Document:

Unassociated Document

    

      AMENDED
        AND RESTATED 

      EMPLOYMENT
        AGREEMENT

      

       

      THIS
        AMENDED AND RESTATED EMPLOYMENT AGREEMENT
        (this
“Agreement”),
        is
        entered into on December 18, 2007, by and between H2Diesel Holdings, Inc.,
        a
        Delaware corporation (the “Company”),
        and
        Cary Claiborne (the “Executive”).

       

      WHEREAS,
        the
        Company desires to employ Executive, and Executive desires to be employed
        by the
        Company, upon the terms and conditions hereinafter set forth.

       

      NOW,
        THEREFORE,
        in
        consideration of the covenants herein contained, and other good and valuable
        consideration, the receipt and adequacy of which are hereby forever
        acknowledged, the parties, with the intent of being legally bound hereby,
        agree
        as follows:

       

      1. Term.
        The term
        of this Agreement shall commence on the first date of the Executive’s
        employment, December 1, 2007 (the “Effective
        Date”)
        and
        shall end on December 31, 2010 (the “Initial
        Term”);
        provided, however, that the term of this Agreement shall automatically be
        extended beyond the Initial Term for a one year period, effective January
        1,
        2011 (the “Renewal
        Term”)
        unless
        either party notifies the other by a date which is two-hundred seventy (270)
        days prior to the expiration of the Initial Term that such party desires
        not to
        extend the Initial Term beyond the third anniversary of the Effective Date.
        This
        Agreement shall continue for successive one-year Renewal Terms unless and
        until
        either party gives two-hundred seventy (270) days notice to the other of
        its
        desire not to extend further the term of this Agreement beyond the end of
        the
        then-current Renewal Term, or this Agreement is otherwise terminated pursuant
        to
Section
        5
        hereof.
        The term of this Agreement, whether during the Initial Term or any Renewal
        Term,
        shall be referred to as the “Term.”

       

      2. Position
        and Responsibilities.

       

      2.1 Position.
        Executive will be employed by the Company to render services to the Company
        in
        the position of Chief Financial Officer. In
        that
        capacity, the Executive shall solely, under supervision of the President
        and
        Chief Executive Officer (the “CEO”),
        have
        general supervision over the financial and accounting matters of the
        Company,
        and
        perform other duties reasonably assigned to the Executive from time to time
        by
        the CEO provided the duties relate to the business of the Company and are
        consistent with the Executive’s position as Chief Financial Officer, as well as
        Executive’s background and experience. The Executive shall diligently perform
        all such services.
        The
        Executive shall report directly to the CEO. Executive shall, in all material
        respects, abide by all material and written Company rules, policies, and
        practices as adopted or modified, from time to time, in the Company’s sole
        discretion; and Executive shall attempt to use his best efforts in the
        performance of his duties hereunder.

       

      2.2 Other
        Activities.
        While
        employed by the Company, Executive shall devote substantially all of his
        business time, attention, and skill to perform his assigned duties, services,
        and responsibilities hereunder, and shall act at all times in the furtherance
        of
        the Company’s business and interests. Executive shall not, during the term of
        this Agreement engage, directly or indirectly, in any other business activity
        (whether or not pursued for pecuniary advantage) which could reasonably be
        expected to materially interfere with Executive’s duties and responsibilities
        hereunder or create a conflict of interest with the Company. The foregoing
        limitations shall not prohibit Executive from: (i) serving as a consultant
        to
        another entity provided that such service would not violate Section 6.1 below
        or
        (ii) making and managing his personal and family investments in such form
        or
        manner as will neither require Executive’s services in the operation or affairs
        of the companies or enterprises in which such investments are made nor
        materially interfere with the performance of the Executive’s duties hereunder.
        The Company acknowledges that Executive will from time-to-time serve on the
        boards of corporations, advisory committees, trade organizations, philanthropic
        organizations or other entities. Accordingly, the foregoing limitations shall
        not prohibit Executive from serving on the boards of corporations, advisory
        committees, trade organizations, philanthropic organizations or other entities,
        provided that such service does not create a material conflict of interest
        with
        the Company.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      2.3 No
        Conflict.
        Executive represents and warrants that Executive’s execution of this Agreement,
        Executive’s employment with the Company, and the performance of Executive’s
        proposed duties under this Agreement shall not violate any obligations Executive
        may have to any other employer, person, or entity, including but not limited
        to
        any obligations with respect to not disclosing any proprietary or confidential
        information of any other person or entity.

       

      3. Compensation
        and Benefits.

       

      3.1 Base
        Salary.
        In
        consideration of the services to be rendered under this Agreement, the Company
        shall pay Executive an initial base salary of eighteen thousand seven hundred
        fifty ($18,750) dollars per month (“Base
        Salary”)
        in
        accordance with the Company’s standard payroll practices. Such Base Salary shall
        be subject to such withholding or deductions as may be mutually agreed between
        the Company and Executive or as required by law. Executive’s Base Salary will be
        reviewed annually, and may be adjusted (upward, but not downward) at the
        discretion of the CEO and the Compensation Committee of the Board.

       

      3.2 Stock
        Options.
        In
        consideration of the services to be rendered under this Agreement:

       

      (a)
        The
        Company shall grant to the Executive options to purchase 300,000 shares of
        the
        Company’s Common Stock at a price of $4.00 per share, the fair market value on
        December 1, 2007 (the “Grant Date”), of which 105,000 shares shall vest on the
        Grant Date and the remainder shall vest in annual tranches as follows
        (collectively, the “Time
        Based Options”):

       

      65,000
        shares shall vest on the first anniversary of the Grant Date;

      

      65,000
        shares shall vest on the second anniversary of the Grant Date; and

      

      65,000
        shares shall vest on the third anniversary of the Grant Date.

