Document:

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is made as of the 14th day of May, 2015 by and between Esperion Therapeutics, Inc., a Delaware corporation (the “Company”), and Narendra Lalwani (the “Executive”).  Except with respect to the Restrictive Covenants (as defined below), this Agreement supersedes, amends and restates in all respects all prior agreements between the Executive and the Company regarding the subject matter herein, including without limitation the employment agreement between the Employee and the Employer date July 23, 2014 (the “Former Employment Agreement”).

 

1.                                      Employment Term.  The Company and the Executive desire to continue their employment relationship, pursuant to this Agreement commencing as of the date hereof and continuing in effect until terminated by either party in accordance with this Agreement (the “Term”).  The Executive’s employment with the Company will continue to be “at will,” meaning that the Executive’s employment may be terminated by the Company or the Executive at any time and for any reason subject to the terms of this Agreement. If the Executive’s employment with the Company is terminated for any reason during the Term, the Company shall pay or provide to the Executive (or to his authorized representative or estate) any earned but unpaid base salary, unpaid expense reimbursements, accrued but unused vacation and any vested benefits the Executive may have under any employee benefit plan of the Company (the “Accrued Benefit”).

 

2.                                      Position; Duties.  During the Term, the Executive will serve as Executive Vice President, Research and Development and Chief Operating Officer, and will have such powers and duties as may from time to time be prescribed by the Board of Directors of the Company (the “Board”).  The Executive shall devote his full working time and efforts to the business and affairs of the Company.  Notwithstanding the foregoing, the Executive may serve on other boards of directors, with the approval of the Board and/or engage in religious, charitable or other community activities as long as such services and activities are disclosed to and approved by the Board and do not interfere with the Executive’s performance of his duties to the Company.

 

3.                                      Compensation and Related Matters.

 

(a)                     Base Salary.  During the Term, the Executive’s annual base salary will be $370,000, subject to redetermination by the Board. The annual base salary in effect at any given time is referred to herein as “Base Salary.” The Base Salary will be payable in a manner that is consistent with the Company’s usual payroll practices for senior executives.

 

(b)                     Bonus.  During the Term, the Executive will be eligible to be considered for annual cash bonus as determined by the Board or the Compensation Committee of the Board (the “Compensation Committee”) from time to time.  The annual bonus will be targeted at 40% of the Executive’s Base Salary (the “Target Bonus”).  The actual bonus is discretionary and will be subject to the Board or the Compensation Committee’s assessment of the Executive’s performance as well as business conditions of the Company.  The Executive’s bonus, if any, will be paid by March 15 following the applicable bonus year.  To earn a bonus, the Executive must be employed by the Company on the day such bonus is paid.

 

 

(c)                      PTO:  During the Term, the Executive is eligible to earn up to four weeks of paid-time-off (“PTO”), to be accrued on a pro rata basis and subject to the terms and conditions of the Company’s policies and procedures relating to PTO.

 

(d)                     Other Benefits.  During the Term, the Executive will be entitled to continue to participate in the Company’s employee benefit plans, subject to the terms and the conditions of such plans and to the Company’s ability to amend and modify such plans.

 

(e)                      Equity.  The Executive’s equity compensation shall be governed by the terms and conditions of the Company’s Stock Option and Incentive Plan, as may be amended, and the applicable stock option and/or restricted stock agreements (collectively the “Equity Documents”).  Provided and notwithstanding anything to the contrary in the Equity Documents, Section 5 of this Agreement shall apply in the event of a Sale Event.

 

(f)                       Reimbursement of Business Expenses.  The Company shall reimburse the Executive for travel, entertainment, business development and other expenses reasonably and necessarily incurred by the Executive in connection with the Company’s business.  Expense reimbursement shall be subject to such policies the Company may adopt from time to time, including policies related to remote working arrangements and associated travel.

 

4.                                      Certain Definitions.

 

(a)                     Sale Event.  A Sale Event shall mean (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation pursuant to which the holders of the Company’s outstanding voting power and outstanding stock immediately prior to such transaction do not own a majority of the outstanding voting power and outstanding stock or other equity interests of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction, (iii) the sale of all of the Stock of the Company to an unrelated person, entity or group thereof acting in concert, or (iv) any other transaction in which the owners of the Company’s outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the Company or any successor entity immediately upon completion of the transaction other than as a result of the acquisition of securities directly from the Company.

 

(b)                     Terminating Event.  A “Terminating Event” shall mean (i) Termination by the Company other than for Cause at any time; or (ii) Termination by the Executive for Good Reason on or within the twelve (12) month period commencing with a Sale Event (such 12-month period, the “Sale Event Period”), both as set forth in this Section 4(b):

 

(i)                                     Termination by the Company Other Than For Cause.  Termination by the Company of the Executive’s employment for any reason other than for Cause, death or Disability.  For purposes of this Agreement, “Cause” shall mean, as determined by the Board:

 

(A)                               conviction (including a guilty or no contest plea) on a felony indictment or for any misdemeanor involving moral turpitude that adversely affects the Company;

 

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(B)                               participation in a fraud or act of dishonesty against the Company;

 

(C)                               material breach of Executive’s duties to the Company, that has not been cured to the reasonable satisfaction of the Board, within thirty (30) days following written notice to Executive (provided that no such notice and cure period will be required if such a breach is not subject to cure);

 

(D)                               intentional and material damage to the Company’s property; or

 

(E)                                material breach of this Agreement or other written agreement with the Company or written policy of the Company.

