Document:

f8k021209ex10iii_confederate.htm

     

    Exhibit
10.3

     

     

     

    CONFEDERATE
MOTORS, INC.

    

    
      
        

      

    

    

    Employment
Agreement for Joseph Mitchell

     

    

    
      
        

      

    
 

    

    THIS
EMPLOYMENT AGREEMENT (this “Agreement”), by and between CONFEDERATE MOTORS, INC.
a Delaware corporation (the “Company”), and Joseph Mitchell (“Executive”), is
hereby entered into as of January 30, 2009.

    

    W I T N E S S E T H

    

    WHEREAS,
Executive is currently an employee of the Company;

    

    WHEREAS,
the Company desires to continue to employ Executive in his capacity as Chief
Financial Officer/Executive Vice President in connection with the conduct of its
business, and Executive desires to accept such employment on the terms and
conditions herein set forth; and

    

    WHEREAS,
the Company and Executive desire to set forth the terms upon which Executive
shall be so employed.

    

    NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration the receipt and adequacy of
which the Company and Executive each hereby acknowledge, the Company and
Executive hereby agree as follows:

    

    
      	
               
      

            	
              1.

            	
              Employment.

            

    

    

    The
Company hereby agrees to employ Executive as its Chief Financial
Officer/Executive Vice President, and Executive hereby agrees to accept such
employment and serve in such capacities, during the Term (as defined in Section
2) and upon the terms and conditions set forth in this Agreement.

    

    
      	
               
      

            	
              2.

            	
              Term.

            

    

    

    The term
of employment of Executive under this Agreement (the “Term”) shall, unless this
Agreement is terminated in accordance with Section 6 or 7, be a five-year period
initially commencing on the Effective Date.  At each anniversary of
the Effective Date, the Term shall automatically be extended by one year, unless
the Company notifies the Executive in writing prior to

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    such
anniversary (the “Termination Notice Date”) that the Term shall not be so
extended and, in such case, the Term shall terminate on the second anniversary
of such Termination Notice Date.  As used herein, “Effective Date”
shall mean the closing date of a merger between (i) Confederate Motor Company,
Inc. (“Confederate”) and (ii) a subsidiary (the “Merger Sub”) of Confederate
Motors, Inc., a Delaware corporation, in which the Merger Sub merges with and
into Confederate and Confederate is the surviving entity.  This
Agreement shall become effective only when and if the Effective Date
occurs.  If the Effective Date does not occur on or before January 30,
2009, then this Agreement shall be null and void.

    

    
      	
               
      

            	
              3.

            	
              Offices and
      Duties.

            

    

    

    The
provisions of this Section 3 will apply during the Term:

    

    (a)          Generally.  Executive
shall serve as the Chief Financial Officer/Executive Vice President of the
Company.  Executive shall have and perform such duties,
responsibilities and authorities as are customary for the Chief Financial
Officer/Executive Vice president of a publicly held corporation of the size,
type, and nature of the Company as they may exist from time to time and
consistent with such position and status and as the Company’s Board of Directors
(the “Board”) shall from time to time direct, but in no event shall such duties,
responsibilities, and authorities be reduced from those of Executive prior to
the Effective Date.  Executive shall devote such business time and
attention as is necessary to appropriately and efficiently discharge his duties
and responsibilities as set forth herein.

    

    (b)          Place of
Employment.  Executive’s principal place of employment shall be
the current corporate offices of the Company in Birmingham,
Alabama.  In no event shall the Executive’s principal place of
employment be relocated to any other location without his prior written
consent.

    

    
      	
               
      

            	
              4.

            	
              Salary and Annual Incentive
      Compensation.

            

    

    

    As
partial compensation for the services to be rendered hereunder by Executive, the
Company agrees to pay to Executive during the Term the compensation set forth in
this Section 4.

    

    (a)          Base Salary and Guaranteed
Cash Bonus.  The Company will pay to Executive during the Term
a base salary at the initial annual rate of $144,000 payable in cash in
accordance with the Company’s usual payroll practices with respect to senior
executives.  The base salary shall be determined at least annually by
the Committee (as defined herein); provided that the base salary may be
increased, but not decreased, from that in effect for the prior
year.  “Committee” means the Compensation Committee of the Board, or,
if the Company does not then have a Compensation Committee, the
Board.  In addition, the Company will pay to Executive during the Term
a guaranteed annual cash bonus equal to 25% of the annual base salary, which
bonus shall be paid in four substantially equal quarterly installments, starting
with the quarterly installment for and payable in the second quarter of
2009.  Each quarterly installment shall be paid no later than the end
of the quarter in which the installment is earned.  Notwithstanding
the foregoing, if the annual base salary increases during any calendar year,
then the guaranteed annual cash bonus payments in that year shall

    

    
      
        
           

        

        
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    be
increased accordingly so that the total guaranteed annual cash bonus paid for
that year is equal to 25% of the total base salary for that
year.  Notwithstanding the foregoing: (i) the guaranteed annual cash
bonus for 2008 shall be equal to 25% (or such higher percentage, if any, that
the Committee may determine) of the annual base salary in effect at the
beginning of the Term and shall be paid in a single lump sum payment no later
than 60 days after the Effective Date; (ii) a guaranteed bonus for the first
quarter of 2009 equal to 25% (or such higher percentage, if any, that the
Committee may determine) of the quarterly base salary in effect at the beginning
of the Term and shall be paid in a single lump sum payment no later than 90 days
after the Effective Date; and (iii) the guaranteed bonus for the second quarter
of 2009 shall be payable no later than 120 days after the Effective
Date.

    

    (b)          Annual Incentive
Compensation.  The Company will pay to Executive during the
Term annual cash incentive compensation, if any, in amounts determined each
calendar year by the Committee.  Any such annual cash incentive
compensation payable to Executive for a calendar year shall be paid in a single
lump sum payment during the period starting on January1, and ending on March 15,
of the calendar year following the calendar year in which the annual cash
incentive compensation is earned.  As used herein, “annual cash
incentive compensation” does not include the guaranteed annual cash bonus
contemplated by Section 4(a).

    

    
      	
               
      

            	
              5.

            	
              Long-Term Compensation,
      Benefits and Expense
Reimbursement

            

    

    

    (a)          Executive Compensation
Plans.  Executive shall be entitled during the Term to
participate, without discrimination or duplication, in all executive
compensation plans and programs intended for general participation by senior
executives of the Company, as presently in effect or as they may be modified or
added to by the Company from time to time, subject to the eligibility and other
requirements of such plans and programs, including, without limitation, the
Company’s 2008 Equity Incentive Plan, and any successor to such plan, any other
stock option plans, performance share plans, management incentive plans,
deferred compensation plans and supplemental retirement plans; provided, however, that such
plans and programs, in the aggregate, shall provide Executive with benefits and
compensation and incentive award opportunities substantially no less favorable
than those provided by the Company to Executive under such plans and programs as
in effect on the Effective Date.

    

    (b)          Employee and Executive
Benefit Plans.  Executive shall be entitled during the Term to
participate, without discrimination or duplication, in all employee, executive
benefit and special individual plans and programs of the Company, as presently
in effect or as they may be modified or added to by the Company from time to
time, to the extent such plans and programs are available to other senior
executives or employees of the Company, subject to the eligibility and other
requirements of such plans and programs, including, without limitation, plans
providing health and medical insurance, life insurance, disability insurance and
accidental death or dismemberment insurance, and pension or other retirement
plans, savings plans, vacation and time-off programs, profit-sharing plans,
stock purchase plans and stock ownership plans; provided, however, that such
plans and programs, in the aggregate, shall provide Executive with benefits and
compensation and incentive award opportunities substantially no less favorable
than those provided by the Company to Executive under such plans and programs as
in effect on the Effective Date.

    

    
      
        
           

        

        
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    (c)          Reimbursement of
Expenses.  The Company will promptly reimburse Executive for
all reasonable business expenses and disbursements incurred by Executive in the
performance of Executive’s duties during the Term within 60 days after Executive
submits reasonable evidence of such expenses and disbursements to the
Company.