      

      (b)
        The
        Company shall grant to the Executive options to purchase 450,000 shares of
        the
        Company’s Common Stock at a price of $4.00 per share, the fair market value on
        the Grant Date, which shall vest in annual tranches if certain annual
        performance targets (the “Performance
        Targets”)
        to be
        established in good faith by the CEO and the Compensation Committee of the
        Board
        (the “Compensation
        Committee”)
        are
        met, as more fully set forth below (collectively, the “Performance
        Options”):
        

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      
        	 	
                75,000
                  shares if the Performance Options shall vest in respect of the
                  fiscal year
                  ending December 31, 2007 if the Performance Targets for such year
                  are
                  met;

              

      

      

      125,000
        shares shall vest in respect of the fiscal year ending December 31, 2008
        if the
        Performance Targets for such year are met; and

      

      125,000
        shares shall vest in respect of the fiscal year ending December 31, 2009
        if the
        Performance Targets for such year are met; and

      

      125,000
        shares shall vest in respect of the fiscal year ending December 31, 2010
        if the
        Performance Targets for such year are met.

      

      Commencing
        with the fiscal year ending December 31, 2008, the Performance Targets for
        each
        fiscal year shall be established by the Compensation Committee not later
        than
        February 28 of such fiscal year. The Compensation Committee shall determine
        whether the Performance Targets for the preceding fiscal year have been met
        not
        later than seven days after the date that the Company’s audited financial
        statements in respect of such fiscal year become available, and if such
        Performance Targets are determined to have been met, the Performance Options
        in
        respect of such fiscal year shall be deemed to be vested as of such date
        of
        determination. The Time Based Options and the Performance Options shall be
        more
        fully documented in one or more Stock Option Agreement(s) containing customary
        terms and conditions and shall expire on the tenth (10th)
        anniversary of the Effective Date.

       

      3.3 Stock
        Grant.
        The
        Company shall grant to the Executive the number of shares of the Company’s
        common stock equal to $25,000 on December 1, 2007, December 1, 2008, and
        December 1, 2009 (each a “Stock Grant Date”), based on the fair market value of
        a share of the Company’s common stock on each applicable Stock Grant Date and
        provided that the Executive is still employed on each applicable Stock Grant
        Date. Any fractional shares shall be paid to the Executive in cash. 

       

      3.4 Equity
        Compensation.
        To the
        extent that the Board and the stockholders of the Company approve an equity
        compensation or incentive plan (the “Plan”),
        the
        Executive shall be eligible to participate in such plan at a level commensurate
        with his position. The amount of any equity awards to the Executive and terms
        and conditions thereof shall be determined not less frequently than annually
        by
        a committee of the Board appointed pursuant to the Plan, or by the Board,
        in
        each case following consultation with the Chief Executive Officer in each
        of its
        discretion and pursuant to the Plan.

       

      3.5 Benefits.
        Executive shall be entitled to participate in the pension and health and
        welfare
        benefit plans and perquisites that the Company generally makes available
        to its
        employees or other executives, at a level commensurate with his position
        (the
“Executive
        Benefits”).

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      3.6 Vacation.
        During
        the Term, Executive shall be entitled to vacation each year in accordance
        with
        the Company’s policies in effect from time to time, but in no event less than
        four (4) weeks paid vacation per calendar year. The Executive shall also
        be
        entitled to such periods of sick leave as is customarily provided by the
        Company
        for its senior executive employees. 

       

      3.7 Business
        Expenses.
        Throughout the term of Executive’s employment hereunder, the Company shall
        reimburse Executive for all reasonable and necessary travel, entertainment,
        promotional, and other business expenses that may be incurred by Executive
        in
        the course of performing Executive’s duties. Authorized expenses shall be
        reimbursed by the Company in accordance with policies and practices adopted,
        from time to time, by the Company concerning expense reimbursement for employees
        and shall be reimbursed upon timely presentation to the Company of an itemized
        expense statement with respect thereto, including substantiation of expenses
        incurred and such other documentation as may be required by the Company’s
        reimbursement policies from time to time and in accordance with Internal
        Revenue
        Service guidelines.

       

      3.8 Bonus
        Plan. The
        Executive shall be eligible to participate in an annual cash bonus plan
        established by the Compensation Committee (the “Bonus
        Plan).
        The
        Executive’s bonus will be targeted at 50% of the Executive’s Base Salary,
        subject to achieving certain performance targets (the “Bonus
        Plan Targets”).
        The
        Executive’s bonus with respect to the fiscal year ending December 31, 2007 shall
        be not less than 22% of the Executive’s Base salary, prorated for the number of
        days the Executive is actually employed by the Company. The Executive’s bonus
        with respect to the fiscal year ending December 31, 2008 shall be not less
        than
        22% of the Executive’s Base salary. Commencing with the fiscal year ending
        December 31, 2008, the Bonus Plan and the performance targets for each fiscal
        year shall be established by the Compensation Committee not later than February
        28 of such fiscal year. The Compensation Committee shall determine whether
        the
        Bonus Plan Targets for the preceding fiscal year have been met not later
        than
        seven days after the date that the Company’s audited financial statements in
        respect of such fiscal year become available and the bonus in respect of
        such
        fiscal year, if earned, shall be payable promptly after such determination.
        Any
        bonus paid under this Section shall be paid in accordance with the Bonus
        Plan
        and the Company’s payroll practices.

       

      3.9 Relocation
        and Commuting Expenses.
        The
        Executive hereby agrees to relocate within 50 miles of the Company’s executive
        offices, which will be established at a location to be determined by the
        Board,
        currently anticipated to be Lake Mary, Florida. 