 

(ii)                                  Termination by the Executive for Good Reason within the Sale Event Period.  Termination by the Executive of the Executive’s employment with the Company for Good Reason within the Sale Event Period.  For purposes of this Agreement, “Good Reason” shall mean that the Executive has complied with the “Good Reason Process” (hereinafter defined) following, the occurrence of any of the following events:

 

(A)                                     a material diminution in the Executive’s position, responsibilities, authority or duties;

 

(B)                                     a material diminution in the Executive’s base salary except for across-the-board salary reductions based on the Company’s financial performance similarly affecting all or substantially all senior management employees of the Company; or

 

(C)                                     a material change in the geographic location at which the Executive is required to provides services to the Company, not including business travel and short-term assignments.

 

“Good Reason Process” shall mean that (i) the Executive reasonably determines in good faith that a “Good Reason” condition has occurred; (ii) the Executive notifies the Company in writing of the first occurrence of the Good Reason condition within 60 days of the first occurrence of such condition; (iii) the Executive cooperates in good faith with the Company’s efforts, for a period not less than 30 days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) the Executive terminates his employment within 60 days after the end of the Cure Period.  If the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

 

A Terminating Event shall not be deemed to have occurred pursuant to this Section 4(b)  as a result of:  (i) the ending of the Executive’s employment due to the Executive’s death or Disability, (ii) Executive’s resignation for any reason, other than for Good Reason within the Sale Event Period, (iii) the Company’s termination of the employment relationship for Cause; or

 

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(iv) solely as a result of the Executive being or becoming an employee of any direct or indirect successor to the business or assets of the Company rather than continuing as an employee of the Company following a Sale Event.  For purposes hereof, the Executive will be considered “Disabled” if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from his duties to the Company on a full-time basis for 180 calendar days in the aggregate in any 12-month period.

 

5.                                      Sale Event; Accelerated Vesting; Severance During the Sale Event Period.  In the event of a Sale Event all stock options and other stock-based awards with time-based vesting held by the Executive shall immediately accelerate and become fully exercisable or nonforfeitable as of the date of the Sale Event.  In addition, in the event a Terminating Event occurs within the Sale Event Period, subject to the Executive signing and complying with a separation agreement in a form and manner satisfactory to the Company containing, among other provisions, a general release of claims in favor of the Company and related persons and entities, confidentiality, return of property and non-disparagement and reaffirmation of the Restrictive Covenants (the “Separation Agreement and Release”) and the Separation Agreement and Release becoming irrevocable, all within 60 days after the Date of Termination, the following shall occur:

 

(a)                     the Company shall pay to the Executive an amount equal to the sum of (i) 1 times the Executive’s Base Salary in effect immediately prior to the Terminating Event (or the Executive’s Base Salary in effect immediately prior to the Sale Event, if higher), and (ii) the Executive’s Target Bonus; and

 

(b)                     if the Executive was participating in the Company’s group health plan immediately prior to the Date of Termination and elects COBRA health continuation, then the Company shall pay to the Executive a lump sum cash payment in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to the Executive if the Executive had remained employed by the Company for twelve (12) months after the Date of Termination.

 

The amounts payable under Section 5(a) and (b), as applicable, shall be paid out in a lump sum within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, the amounts shall be paid in the second calendar year no later than the last day of the 60-day period.

 

6.                                      Severance Outside the Sale Event Period.  In the event a Terminating Event occurs at any time other than during the Sale Event Period, subject to the Executive signing the Separation Agreement and Release and the Separation Agreement and Release becoming irrevocable, all within 60 days after the Date of Termination, the following shall occur:

 

(a)                     the Company shall pay to the Executive an amount equal to nine (9) months of the Executive’s annual Base Salary in effect immediately prior to the Terminating Event;

 

(b)                     if the Executive was participating in the Company’s group health plan immediately prior to the Date of Termination and elects COBRA health continuation, then the

 

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Company shall pay to the Executive a monthly cash payment for nine (9) months or the Executive’s COBRA health continuation period, whichever ends earlier, in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to the Executive if the Executive had remained employed by the Company.

 

The amounts payable under Section 6(a) and (b), as applicable, shall be paid out in substantially equal installments in accordance with the Company’s payroll practice over nine (9) months commencing within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, the severance shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Date of Termination.  Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2).

 

7.                                      Restrictive Covenants.  The terms of the Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement, dated July 31, 2014 (the “Restrictive Covenants”), appended as Exhibit A, continue to be in full force and effect and are incorporated by reference as material terms of this Agreement.  The Executive hereby reaffirms the Restrictive Covenants as material terms of this Agreement.

 

(a)                                 Third-Party Agreements and Rights.  The Executive hereby confirms that the Executive is not bound by the terms of any agreement with any previous employer or other party which restricts in any way the Executive’s use or disclosure of information or the Executive’s engagement in any business.  The Executive represents to the Company that the Executive’s execution of this Agreement, the Executive’s employment with the Company and the performance of the Executive’s proposed duties for the Company will not violate any obligations the Executive may have to any such previous employer or other party.  In the Executive’s work for the Company, the Executive will not disclose or make use of any information in violation of any agreements with or rights of any such previous employer or other party, and the Executive will not bring to the premises of the Company any copies or other tangible embodiments of non-public information belonging to or obtained from any such previous employment or other party.

 

(b)                                 Litigation and Regulatory Cooperation.  During and after the Executive’s employment, the Executive shall cooperate fully with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company which relate to events or occurrences that transpired while the Executive was employed by the Company.  The Executive’s full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times.  During and after the Executive’s employment, the Executive also shall cooperate fully with the Company in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while the Executive was employed by the Company.  The Company shall reimburse the Executive for any reasonable out-of-pocket expenses incurred in connection with the Executive’s performance of obligations pursuant to this Section 7(b).