    

    (d)          Funding of Rabbi
Trust.  Not later than 30 days following a Change in Control:
(1) the Company shall contribute to a “rabbi trust” within the contemplation of
IRS Revenue Procedure 92-64 (which trust and its assets shall be located within
the United States) an amount equal to the amount that would be payable to the
Executive under (i), (ii), (iii), and (v) of Section 7(b) (and, if applicable,
under the last sentence of the first grammatical paragaph of Section 7(b)) upon
a Termination of Employment described in Section 7(b), and (2) the trustee of
the rabbi trust shall be irrevocably instructed to pay such amounts (plus
earnings thereon) to the Executive upon the Executive’s Termination of
Employment, if the amounts due to the Executive hereunder are not otherwise paid
to the Executive by the Company.  The Company shall provide to
Executive written evidence of compliance with this Section 5(d) within two
business days after such contribution.

    

    
      	
               
      

            	
              6.

            	
              Termination Due to Death or
      Disability.

            

    

    

    Executive’s
employment and the Term shall terminate upon Executive’s death.  The
Company may terminate the employment of Executive as Chief Financial
Officer/Executive Vice President due to Disability (as defined in Section 8(c))
of Executive, effective upon the expiration of the 30-day period set forth in
Section 8(c), absent the actions referred to therein being taken by Executive to
return to service and Executive’s presentation to the Company of a certificate
of good health.

    

    In the
event of Executive’s Termination of Employment due to death or Disability, all
obligations of the Company and Executive under Sections 1 through 5 of this
Agreement will immediately cease; provided, however, that the
Company will pay Executive (or, in the case of Executive’s death, his
beneficiaries or estate), and Executive (or, in the case of Executive’s death,
his beneficiaries or estate) will be entitled to receive, the
following:

    

    
      	
               
      

            	
              (i)

            	
              The
      earned but unpaid portion of annual base salary and guaranteed annual cash
      bonus;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Any
      annual cash incentive cash compensation earned, but unpaid, for the
      calendar year prior to the calendar year in which such Termination of
      Employment occurs,

            

    

    

    
      	
               
      

            	
              (iii)

            	
              An
      amount equal to the Severance Annual Incentive Amount, multiplied by a
      fraction, the numerator of which is the number of days Executive was
      employed in the year of termination and the denominator of which is the
      total number of days in the year of
termination,

            

    

    

    
      	
               
      

            	
              (iv)

            	
              All
      vested, nonforfeitable amounts owing or accrued at the date of Executive’s
      Termination of Employment under any compensation and benefit plans,
      programs

            

    

    

    
      
        
           

        

        
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              and
      arrangements set forth or referred to in Sections 5(a) and 5(b) in which
      Executive theretofore participated, in accordance with the terms and
      conditions of the plans, programs and arrangements (and agreements and
      documents thereunder); and

            

    

    

    
      	
               
      

            	
              (v)

            	
              Reimbursement
      of reasonable business expenses and disbursements incurred by Executive
      prior to such Termination of Employment, within 60 days after Executive
      (or Executive’s representative) submits reasonable evidence of such
      expenses and disbursements to the
Company.

            

    

    

    The
Company shall pay the amounts under clauses (i) and (iii) in a single lump sum
payment no later than 30 days after Termination of Employment.  The
Company shall pay the amount under clause (ii) in a single lump sum payment no
later than (A) 30 days after Termination of Employment or (B) such earlier date
as required by Section 4(b).

    

    As used
herein, “Severance Annual Incentive Amount” means an amount equal to the average
annual cash incentive compensation paid to Executive for the Most Recent Years,
except that if Executive was not eligible to receive or did not receive such
compensation for any year in the Most Recent Years, then “Severance Annual
Incentive Amount” means the target annual cash incentive compensation for the
year of termination.  As used herein, “Most Recent Years” means the
three calendar years immediately preceding the year of termination; provided, however that if, at
the time of termination Executive has not been employed by the Company for the
entire year in each of the three immediately calendar years, then “Most Recent
Years” means the immediately preceding calender year(s) (not to exceed two
years) during which Executive was employed for the entire year by the
Company.

    

    In
addition, upon a termination of Executive’s employment due to death or
Disability, stock options then held by Executive will be exercisable to the
extent and for such periods indicated in, and otherwise be governed by, the
plans and programs (and agreements and other documents thereunder) pursuant to
which such stock options were granted.  Furthermore, for the period
extending from such termination until Executive reaches age 65, Executive shall
continue to participate in all health, medical and life insurance plans,
programs and arrangements (including those self-funded by the Company) under
Section 5(b) in which Executive was participating immediately prior to
termination (“Insurance Plans”), as if Executive had continued in employment
with the Company during such period.  To the extent that the Insurance
Plans do not allow such continued participation, the Company shall make cash
payments to Executive equivalent on an after-tax basis to the value of the
benefits Executive would have received under the Insurance Plans
if  Executive had so continued in the employment of the Company during
such period and had continued to participate in the Insurance Plans, provided
that (i) the value of any insurance-provided benefits (including under
self-funded Insurance Plans) will be based on the premium cost to Executive,
which shall not exceed the highest risk premium charged by a carrier having an
investment grade or better credit rating, and (ii) such cash payments by the
Company shall be made within 60 days after the Executive submits reasonable
evidence to the Company of Executive’s payment of such premiums.

    

    
      	
               
      

            	
              7.

            	
              Termination of Employment For
      Reasons Other Than Death or
Disability.

            

    

    

    
      
        
           

        

        
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    (a)           Termination by the Company
for Cause and Termination by Executive Other Than For Good
Reason.  In accordance with the provisions of this Section
7(a), the Company may terminate the employment of Executive as  for
Cause at any time prior to a Change in Control, and Executive may terminate his
employment as Executive as Chief Financial Officer/Executive Vice President
voluntarily for reasons other than Good Reason (as defined in Section 8(d)) at
any time.

    

    Upon
Termination of Employment by the Company for Cause or by the Executive for
reasons other than Good Reason, the Term will immediately terminate, and all
obligations of the Company and Executive under Sections 1 through 5 of this
Agreement will immediately cease; provided, however, that the
Company shall pay Executive, and Executive shall be entitled to receive, the
following:

    

    
      	
               
      

            	
              (i)

            	
              The
      earned but unpaid portion of annual base salary and guaranteed annual cash
      bonus;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Any
      annual cash incentive cash compensation earned, but unpaid, for the
      calendar year prior to the calendar year in which occurs such Termination
      of Employment.

            

    

    

    
      	
               
      

            	
              (iii)

            	
              All
      vested, nonforfeitable amounts owing or accrued at the date of such
      Termination of Employment under any compensation and benefit plans,
      programs and arrangements set forth or referred to in Sections 5(a) and
      5(b) in which Executive theretofore participated, in accordance with the
      terms and conditions of the plans, programs and arrangements (and
      agreements and documents thereunder);
and

            

    

    

    
      	
               
      

            	
              (iv)

            	
              Reimbursement
      of reasonable business expenses and disbursements incurred by Executive
      prior to such termination of employment, within 60 days after Executive
      submits reasonable evidence of such expenses and disbursements to the
      Company.

            

    

    

    The
Company shall pay the amount under clause (i) in a single lump sum payment no
later than 30 days after Termination of Employment. The Company shall pay the
amount under clause (ii) in a single lump sum payment no later than (A) 30 days
after Termination of Employment or (B) such earlier date as required by Section
4(b).

    

    (b)          Termination by the Company
Without Cause and Termination by Executive for Good Reason.  In
accordance with the provisions of this Section 7(b), the Company may terminate
the employment of Executive without Cause, including after a Change in Control,
upon 90 days’ written notice to Executive, and Executive may terminate his
employment with the Company for Good Reason upon 90 days’ written notice to the
Company; provided, however, that the
Company shall have 30 days after receipt of such notice to remedy the basis for
such Good Reason.  Termination of Employment by Executive shall not be
a termination for Good Reason unless such termination occurs during the two (2)
year period following the initial occurrence of one or more events constituting
a Good Reason.  Notwithstanding the foregoing, the Company may
terminate Executive without Cause and without providing 90 days’ written notice
to Executive provided that the Company pays Executive the portion of his
then-current annual base salary under Section 4(a) for such 90-day period in a
single lump sum payment on 30th day
following such Termination of

    

    
      
        
           

        

        
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    Employment
and credits Executive with service for such 90 days for purposes of determining
amounts payable under Sections 7(b)(ii), (iii) and (v).