       

      (a) The
        Company will provide the Executive with a lump-sum payment of $50,000 (the
        “Relocation Payment”) for all reasonable and necessary actual out-of-pocket
        relocation expenses paid or incurred by the Executive. The Relocation Payment
        will be made within thirty days after the Executive completes the
        relocation.

       

      (b) If
        this
        Agreement is terminated under Section 5(c) or 5(g) within 2 years of the
        Executive completing his relocation then the Executive will reimburse the
        Company the full amount of the Relocation Payment

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      (c) The
        Executive will complete the relocation process not later than August 31,
        2009.
        During the period from the Effective Date up to the date when the Executive
        completes his relocation, the Executive’s office will be located in Central
        Florida and the Executive will commute between the office and his current
        residence.

       

      (d) During
        the period from the Effective Date until the completion of the Executive’s
        relocation the Company will reimburse the Executive for reasonable out of
        pocket
        travel expenses incurred in commuting between the Executive’s home in Ellicott
        City, Maryland and the Company’s offices in Central Florida.

       

      (e) During
        the period from the Effective Date until the completion of the Executive’s
        relocation the Company will reimburse the Executive for reasonable out of
        pocket
        expenses incurred for temporary housing and meals while in Florida.

       

      4. Nondisclosure
        of Confidential and Proprietary Information.
        At all
        times before and for five (5) years after the termination of Executive’s service
        (for any reason by the Company or by Executive), Executive agrees to keep
        all
        Confidential or Proprietary Information in strict confidence and secrecy,
        and
        not to disclose or use the Confidential or Proprietary Information in any
        way
        outside of Executive’s assigned responsibilities for the Company. “Confidential
        or Proprietary Information” means any non-public information or idea (whether or
        not a trade secret) relating to the business of the Company obtained by
        Executive in the course of employment by the Company that is not generally
        known
        outside the Company or not generally known in the industry or by persons
        engaged
        in businesses similar to that of the Company (including information which
        may be
        available from sources outside the Company, but not in the form, arrangement,
        or
        compilation in which it exists within the Company) that should reasonably
        be
        considered confidential, including, but not limited to: (i) customer lists
        and
        records of current, former, and prospective customers; (ii) special needs
        and
        characteristics of current, former, or prospective customers; (iii) present
        or
        future business plans; (iv) trade secrets, proprietary, or confidential
        information of any customer or other entity to which the Company owes an
        obligation not to disclose such information; (v) marketing, financing, business
        development, or strategic plans; (vi) sales methods, practices, and procedures;
        (vii) personnel information; (viii) research and development data and
        projections; (ix) information or data concerning the Company’s competitive
        position in its various lines of business; (x) existing, new, or envisioned
        products, programs, services, methods, techniques, processes, projects, or
        systems; and (xi) sales, pricing, billing, costs, and other financial data
        and
        projections. All documents containing this information will be considered
        Confidential or Proprietary Information whether or not marked with any
        proprietary or confidential notice or legend. Notwithstanding the foregoing,
        nothing herein shall prohibit the Executive from disclosing any information:
        (1)
        in connection with performance of his duties hereunder as he deems in good
        faith
        to be necessary or desirable; or (2) if compelled pursuant to the order of
        a
        court or other governmental or legal body having jurisdiction over such matter;
        or (3) if necessary for Executive to defend his rights in a legal or regulatory
        proceeding. In the event Executive is compelled by order of a court or other
        governmental or legal body to communicate or divulge any such information,
        knowledge or data, he shall promptly notify the Company. However, Employee’s
        obligations under this Section shall not extend to:

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
        	
                1)

              	
                Confidential
                  or Proprietary Information which is or becomes part of the public
                  domain
                  or is available to the public by publication or otherwise without
                  disclosure by Employee; or

              

      

      

      
        	
                2)

              	
                Confidential
                  or Proprietary Information which was within Employee’s knowledge or in his
                  possession prior to his employment by the Company;
                  or

              

      

      

      
        	
                3)

              	
                Confidential
                  or Proprietary Information which, either prior to or subsequent
                  to the
                  Company’s disclosure to Employee with an obligation of confidentiality,
                  was disclosed to Employee, without obligation of confidentiality,
                  by a
                  third party who did not acquire such information, directly or indirectly,
                  from Employee.

              

      

      

      5. Termination;
        Rights and Obligations on Termination. The
        Executive’s employment under this Agreement may be terminated in any one of the
        followings ways:

       

      (a) Death.
        The
        death of Executive shall immediately and automatically terminate the Executive’s
        employment under this Agreement. If Executive dies while employed by the
        Company, any vested options may be exercised on or before the option’s
        expiration date. Any option that remains unexercised after this period shall
        be
        forfeited. Upon the Executive’s death, the Executive’s legal representative
        shall receive: (1) any compensation earned but not yet paid, including and
        without limitation, any bonus if declared or earned but not yet paid for
        a
        completed fiscal year (and also in any event including the guaranteed bonuses
        for 2007 and 2008, pro rata, based on time served during the applicable year
        through the date of termination), any amount of Base Salary earned but unpaid,
        any accrued vacation payable pursuant to the Company’s policies, and any
        unreimbursed business expenses, which amounts shall be promptly paid in a
        lump
        sum, and (2) any other amounts or benefits owing to the Executive under the
        then
        applicable employee benefit plans, long term incentive plans or equity plans
        and
        programs of the Company which shall be paid or treated in accordance with
        the
        terms of such plans and programs (subsections (1) and (2) shall be collectively
        referred to as, the “Accrued
        Amounts”).
        Other
        than the benefits described above, no further compensation or benefits shall
        be
        due or owing upon the Executive’s death.