 

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(c)                                  Relief.  The Executive agrees that it would be difficult to measure any damages caused to the Company which might result from any breach by the Executive of the promises set forth in this Section 7, and that in any event money damages would be an inadequate remedy for any such breach.  Accordingly, the Executive agrees that if the Executive breaches, or proposes to breach, any portion of this Agreement, the Company shall be entitled, in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach without showing or proving any actual damage to the Company.  In addition, in the event the Executive breaches the Restrictive Covenants during a period when he is receiving Severance, the Company shall have the right to suspend or terminate the Severance.  Such suspension or termination shall not limit the Company’s other options with respect to relief for such breach and shall not relieve the Executive of his duties under this Agreement.

 

8.                                      Additional Limitation.

 

(a)                     Anything in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent with Section 280G of the Code and the applicable regulations thereunder (the “Severance Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, the following provisions shall apply:

 

(i)                                     If the Severance Payments, reduced by the sum of (A) the Excise Tax and (B) the total of the federal, state, and local income and employment taxes payable by the Executive on the amount of the Severance Payments which are in excess of the Threshold Amount, are greater than or equal to the Threshold Amount, the Executive shall be entitled to the full amount of Severance Payments.

 

(ii)                                  If the Threshold Amount is less than (x) the Severance Payments, but greater than (y) the Severance Payments reduced by the sum of (A) the Excise Tax and (B) the total of the federal, state, and local income and employment taxes on the amount of the Severance Payments which are in excess of the Threshold Amount, then the Severance Payments shall be reduced (but not below zero) to the extent necessary so that the sum of all Severance Payments shall not exceed the Threshold Amount.  In such event, the Severance Payments shall be reduced in the following order:  (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash forms of benefits.  To the extent any payment is to be made over time (e.g., in installments, etc.), then the payments shall be reduced in reverse chronological order.

 

(b)                     For the purposes of this Section 8, “Threshold Amount” shall mean three times the Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Code and the regulations promulgated thereunder less one dollar ($1.00); and “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by the Executive with respect to such excise tax.

 

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(c)                      The determination as to which of the alternative provisions of Section 8(a) above shall apply to the Executive shall be made by a nationally recognized accounting firm selected by the Company (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or the Executive.  For purposes of determining which of the alternative provisions of Section 8(a) above shall apply, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.  Any determination by the Accounting Firm shall be binding upon the Company and the Executive.

 

9.                                      Section 409A.

 

(a)                     Anything in this Agreement to the contrary notwithstanding, if at the time of the Executive’s “separation from service” within the meaning of Section 409A of the Code, the Company determines that the Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement on account of the Executive’s separation from service would be considered deferred compensation subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after the Executive’s separation from service, or (B) the Executive’s death.

 

(b)                     The parties intend that this Agreement will be administered in accordance with Section 409A of the Code.  To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code.  The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

 

(c)                      All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by the Executive during the time periods set forth in this Agreement.  All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred.  The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year.  Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

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(d)                     To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executive’s termination of employment, then such payments or benefits shall be payable only upon the Executive’s “separation from service.”  The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).

 

(e)                      The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.

 

10.                               Withholding.  All payments made by the Company to the Executive under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law.

 

11.                               Notice and Date of Termination.

 

(a)                     Notice of Termination.  The Executive’s employment with the Company may be terminated by the Company or the Executive at any time and for any reason.  During the Term, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with this Section 11.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

 

(b)                     Date of Termination.  “Date of Termination” shall mean:  (i) if the Executive’s employment is terminated by his death, the date of his death; (ii) if the Executive’s employment is terminated on account of Executive’s Disability or by the Company for Cause, the date on which Notice of Termination is given; (iii) if the Executive’s employment is terminated by the Company without Cause the date on which a Notice of Termination is given; (iv) if the Executive’s employment is terminated by the Executive for any reason except for Good Reason during a Sale Event Period, 30 days after the date on which a Notice of Termination is given, and (v) if the Executive’s employment is terminated by the Executive with Good Reason during a Sale Event Period, the date on which a Notice of Termination is given after the end of the Cure Period.  Notwithstanding the foregoing, in the event that the Executive gives a Notice of Termination to the Company, the Company may unilaterally accelerate the Date of Termination and such acceleration shall not result in a termination by the Company for purposes of this Agreement.

 

12.                               No Mitigation.  The Company agrees that, if the Executive’s employment by the Company is terminated during the term of this Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 5 or Section 6 hereof.  Further, the amount of any payment provided for in this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer.

 

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13.                               Consent to Jurisdiction.  The parties hereby consent to the jurisdiction of the Superior Court of the State of Michigan and the United States District Court in Michigan.  Accordingly, with respect to any such court action, the Executive (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.

 

14.                               Integration.  This Agreement constitutes the entire agreement between the parties with respect to compensation, severance pay, benefits and accelerated vesting and supersedes in all respects all prior agreements between the parties concerning such subject matter, including without limitation the Former Employment Agreement and any offer letter or employment agreement relating to the Executive’s employment relationship with the Company.  Provided, and notwithstanding the foregoing, the Restrictive Covenants and any other agreement relating to confidentiality, noncompetition, nonsolicitation or assignment of inventions shall not be superseded by this Agreement and the Executive acknowledges and agrees that any such agreement shall remain in full force and effect.

 

15.                               Successor to the Executive.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal representatives, executors, administrators, heirs, distributees, devisees and legatees.  In the event of the Executive’s death after a Terminating Event but prior to the completion by the Company of all payments due him under this Agreement, the Company shall continue such payments to the Executive’s beneficiary designated in writing to the Company prior to his death (or to his estate, if the Executive fails to make such designation).

