Document:

f8k010614ex10i_soligenix.htm

 

EXHIBIT 10.1

 

EMPLOYMENT AGREEMENT

 

This Agreement (the “Agreement”), dated as of January 6, 2014 (the “Effective Date”) by and between Soligenix, Inc., a Delaware corporation having a place of business at 29 Emmons Drive, Suite C-10, Princeton, NJ 08540 (the “Corporation”), and Richard Straube, MD, an individual (the “Employee”).

 

W I T N E S S E T H:

 

WHEREAS, the Corporation desires to employ Employee as Senior Vice President and Chief Medical Officer, and the Employee desires to be employed by the Corporation as Senior Vice President and Chief Medical Officer, all pursuant to the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and covenants herein contained, it is agreed as follows:

 

1.             EMPLOYMENT DUTIES

 

The Corporation engages and employs Employee, and Employee hereby accepts engagement and employment, as Senior Vice President and Chief Medical Officer reporting to the Chief Executive Officer of the Corporation, and shall perform high quality, full-time service to the Corporation to direct, supervise and have responsibility for the clinical development efforts of the Corporation, including, but not limited to:  (i) directing and supervising the clinical research and regulatory strategies of the Corporation; (ii) managing the development personnel of the Corporation; and (iii) medical monitoring of the Corporation’s ongoing and planned clinical trials and such other activities as may be reasonably requested by the Chief Executive Officer or the Board of Directors of the Corporation.  Employee acknowledges and understands that his employment may entail significant travel on behalf of the Corporation.

 

2.             EMPLOYMENT TERM

 

Employee’s employment hereunder shall be for a period of one (1) year, unless extended by mutual agreement of the parties (the “Term”).  At the end of the Term, the Term of employment automatically shall renew for successive one (1) year term (subject to earlier termination as provided in Section 7 hereof), unless the Corporation or the Employee delivers written notice to the other at least three (3) months prior to the expiration hereof of its or his election not to renew the Term of employment.

 

  

 

  

 

3.             COMPENSATION

 

As compensation for the performance of Employee’s duties on behalf of the Corporation, Employee shall be compensated as follows:

 

(a)           (i)            The Corporation shall pay Employee an annual base salary (“Base Salary”) of two hundred and ninety thousand dollars ($300,000) per annum, payable in accordance with the usual payroll period of the Corporation.

 

(ii)           The Corporation shall pay Employee a targeted annual bonus of thirty percent (30%) of base salary, payable at the end of each calendar year in prorated amount if necessary.  Such bonus may be increased at the recommendation of the CEO and by the approval of the Board of Directors.

 

(b)           Contingent upon Employee’s acceptance of this Agreement, the Corporation will grant to Employee Options (“Options”) to purchase  one hundred thousand (100,000) shares of Soligenix Common Stock.  Twenty five thousand,  (25,000) options will vest immediately and the remainder will vest on each three (3) month anniversary of the grant date of this form at a rate of six thousand, two hundred and fifty (6,250) options per quarter while Employee continues to be employed by Corporation.  The exercise price of such Options shall be equal to the market price of Soligenix common stock as of the market close on the business day before the Effective Date of this Agreement.  The Options will be granted pursuant to the Corporation’s Employee Stock Option Plan and the Corporation’s standard Stock Option Agreement.  All vested options shall be exercisable for a period of one year following termination, subject to extension in the discretion of the Stock Option Plan administrator.  Upon a change in control due to merger or acquisition, all Employee options shall become fully vested, and be exercisable for a period of 3 years after the merger or acquisition (unless they would have expired sooner pursuant to their natural term).  In the event of death of Employee during the Term, all unvested options shall immediately vest and remain exercisable for the rest of their natural term and become property of Employee’s immediate family.

 

(c)           The Corporation shall withhold all applicable federal, state and local taxes; social security; workers’ compensation contributions; and such other amounts as may be required by law or agreed upon by the parties with respect to the compensation payable to the Employee pursuant to Section 3(a) hereof.

 

(d)           The Corporation shall reimburse Employee for all normal, usual and necessary expenses incurred by Employee in furtherance of the business and affairs of the Corporation, including reasonable travel and entertainment, against receipt by the Corporation of appropriate vouchers or other proof of Employee’s expenditures and otherwise in accordance with the policy of the Corporation.

 

(e)            During the Term, Employee shall be entitled to a maximum of four (4) weeks paid vacation per annum.  Unused vacation may be carried over to successive years upon approval of the Chief Executive Officer.

 

(f)             The Corporation shall make available to Employee and his dependents such medical, disability, life insurance and such other benefits as the Corporation makes available to its other senior officers and directors.

