. If the Employee’s employment is terminated without Cause
pursuant to Section 4(f) or if the Employee terminates his own employment for Good Reason
pursuant to Section 4(d), and if, and only if, the Employee first executes a general release
drafted by and satisfactory to counsel for the Company releasing the Company, along with its
directors, officers, employees, agents and affiliate company’s from any and all liability to the
Employee (the “Release Agreement”), the Company shall pay and provide to the Employee, or to his
estate if he were to die after termination and prior to such payment: (i) the Employee’s then
current base salary, as severance pay, for a period equal to the Severance Period, as defined
below, to be paid in a lump sum payment within thirty (30) days of termination, and (ii)
continuation of the Employee’s health, medical and long term disability insurance during the
Severance Period, as defined below, at the Company’s expense, until such time as the Employee
becomes eligible for such coverage through a subsequent employer and only to the extent permitted
pursuant to the Company’s applicable benefit insurance policies (or, if not so permitted, the
Company shall reimburse the Employee for similar coverage under COBRA). The payments pursuant to
Section 5(c)(i) shall be paid regardless of whether the Employee seeks or obtains any employment
subsequent to his employment with the Company. The payments under Section 5(c)(i) shall commence
30 days following the Employee’s date of termination, provided that the Employee has executed the
Release Agreement and any waiting periods contained in such release have expired prior to such
30th day following the date of termination. Notwithstanding the foregoing, if the
30th day following the date of termination occurs in the calendar year following the
year of Employee’s termination of employment, then the payments shall commence no earlier than
January 1 of such subsequent calendar year. In addition, regardless of whether the Employee signs
the Release Agreement, the Company shall pay to the Employee the salary and benefits due and owing
to him under Section 3 through the last day of the Employee’s actual employment by the Company.
The term “Severance Period” as used herein shall mean a period of twelve (12)
months. The payments under clause (i) of this Section 5(c) shall be subject to the terms and
conditions set forth on Exhibit A hereto.

 

- 8 -

 

(d) Survival. The provisions of Sections 6, 7 and 8 of this Agreement shall survive
the termination of this Agreement.

6. Restrictive Covenants.

(a) During the term of this Agreement and for a period of one (1) year after the termination
or expiration thereof, the Employee will not directly or indirectly:

(i) as an individual proprietor, partner, stockholder, officer, employee, director,
joint venturer, investor, lender, or in any other capacity whatsoever (other than as
the holder of not more than one percent (1%) of the total outstanding stock of a
publicly held company), engage in the business of developing, producing, marketing
or selling services of the kind or type developed or being developed, produced,
marketed or sold by the Company while the Employee was employed by the Company; or

(ii) hire, engage, recruit, solicit or induce, or attempt to induce, any current or
prospective employee, officer, director, contractor or other business associate of
the Company to terminate their employment with, or otherwise cease their business
relationship with, the Company; or

(iii) solicit, divert or take away, or attempt to divert or to take away, the
business or patronage of any of the clients, customers or accounts, or prospective
clients, customers or accounts, of the Company which were contacted, solicited or
served by the Employee while employed by the Company.

(iv) For the purposes of these restrictions, the word “prospective” shall apply to
any individual or entity with which the Company has had substantive contact
within the twelve month period prior to any potential hiring, solicitation,
recruiting, diversion or otherwise. In addition a “current” employee shall include
any employee who was employed by the Company within the three (3) months preceding
any potential solicitation or hiring.

 

- 9 -

 

(b) If any restriction set forth in this Section 6 is found by any 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 area as to which it may be
enforceable.

(c) The restrictions contained in Sections 6, 7 and 8 are necessary for the protection of the
business and goodwill of the Company and are considered by the Employee to be reasonable for such
purpose. The Employee agrees that any breach of Sections 6, 7 or 8 will cause the Company
substantial and irrevocable damage and therefore, in the event of any such breach, in addition to
such other remedies which may be available, the Company shall have the right to seek specific
performance and injunctive relief in any court of competent jurisdiction, regardless of any
statement to the contrary herein.

7. Proprietary Information.

(a) The Employee agrees that all information and know-how, whether or not in writing, of a
private, secret or confidential nature concerning the Company’s business or financial affairs
(collectively, “Proprietary Information”) is and shall be the exclusive property of the Company.
By way of illustration, but not limitation, Proprietary Information may include inventions,
products, processes, methods, techniques, formulas, compositions, compounds, projects,
developments, plans, research data, clinical data, financial data, personnel data, computer
programs, and customer and supplier lists. The Employee will not disclose any
Proprietary Information to others outside the Company or use the same for any unauthorized
purposes without written approval by an officer of the Company, either during or after his
employment, unless and until such Proprietary Information has become public knowledge without fault
by the Employee.

 

- 10 -

 

(b) The Employee agrees that all files, letters, memoranda, reports, records, data, sketches,
drawings, laboratory notebooks, program listings, or other written, photographic, or other tangible
material containing Proprietary Information, whether created by the Employee or others, which shall
come into his custody or possession, shall be and are the exclusive property of the Company to be
used by the Employee only in the performance of his duties for the Company.