 

16.                               Enforceability.  If any portion or provision of this Agreement (including, without limitation, any portion or provision of any Section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 

17.                               Waiver.  No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party.  The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

 

18.                               Notices.  Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight currier service of by registered or certified mail, postage prepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with the Company, or to the Company at its main office, attention of the Board of Directors.

 

19.                               Amendment.  This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Company.

 

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20.                               Effect on Other Plans and Agreements.  An election by the Executive to resign for Good Reason under the provisions of this Agreement shall not be deemed a voluntary termination of employment by the Executive for the purpose of interpreting the provisions of any of the Company’s benefit plans, programs or policies.  Nothing in this Agreement shall be construed to limit the rights of the Executive under the Company’s benefit plans, programs or policies except as otherwise provided in Section 7 hereof, and except that the Executive shall have no rights to any severance benefits under any Company severance pay plan, offer letter or otherwise.  In the event that the Executive is party to an agreement with the Company providing for payments or benefits under such agreement and this Agreement, the terms of this Agreement shall govern and Executive may receive payment under this Agreement only and not both.  Further, Section 5 and Section 6 of this Agreement are mutually exclusive and in no event shall Executive be entitled to payments or benefits pursuant to Section 5 and Section 6 of this Agreement.

 

21.                               Governing Law.  This is a Michigan contract and shall be construed under and be governed in all respects by the laws of the State of Michigan, without giving effect to the conflict of laws principles.

 

22.                               Successor to Company.  The Company shall 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 Company expressly to assume and agree to perform this Agreement to the same extent that the Company would be required to perform it if no succession had taken place.  Failure of the Company to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a material breach of this Agreement.

 

23.                               Gender Neutral.  Wherever used herein, a pronoun in the masculine gender shall be considered as including the feminine gender unless the context clearly indicates otherwise.

 

24.                               Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written.

 

	
 
    	
ESPERION   THERAPEUTICS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Tim Mayleben
    
	
 
    	
Name:   
    	
Tim   Mayleben
    
	
 
    	
Title:
    	
President &   CEO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
EXECUTIVE:
    
	
 
    	
 
    
	
 
    	
/s/   Narendra Lalwani
    
	
 
    	
Narendra   Lalwani
    
	
 
    	
Executive   Vice President, Research and Development and Chief Operating Officer
    

 

11Employment Contract

EMPLOYMENT CONTRACT

THIS EMPLOYMENT AGREEMENT is made this 26th day of March, 2015,  (the Effective Date”), between UNIVERSAL BIOENERGY, INC, (hereinafter referred to as "Employer", or the Company), having a principal place of business at 18100 Von Karman, Suite 850, Irvine, CA  92612, and KENNETH L. HARRIS (hereinafter referred to as "Employee") who resides in, Charlotte, North Carolina. In consideration of the mutual covenants contained in this Agreement, the Employer and the Employee hereby agree as follows:

1.

Term of Employment.

Employer employs Employee and Employee accepts employment with the Employer for a period of twelve (12) months beginning on the 1st day of April, 2015; however, this Agreement may be terminated earlier as provided elsewhere in this Agreement.  This Agreement shall be automatically renewed from month to month beyond the period herein identified for an additional period of up to three (3) years on the terms and conditions herein set out in the absence of notice from one party to the other.

2.

Duties of Employee.

A.

Employee is employed as the Company’s CHIEF OPERATIONS OFFICER.  Employee shall perform the duties and responsibilities customarily assigned to a company COO and as set forth in Exhibit A of this agreement. Employee shall report to and be subject to the direction and control of the President of  Universal Bioenergy, Inc.

B.

As a condition of his/her continued employment Employee shall assure that the Company complies with federal laws and regulations controlling the terms and conditions of the employment of employees, including EEO laws, NLRA rules and regulations, LMRA rules and regulations, OSHA rules and regulations, FLSA rules and regulations, et cetera.

C.

Employee shall devote a reasonable amount of his productive time, ability, and attention to the business of Employer during the term of this contract, (except as indicated in paragraph 2D).  

E.

Employer and Employee hereby specifically acknowledge that Employee is a principal in the law firm of Ken Harris Associates PA, and the Employer and Employee hereby consent to Employee’s present simultaneous employment by both the Employer  and Ken Harris Associates PA in this transaction and hereby waive any conflicts of interests with respect to this Agreement. The undertaking of such employment by Employee with Employer will not constitute a breach of any agreement to which Employee is bound. Employer and Employee also specifically acknowledge Employee’s past and present work in the energy industry with and for NDR Energy Group, LLC, a subsidiary of Employer. Employer and Employee hereby waive any conflicts of interest related to Employee’s current of future activity with NDR Energy Group LLC. The parties further agree that Employee’s current or future activity with NDR Energy Group LLC, shall not violate the Non-Competition or Other Restrictive Covenants contained in this Agreement, and in particular Section 5 below.

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3.

Compensation of Employee.

A.

Base Compensation.  As compensation for services rendered under this Agreement, Employee shall be entitled to receive from Employer an annual salary of Twenty Seven Thousand Six Hundred Dollars ($27,600.00), payable in equal semi-monthly installments in accordance with Employer’s regular payroll schedule.

B.

Performance Incentives.  As additional compensation, the Employer agrees to pay to the Employee, Performance Incentives in accordance with the Performance Incentive Plan set forth on Exhibit B, attached.  The Performance Incentives to be paid under this Agreement shall be determined in accordance with generally accepted accounting principles by the firm of independent certified public accountants then servicing the Employer.  The computation as determined by the firm shall be final and conclusive for such purposes on both the Employer and the Employee.