       

      (b) Disability.
        If as a
        result of incapacity due to physical or mental illness or injury, Executive
        shall have been absent from Executive’s duties hereunder for six (6) consecutive
        months, then thirty (30) days after receiving written notice (which notice
        may
        occur before or after the end of such six (6) month period, but which shall
        not
        be effective earlier than the last day of such six (6) month period), the
        Company may terminate Executive’s employment hereunder provided Executive is
        unable to substantially perform his duties hereunder at the conclusion of
        such
        notice period (a “Disability”),
        as
        determined by a physician mutually selected by the parties hereto. In the
        event
        the Executive’s employment is terminated as a result of Disability, Executive
        shall receive from the Company, in a lump-sum payment due within ten (10)
        days
        of the effective date of termination, an amount equal to the sum of the Base
        Salary and bonus, if any, that would have been paid to Executive through
        the end
        of the then remaining Term if the Executive were not disabled or for six
        (6)
        months, whichever is less (assuming that Executive would have received no
        further increases in his Base Salary (including for the sake of clarity the
        automatic achievement of 2007 and 2008 guaranteed bonuses, pro rata based
        on
        time that would have been served during the applicable year through the end
        of
        the Term or the 12 month period described above, as applicable)). The Executive
        shall also be entitled to the Accrued Amounts. Additionally, if Executive
        is
        terminated due to a Disability, the next unvested tranche of Performance
        Options
        will vest if the applicable Performance Targets are actually met. Any vested
        options may be exercised on or before the option’s expiration date. Any option
        that remains unexercised after this period shall be forfeited. Other than
        the
        benefits described above, no further compensation or benefits shall be due
        or
        owing upon the Executive’s termination due to a Disability.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      (c) Cause.
        The
        Company may terminate this Agreement immediately upon written notice to
        Executive for “Cause,” which shall mean: (i) the Executive’s willful, material,
        and irreparable breach of this Agreement; (ii) Executive’s willful misconduct in
        the performance of any of his material duties and responsibilities hereunder
        that has a material adverse effect on the Company; (iii) Executive’s intentional
        and continued non-performance (other than by reason of disability or incapacity)
        of any of the Executive’s material duties and responsibilities hereunder or of
        any reasonable, lawful instructions from the Board, which continues for ten
        (10)
        days after receipt by Executive of written notice from the Company except
        when
        Executive is diligently working to cure such non-performance and the cure
        requires more than ten (10) days; (iv) Executive’s material and willful
        dishonesty or fraud with regard to the Company (other than good faith expense
        account disputes) that has a material adverse effect on the Company (whether
        to
        the business or reputation of the Company; or (v) Executive’s conviction of a
        felony (other than as a result of vicarious liability or a traffic related
        offense). For purposes of this paragraph, no act, or failure to act, on
        Executive’s part shall be considered “willful” unless done or omitted to be
        done, by him not in good faith and without reasonable belief that his action
        or
        omission was in the best interests of the Company. In the event of the
        Executive’s termination of employment by the Company for Cause the Executive
        shall receive the Accrued Amounts, if the termination is within two years
        of the
        Executive’s relocation the Executive shall repay the Relocation Payment and the
        Executive may exercise his vested options for a period of thirty (30) days
        following termination for Cause.

       

      Notwithstanding
        the foregoing, following the Executive’s receipt of written notice from the
        Company of any of the events described in subsections (i) through (iv) above,
        the Executive shall have ten (10) days in which to cure the alleged conduct
        (if
        curable) except when Executive is diligently working to cure such
        non-performance and the cure requires more than ten (10) days.

       

      (d) Without
        Cause.
        At any
        time after Executive’s commencement of employment, the Company may, without
        Cause, terminate the Executive’s employment, effective thirty (30) days after
        written notice is provided to Executive. In the event Executive is terminated
        by
        the Company without Cause, Executive shall receive from the Company within
        ten
        (10) days after such termination, in a lump sum payment, an amount equal
        to the
        sum of the Base Salary and bonus, if any, that would have been paid to Executive
        through the end of the then remaining Term if the Executive had not been
        terminated or for twelve (12) months, whichever is less (assuming that Executive
        would have received no further increases in his Base Salary and assuming
        achievement of all applicable Bonus Plan Targets (including for the sake
        of
        clarity the automatic achievement of 2007 and 2008 guaranteed bonuses, pro
        rata
        based on time that would have been served during the applicable year through
        the
        end of the Term (or the renewal term, as applicable) or the 12 month period
        described above, as applicable). The Executive shall also receive the Accrued
        Amounts. Additionally, if Executive is terminated by the Company without
        Cause,
        all of the unvested Time Based Options will vest and the next tranche of
        unvested Performance Options will vest as if the applicable Performance Targets
        had been met. Any vested options may be exercised on or before the option’s
        expiration date. Any option that remains unexercised after this period shall
        be
        forfeited.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      (e) Resignation
        for Good Reason.
        At any
        time after Executive’s commencement of employment, the Executive may resign for
        Good Reason (as defined below) effective thirty (30) days after written notice
        is provided to the Company. Upon the Executive’s termination of employment for
        Good Reason, the Executive shall be entitled to all payments and benefits
        as if
        his employment was terminated by the Company without Cause as provided in
        subsection (d) above. For purposes of this Agreement, Good Reason means:
        (i) any adverse change in the Executive’s position, title or reporting
        relationship or a material diminution of his duties, responsibilities or
        authority or the assignment to Executive of duties or responsibilities that
        are
        inconsistent with the Executive’s position; (ii) any reduction in salary or
        bonus opportunities; (iii) the failure by the Company to continue in effect
        any
        material compensation or benefit plan or arrangement in which Executive
        participates unless an equitable and substantially comparable arrangement
        (embodied in a substitute or alternative plan) has been made with respect
        to
        such plan or arrangement, or the failure by the Company to continue Executive’s
        participation therein (or in such substitute or alternative plan or arrangement)
        on a basis not less favorable, both in terms of the amount of benefits provided
        and the level of participation relative to other participants, as existed
        at the
        time of the Executive’s commencement of employment; (iv) any material
        breach of this Agreement (or any other written agreement entered into between
        the Executive and the Company) by the Company; (v) failure of any successor
        to the Company (whether direct or indirect and whether by merger, acquisition,
        consolidation or otherwise) to assume in a writing delivered to Executive
        upon
        the assignee becoming such, the obligations of the Company hereunder; or
        (vi) a
        requirement by the Company that the Executive relocate a second
        time.