    

    Upon a
Termination of Employment by the Company without Cause, or a Termination of
Employment by Executive for Good Reason, the Term will immediately terminate and
all obligations of the parties under Sections 1 through 5 of this Agreement will
immediately cease, except that the Company shall pay Executive, and Executive
shall be entitled to receive, the following (in addition to any amount payable
under the last sentence of the first grammatical paragraph of this Section
7(b)):

    

    
      	
               
      

            	
              (i)

            	
              A
      cash payment in an amount equal to the product of (x) the sum of (A)
      Executive’s annual base salary under Section 4(a) at the annual rate in
      effect immediately prior to termination plus (B) the guaranteed annual
      cash bonus under Section 4(a) at the annual rate in effect immediately
      prior to termination, plus (C) the Severance Annual Incentive Amount,
      multiplied by (y) 2.9;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              The
      earned but unpaid portion of annual base salary and guaranteed cash
      bonus;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              Any
      annual cash incentive cash compensation earned, but unpaid, for the
      calendar year prior to the calendar year in which occurs such termination
      of employment;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              All
      vested, nonforfeitable amounts owing or accrued at the date of Executive’s
      Termination of Employment under any compensation and benefit plans,
      programs and arrangements set forth or referred to in Sections 5(a) and
      5(b) in which Executive theretofore participated, in accordance with the
      terms and conditions of the plans, programs and arrangements (and
      agreements and documents thereunder) pursuant to which such compensation
      and benefits were granted;

            

    

    

    
      	
               
      

            	
              (v)

            	
              An
      amount equal to the Severance Annual Incentive Amount, which, unless a
      termination occurs during the period beginning on the date of a Change in
      Control and ending two years after a Change in Control, shall be
      multiplied by a fraction, the numerator of which is the number of days
      Executive was employed in the year of termination and the denominator of
      which is the total number of days in the year of termination;
      and

            

    

    

    
      	
               
      

            	
              (vi)

            	
              Reimbursement
      of reasonable business expenses and disbursements incurred by Executive
      prior to such termination of employment, within 60 days after Executive
      submits reasonable evidence of such expenses and disbursements to the
      Company.

            

    

    

    The
Company shall pay the amounts under clauses (i), (iii) and (v) in a single lump
sum payment no later than 30 days after Termination of
Employment.  The Company shall pay the amount under clause (ii) in a
single lump sum payment no later than (A) 30 days after Termination of
Employment or (B) such earlier date as required by Section 4(b).

    

    
      
        
           

        

        
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    In
addition, upon a Termination of Employment by the Company without Cause, or
Termination of Employment by the Executive for Good Reason, stock options then
held by Executive will be exercisable to the extent and for such periods
indicated in, and otherwise be governed by, the plans and programs (and
agreements and other documents thereunder) pursuant to which such stock options
were granted.  Furthermore, for a period of one (1) year after such
termination, Executive shall continue to participate in the Insurance Plans (as
defined in Section 6) as if Executive had continued in employment with the
Company during such period.  To the extent that the Insurance Plans do
not allow such continued participation, the Company shall make cash payments to
Executive equivalent on an after-tax basis to the value of the benefits
Executive would have received under the Insurance Plans if  Executive
had so continued in the employment of the Company during such period and had
continued to participate in the Insurance Plans, provided that (i) the value of
any insurance-provided benefits (including under self-funded Insurance Plans)
will be based on the premium cost to Executive, which shall not exceed the
highest risk premium charged by a carrier having an investment grade or better
credit rating, and (ii) such cash payments by the Company shall be made within
60 days after the Executive submits reasonable evidence to the Company of
Executive’s payment of such premiums.

    

    
      	
               
      

            	
              8.

            	
              Definitions.

            

    

    

    The
definitions in this Section 8 apply for purposes of this Agreement.

    

    (a)          “Cause.”  “Cause”
shall mean Executive’s gross misconduct (as defined below) or willful (as
defined below) and material breach of Section 10 of this
Agreement.  For purposes of this definition, “gross misconduct” shall
mean (A) a felony conviction in a court of law under applicable federal or state
laws which results in material damage to the Company or its subsidiaries or
materially impairs the value of the Executive’s services to the Company, or (B)
willfully engaging in one or more material acts of misconduct, or willfully
omitting to perform material duties hereunder, which act or omission
demonstrably and materially damages the Company.  For purposes of this
Agreement, a “willful” act or omission by Executive means an act or omission
that is done or omitted to be done by him not in good faith, and does not
include any act or failure to act resulting from any incapacity of
Executive.  Notwithstanding the foregoing, Executive may not be
terminated for Cause unless and until there shall have been delivered to him,
within six months after the Board (A) had knowledge of conduct or an event
allegedly constituting Cause and (B) had reason to believe that such conduct or
event could be grounds for Cause, a copy of a resolution duly adopted by a
majority affirmative vote of the membership of the Board (excluding Executive)
(after giving Executive reasonable notice specifying the nature of the grounds
for such termination and not less than 30 days to correct the acts or omissions
complained of, if correctable, and affording Executive the opportunity, together
with his counsel, to be heard before the Board) finding that, in the good faith
opinion of the Board, Executive was guilty of conduct set forth above in this
Section 8(a).

    

    (b)          “Change in
Control.”  A “Change in Control” means the happening of any of
the following events:

    

    (i)           An
acquisition by any individual, entity or group, within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act, (a “Person”) of beneficial
ownership

    

    
      
        
           

        

        
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    (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty
percent (50%) of either (1) the then outstanding shares of Common Stock of the
Company (the “Outstanding Common Stock”) or (2) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Voting Securities”); excluding,
however, the following: (1) any acquisition directly from the Company, other
than an acquisition by virtue of the exercise, exchange or conversion of any
Convertible Securities unless such securities were themselves acquired directly
from the Company, (2) any acquisition by the Company; (3) any acquisition by H.
Matt Chambers or any of his affiliates, or (4) any acquisition by any Person
pursuant to a transaction which complies with clauses (1), (2) and (3) of
subsection (iii) of this Section 8(b); or

    

    (ii)           Within
any period of 24 consecutive months, a change in the composition of the Board
such that the individuals who, immediately prior to such period, constituted the
Board (such Board shall be hereinafter referred to as the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided,
however, for purposes hereof, that any individual who becomes a member of the
Board during such period, whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least a majority of those
individuals who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board; but,
provided further, that any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so considered as a member
of the Incumbent Board; or

    

    (iii)           The
consummation of a reorganization, merger or consolidation of the Company or of
the sale or other disposition of all or substantially all of the assets of the
Company and its direct and indirect subsidiaries taken as a whole (a “Corporate
Transaction”), excluding, however, a Corporate Transaction pursuant to which (1)
all or substantially all of the individuals and entities who are the beneficial
owners, respectively, of the Outstanding Common Stock and Outstanding Voting
Securities immediately prior to such Corporate Transaction will beneficially
own, directly or indirectly, more than sixty percent (60%) of, respectively, the
outstanding shares of common stock, and the combined voting power of the
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the entity resulting from such Corporate
Transaction (including, without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the Company’s
assets, either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Common Stock and Outstanding Voting Securities,
as the case may be, (2) no Person (other than the Company) will beneficially
own, directly or indirectly, more than twenty-five
percent (25%) of, respectively, the outstanding shares of common stock of the
entity resulting from such Corporate Transaction or the combined voting power of
the outstanding voting securities of such entity

    

    
      
        
           

        

        
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    entitled
to vote generally in the election of directors, except to the extent that such
ownership existed with respect to the Company prior to the Corporate
Transaction, and (3) individuals who were members of the Board immediately prior
to the approval by the stockholders of the Company of such Corporate Transaction
will constitute at least a majority of the members of the board of directors of
the entity resulting from such Corporate Transaction; or

    

    (iv)           The
approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company, other than to an entity pursuant to a transaction
which would comply with clauses (1), (2) and (3) of subsection (iii) of this
Section 8(b), assuming for this purpose that such transaction were a Corporate
Transaction.

    

    
      	
               

              For
      purposes this definition of “Change of Control”, a series of transactions
      with a common purpose shall be treated as a single transaction that begins
      on the date of the first transaction in the series and ends on the date of
      the last transaction in the series.

            

    

    

    (c)          “Convertible
Security.”  “Convertible Security” means any security
convertible into or exchangeable for shares of common stock of the Company, or
any option, warrant or other right to acquire shares of common stock of the
Company.