(c) The Employee agrees that his obligation not to disclose or use information, know-how and
records of the types set forth in paragraphs (a) and (b) above, also extends to such types of
information, know-how, records and tangible property of customers of the Company or suppliers to
the Company or other third parties who may have disclosed or entrusted the same to the Company or
to the Employee in the course of the Company’s business.

(d) The Employee agrees that, immediately upon the termination of his employment with the
Company for any reason, he shall return all Proprietary Information and other property of the
Company that is in his possession or control.

8. Developments.

(a) The Employee will make full and prompt disclosure to the Company of all inventions,
improvements, discoveries, methods, developments, software, and works of authorship, whether
patentable or not, which are created, made, conceived or reduced to practice by the Employee or
under his direction or jointly with others during his employment by the
Company, whether or not during normal working hours or on the premises of the Company (all of
which are collectively referred to as “Developments”).

 

- 11 -

 

(b) The Employee agrees to assign and does hereby assign to the Company (or any person or
entity designated by the Company) all his right, title and interest in and to all Developments and
all related patents, patent applications, copyrights, copyright applications, design rights
(registered or unregistered) and all rights of a similar or equivalent nature in any jurisdiction.
However, this Section 8(b) shall not apply to Developments which do not relate to the present or
planned business or research and development of the Company and which are made and conceived by the
Employee not during normal working hours, not on the Company’s premises and not using the Company’s
tools, devices, equipment or Proprietary Information.

(c) The Employee agrees to cooperate fully with the Company, both during and after his
employment with the Company, with respect to the procurement, maintenance and enforcement of
copyrights and patents (both in the United States and foreign countries) relating to Developments.
The Employee shall sign all papers, including, without limitation, copyright applications, patent
applications, declarations, oaths, formal assignments, assignment of priority rights, and powers of
attorney, which the Company may deem necessary or desirable in order to protect its rights and
interests in any Development. The Employee unconditionally and irrevocably waives all moral rights
he may have in relation to the Developments.

9. Other Agreements. The Employee hereby represents that he is not bound by the terms
of any agreement with any previous employer or other party to refrain from using or disclosing any
trade secret or confidential or proprietary information in the course of his employment with the
Company or to refrain from competing, directly or indirectly, with the business of such previous
employer or any other party. The Employee further represents that his performance of all the terms
of this Agreement and as an employee of the Company does not and
will not breach any agreement to keep in confidence proprietary information, knowledge or data
acquired by him in confidence or in trust prior to his employment with the Company or otherwise
violate any agreement or other obligation that the Employee may have to any other party.

 

- 12 -

 

10. Indemnification Agreement and Invention Assignment Confidentiality Agreement.
Nothing in this Agreement is intended to supercede: (i) the Indemnification Agreement signed by the
Employee on March 24, 1995; or (ii) any stock option agreement between the Employee and the
Company. The parties intend to provide the Employee with the greatest level of protection under
each of the agreements. To the extent that the Employee is eligible for severance pay or other
post termination benefits pursuant to more than one agreement, the provisions of this agreement
shall supercede all other agreements (post termination treatment of equity positions shall not be
considered “severance” for the purpose of this Section). Nothing herein is intended to supercede
any rights the Company may have pursuant to any invention assignment, confidentiality,
non-competition or non-solicitation agreement between the Employee and the Company and it is
intended that the Company shall receive the greatest protection provided pursuant to any such
agreement, this agreement or common law.

11. Resolution of Disputes. Any disputes arising under or in connection with this
Agreement or otherwise arising pursuant to the Employee’s employment with the Company shall be
resolved by binding arbitration to be held in the State of New Jersey, in accordance with the
applicable arbitration rules of the American Arbitration Association before a panel of three
arbitrators. Judgment upon the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof. Each party shall bear his or its own costs of the arbitration or, if
applicable, litigation; however, the prevailing party shall be reimbursed for his or
its costs and expenses, including attorneys’ fees to the extent the dispute involves rights arising under a
statute providing costs and fees to a prevailing party or to the extent such prevailing party has
proven a material breach of this Agreement by the other party. Nothing in this Section shall in
any way limit the Company’s right to seek injunctive or other equitable relief in any court of
competent jurisdiction, to enforce the provisions of Sections 6, 7 and 8 hereof. Each party agrees
to waive his or its right to a trial by jury on any claims arising out of their relationship and
agree that the arbitrators shall be empowered to award damages to the same extent a court of
competent jurisdiction would have had.

 

- 13 -

 

12. Notices. All notices required or permitted under this Agreement shall be in
writing and shall be deemed effective upon personal delivery or upon deposit in the United States
Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the
address shown above, or at such other address or addresses as either party shall designate to the
other in accordance with this Section 12.

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, including but not limited to the Original Agreement and
the Change in Control Severance Pay Agreement signed by the Employee on or about January 12, 2000,
except as stated to the contrary in Section 10.

14. Amendment. This Agreement may be amended or modified only by a writing executed
by both the Employee and a representative of the Company acting on express authority from the
Board.