       

      Notwithstanding
        the foregoing, following the Company’s receipt of written notice from the
        Executive of any of the events described in subsections (i) through (vi)
        above,
        the Company shall have ten (10) days in which to cure the alleged conduct
        (if
        curable).

       

      (f) Change
        in Control of the Company.
        In the
        event that a Change of Control (as defined below) in the Company shall occur
        during the Term of this Agreement, and within 12 months thereafter the
        Executive’s employment shall be terminated without Cause pursuant to Section
        5(d) above or for Good Reason pursuant to Section 5(e) above, then the
        Executive’s severance compensation will be as set forth above for termination
        without Cause or Good Reason, as the case may be; provided, however, that
        all
        unvested options (both Perfomance and Time Based) will vest and remain
        exercisable for the balance of the option term. The Company shall have no
        further liability under this Agreement. (For the sake of clarity, if the
        Executive’s employment is not terminated within 12 months after a Change of
        Control, the compensation payable to Executive for terminations thereafter
        without Cause pursuant to Section 5(d) above or for Good Reason pursuant
        to
        Section 5(e) above shall remain as stated in those sections.)

       

      For
        purposes of this Agreement, the term “Change of Control” shall
        mean:

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      (i) approval
        by the stockholders of the Company of (x) a reorganization, merger,
        consolidation or other form of corporate transaction or series of transactions
        (other than the issuance by the Company of equity securities to investors
        whether in private placements or public offerings (an “Equity
        Offering”)),
        in
        each case, with respect to which persons who were the stockholders of the
        Company immediately prior to such reorganization, merger or consolidation
        or
        other transaction do not, immediately thereafter, own more than 50% of the
        combined voting power entitled to vote generally in the election of directors
        of
        the reorganized, merged or consolidated company’s then outstanding voting
        securities, in substantially the same proportions as their ownership immediately
        prior to such reorganization, merger, consolidation or other transaction,
        or (y)
        a liquidation or dissolution of the Company or (z) the sale of all or
        substantially all of the assets of the Company (unless such reorganization,
        merger, consolidation or other corporate transaction, liquidation, dissolution
        or sale is subsequently abandoned);

       

      (ii) individuals
        who, as of the Effective Date of this Agreement, constitute the Board (the
        “Incumbent
        Board”)
        cease
        for any reason to constitute at least a majority of the Board, provided that
        any
        person becoming a director subsequent to the Effective Date of this Agreement
        whose election, or nomination for election by the Company’s stockholders, was
        approved by a vote of at least a majority of the directors then comprising
        the
        Incumbent Board (other than an election or nomination of an individual whose
        initial assumption of office is in connection with an actual or threatened
        election contest relating to the election of the directors of the Company)
        shall
        be, for purposes of this Agreement, considered as though such person were
        a
        member of the Incumbent Board; or 

       

      (iii) the
        acquisition (other than from the Company) by any person, entity or “group”,
        within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
        Act of 1934, as amended (the “Securities
        Exchange Act”),
        of
        beneficial ownership within the meaning of Rule 13-d promulgated under the
        Securities Exchange Act of more than 50% of either the then outstanding shares
        of the Company’s common stock or the combined voting power of the Company’s then
        outstanding voting securities entitled to vote generally in the election
        of
        directors (hereinafter referred to as the ownership of a “Controlling
        Interest”)
        excluding, for this purpose, any acquisitions by (1) the Company or its
        subsidiaries, (2) any person, entity or “group” that as of the Effective Date of
        this Agreement owns beneficial ownership (within the meaning of Rule 13d-3
        promulgated under the Securities Exchange Act) of a Controlling Interest,
        (3)
        any employee benefit plan of the Company or its subsidiaries, or (4) any
        acquisition in one or more Equity Offerings.

       

      (g) Resignation
        without Good Reason or Retirement by Executive.
        The
        Executive may resign without Good Reason or retire upon 90 days’ written notice,
        and upon such termination of employment he shall receive the Accrued
        Amounts.

       

      (h) Superseding
        Agreement.
        This
        Agreement shall be terminated immediately and automatically if the parties
        enter
        into another employment agreement which supersedes this Agreement. In the
        event
        the parties enter into a superseding agreement, no severance pay or other
        compensation shall be due to Executive with respect to the termination of
        this
        Agreement.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      6. Use
        and Return of Company Property.
        Executive acknowledges the Company’s proprietary rights and interests in its
        tangible and intangible property. Accordingly, Executive agrees that upon
        termination of Executive’s employment with the Company, for any reason, and at
        any time, Executive shall deliver to the Company all Company property,
        including: (a) all documents, contracts, writings, disks, diskettes, computer
        files or programs, computer-generated materials, information, documentation,
        or
        data stored in any medium, recordings and drawings pertaining to trade secrets,
        proprietary or confidential information, or other inventions and works of
        the
        Company; (b) all records, designs, plans, sketches, specifications, patents,
        business plans, financial statements, accountings, flow charts, manuals,
        notebooks, memoranda, lists, and other property delivered to or compiled
        by
        Executive, by or on behalf of the Company or any of its representatives,
        vendors, or customers which pertain to the business of the Company, all of
        which
        shall be and remain the property of the Company, and shall be subject, at
        all
        times, to its discretion and control; (c) all equipment, devices, products,
        and
        tangible property entrusted to Executive by the Company; and (d) all
        correspondence, reports, records, notes, charts, advertisement materials,
        and
        other similar data pertaining to the business, activities, or future plans
        of
        the Company, in the possession or control of Executive, shall be delivered
        promptly to the Company without request by it. Executive shall certify to
        the
        Company, in writing, within five (5) days of any request by the Company,
        that
        all such materials have been returned to the Company. Notwithstanding the
        foregoing or anything else to the contrary in this Agreement, the Executive
        may
        (i) retain and use in his discretion his rolodex and similar address and
        telephone directories (whether in writing or electronic format) and (ii)
        retain
        the personal computer provided to Executive by Company.