 

  

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4.             REPRESENTATIONS AND WARRANTIES BY EMPLOYEE AND CORPORATION

 

(a)            Employee hereby represents and warrants to the Corporation as follows:

 

(i)            Neither the execution and delivery of this Agreement nor the performance by Employee of his duties and other obligations hereunder violate or will violate any statute, law, determination or award, or conflict with or constitute a breach or violation (whether immediately, upon the giving of notice or lapse of time or both) of any prior employment agreement, contract, or other instrument to which Employee is a party or by which he is bound.

 

(ii)           Employee has the full right, power and legal capacity to enter and deliver this Agreement and to perform his duties and other obligations hereunder.  This Agreement constitutes the legal, valid and binding obligation of Employee enforceable against him in accordance with its terms.  No approvals or consents of any persons or entities are required for Employee to execute and deliver this Agreement or perform his duties and other obligations hereunder.

 

(b)            The Corporation hereby represents and warrants to Employee as follows:

 

(i)            The Corporation is duly organized, validly existing and in good standing under the laws of the State of Delaware, with all requisite corporate power and authority to own its properties and conduct its business in the manner presently contemplated.

 

(ii)           The Corporation has full power and authority to enter into this Agreement and to incur and perform its obligations hereunder.  This Agreement constitutes the legal, valid and binding obligation of the Corporation enforceable against it in accordance with its terms.  Except as expressly set forth herein, no approvals or consents of any persons or entities are required for Corporation to execute and deliver this Agreement or perform its duties and other obligations hereunder.

 

(iii)          The execution, delivery and performance by the Corporation of this Agreement does not conflict with or result in a breach or violation of or constitute a default under (whether immediately, upon the giving of notice or lapse of time or both) the certificate of incorporation or by-laws of the Corporation, or any agreement or instrument to which the Corporation is a party or by which the Corporation or any of its properties may be bound or affected.

 

5.             NON-COMPETITION

 

(a)            Employee understands and recognizes that his services to the Corporation are special and unique and agrees that, during the term of this Agreement and for a period of two (2) years following the termination of the Employee’s employment with the Corporation (or one (1) year in the event that the Employee is terminated within 1 year of the Effective Date), employee shall not in any manner, directly or indirectly, on behalf of himself or any person, firm, partnership, joint venture, corporation or other business entity (“Person”), enter into or engage in any business competitive with the Corporation’s business or research activities, either as an individual for his own account, or as a partner, joint venturer, executive, agent, consultant, salesperson, officer, director of a Person operating or intending to operate in the area of the use of any of the compounds owned or licensed by the Corporation during the time of his employ.

 

  

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(b)           During the Term and for one (1) year in the event that the Employee is terminated within 1 year of the Effective Date) following the termination of the Employee’s employment with the Corporation, Employee shall not, directly or indirectly, without the prior written consent of the Corporation:

 

(i)            interfere with, disrupt or attempt to disrupt any past, present or prospective relationship, contractual or otherwise between the Corporation and any of its licensors, licensees, clients, customers, suppliers, employees, consultants or other related parties, or solicit or induce for hire any of the employees or agents of the Corporation, or any such individual who in the past was employed or retained by the Corporation within six (6) months of the termination of said individual’s employment or retention by the Corporation; or

 

(ii)           solicit or accept employment or be retained by any party who, at any time during the Term of this Agreement (or any renewal or extension thereof), was a customer or supplier of the Corporation or any of its Affiliates, or any licensor or licensee thereof where the Employee’s position will be related to the business of the Corporation.

 

(c)            In the event that Employee breaches any provisions of this Section 5 or there is a threatened breach, then, in addition to any other rights which the Corporation may have, the Corporation shall be entitled without the posting of a bond or other security to injunctive relief to enforce the restrictions contained herein.

 

6.             CONFIDENTIAL INFORMATION

 

(a)            Employee agrees that during the course of his employment or at any time after termination, he will not disclose or make accessible to any other person, the Corporation’s or any of its subsidiaries’ or affiliates’, (collectively the “Affiliates”) products, services and technology, both current and under development, promotion and marketing programs, business plans, lists, customer lists, product or licensing opportunities, investor lists, trade secrets and other confidential and proprietary business information of the Corporation or the Affiliates.  Employee agrees:  (i) not to use any such information for himself or others; and (ii) not to take any such material or reproductions thereof in any form or media from the Corporation’s facilities at any time during his employment by the Corporation, except as required in Employee’s duties to the Corporation.  Employee agrees immediately to return all such material and reproductions thereof in his possession to the Corporation upon request and in any event upon termination of employment.