C.

Incentive Bonus.  Employer, in its sole discretion, may from time to time pay Employee an incentive bonus, in such amount and under such terms and conditions as it determines to be appropriate and in the best interest of the Company.

D.

Signing Bonus.     As additional inducement to enter into this Agreement, and in acknowledgement the base compensation indicated in paragraph 3B is below market for similar positions in the industry,  the Company will pay to Employee a Signing Bonus, see “Exhibit C”, of Ten Million (10,000,000) shares of its common stock to be issued within 90 days of execution of this Agreement. The Employee, (subject to “Exhibit C”),  shall be restricted from selling or otherwise deposing of the stock and agrees that he/she shall not sell, or otherwise depose of the stock for a period of one (1) year after the “effective date” of  this Agreement. In the event the Employee should voluntarily terminate his employment in less than one (1) year in accordance with the provisions of paragraphs 6B(i) of this Agreement,  the “Signing Bonus” shall be partially forfeited, and the Employer agrees that Employee shall retain a percentage of the stock of the aforementioned shares of common stock in Company equaling a prorata percentage of the first year that Employee worked as an Employee with Company under this Agreement. In the event that Employee is only entitled to retain a portion of his Signing Bonus, then Employee shall reconvey  and return the remainder of the aforementioned Signing Bonus to Company within five (5) days of termination, and Employee agrees to sign all of the required documentation to complete the return of the stock to the Company.

4.

Confidential Information.

A.

Employee shall not, during the term of this Agreement or at any time thereafter, make unauthorized use of, or divulge to any other person or entity Company's trade secrets, confidential or other information as is described in Article 4, Section B, without prior written permission from Company's President. This Confidentiality Covenant shall apply to, but shall not be limited to all information protected under the Georgia Trade Secrets Act of 1990, and, in addition thereto, to all information described in Section B of this Paragraph and the protections provided to the Company under this Agreement shall be in addition to and not in lieu of the protections afforded under said Act. 

2

B.

At all times during the term of this Agreement, and after its termination Employee shall take all reasonable precautions to protect the integrity of and shall refrain from any use or divulgence of Company's confidential information and trade secrets including, but not limited to: all files, tickler files, resource information, rolodex, records, documents, drawings, specifications, equipment, customer lists, supplier lists or information, product, supplier or customer catalogues, and similar items relating to the business of Company, or copies thereof, whether the originals or copies were prepared by Employee or otherwise came into Employee's possession.

C.

The confidential information and trade secrets described above shall remain the exclusive property of Company and shall not be removed from the premises of Company under any circumstances whatsoever without the express prior written consent of Company.

D.

If Employee breaches or threatens to breach this Article 4, Company shall be entitled to obtain injunctive relief containing such mandatory or prohibitory clauses as are necessary to prevent the continued breach of this covenant of confidentiality. Company shall also be entitled to any other remedies provided under this contract or at law. If Company elects to enforce this Paragraph through a court of law of appropriate jurisdiction, Employee shall be liable for payment of all court costs, attorney’s fees, and necessary expenditures, which Company incurs.

5.

Non-Competition and Other Restrictive Covenants.

A.

During the term of this Agreement and upon termination of Employee's employment hereunder, and for a period of one (1) year from the date thereof, Employee shall not directly or indirectly engage in any business or other activity where the employee will engage in the same or substantially similar activities to those which he engaged in for the Company, if such activity or business is in competition with Company. However, Employee may use information obtained during his past, current or future work with NDR Energy Group LLC, or information obtained during his work with Employer, if said information is used for the benefit of NDR Energy Group, LLC, a subsidiary of Employer.

 

B.

During the term of this Agreement and for a period of two (2) years after its termination, Employee shall not recruit or seek to hire (whether directly or by assisting others) any other employee of Company or its affiliates who are still actively employed by or doing business with Company or its affiliates at the time Employee attempts to recruit or hire such persons, if employee had substantial contact with such other employee while employed by the Company.

C.

For a period of two (2) years after the termination of this Agreement Employee shall not, solicit or attempt to solicit, directly, indirectly, or by assisting others, any business from any of Company's clients, customers, or actively-sought prospective customers with whom Employee had material contact during Employee's employment for purposes of providing products or services that are competitive with those the Company provides.

3

D.

 The Non-Competition Covenants contained in this Article 5 shall apply within any geographic areas in which Employee conducted such activities for Company, and within the area where Employee is working at the time of the termination, and to any area wherein Employee worked at any time during the twenty four (24) months immediately preceding the date of Employee's termination.

E.

The parties understand that the Company does business throughout the United States.  Accordingly, they each understand and agree that these Non-Competition Covenants shall apply to any area wherein Employee conducts, performs supervises or assists in any operations on Company's behalf, and to any area where clients, customers or actively sought prospective customers with whom Employee had material contact are present.

F.

The prohibitions in these Non-Competition Covenants shall apply to all such activities in such geographic area and during such period whether they are conducted for Employee's own sake, or account, or on behalf of or in conjunction with another or others, or as a partner or joint venturer, employee, agent, officer, director, beneficiary, or shareholder of such entity, person, partnership, association, firm, trust, or corporation.

G.