       

      6.1 Non-competition.
        At all
        times while the Executive is employed by the Company and for a period of:
        (i)
        two (2) years after any termination of the Executive’s employment for Cause or
        the Executive’s termination of his employment without Good Reason; (ii) the
        lesser of one (1) year or the remainder of the Term after any termination
        of the
        Executive’s employment by the Company without Cause or the Executive’s
        termination for Good Reason; or (iii) one (1) year following the non-renewal
        of
        this Agreement or any termination pursuant to Section
        5,
        the
        Executive shall not, directly or indirectly, engage in or have any interest
        in
        any person (whether as an employee, officer, director, partner, agent, security
        holder, creditor, consultant or otherwise) that directly or indirectly (or
        through any affiliated entity to the extent the combined entities derive
        fifty
        percent (50%) or more of their revenues through a business competitive with
        the
        Company’s Business) competes with the Company’s Business (as defined below);
        provided that such provision shall not apply to the Executive’s ownership of
        securities of the Company or the acquisition by the Executive, solely as
        an
        investment, of securities of any issuer that is registered under Section
        12(b)
        or 12(g) of the Securities Exchange Act of 1934, as amended and that are
        listed
        or admitted for trading on any United States national securities exchange
        or
        that are quoted on the National Association of Securities Dealers Automated
        Quotations System, or any similar system or automated dissemination of
        quotations of securities prices in common use, so long as the Executive does
        not
        control, acquire a controlling interest in or become a member of a group
        which
        exercises direct or indirect control of, more than five percent of any class
        of
        capital stock of such issuer. For purposes of this Section
        6.1,
        the
        term “Business” shall mean the biofuels business and any other business in which
        the Company is actively engaged prior to the delivery of a notice of termination
        by the Company or the Executive hereunder and which business the Company
        is
        engaged at the date of termination of the Executive’s employment.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      6.2 Non-Solicitation.
        At all
        times while the Executive is employed by the Company and for a period of:
        (i)
        two (2) years after any termination of the Executive’s employment for Cause or
        the Executive’s termination of his employment without Good Reason; (ii) the
        lesser of one (1) year or the remainder of the Term after any termination
        of the
        Executive’s employment by the Company without Cause or the Executive’s
        termination for Good Reason; or (iii) one (1) year following the non-renewal
        of
        this Agreement or any termination pursuant to Section
        5,
        the
        Executive shall not, directly or indirectly, for himself or for any other
        person
        (a) employ or attempt to employ or enter into any contractual arrangement
        with
        any employee or former employee of the Company, or (b) call on or solicit
        any of
        the actual or targeted prospective customers or suppliers of the Company
        on
        behalf of any person in connection with any business that competes with the
        Business of the Company nor shall the Executive make known the names and
        addresses of such customers or suppliers or any information relating in any
        manner to the Company’s trade or business relationships with such customers or
        suppliers, other than in connection with the performance of Executive’s duties
        under this Agreement.

       

      6.3 Reasonable
        Restrictions.
        Executive hereby acknowledges and agrees that the limits on his ability to
        engage in activities that are competitive with the Company, as defined above,
        are warranted in order to protect the Company’s trade secrets and Confidential
        or Proprietary Information, and further, are warranted to protect the Company
        in
        developing and maintaining its reputation, goodwill, and status in the
        marketplace. Executive specifically agrees that the time period, geographic
        scope, and nature of the restrictions set forth in Sections
        6.1
        and
6.2
        are
        reasonable and necessary to protect the Company’s legitimate business interests
        and do not impose any limitations greater than those necessary to protect
        those
        interests.

       

      6.4. Remedies.
        Executive hereby acknowledges and agrees that the services Executive has
        rendered and will continue to render to the Company are of a special and
        unique
        character, which gives this Agreement a peculiar value to the Company, and
        further acknowledges and agrees that the loss of those services to a direct
        competitor or the direct competition by Executive against the Company cannot
        be
        reasonably or adequately compensated for by damages in an action at law.
        Executive further acknowledges and agrees that any material breach by Executive
        of any provision of Sections
        4
        or
6
        of this
        Agreement shall cause irreparable harm to the Company, which harm cannot
        be
        reasonably or adequately compensated for by damages in an action at law.
        Accordingly, without prejudice to the rights and remedies otherwise available
        to
        the Company, Executive agrees that, in addition to any other right or remedy
        the
        Company may have, upon adequate proof of a material breach the Company shall
        be
        entitled to a temporary restraining order and to a preliminary and permanent
        injunction enjoining or restraining the breach of this Agreement by Executive,
        without the necessity of proving the inadequacy of monetary damages or the
        posting of any bond or security. Executive acknowledges and agrees that the
        preceding remedies shall be in addition to any and all other rights available
        to
        the Company at law or in equity. The failure of the Company to promptly
        institute legal action upon any breach of this Agreement shall not constitute
        a
        waiver of that or any other breach hereof.