    

    (d)          “Disability.”  “Disability”
means the failure of Executive to render and perform the services required of
him under this Agreement, for a total of 180 days of more during any consecutive
12 month period, because of any physical or mental incapacity or disability as
determined by a physician or physicians selected by the Company and reasonably
acceptable to Executive, unless, within 30 days after Executive has received
written notice from the Company of a proposed termination due to such absence,
Executive shall have returned to the full performance of his duties hereunder
and a physician or physicians (selected by the Executive and reasonably
acceptable to the Company) shall have determined that Executive’s health permits
him to handle the full performance of such duties.

    

    (e)          “Good
Reason.”  “Good Reason” means, without Executive’s prior
written consent, (A) a material diminution in Executive’s authority, duties or
responsibilities as set forth in Section 3(a), (B) a change in the Company’s
reporting structure whereby Executive is no longer reporting to the Company’s
Board of Directors, (C) a material reduction by the Company in Executive’s
annual base compensation (including base salary and guaranteed bonus) as set
forth in Section 4(a) (in which event, the Executive’s annual base compensation
in effect prior to such reduction shall be treated, for purposes of calculating
amounts payable under Sections 6 and 7, as the annual base compensation in
effect immediately prior to termination), (D) any material breach of this
Agreement by the Company, and (E) a relocation of Executive to an office that is
more than 35 miles from the latest location of Executive’s office prior to the
date of a Change in Control.

    

    (f)          “Termination of
Employment.”  “Termination of Employment” means Executive’s
termination of employment from the Company which constitutes a “separation
from

    

    
      
        
           

        

        
          10

          
            

          

        

        
           

        

      

    

    

    service”,
as such term is defined under Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”).

    

    

    
      	
               
      

            	
              9.

            	
              Excise Tax
      Gross-Up.

            

    

    

    If it
shall be determined that any payment or benefit received or to be received by
Executive under this Agreement or any other plan, arrangement or agreement of
the Company (all such payments and benefits a “Payment”), would be subject to
the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the
Company shall pay to Executive an additional payment (a “Gross-Up Payment”) in
an amount necessary to reimburse Executive, on an after-tax basis, for the
Excise Tax and for any federal, state and local income tax and excise tax
(including any interest and penalties imposed with respect to such taxes) that
may be imposed by reason of the Payment.  For purposes of determining
the amount of any Gross-Up Payment, Executive shall be deemed to pay federal,
state and local income taxes at the highest applicable marginal rate of taxation
in the calendar year in which the Gross-Up Payment is to be made.  All
determinations required to be made under this Section 9, including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be
made by a nationally known independent accounting firm regularly retained by the
Company (the “Accounting Firm”) which shall provide detailed supporting
calculations both to the Company and Executive within 15 business days of the
request for such determination.  Such request may be made by either
party.  The Company shall pay the fees and expenses of the Accounting
Firm in connection with any determinations hereunder.  Any Gross-Up
Payment shall be paid by the Company to Executive within 10 days of the
Accounting Firm’s determination of the amount thereof

    

    
      	
               
      

            	
              10.

            	
              Executive
      Covenants.

            

    

    

    (a)           Executive’s
Acknowledgment.  Executive agrees and acknowledges that in
order to assure the Company that the Company will retain its value as a going
concern, it is necessary that Executive undertake not to utilize his special
knowledge of the Company’s business and his relationships with customers and
suppliers to compete with the Company.  Executive further acknowledges
that:

    

    (i)          Executive
is one of a limited number of persons who has developed the Company’s
business;

    

    (ii)          Executive
has occupied a position of trust and confidence with the Company prior to the
date of this Agreement and, during such period and Employee’s employment under
this Agreement, Employee has acquired and will acquire an intimate knowledge of
proprietary and confidential information concerning the Company and its
business;

    

    (iii)          the
agreements and covenants contained in Sections 10(b), (c), (d), (e), (f) and (g)
are essential to protect the Company and the goodwill of its
business;

    

    
      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    

    

    (iv)           Executive’s
employment with the Company has special, unique and extraordinary value to the
Company, and the Company would be irreparably damaged if Executive were to
provide services to any person or entity or otherwise act in violation of the
provisions of this Agreement;

    

    (v)          the
scope and duration of the restrictive covenants in Section 10(b) are reasonably
designed to protect a protected interest of the Company and are not excessive in
light of the circumstances; and

    

    (vi)          Executive
has a means to support himself and his dependents other than by engaging in
conduct prohibited by the restrictive covenants in Section 10(b), and the
provisions of Sections 10(b) will not impair such ability.

    

    (b)          Non-Competition;
Non-Solicitation; Non-Interference.  During the Term and for a
period of two years after the termination of Executive’s employment hereunder,
Executive will not by himself or in conjunction with others, directly or
indirectly engage (either as owner, investor, partner, member stockholder,
employer, employee, consultant, advisor, manager or director) in any business in
the United States which, at the time of such termination, is directly or
indirectly in competition with a business then conducted by the Company or any
of its subsidiaries;
provided,
however, this the limitation shall not apply if Executive’s employment is
terminated as a result of a termination by the Company without Cause or a
termination by Executive for Good Reason.  During the Term and for a
period of three years after the termination of Executive’s employment hereunder,
Executive will not by himself or in conjunction with others, directly or
indirectly (i) induce any customers of the Company or any of its subsidiaries
with whom Executive has had personal contacts or relationships, during and
within the scope of his employment with the Company, to curtail or cancel their
relationship with the Company or its subsidiaries; or (ii) induce, or attempt to
influence, any employee of the Company or any of its subsidiaries to terminate
their employment therewith.  The provisions of the first sentence of
this Section 10(b) and clauses (i) and (ii) of the immediately preceding
sentence are separate and distinct commitments independent of each
other.  It is agreed that the ownership of not more than one percent
of the equity securities of any company having securities listed on an exchange
or regularly traded in an over-the-counter market shall not, of itself, be
deemed inconsistent with the first sentence of this Section 10(b).

    

    (c)          Non-Disclosure.  Executive
shall not, at any time during the Term and thereafter (including following
Executive’s termination of employment for any reason), disclose, use, transfer
or sell, except in the course of employment with, or providing other service to,
the Company, any confidential or proprietary information of the Company and its
subsidiaries so long as such information has not otherwise been publicly
disclosed or is not otherwise in the public domain, except as required by law or
pursuant to legal process.

    

    (d)          Return of Company Materials
Upon Termination.  Executive acknowledges that all records and
documents containing confidential or proprietary information of the Company or
its subsidiaries prepared by Executive or coming into his possession by virtue
of his employment by the Company are and will remain the property of the Company
and its subsidiaries.  Upon termination of his employment with the
Company, Executive shall immediately return to the Company all such items and
all copies of such items, in his possession.

    

    
      
        
           

        

        
          12

          
            

          

        

        
           

        

      

    

    

    

    (e)          Cooperation With Regard to
Litigation.  Executive agrees to cooperate with the Company,
during the Term and thereafter (including following Executive’s termination of
employment for any reason), by making himself available to testify on behalf of
the Company or any subsidiary or affiliate of the Company, in any action, suit
or proceeding, whether civil, criminal, administrative or investigative, and to
assist the Company, or any subsidiary or affiliate of the Company, in any such
action, suit or proceeding, by providing information and meeting and consulting
with the Board or its representatives or counsel, or representatives or counsel
to the Company or any subsidiary or affiliate of the Company, as reasonably
requested and at a time mutually convenient to Executive and the
Company.  The Company agrees to reimburse the Executive, on an
after-tax basis, for all expenses actually incurred in connection with his
provision of testimony or assistance.

    

    (f)          Non-Disparagement.  Executive
shall not, at any time during the Term and thereafter, make statements or
representations, or otherwise communicate, directly or indirectly, in writing,
orally or otherwise, or take any action which may, directly or indirectly,
disparage or be damaging to the Company or any of its subsidiaries or affiliates
or their respective officers, directors, employees, advisors, businesses or
reputations.  Notwithstanding the foregoing, nothing in this Agreement
shall preclude Executive from making truthful statements or disclosures that are
required by applicable law, regulation or legal process.

    

    (g)          Inventions.  Executive
acknowledges that all inventions, innovations, discoveries, improvements,
developments, methods, know-how, designs, analyses, drawings, reports and all
similar or related information (whether or not patentable) which (i) relate to
the then current business or any anticipated business of the Company, the
Company’s research and development or the Company’s existing or future services
or products and (ii) which are conceived, developed or made by Executive during
and in the scope of his employment by the Company (“Work Product”) belong to the
Company.  Executive shall promptly disclose such Work Product to the
Company and perform all actions reasonably requested by the Company (whether
during or after his period of employment with the Company) to establish and
confirm such ownership (including the execution of assignments, consents, powers
of attorney and other instruments).