15. Governing Law. This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of New Jersey.

 

- 14 -

 

16. Successors and Assigns; Binding Agreement.

(a) This Agreement shall be binding upon and inure to the benefit of both parties and their
respective successors and assigns, including any corporation with which or into which the Company
may be merged or which may succeed to its assets or business, provided however, that the
obligations of the Employee are personal and shall not be assigned by him. The Company
specifically reserves the right to assign its rights under this Agreement, including but limited
to, any covenants by the Employee contained in Sections 6, 7 and 8 hereof.

(b) The Employer will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or assets of 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, unless
such assumption occurs automatically by operation of law.

17. Acknowledgement. The Employee states and represents that he has had an
opportunity to fully discuss and review the terms of this Agreement with an attorney. The Employee
further states and represents that he has carefully read this Agreement, understands the contents
herein, freely and voluntarily assents to all of the terms and conditions hereof, and signs his
name as his own free act.

18. No 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.

19. Captions. The captions of the Sections of this Agreement are for convenience of
reference only and in no way define, limit or affect the scope or substance of any Section of this
Agreement.

 

- 15 -

 

20. Severability. In case any provision of this Agreement shall be invalid, illegal
or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions
shall in no way be affected or impaired thereby.

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

	 	 	 	 	 	 	 	 	 
	 	 	 	 	OCEAN POWER TECHNOLOGIES, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ GEORGE W. TAYLOR
 

George W. Taylor

	 	 
	 	By:
	 	/s/ SEYMOUR S. PRESTON
 

Name: Seymour S. Preston III

Title: Vice Chairman of the Board
	 	 

 

- 16 -

 

Exhibit A

Compliance with Section 409A

Subject to the provisions in this Exhibit A, any severance payments or benefits under this
Agreement shall begin only upon the date of Employee’s “separation from service” (determined as set
forth below) which occurs on or after the date of termination of Employee’s employment. The
following rules shall apply with respect to distribution of the payments and benefits, if any, to
be provided to Employee under this Agreement:

(a) It is intended that each installment of the severance payments and benefits provided under
this Agreement shall be treated as a separate “payment” for purposes of Section 409A of the Code
and the guidance issued thereunder (“Section 409A”). Neither the Company nor Employee shall have
the right to accelerate or defer the delivery of any such payments or benefits except to the extent
specifically permitted or required by Section 409A.

(b) If, as of the date of Employee’s “separation from service” from the Company, Employee is
not a “specified employee” (within the meaning of Section 409A), then each installment of the
severance payments and benefits shall be made on the dates and terms set forth in this Agreement.

(c) If, as of the date of Employee’s “separation from service” from the Company, Employee is a
“specified employee” (within the meaning of Section 409A), then:

(i) Each installment of the severance payments and benefits due under this Agreement
that, in accordance with the dates and terms set forth herein, will in all circumstances,
regardless of when the separation from service occurs, be paid within the short-term
deferral period (as defined in Section 409A) shall be treated as a short-term deferral
within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent
permissible under Section 409A; and

(ii) Each installment of the severance payments and benefits due under this Agreement
that is not described in this Exhibit A, paragraph (c)(i) above and that would, absent this
subparagraph, be paid within the six-month period following Employee’s “separation from
service” from the Company shall not be paid until the date that is six months and one day
after such separation from service (or, if earlier, Employee’s death), with any such
installments that are required to be delayed being accumulated during the six-month period
and paid in a lump sum on the date that is six months and one day following Employee’s
separation from service and any subsequent installments, if any, being paid in accordance
with the dates and terms set forth herein; provided, however, that the
preceding provisions of this sentence shall not apply to any installment of severance
payments and benefits if and to the maximum extent that such installment is deemed to be
paid under a separation pay plan that does not provide for a deferral of compensation by
reason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation
pay upon an involuntary separation from service). Any installments that qualify for the
exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than
the last day of Employee’s second taxable year following the taxable year in which the
separation from service occurs.

 

- 17 -

 

(d) The determination of whether and when Employee’s separation from service from the Company
has occurred shall be made in a manner consistent with, and based on the presumptions set forth in,
Treasury Regulation Section 1.409A-1(h). Solely for purposes of this Exhibit A, paragraph (d),
“Company” shall include all persons with whom the Company would be considered a single employer as
determined under Treasury Regulation Section 1.409A-1(h)(3).

(e) All reimbursements and in-kind benefits provided under this Agreement shall be made or
provided in accordance with the requirements of Section 409A to the extent that such reimbursements
or in-kind benefits are subject to Section 409A, including, where applicable, the requirements that
(i) any reimbursement is for expenses incurred during Employee’s lifetime (or during a shorter
period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement
during a calendar year may not affect the expenses eligible for reimbursement in any other calendar
year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the
calendar year following the year in which the expense is incurred and (iv) the right to
reimbursement is not subject to set off or liquidation or exchange for any other benefit.

(f) Notwithstanding anything herein to the contrary, the Company shall have no liability to
Employee or to any other person if the payments and benefits provided hereunder that are intended
to be exempt from or compliant with Section 409A are not so exempt or compliant.

 

- 18 -

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