       

      7. Indemnification;
        Insurance.

       

      7.1 Indemnification
        of Executive.
        While
        the Executive is employed by the Company and thereafter, in the event Executive
        is made a party to any threatened, pending, or contemplated action, suit,
        or
        proceeding, whether civil, criminal, administrative, or investigative (other
        than an action by the Company against Executive), by reason of the fact that
        Executive is or was performing services under this Agreement, then the Company
        shall indemnify Executive to the fullest extent permitted by applicable law
        against all expenses (including attorneys’ fees), judgments, fines, and amounts
        paid in settlement, as actually and reasonably incurred by Executive in
        connection therewith. In the event that both Executive and the Company are
        made
        a party to the same third party action, complaint, suit, or proceeding, the
        Company will engage competent legal representation, and Executive will use
        the
        same representation, provided that if counsel selected by the Company shall
        have
        a conflict of interest that prevents such counsel from representing Executive,
        then the Company shall engage separate counsel on Executive’s behalf, and
        subject to the provisions of this Section
        7,
        the
        Company will pay all attorneys’ fees of such separate counsel.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      7.2 Insurance
        Provided by Company.
        As soon
        as practicable after the Effective Date, the Company shall obtain a directors
        and officers liability insurance policy covering all directors and officers
        of
        the Company, including Executive, which insurance policy shall provide adequate
        insurance coverage for each of such persons, as shall be approved by the
        Board.
        The Executive shall be entitled to such coverage while employed and thereafter
        while potential liability exists.

       

      8. Assignment;
        Binding Effect.
        Executive shall have no right to assign this Agreement to another party other
        than by will or by the laws of descent and distribution. This Agreement may
        be
        assigned or transferred by the Company only to an acquirer of all or
        substantially all of the assets of the Company, provided such acquirer promptly
        assumes all of the obligations hereunder of the Company in a writing delivered
        to the Executive and otherwise complies with the provisions hereof with regard
        to such assumption. Nothing in this Agreement shall prevent the consolidation,
        merger, or sale of the Company or a sale of any or all or substantially all
        of
        its assets. Subject to the foregoing restriction on assignment by Executive,
        this Agreement shall be binding upon, inure to the benefit of, and be
        enforceable by the parties hereto and their respective heirs, legal
        representatives, successors, and assigns.

       

      9. Additional
        Provisions.

       

      9.1 Damages.
        Nothing
        contained herein shall be construed to prevent the Company or the Executive
        from
        seeking and recovering from the other damages sustained by either or both
        of
        them as a result of its or his breach of any term or provision of this
        Agreement. In the event that either party hereto brings suit for the collection
        of any damages resulting from, or the injunction of any action constituting,
        a
        breach of any of the terms or provisions of this Agreement, then the party
        found
        to be at fault shall pay all reasonable court costs and attorneys’ fees of the
        other.

       

      9.2 Amendments;
        Waivers; Remedies.
        This
        Agreement may not be amended, and no provision of this Agreement may be waived,
        except by a writing signed by Executive and by a duly authorized representative
        of the Company. Failure to exercise any right under this Agreement shall
        not
        constitute a waiver of such right. Any waiver of any breach of this Agreement
        shall not operate as a waiver of any subsequent breaches. All rights or remedies
        specified for a party herein shall be cumulative and in addition to all other
        rights and remedies of the party hereunder or under applicable law.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      9.3 Notices.
        Any
        notice under this Agreement must be in writing and addressed to the Company
        or
        to Executive at the corresponding address below. Notices under this Agreement
        shall be effective upon: (a) hand delivery, when personally delivered; (b)
        written verification of receipt, when delivered by overnight courier or
        certified or registered mail; or (c) acknowledgment of receipt of electronic
        transmission, when delivered via electronic mail or facsimile. Executive
        shall
        be obligated to notify the Company, in writing, of any change in Executive’s
        address. Notice of change of address shall be effective only when done in
        accordance with this Section
        9.3.

       

      
        	
                Company’s
                  Notice Address:

              	
                H2Diesel
                  Holdings, Inc.

                11111
                  Katy Freeway

                Houston,
                  TX 77079

                Attn.:
                  David A Gillespie

                Telephone:
                  713 973 5720

                Facsimile:
                  713 973 5777

                 

              
	
                Executive’s
                  Notice Address:

              	
                Mr.
                  Cary Claiborne

                3056
                  Seneca Chief Trail

                Ellicott
                  City, Maryland 21042

              

      

       

      9.4 Severability.
        If any
        provision of this Agreement shall be held by a court of competent jurisdiction
        to be invalid, unenforceable, or void, such provision shall be enforced to
        the
        fullest extent permitted by law, and the remainder of this Agreement shall
        remain in full force and effect. In the event that the time period or scope
        of
        any provision is declared by a court of competent jurisdiction to exceed
        the
        maximum time period or scope that such court deems enforceable, then such
        court
        shall reduce the time period or scope to the maximum time period or scope
        permitted by law.

       

      9.5 Taxes.
        All
        amounts paid under this Agreement (including, without limitation, Base Salary)
        shall be reduced by all applicable state and federal tax withholdings and
        any
        other withholdings required by any applicable jurisdiction.

       

      9.6 Governing
        Law.
        The
        validity, interpretation, enforceability and performance of this Agreement
        shall
        be governed by and construed in accordance with the laws of the State of
        Florida, without regard to conflict of laws principles that would cause the
        laws
        of another jurisdiction to apply.

       

      9.7 Interpretation.
        This
        Agreement shall be construed as a whole, according to its fair meaning, and
        not
        in favor of or against any party. Sections and section headings contained
        in
        this Agreement are for reference purposes only, and shall not affect, in
        any
        manner, the meaning or interpretation of this Agreement. Whenever the context
        requires, references to the singular shall include the plural and the plural
        the
        singular.