    

    (h)          Remedies.  Executive
acknowledges that the agreements and covenants in Sections 10(b), (c), (d), (e)
and (f) are reasonable and necessary for the protection of the Company’s
business interests, that in the event of any actual or threatened violation of
the covenants contained in Sections 10(b), (c), (d), (e) and (f), the Company
will suffer irreparable injury, Company’s damages will be difficult to ascertain
and the Company’s remedy at law will be inadequate.  Employee
accordingly agrees that, subject to applicable law, in the event of any actual
or threatened breach by him of any of the covenants set forth in Sections 10(b),
(c), (d), (e) and (f), the Company shall be entitled to injunctive and other
equitable relief, including immediate temporary injunctive and other equitable
relief.  Nothing contained herein shall be construed as prohibiting
the Company from pursuing any other remedies available to it for such breach or
threatened breach, including the recovery of any damages which it is able to
prove.

    

    
      
        
           

        

        
          13

          
            

          

        

        
           

        

      

    

    

    (i)           Survival.  The
provisions of this Section 10 shall survive the termination or expiration of
this Agreement in accordance with the terms hereof.

    

    
      	
               
      

            	
              11.

            	
              Governing Law; Disputes;
      Arbitration.

            

    

    

    (a)          Governing
Law.  This Agreement is governed by and is to be construed,
administered and enforced in accordance with the laws of the State of Delaware,
without regard to Delaware conflicts of law principles, except insofar as the
Delaware General Corporation Law and federal laws and regulations may be
applicable.  If, under the governing law, any portion of this
Agreement is at any time deemed to be in conflict with any applicable statute,
rule, regulation, ordinance or other principle of law, such portion shall be
deemed to be modified or altered to the extent necessary to conform thereto or,
if that is not possible, to be omitted from this Agreement.  The
invalidity of any such portion shall not affect the force, effect, and validity
of the remaining portion hereof.  If any court determines that any
provision of Section 10 is unenforceable because of the duration or geographic
scope of such provision, it is the parties’ intent that such court shall have
the power to modify the duration or geographic scope of such provision, as the
case may be, to the extent necessary to render the provision enforceable, and,
in its modified form, such provision shall be enforced.

    

    (b)          Reimbursement of Expenses in
Enforcing Rights.  All reasonable costs and expenses (including
reasonable fees and disbursements of counsel) incurred by Executive during the
Term and thereafter (including following Executive’s termination of employment
for any reason) in seeking to interpret this Agreement or enforce rights
pursuant to this Agreement shall be paid on behalf of or reimbursed to Executive
promptly by the Company, whether or not Executive is successful in asserting
such rights; provided, however, that no
reimbursement shall be made of such expenses relating to any unsuccessful
assertion of rights if and to the extent that Executive’s assertion of such
rights was in bad faith or frivolous, as determined by independent counsel
mutually acceptable to the Executive and the Company.

    

    (c)          Arbitration.  Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by binding arbitration in Birmingham, Alabama by a panel
of three arbitrators in accordance with the rules of the American Arbitration
Association in effect at the time of submission to
arbitration.  Judgment may be entered on the arbitrators’ award in any
court having jurisdiction.  For purposes of entering any judgment upon
an award rendered by the arbitrators, the Company and Executive hereby consent
to the jurisdiction of any or all of the following courts: (i) the United States
District Court for the District of Alabama, (ii) any of the courts of the State
of Alabama, or (iii) any other court having jurisdiction.  The Company
and Executive further agree that any service of process or notice requirements
in any such proceeding shall be satisfied if the rules of such court relating
thereto have been substantially satisfied.  The Company and Executive
hereby waive, to the fullest extent permitted by applicable law, any objection
which they may now or hereafter have to such jurisdiction and any defense of
inconvenient forum.  The Company and Executive hereby agree that a
judgment upon an award rendered by the arbitrators may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Subject to Section 11(b), the Company shall bear all costs and expenses arising
in connection with any arbitration proceeding pursuant to this Section
11.  Notwithstanding any

    

    
      
        
           

        

        
          14

          
            

          

        

        
           

        

      

    

    

    provision
in this Section 11, Executive shall be entitled to seek (in the arbitration
proceeding or in any court proceeding) specific performance of Executive’s right
to be paid during the pendency of any dispute or controversy arising under or in
connection with this Agreement.

    

    (d)          Interest on Unpaid
Amounts.  Any amounts that have become payable pursuant to the
terms of this Agreement or any decision by arbitrators or judgment by a court of
law pursuant to this Section 11 but which are not timely paid shall bear
interest at the prime rate in effect at the time such payment first becomes
payable, as quoted in The Wall Street Journal (Midwest edition).  Any
interest payable under this Section 11(d) shall be paid on the same date as the
amounts to which such interest relates are actually paid.

    

    
      	
               
      

            	
              12.

            	
              Miscellaneous.

            

    

    

    (a)          General.  This
Agreement cancels and supersedes any and all prior agreements and understandings
between the parties hereto with respect to the employment of Executive by the
Company and its subsidiaries.  This Agreement constitutes the entire
agreement among the parties with respect to the matters herein provided, and no
modification or waiver of any provision hereof shall be effective unless in
writing and signed by the parties hereto.  Executive shall not be
entitled to any payment or benefit under this Agreement which duplicates a
payment or benefit received or receivable by Executive under such prior
agreements and understandings or under any benefit or compensation plan of the
Company.  As used in this Agreement: (1) the terms “including”,
“includes” and words of like import shall be construed broadly as if followed by
“without limitation”; and (2) the terms “herein”, “hereof” and “hereunder” refer
to this Agreement as a whole, not just the particular section where such term
appears.

    

    (b)          Non-Transferability.  Neither
this Agreement nor the rights or obligations hereunder of the parties hereto
shall be transferable or assignable by Executive, except in accordance with the
laws of descent and distribution or as specified in Section
12(c).  The Company may assign this Agreement and the Company’s rights
and obligations hereunder, and shall assign this Agreement, to any Successor (as
hereinafter defined) which, by operation of law or otherwise, continues to carry
on substantially the business of the Company prior to the event of succession,
and the Company shall, as a condition of the succession, require such Successor
to assume in writing the Company’s obligations under (and agree in writing to be
bound by) this Agreement.  For purposes of this Agreement, “Successor”
shall mean any person that succeeds to, or has the practical ability to control
(either immediately or with the passage of time), the Company’s business
directly, by merger or consolidation, or indirectly, by purchase of the
Company’s voting securities or all or substantially all of its assets, or
otherwise.

    

    (c)          Beneficiaries.  Executive
shall be entitled to designate (and change, to the extent permitted under
applicable law) a beneficiary or beneficiaries to receive any compensation or
benefits payable hereunder following Executive’s death.

    

    (d)          Notices.  Whenever
under this Agreement it becomes necessary to give notice, such notice shall be
in writing, signed by the party or parties giving or making the same, and shall
be deemed to have been duly given (i) upon actual receipt (or refusal of
receipt) if delivered personally;

    

    
      
        
           

        

        
          15

          
            

          

        

        
           

        

      

    

    

    (ii)
three business days following deposit, if sent by certified or registered mail,
return receipt requested, postage prepaid; (iii) one business day following
deposit with a documented overnight delivery service or (iv) upon transmission,
if sent by facsimile (with confirmation receipt and followed by a copy sent by
regular mail), in each case to the appropriate address or number as set forth
below or at such other address as may be designated by such party by like
notice:

    

    If to the
Company:

    

    Confederate
Motors, Inc.

    2222 5th
Avenue South

    Birmingham,
Alabama 35233

    (205)
324-9888- Phone

    (205)
449-9747 - Fax

    matt@confederate.com

    Attention:
H. Matthew Chambers

    

    If to
Executive:

    

    Joseph Mitchell

    1275 Eagle Park Road

    Birmingham, Alabama 35242

    (205) 531-2394 – Phone

    joseph@confederate.com

    

    

    (e)          Reformation.  The
invalidity of any portion of this Agreement shall not be deemed to render the
remainder of this Agreement invalid.

    

    (f)          Headings.  The
headings of this Agreement are for convenience of reference only and do not
constitute a part hereof.