Employee understands and acknowledges that the provisions of Article 4 and 5 of this Agreement are required for the fair and reasonable protection of Company's proprietary interest in its business, and are intended to prohibit third parties from benefitting from Employee's relationship with Company at the Company's expense and economic detriment. Employee recognizes and agrees that the ascertainment of damages in the event of Employee's breach or violation of any covenant or undertaking contained in this Agreement, would be difficult, if not impossible to determine, and further that the various rights and duties created hereunder are extraordinary and unique, so that Company will suffer irreparable injury that cannot adequately be compensated for by monetary damages if Employee breaches or violates any covenant or undertaking contained in the Articles of this Agreement.  Employee therefore agrees that, in addition to and without limiting any other remedy or right it may have, Company shall have the immediate right to obtain a preliminary and final injunction against Employee, from any court of competent jurisdiction enjoining any such alleged breach or violation without posting any bond that might otherwise be required, and agrees that Employee shall not plead or otherwise deny the adequacy of consideration given by Company in exchange for these covenants, nor the adequacy of any relief at law (including monetary damages) as a defense to Company's petition, claim or motion for preliminary or final injunctive relief.

H.

Agreement to Arbitrate and Jury Trial Waiver.  Except as otherwise set forth in this Agreement, Employer and Employee agree that claims between the parties concerning this Agreement, which cannot be resolved through discussions or negotiations between them, shall be settled by arbitration through the services of an arbitrator mutually agreed upon by the parties, who shall apply the rules of the American Arbitration Association, or such other rules as the parties may mutually agree to observe.  The decision of the arbitrator shall be final and may be enforced by any court having jurisdiction over the persons subject to such proceedings.  The parties to this Agreement waive all rights to trial by jury which may otherwise exist with regard to the interpretation and enforcement of this Agreement.

4

6.

Termination.

A.

Termination for Cause.  If the Employee willfully breaches or habitually neglects the duties he/she is required to perform under the terms of this Agreement, the Employer may, at the Employer's option, terminate this Agreement by giving written notice of the termination to the Employee.  Such termination shall not prejudice any other remedy to which the Employer may be entitled.

B.

Termination Without Cause.

(i)

Employee may, without cause, terminate this Agreement by giving to Employer thirty (30) days written notice by Certified Mail, Return Receipt Requested, at the office of Employer, and such termination shall be effective on the thirtieth (30th) day following the date of such notice.

(ii)

Employer may, without cause, terminate this Agreement at any time by either (a) giving to Employee thirty (30) days prior written notice by Certified Mail, Return Receipt Requested, at the last known residence of Employee, and such termination shall be effective on the thirtieth (30th) day following the date of such notice, or (b) by delivering written notice to Employee and pre-paying Employee his/her base salary for the ensuing thirty (30) day period in which event Employee shall be immediately discharged from the employ of Employer.

C.

In the event of the bankruptcy or insolvency of Employer, this Agreement and all the obligations of either party hereunder shall terminate.

7.

Miscellaneous.

A.

Vacation.  Employee shall be entitled to a total of Three (3) weeks annual paid vacation in addition to holiday and sick leave.  Any unused vacation time may not be carried forward from year to year.

B.

Sick Leave.  Employee shall be entitled to Ten (10) days of sick leave annually, which shall be administered in accordance with Employer’s standard business practices. Any unused sick leave may not be carried forward from year to year.

C.

Employee Benefit Plan.  Employee shall be entitled to participate in such employee benefit plans as may be provided by the Company for the benefit of the Company’s executive officers, including any health insurance plan, disability insurance plan, stock option plan, or other employee welfare benefit plan.  The existence of any such plans, along with the terms and conditions of inclusion, and the specific benefits thereby provided are matters within the sole discretion of the Company.

D.

Holidays.  Employee shall be entitled to receive paid time off for all nationally recognized or local holidays, in accordance with Employer’s policies and procedures as they may exist from time to time.

5

E.

Expenses.  Employer shall reimburse Employee for such expenses incurred by Employee which Employer, in its sole discretion, determines were reasonably necessary to the performance by Employee of her duties on behalf of the Company.

F.

Stock Option.  Employee shall be granted the right or option to purchase an aggregate of 2,000,000 shares of the common stock of Universal Bioenergy, Inc.  The purchase price shall be a thirty percent (30%) discount to the current market trading price of Universal Bioenergy, Inc., stock at the time the right or option is exercised, and may only be exercised in accordance with Universal Bioenergy, Inc.’s Stock Option Plan, (if one is then in existence), or with the approval of the Board of Directors.  This right or option may not be exercised by Employee until Employee has completed one full year of employment with the Company.  Thereafter, Employee may exercise the right or option at any time, provided he/she is actively employed by the Company.  Upon the termination of Employee’s employment by the Company, for any reason, the option set forth herein shall terminate.

G.

Severability.  All of the clauses of this Agreement are distinct and severable and if any clause shall be deemed illegal, void or unenforceable, the validity, legality or enforceability of any other clause or provision of this Agreement shall not be affected.

H.

Waiver.  Waiver by either party of any provision of this Agreement shall not operate as, or be construed to be, a waiver of any subsequent breach hereof.

I.

Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia.  Employee hereby consents to the subject matter and personal jurisdiction of the Superior Court of Fulton County, Georgia over any action brought by either Party to enforce this Agreement.

J.

Entire Agreement.  This Agreement, including Exhibits A and B, contains the entire agreement between the parties and supersedes any and all other agreements, whether oral or in writing, between the parties and contains all of the covenants and agreements between the parties with respect to the subject matter of this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, that are not embodied in this Agreement, and that no other agreement, statement, or promise not contained in this Agreement shall be valid or binding. Any modification of this Agreement will be effective only if it is in writing signed by the party to be charged.

[SIGNATURE PAGE FOLLOWS]

6

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement to be effective as of the date first written above.