       

      9.8 Survival.
        All of
        those portions of this Agreement that require performance by either party
        following termination of Executive’s employment hereunder shall survive any
        termination of this Agreement.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      9.9 Counterparts.
        This
        Agreement may be executed in several counterparts (including by means of
        telecopied signature pages), each of which shall be deemed an original but
        all
        of which shall constitute one and the same instrument.

       

      9.10 Authority.
        Each
        party represents and warrants that such party has the right, power, and
        authority to enter into and execute this Agreement and to perform and discharge
        all of the obligations hereunder, and that this Agreement constitutes the
        valid
        and legally binding agreement and obligation of such party and is enforceable
        in
        accordance with its terms.

       

      9.11 Additional
        Assurances.
        The
        provisions of this Agreement shall be self-operative and shall not require
        further agreement by the parties except as may be herein specifically provided
        to the contrary; provided, however, that at the request of the Company,
        Executive shall execute such additional instruments and take such additional
        acts as the Company may deem necessary to effectuate this
        Agreement.

       

      9.12 Entire
        Agreement.
        This
        Agreement is the final, complete, and exclusive agreement of the parties
        with
        respect to the subject matter hereof and supersedes and merges all prior
        or
        contemporaneous representations, discussions, proposals, negotiations,
        conditions, communications, and agreements, whether written or oral, between
        the
        parties relating to the subject matter hereof and all past courses of dealing
        or
        industry custom. No oral statements or prior written material not specifically
        incorporated herein shall be of any force and effect, and no changes in or
        additions to this Agreement shall be recognized unless incorporated herein
        by
        amendment, as provided herein (such amendment to become effective on the
        date
        stipulated therein).

       

      9.13 Executive
        Acknowledgment.
        Executive acknowledges that, before signing this Agreement, Executive was
        advised of his right to consult with an attorney of his choice to review
        this
        Agreement and that Executive had sufficient opportunity to have an attorney
        review the provisions of this Agreement and negotiate its terms. Executive
        further acknowledges that Executive had a full and adequate opportunity to
        review this Agreement before signing it; that Executive carefully read and
        fully
        understood all the provisions of this Agreement before signing it, including
        the
        rights and obligations of the parties; and that Executive has entered into
        this
        Agreement knowingly and voluntarily.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

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

       

      
        	 	
                COMPANY:

              
	 	 
	 	 
	 	
                H2DIESEL
                  HOLDINGS, INC.

              
	 	 
	 	 
	 	
                By:
                  /s/ David A.
                  Gillespie                      
                  

              
	 	
                Name:
                  David A Gillespie

              
	 	
                Title:
                  President and Chief Executive Officer

              
	 	 
	 	 
	 	 
	 	
                EXECUTIVE:

              
	 	 
	 	
                /s/
                  Cary J.
                  Claiborne                                

              
	 	
                Cary
                  J. ClaiborneUnassociated Document

    Amendments
      to the

    Registration
      Rights Agreement

     

    1.  The
      definition of “Registrable Securities” in Section 1 of the Registration Rights
      Agreement is hereby deleted, and the following new definition be substituted
      in
      lieu thereof: 

     

    “Registrable
      Securities” means the shares of Common Stock issuable upon exercise of the
      Warrants and the securities listed on Schedule
      II
      to the
      Registration Rights Agreement, as amended.”

     

    2.  Section
      2(b) of the Registration Rights Agreement is hereby deleted, and the following
      new Section 2(b) be substituted in lieu thereof:

     

    “Notwithstanding
      anything to the contrary set forth in this Section 2, in the event the
      Commission does not permit the Company to register all of the Registrable
      Securities in the Registration Statement because of the Commission’s application
      of Rule 415 or the Commission requires the Company to either exclude shares
      held
      by certain Holders or deem such Holders to be underwriters with respect to
      their
      Registrable Securities, the Company shall register in the Registration Statement
      such number of Registrable Securities as is permitted by the Commission without
      naming such Holder as an underwriter (unless such Holder agrees to be named
      as
      an underwriter), provided, however, that the number of Registrable Securities
      to
      be included in such Registration Statement or any subsequent registration
      statement shall be determined in the following order: the shares of Common
      Stock
      issuable upon exercise of the Warrants and the securities listed on Schedule
      II
      hereto, shall be registered on a pro rata basis among the holders of the
      Warrants and such securities. In the event the Commission does not permit the
      Company to register all of the Registrable Securities in the initial
      Registration Statement, the Company shall use its commercially reasonable
      efforts to file subsequent Registration Statements to register the Registrable
      Securities that were not registered in the initial Registration Statement as
      promptly as possible and in a manner permitted by the Commission. For purposes
      of this Section 2(b), “Filing Date” means with respect to each subsequent
      Registration Statement filed pursuant hereto, the later of (i) sixty (60) days
      following the sale of substantially all of the Registrable Securities included
      in the initial Registration Statement or any subsequent Registration Statement
      and (ii) six (6) months following the effective date of the initial Registration
      Statement or any subsequent Registration Statement, as applicable, or such
      earlier or later date as permitted or required by the Commission. For purposes
      of this Section 2(b), “Effectiveness Date” means with respect to each subsequent
      Registration Statement filed pursuant hereto, the earlier of (A) the ninetieth
      (90th) day following the filing date of such Registration Statement (or in
      the
      event such Registration Statement is reviewed by the Commission, the one hundred
      twentieth (120th) day following such filing date) or (B) the date which is
      within three (3) Business Days after the date on which the Commission informs
      the Company (i) that the Commission will not review such Registration Statement
      or (ii) that the Company may request the acceleration of the effectiveness
      of
      such Registration Statement and the Company promptly makes such request;
      provided that, if the Effectiveness Date falls on a Saturday, Sunday or any
      other day which shall be a legal holiday or a day on which the Commission is
      authorized or required by law or other government actions to close, the
      Effectiveness Date shall be the following Business Day.”

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}]]