    

    (g)          No General
Waivers.  The failure of any party at any time to require
performance by any other party of any provision hereof or to resort to any
remedy provided herein or at law or in equity shall in no way affect the right
of such party to require such performance or to resort to such remedy at any
time thereafter, nor shall the waiver by any party of a breach of any of the
provisions hereof be deemed to be a waiver of any subsequent breach of such
provisions.  No such waiver shall be effective unless in writing and
signed by the party against whom such waiver is sought to be
enforced.

    

    (h)          No Obligation To
Mitigate.  Executive shall not be required to seek other
employment or otherwise to mitigate Executive’s damages upon any termination of
employment; provided, however, that, to the
extent Executive receives from a subsequent employer health or other insurance
benefits that are substantially similar to the benefits referred to in Section
5(c) hereof, any such benefits to be provided by the Company to Executive
following the Term shall be correspondingly reduced.

    

    
      
        
           

        

        
          16

          
            

          

        

        
           

        

      

    

    

    

    (i)          Offsets;
Withholding.  The amounts required to be paid by the Company to
Executive pursuant to this Agreement shall not be subject to offset. The
foregoing and other provisions of this Agreement notwithstanding, all payments
to be made to Executive under this Agreement, including under Sections 6 and 7,
or otherwise by the Company will be subject to required withholding taxes and
other required deductions.

    

    (j)          Successors and
Assigns.  This Agreement shall be binding upon and shall inure
to the benefit of Executive, his heirs, executors, administrators and
beneficiaries, and shall be binding upon and inure to the benefit of the Company
and its successors and assigns.

    

    (k)          Reimbursement of Expenses,
Certain Other Payments.  Notwithstanding any provision to the
contrary herein:

    

    (1)           any
payment to Executive for reimbursement of expenses or disbursements pursuant to
this Agreement (including pursuant to Section 5(c), Section 10(e), Section
11(b), clause (v) of Section 6, clause (iv) of Section 7(a) or clause (vi) of
Section 7(b)), any payment on Executive’s behalf pursuant to Section 11(b), and
any payment pursuant to Section 9 or the last grammatical paragraph of Sections
6 and 7(b), shall be made no later than the end of the Executive’s taxable year
following the taxable year in which such expenses and disbursements (including
insurance premiums contemplated by Sections 6 and 7(b)) are
incurred;

    

    (2)           any
such amount paid during one taxable year shall not affect any such amount
payable the Company during a subsequent taxable year; and

    

    (3)           the
right to such payment may not be exchanged or substituted for other forms of
compensation to Executive.

    

    (l)  Section 409A. The
parties intend that the payments and benefits under this Agreement are either
exempt from Section 409A of the Code or fully comply with the payout and other
limitations and restrictions imposed under Section 409A of the Code.  In
this connection, the payout timing provisions and any other terms of this
Agreement shall be interpreted to be exempt from Section 409A of the Code or
comply with the payout and other limitations and restrictions imposed under
Section 409A of the Code, to the extent necessary to avoid the penalties
otherwise imposed under Section 409A of the Code.  The Company and
Executive agree to make in good faith such changes to this Agreement, without
changing the basic economics of this Agreement, as are necessary to avoid
penalties imposed under Section 409A of the Code.

    

    13.           Income Tax
Treatment.

    

    Executive
and the Company acknowl­edge that it is the intention of the Company to
deduct all amounts paid by the Company to Executive pursuant to this Agreement,
including under Sections 6 and 7 as ordinary and necessary business expenses for
income tax purposes.  Executive agrees and represents that he will
treat all such amounts as ordinary income for income tax purposes,

    

    
      
        
           

        

        
          17

          
            

          

        

        
           

        

      

    

    

    and
should he report such amounts as other than ordinary income for income tax
purposes, he will indemnify and hold the Company harmless from and against any
and all taxes, penalties, interest, costs and expenses, including reasonable
attorneys’ and accounting fees and costs, which are incurred by Company directly
or indirectly as a result thereof.

    

    14.           
Key Man Life
Insurance.

    

    If the
Company, in its sole discretion, desires to procure “key man” insurance covering
the life of Executive, Executive shall cooperate with the Company in procuring
such insurance and shall, at the request of the Company, submit to such medical
examinations, supply such information and execute such documents as may be
required by the insurance company to which the Company has applied for
insurance.  Executive shall use his reasonable efforts to qualify for
the standard premium category of such insurance company.  Executive
shall have no interest whatsoever in any “key man” insurance policy procured by
the Company.

    

    

    

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

    

    CONFEDERATE
MOTORS, INC.

    

    By:      ______________________________                                              

    Name:

    Title:

    

    EXECUTIVE

    

    

    ___________________________________

    Joseph
Mitchell

     

     

    18f8kex10i_nxt.htm

    Exhibit 10.1 

     

    
      EMPLOYMENT
AGREEMENT

      

      This employment agreement (this
"Agreement") dated as of February 12, 2009 (the "Effective Date"), is made by
and between NXT Nutritionals Holding, Inc., a Delaware corporation (the
"Company") and Francis (Michael) McCarthy (the “Executive”) (collectively, the
“Parties”).

      

      WHEREAS, the Company is a publicly
traded company whose shares are quoted on the OTC Bulletin Board;

      

      WHEREAS, the Executive will have the
duties and responsibilities as described in Section 1 of the Agreement during
the period when the Executive is the Chief Executive Officer of the Company;
and

      

      WHEREAS, the Parties wish to establish
the terms of the Executive’s employment with the Company;

      

      NOW, THEREFORE, in consideration of the
foregoing, of the mutual promises contained herein and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:

      

      1. POSITION/DUTIES.

      

      (a) During
the Employment Term (as defined in Section 2 below), the Executive shall serve
as a Chief Executive Officer of the Company. In this capacity the Executive
shall have such duties, authorities and responsibilities commensurate with the
duties, authorities and responsibilities of persons in similar capacities in
similarly sized companies and such other reasonable duties and responsibilities
as the Board of Directors of the Company (the "Board") shall
designate.  The Executive shall report directly to the Board of
Directors.  The Executive shall obey the lawful directions of the
Board of Directors to whom the Executive reports and shall use his diligent
efforts to promote the interests of the Company and to maintain and promote the
reputation thereof.

      

      (b) During
the Employment Term, the Executive shall use his best efforts to perform his
duties under this Agreement and shall devote all of his business time, energy
and skill in the performance of his duties with the Company.  The
Executive shall not during the Employment Term (except as a representative of
the Company or with consent in writing of the Board) be directly or indirectly
engaged or concerned in any other business activity.  Notwithstanding
the foregoing provisions, the Executive is not prohibited from (1) participating
in charitable, civic, educational, professional or community affairs or serving
on the board of directors or advisory committees of non-profit entities, and (2)
managing his and his family's personal investments, in each case, provided that such activities
in the aggregate do not materially interfere with his duties
hereunder.

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      

      2. EMPLOYMENT
TERM.  Except for earlier termination as provided in Section 5,
the Executive's employment under this Agreement shall be for a three year term
commencing on the Effective Date and ending on February 12, 2012 (the "Initial
Term"). Subject to Section 5, at the end of the Initial Term this Agreement may
be extended for additional terms by mutual agreement of the parties (“Additional
Term”).  The amount of compensation payable to the Executive during
any extension of the Initial Term shall be discussed and agreed upon by both
parties 30 days before the Agreement termination date.  The Initial
Term and any Additional Term shall be referred to herein as the "Employment
Term."

      

      3. COMPENSATION.

      

      (a) Base Salary. In consideration
of the services to be rendered as provided in Section 1, the Company hereby
agrees to pay the Executive an annual base salary of $120,000 payable in equal
semimonthly installments in accordance with the usual practice of the Company
(the “Base Salary”). The Executive's Base Salary shall be subject to annual
review by the Board of Directors of the Company (the “BOD”).

      

      (b) Bonus.  With respect
to each full fiscal year during the Employment Term, the Executive shall be
eligible to earn an annual bonus (the "Annual Bonus") in such amount, if any, as
determined in the sole discretion of the Board of up to 100% of the Executive's
Base Salary. In addition, the Executive shall be eligible to participate in the
Company's bonus and other incentive compensation plans and programs (if any) for
the Company's senior executives at a level commensurate with his position and
may be entitled to bonus payments in addition to the amount set forth
hereinabove.1

      

      4. EMPLOYEE
BENEFITS.

      

      (a) Benefit Plans.  The
Executive shall be eligible to participate in any employee benefit plan of the
Company, including, but not limited to, equity, pension, thrift, profit sharing,
medical coverage, education, or other retirement or welfare benefits that the
Company has adopted or may adopt, maintain or contribute to the benefit of its
senior executives, at a level commensurate with his positions, subject to
satisfying the applicable eligibility requirements. The Company may at any time
or from time to time amend, modify, suspend or terminate any employee benefit
plan, program or arrangement for any reason in its sole discretion.