EMPLOYER

UNIVERSAL BIOENERGY, INC.

By: / s / Vince M. Guest

Vince M. Guest  

Its: President & CEO

    

EMPLOYEE

By:  / s / Kenneth L. Harris

KENNETH L. HARRIS

7

“Exhibit A”

Job Description 

Universal Bioenergy, Inc.

					
	Job Title:

	Chief Operations  Officer

	Job Category: 

	Executive

	Department/Group:

	Operations

	Job Code

	COO1

	Location:

	Charlotte, NC

	Travel Required:

	Travel required to US and International destinations. Employee must hold valid passport.

	Level/Salary Range:

	$27,600K yearly base plus commissions & bonus

	Position Type:

	Full Time

	Training Cycle

	3 Weeks

	Probationary

	N/A

	Training Evaluation

	Yes

	 
	 

	Development Goals

	Posted Monthly. Evaluated Quarterly

	New Hire

	Ken Harris

	Job Description

8

					
	Job Purpose:

The Chief Operating Officer is responsible for managing all hands-on operational aspects of Universal Bioenergy, its subsidiaries, affiliates, and partnerships. Assists the CEO in the aggressive and successful growth of the Company. COO provides the leadership, management and vision necessary to ensure that the Company has the proper operational controls, administrative and reporting procedures, and people systems in place to effectively grow the organization and to ensure financial strength and operating efficiency.  This classification requires leadership qualities such as adaptability, flexibility, dependability and accountability. Much of the work is self-appointed and requires a high degree of professional independence, initiative and self-discipline.

Duties:

The Chief Operations Officer will perform all or some of the following Job description:

?

Provide day-to-day leadership and management to Universal Bioenergy and demonstrate willingness to assist its subsidiaries, affiliates, and partners with their operations.

?

Responsible for driving the Company to achieve and surpass sales, profitability, cash flow and business goals and objectives. 

?

Responsible for the measurement and effectiveness of all processes internal and external. Provides timely, accurate and complete reports on the operating condition of the Company. 

?

Spearhead the development, communication and implementation of effective growth strategies and processes. 

?

Collaborate with the management team to develop and implement plans for the operational infrastructure of systems, processes, and personnel designed to accommodate the rapid growth objectives of our organization.

?

Track and maintain all reporting statuses of the Company. Communicate monthly with executive and operations team concerning registrations, filings, licenses, etc. of the Company, its subsidiaries, and affiliates.

?

Motivate and lead a high performance management team; attract, recruit and retain required members of the executive team not currently in place; provide mentoring as a cornerstone to the management career development program. 

?

Act as lead "client-care officer" through direct contact with every client and partner. 

?

Assist, as required, in raising additional capital at appropriate valuations to enable the Company to meet sales, growth, and market share objectives. 

?

Foster a success-oriented, accountable environment within the Company. 

?

Represent the Company with clients, investors, and business partners. 

Relationships and Roles

?

Works primarily with Executive team members but also works with Executives of subsidiaries of the Company.

?

Prepares reports for weekly presentation to Executive Team.

?

Reports directly to the President and works directly with SVP Finance, CFO, and CEO concerning negotiations in relation to the acquisition and retention of supplier and end customer relationships.

?

Works with Accounting and Audit partners in review of monthly reconciliations of Universal Bioenergy, its subsidiaries, affiliates, and partners.

?

Daily or Weekly communication with all executives.

?

Coordinates quarterly Executive Meeting and reporting from each Company.

?

Works with CEO to increase client base of Universal Bioenergy and assumes primary contact role once relationships have been established.

.

Skills/Qualifications:

·

A bachelors degree  and/or master’s in business, law or finance and 3-5 years of executive management or 10+ years of equivalent managerial experience.

·

Strong knowledge of Microsoft Excel, Word, Outlook, Sales Force, and/or Quick Books.

·

Strong Knowledge of US Generally Accepted Accounting Principles.

·

Proven Project Management skills are a must.

·

Strong verbal and written communication skills.

·

Ability to solve practical problems and deal with a variety of concrete variables in situations where only limited standardization exists

·

Ability to delegate and be HIGHLY organized.

·

Identify and resolve problems in a timely manner, gather and analyze information skillfully, develop alternative solutions, work well in group problem solving situations.

·

Willingness to travel at reasonable times and with reasonable frequency.

9

					
	Employee Signature

	/ s / Kenneth L. Harris

	Date:

	3-26-15

	Universal  Representative

	/ s / Vince M. Guest

	Date:

	3-26-15

“EXHIBIT B”

Performance Incentive Plan

Sales Goals and Objectives 

The primary of objective for the Employees engaged in the marketing and sales of natural gas is to achieve an annual revenue $180 million dollars in the next 12 months.  The secondary objective is to generate a gross margin on the sales of natural gas to achieve a gross and ultimately net profit to the Company. 

Performance Incentive And  Bonus Plan

The following is the formal incentive plan that the Employee will participate in to receive certain awards, incentives and bonuses upon meeting certain performance objectives.

a.  Bonus Incentive Plan. Employee is eligible to receive a bonus based upon individual and company performance as determined by the Employer in its sole discretion. The bonus will  be earned on or quarterly basis, and paid sixty (60) days after the closing of the quarter. To determine the bonus, the Employer will use the following criteria, to arrive at their decision; increase in revenue, earnings, cash flow, debt reduction; economic value  added, return on net assets, return on stockholders’ equity, return on assets, return on capital, stockholder returns, return on sales, gross or net profit margin, productivity, expense, margins, operating efficiency, objective measures of customer satisfaction, working capital, financing, earnings per share,  market share, inventory turns, acquisitions or strategic transactions, or other means of bringing additional value to the Employer.

b. Equity Awards. Employee will be eligible to participate in Employer’s current or future  equity participation programs to acquire options or equity incentive compensation units in the common stock of Employer, subject to and in accordance with the following contingencies: (1) approval by Employer's Board of Directors (the “Board”),  (2) Employee’s execution of documents requested by Employer at the time of grant, and  (3)  in accordance with the policies, procedures and practices from time to time of Employer for granting such options or equity incentive compensation units.