      

      (b) Vacation.  Employee
shall be entitled to a vacation (without deduction of salary or other
compensation) for the period as is in conformity with the Company’s policy
regarding vacations for management employees (but in no event less than three
weeks per year).

      

      (c) Business and Entertainment
Expenses. Upon presentation of appropriate documentation, the Executive
shall be reimbursed for all reasonable and necessary business and

      

        

      

       

        1  NOTE:
publicly held companies are subject to the $1,000,000 compensation deduction
limitation imposed by Internal Revenue Code Section
162(m).

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      entertainment
expenses incurred in connection with the performance of his duties hereunder,
all in accordance with the Company's expense reimbursement policy applicable to
senior executives from time to time in effect.

      

      (d) Insurance. The Company shall
provide standard coverage for the Executive and each individual family member of
the Executive under the Company health insurance after consultation with the
Executive.

      

      (e) Company Car. The Executive
shall either (i) receive a monthly expense allowance for purchase or lease of a
car or (ii) be given a company car for use in connection with the performance of
his duties hereunder.

      

      5. EARLY
TERMINATION.  The Executive's employment and the Employment
Term shall terminate on the first of the following to occur:

      

      (a) Disability.  The
thirtieth (30th) day
following a written notice of termination by the Company to the Executive due to
Disability. For purposes of this Agreement, "Disability" shall mean a
determination  by the Company in accordance with applicable law that
due to a physical or mental injury, infirmity or incapacity, the Executive is
unable to perform the essential functions of his job with or without
accommodation for 180 days (whether or not consecutive) during any 12-month
period.

      

      (b) Death.  Automatically
on the date of death of the Executive.

      

      (c) Cause.  Immediately
upon written notice of termination by the Company to the Executive for Cause.
"Cause" shall mean, as determined by the Board (or its designee) (1) conduct by
the Executive in connection with his employment duties or responsibilities that
is fraudulent, unlawful or grossly negligent; (2) the willful misconduct of the
Executive; (3) the willful and continued failure of the Executive to perform the
Executive's duties with the Company (other than any such failure resulting from
incapacity due to physical or mental illness); (4) the commission by the
Executive of any felony (other than traffic-related offenses) or any crime
involving moral turpitude; (5) violation of any material policy of the Company
or any material provision of the Company's code of conduct, employee handbook or
similar documents; or (6) any material breach by the Executive of any provision
of this Agreement or any other written agreement entered into by the Executive
with the Company.

      

      (d) Without Cause.  On
the sixtieth (60th) day following written notice by either Party to the other
Party without Cause, other than for death or Disability of the
Executive.  The Company may also terminate this Agreement for cause at
any time in the event of the failure of the Executive to perform duties assigned
by the Company in a correct, timely and expeditious manner or in the event of
material violation by the Executive of any term or condition of this
Agreement.

      

      6. CONSEQUENCES
OF TERMINATION.

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      Disability.  Upon
termination of the Employment Term because of the Executive's Disability, the
Company shall pay or provide to the Executive (1) any unpaid Base Salary and any
accrued vacation through the date of termination; (2) any unpaid bonus accrued
through the date of termination; (3) three (3) months’ Base Salary at the then
current rate, payable in a lump sum, less withholding of applicable taxes; (4)
reimbursement for any unreimbursed expenses properly incurred through the date
of termination; and (5) all other payments or benefits to which the Executive
may be entitled under the terms of any applicable employee benefit plan, program
or arrangement (collectively, "Accrued Benefits").

      

      (a) Death.  Upon the
termination of the Employment Term because of the Executive's death, the
Executive's estate shall be entitled to (1) three (3) months’ Base Salary at the
then current rate, payable in a lump sum, less withholding of applicable taxes;
and (2) any Accrued Benefits.

      

      (b) Termination for Cause. Upon
the termination of the Employment Term by the Company for Cause or by either
party in connection with a failure to renew this Agreement, the Company shall
pay to the Executive any Accrued Benefits.

      

      (c) Termination without
Cause.  Upon the termination of the Employment Term by the
Company without Cause, the Company shall pay or provide to the Executive (1) the
Accrued Benefits, (2) six (6) months’ Base Salary at the then current rate,
payable in a lump sum, less withholding of applicable taxes, (3) continued
coverage under all plans or programs of the types listed in Section 3.1 until
the sooner of one (1) year or one (1) month after Employee becomes otherwise
employed and eligible for other comparable coverage, and (4) all other benefits
provided to Employee under this Agreement for a period of thirty (30)
days.

      

      7. NO ASSIGNMENT.  This
Agreement is personal to each of the Parties.  Except as provided
below, no Party may assign or delegate any rights or obligations hereunder
without first obtaining the written consent of the other Party hereto; provided, however, that the
Company may assign this Agreement to 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.

      

      8. NOTICES. For the purpose of
this Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given (1) on
the date of delivery if delivered by hand, (2) on the date of transmission, if
delivered by confirmed facsimile, (3) on the first business day following the
date of deposit if delivered by guaranteed overnight delivery service, or (4) on
the fourth business day following the date delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

      

      If to the Executive:

      

      Francis (Michael)
McCarthy

      56 Jackson Street

      Holyoke, MA 01040

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      

      If to the Company:

      

      NXT Nutritionals Holdings,
Inc.

      56
Jackson Street

      Holyoke, MA 01040

      

      With a copy (which does not constitute
a notice) to:

      

      Anslow & Jaclin, LLP

      195 Route 9 South, Suite
204

      Manalapan, New Jersey,
07726

      Attention: Kristina Trauger,
Esq.

      Tel.:732-409-1212

      Fax: (732) 577-1188

      

      or to
such other address as either Party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.

      

      9. PROTECTION
OF THE COMPANY'S BUSINESS.

      

      (a) Confidentiality.  The
Executive acknowledges that during the course of his employment by the Company
(prior to and during the Employment Term) he has and will occupy a position of
trust and confidence. The Executive shall hold in a fiduciary capacity for the
benefit of the Company and shall not disclose to others or use, whether directly
or indirectly, any Confidential Information regarding the Company, except (i) as
in good faith deemed necessary by the Executive to perform his duties hereunder,
(ii) to enforce any rights or defend any claims hereunder or under any other
agreement to which the Executive is a party, provided that such disclosure
is relevant to the enforcement of such rights or defense of such claims and is
only disclosed in the formal proceedings related thereto, (iii) when required to
do so by a court of law, by any governmental agency having supervisory authority
over the business of the Company or by any administrative or legislative body
(including a committee thereof) with jurisdiction to order him to divulge,
disclose or make accessible such information, provided that the Executive
shall give prompt written notice to the Company of such requirement, disclose no
more information than is so required, and cooperate with any attempts by the
Company to obtain a protective order or similar treatment, (iv) as to such
Confidential Information that shall have become public or known in the Company's
industry other than by the Executive's unauthorized disclosure, or (v) to the
Executive's spouse, attorney and/or his personal tax and financial advisors as
reasonably necessary or appropriate to advance the Executive's tax, financial
and other personal planning (each an "Exempt Person"), provided, however, that any disclosure
or use of Confidential Information by an Exempt Person shall be deemed to be a
breach of this Section 9(a) by the Executive. The Executive shall take all
reasonable steps to safeguard the Confidential Information and to protect it
against disclosure, misuse, espionage, loss and theft.  The Executive
understands and agrees that the Executive shall acquire no rights to any such
Confidential Information. "Confidential Information" shall mean information
about the Company, its subsidiaries and affiliates, and their respective clients
and customers that is not

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      disclosed
by the Company and that was learned by the Executive in the course of his
employment by the Company, including, but not limited to, any proprietary
knowledge, trade secrets, data and databases, formulae, sales, financial,
marketing, training and technical information, client, customer, supplier and
vendor lists, competitive strategies, computer programs and all papers, resumes,
and records (including computer records) of the documents containing such
Confidential Information.