Monthly Bonus Pool

At the Company’s discretion, a monthly bonus pool will be made available in the condition where BOTH the following criteria are satisfied for the sales of natural gas: 

10

Criteria 1.  The Monthly Gross Sales Volume of natural gas is greater than $10 million dollars for the month. 

Criteria 2.  The Monthly Gross Revenue of natural gas – Monthly Team Base Compensation is greater than 0.

In the event that both Case 1 and Case 2 are met, bonuses will be calculated on the following formulas.

If the Monthly Gross Sales Volume > $10 million and < $15 million dollars

VP Business Development will receive 40% of the monthly bonus pool (where each VP Business Development will receive their percentage of the 40% based on the percentage of the monthly gross revenue they booked for their confirmed gas orders)

COO will receive 10% of the monthly bonus pool

The company will retain 50% of the monthly bonus pool to offset the additional business operating expenses.

If the Monthly Gross Sales Volume > $15 million dollars

VP Business Development will receive 50% of the monthly bonus pool (where each VP Business Development will receive their percentage of the 40% based on the percentage of the gross revenue they booked for their confirmed gas orders)

COO will receive 15% of the monthly bonus pool

The company will retain 35% of the monthly bonus pool to offset the additional business operating expenses.

11

“EXHIBIT C”

Signing Bonus

UNIVERSAL BIOENERGY, INC.

SIGNING BONUS

INDIVIDUAL AGREEMENT

                        

THIS AGREEMENT is made this 26th day of March, 2015,  (the Effective date”), between UNIVERSAL BIOENERGY, INC, (hereinafter referred to as "Employer", or the Company), having a principal place of business at 18100 Von Karman, Suite 850, Irvine, CA  92612, and KENNETH L. HARRIS (hereinafter referred to as "Employee"), who resides in Charlotte, North Carolina. In consideration of the mutual covenants contained in this Agreement, the Employer and the Employee hereby agree as follows:

1. In accordance with the provisions of Article 2D, of the Employment Agreement, Universal Bioenergy Inc., (the ‘Company”) agrees to pay a “Signing Bonus” of Ten Million (10,000,000) shares  of the Company’s Common Stock  to Kenneth L. Harris (“Employee”) for accepting the  position of Chief Operations Officer (COO). The bonus will be paid via stock certificate issued to Employee within 90 days of execution of the Employment and Signing Bonus Agreements. The Common Stock issued will have a holding period of 1 year and afterwards be eligible for deposit and sale based on SEC regulatory guidelines. 

2. The “Signing Bonus” is not a part of base pay. The Employee acknowledges and understands that receiving the “Signing Bonus” may initiate a taxable event and  is advised to consult his/her tax consultants in regards to this matter. Concurrently with any Stock Bonus made pursuant to this Agreement, Employee understands that the fair market value of the Shares constituting the Stock Bonus granted to Employee hereunder may be immediately included in his income.  Employee acknowledges that he is responsible for all federal and state income taxes arising from the Stock Bonus.

3. The Employee shall be restricted from selling or otherwise deposing of the “Signing Bonus” stock and agrees that he/she shall not sell, or otherwise depose of the stock for a period of one (1) year after the “effective date” of the  Employment Agreement. In the event the Employee should voluntarily terminate his employment in less than  one (1) year in accordance with the provisions of paragraphs 6B(i) of this the Employment Agreement,  the “Signing Bonus” shall be forfeited, and the Employee agrees to return the stock to the Company within five (5) days of termination, and agrees to sign all of the required documentation to complete the return of the stock to the Company.

4. With respect to the “Signing Bonus” stock; the Employee furthermore hereby agrees that, without the prior written consent of the Company, that Employee will not, during the period commencing on the date 

12

hereof and ending one (1) year after the “effective  date” of the Employment Agreement, (the “Lock-Up Period”), directly or indirectly;

(a) offer, pledge, assign, encumber, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, any shares of the common stock  directly or indirectly or exchangeable for common stock owned either of record or beneficially (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) by the Employee on the date hereof or hereafter acquired or;

(b) enter into any swap or other agreement or arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the common stock, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of common Stock or such other securities, in cash or otherwise, or publicly announce an intention to do any of the foregoing.

5. The Employee understands that the Shares  to be issued by the Company to the Employee shall be exempt from the registration requirements of the Securities Act  of 1933, as amended (the “Securities Act”) pursuant to Section 4(2) of the Securities Act and the rules and regulations promulgated there under.

6. None of the Shares issued in connection herewith will be registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and cannot be transferred, hypothecated, sold or otherwise disposed of until: (i) a registration statement with respect to such securities is declared effective under the Securities Act, or (ii) the Company receives an opinion of counsel for the interest holders, reasonably satisfactory to counsel for the Company, that an exemption from the registration requirements of the Securities Act is available.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement to be effective as of the date first written above.

Employee

Company

KENNETH L. HARRIS

UNIVERSAL BIOENERGY, INC.

By: / s / Kenneth L. Harris

                                       By: / s / Vince M. Guest 

Kenneth L. Harris

             Vince M. Guest 

                                                                                                         Its: President

13

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