      

      (b) Non-Competition.  During
the Employment Term and for the one-year period following the termination of the
Executive's employment for any reason (the "Restricted Period"), the Executive
shall not, directly or indirectly, without the prior written consent of the
Company, provide employment (including self-employment), directorship,
consultative or other services to any business, individual, partner, firm,
corporation, or other entity that competes with any business conducted by the
Company or any of its subsidiaries or affiliates on the date of the Executive's
termination of employment or within one year of the Executive's termination of
employment in the geographic locations where the Company and its subsidiaries or
affiliates engage or propose to engage in such business (the "Business").
Nothing herein shall prevent the Executive from having a passive ownership
interest of not more than 2% of the outstanding securities of any entity engaged
in the Business whose securities are traded on a national securities
exchange.

      

      (c) Non-Solicitation of Employees.
The Executive recognizes that he possesses and will possess confidential
information about other employees of the Company and its subsidiaries and
affiliates relating to their education, experience, skills, abilities,
compensation and benefits, and inter-personal relationships with customers of
the Company and its subsidiaries and affiliates. The Executive recognizes that
the information he possesses and will possess about these other employees is not
generally known, is of substantial value to the Company and its subsidiaries and
affiliates in developing their business and in securing and retaining customers,
and has been and will be acquired by him because of his business position with
the Company. The Executive agrees that, during the Restricted Period, he will
not, directly or indirectly, (i) solicit or recruit any employee of the
Company or any of its subsidiaries or affiliates (a "Current Employee") or any
person who was an employee of the Company or any of its subsidiaries or
affiliates during the twelve (12) month period immediately prior to the date the
Executive's employment terminates (a "Former Employee") for the purpose of being
employed by him or any other entity, or (ii) hire any Current Employee or Former
Employee.

      

      (d) Non-Solicitation of
Customers.  The Executive agrees that, during the Restricted
Period, he will not, directly or indirectly, solicit or attempt to solicit (i)
any party who is a customer or client of the Company or its subsidiaries, who
was a customer or client of the Company or its subsidiaries at any time during
the twelve (12) month period immediately prior to the date the Executive's
employment terminates or who is a prospective customer or client that has been
identified and targeted by the Company or its subsidiaries for the purpose of
marketing, selling or providing to any such party any services or products
offered by or available from the Company or its subsidiaries, or (ii) any
supplier or vendor to the Company or any subsidiary to terminate, reduce or
alter negatively its relationship with the Company or any subsidiary or in any
manner interfere with any agreement or contract between the Company or any
subsidiary and such supplier or vendor.

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      

      (e) Property.  The
Executive acknowledges that all originals and copies of materials, records and
documents generated by him or coming into his possession during his employment
by the Company or its subsidiaries are the sole property of the Company and its
subsidiaries ("Company Property").  During the Employment Term, and at
all times thereafter, the Executive shall not remove, or cause to be removed,
from the premises of the Company or its subsidiaries, copies of any record,
file, memorandum, document, computer related information or equipment, or any
other item relating to the business of the Company or its subsidiaries, except
in furtherance of his duties under this Agreement.  When the
Executive's employment with the Company terminates, or upon request of the
Company at any time, the Executive shall promptly deliver to the Company all
copies of Company Property in his possession or control.

      

      (f) Non-Disparagement.  Executive
shall not, and shall not induce others to, Disparage the Company or its
subsidiaries or affiliates or their past and present officers, directors,
employees or products. "Disparage" shall mean making comments or statements to
the press, the Company's or its subsidiaries' or affiliates' employees or any
individual or entity with whom the Company or its subsidiaries or affiliates has
a business relationship which would adversely affect in any manner (1) the
business of the Company or its subsidiaries or affiliates (including any
products or business plans or prospects), or (2) the business reputation of the
Company or its subsidiaries or affiliates, or any of their products, or their
past or present officers, directors or employees.

      

      (g) Cooperation.  Subject
to the Executive's other reasonable business commitments, following the
Employment Term, the Executive shall be available to cooperate with the Company
and its outside counsel and provide information with regard to any past,
present, or future legal matters which relate to or arise out of the business
the Executive conducted on behalf of the Company and its subsidiaries and
affiliates, and, upon presentation of appropriate documentation, the Company
shall compensate the Executive for any out-of-pocket expenses reasonably
incurred by the Executive in connection therewith.

      

      (h) Equitable Relief and Other
Remedies.  The Executive acknowledges and agrees that the
Company's remedies at law for a breach or threatened breach of any of the
provisions of this Section 9 would be inadequate and, in recognition of this
fact, the Executive agrees that, in the event of such a breach or threatened or
attempted breach, in addition to any remedies at law, the Company, without
posting any bond, shall be entitled to obtain equitable relief in the form of
specific performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available. In
addition, without limiting the Company's remedies for any breach of any
restriction on the Executive set forth in this Section 9, except as required by
law, the Executive shall not be entitled to any payments set forth in Section
5(d) hereof if the Executive has breached the covenants applicable to the
Executive contained in this Section 9, the Executive will immediately return to
the Company any such payments previously received under Section 5(d) upon such a
breach, and, in the event of such breach, the Company will have no obligation to
pay any of the amounts that remain payable by the Company under Section
5(d).

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      Reformation.  If it
is determined by a court of competent jurisdiction in any state that any
restriction in this Section 9 is excessive in duration or scope or is
unreasonable or unenforceable under the laws of that state, it is the intention
of the parties that such restriction may be modified or amended by the court to
render it enforceable to the maximum extent permitted by the law of that
state.  The Executive acknowledges that the restrictive covenants
contained in this Section 9 are a condition of this Agreement and are reasonable
and valid in temporal scope and in all other respects.

      

      (i) Liability.                      Notwithstanding
the provisions in this Section 9 the Executive shall not be liable for any
mistakes of fact, errors of judgment, for losses sustained by the Company or any
subsidiary or for any acts or omissions of any kind, unless caused by the
negligence or willful or intentional misconduct of the Executive or any person
or entity acting for or on behalf of the Executive.

      

      (j) Survival of
Provisions.  The obligations contained in this Section 9 shall
survive in accordance with their terms the termination or expiration of the
Executive's employment with the Company and shall be fully enforceable
thereafter.

      

      10. INDEMNIFICATION.  The
Executive shall be indemnified to the extent permitted by the Company's
organizational documents and to the extent required by law.

      

      11. SECTION HEADINGS AND
INTERPRETATION. The section headings used in this Agreement are included
solely for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement. Expressions of inclusion used in this
agreement are to be understood as being without limitation.

      

      12. SEVERABILITY.  The
provisions of this Agreement shall be deemed severable and the invalidity of
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

      

      13. COUNTERPARTS.  This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
Agreement.

      

      14. GOVERNING LAW.  This
Agreement in its interpretation and application and enforcement shall be
governed by the law of the State of Delaware.

      

      15. ENTIRE AGREEMENT. This
Agreement contains the entire agreement between the Parties with respect to the
subject matter hereof and supersedes all prior agreements, written or oral, with
respect thereto. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.

      

      16. WAIVER AND
AMENDMENT.  No provision of this Agreement may be modified,
amended, waived or discharged unless such waiver, modification, amendment or
discharge is agreed to in writing and signed by the Executive and such officer
or director as may

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      be
designated by the Board. No waiver by either Party at any time of any breach by
the other Party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other Party shall be deemed a waiver or
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

      

      17. WITHHOLDING. The Company may
withhold from any and all amounts payable under this Agreement such federal,
state, local and foreign taxes as may be required to be withheld pursuant to any
applicable law or regulation.

      

      18. AUTHORITY AND
NON-CONTRAVENTION.  The Executive represents and warrants to
the Company that he has the legal right to enter into this Agreement and to
perform all of the obligations on his part to be performed hereunder in
accordance with its terms and that he is not a party to any agreement or
understanding, written or oral, which could prevent him from entering into this
Agreement or performing all of his obligations hereunder.

      

      19. COUNTERPARTS.  This
Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same
instrument.

      

      

      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      

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

      

      

      
        
          
            
              
                	
                        NXT
      NUTRITIONALS HOLDINGS, INC.

                      
	 
      
	
                        /s/ Theodore Mandes, II

                      
	
                        By:   Theodore
      Mandes, II

                      
	
                        Title:
      Chairman of the Board of Directors

                      
	 
      
	 
      
	
                        EXECUTIVE

                      
	 
      
	
                        /s/ Francis
      McCarthy

                      
	
                        By:    Francis
      (Michael)
McCarthy

                      

              

            

          

        

      

      

      

      10

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