 

(b)           Except with prior written authorization by the Corporation, Employee agrees not to disclose or publish any of the confidential, technical or business information or material of the Corporation, to any suppliers, licensors, licensees, customers, partners or other third parties to whom the Corporation owes an obligation of confidence, at any time during or after his employment with the Corporation.

 

(c)            Employee hereby assigns to the Corporation all right, title and interest he may have or acquire in all inventions (including patent rights) developed by Employee during the term of this Agreement (hereinafter the “Inventions”) and agrees that all Inventions shall be the sole property of the Corporation and its assigns, and the Corporation and its assigns shall be the sole owner of all patents, copyrights and other rights in connection therewith.  Employee further agrees to assist the Corporation in every proper way (but at the Corporation’s expense) to obtain and from time to time enforce patents, copyrights or other rights on said Inventions in any and all countries.  Employee hereby irrevocably designates counsel to the Corporation as Employee’s agent and attorney-in-fact to do all lawful acts necessary to apply for and obtain patents and copyrights and to enforce the Corporation’s rights under this Section.  This Section shall survive the termination of this Agreement for any reason.

 

  

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(d)           The Employee recognizes that in the course of his duties hereunder, he may receive from Affiliates or others information which may be considered “material, nonpublic information” concerning a public company that is subject to the reporting requirements of the Securities and Exchange Act of 1934, as amended.  The Employee agrees not to:

 

(i)            Buy or sell any security, option, bond or warrant while in possession of relevant material, nonpublic information received from Affiliates or others in connection herewith;

 

(ii)           Provide Affiliates with information with respect to any public company that may be considered material, nonpublic information; or

 

(iii)          Provide any person with material, nonpublic information, received from Affiliates, including any relative, associate, or other individual who intends to, or may otherwise directly or indirectly benefit from, such information.

 

7.             TERMINATION

 

(a)           The Employee’s employment hereunder shall begin on the Effective Date and shall continue for the period set forth in Section 2 hereof unless renewed by mutual agreement or sooner terminated upon the first to occur of the following events:

 

(i)            The death of the Employee;

 

(ii)           One year following the merger or consolidation in which either more than fifty percent of the voting power of the Corporation is transferred or the Corporation is not the surviving entity, or sale or other disposition of all or substantially all the assets of the Corporation;

 

(iii)          Termination by the Board of Directors of the Corporation for Just Cause.  Any of the following actions by the Employee shall constitute “Just Cause”:

 

(A)             Material breach by the Employee of Section 1, Section 5 orSection 6 of this Agreement;

 

(B)             Material breach by the Employee of any provision of thisAgreement other than Section 5 or Section 6 which is notcured by the Employee within thirty (30) days of noticethereof from the Corporation;

 

(C)              Any action by the Employee to intentionally harm theCorporation or any action of gross negligence by theEmployee; or

 

(D)             The conviction of the Employee of a felony.

 

  

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(iv)          Termination by the Employee for Just Cause.  Any of the following actions or omissions by the Corporation shall constitute just cause, subject to the notice and cure requirements below, provided that the Employee terminates employment with the Corporation within one year following the initial existence of one or more of the following conditions, without the consent of the Executive:

 

(A)             Material diminution of base salary;

 

(B)             Material diminution of the Employee’s authority, duties orresponsibilities; or

 

(C)             Material breach by the Corporation of any provision of thisAgreement which is not cured by the Corporation withinthirty (30) days of notice thereof from the Employee.

 

The Employee must provide notice to the Corporation of the existence of the “just cause” condition not later than 90 days of its initial existence and the Corporation shall have 30 days from the date of the Employee notice to cure the condition giving rise to such notice.

 

(b)           Upon termination by the Corporation pursuant to either subparagraph (i) or (iii) of paragraph (a) above or by Employee other than pursuant to subparagraph (iv) of paragraph (a) above, the Employee (or his estate in the event of termination pursuant to subparagraph (i)) shall be entitled to receive the Base Salary plus Bonus accrued but unpaid as of the date of termination including any vacation time accrued but not taken.

 

(c)            Upon termination by the Corporation without Just Cause or pursuant to subparagraphs (i), (ii) or (iv) of paragraph (a) above, then the term of the Agreement as set forth in Section 2 hereof shall be deemed to have been terminated as of such date and the Corporation shall pay to the Employee (or his estate in the event of termination pursuant to subparagraph (i)), (A) Base Salary plus Bonus accrued but unpaid as of the date of termination, including any vacation time accrued but not taken, (B) severance equal to his annual rate of Base Salary in effect as of the date of termination payable at said rate in accordance with the Corporation’s payroll practices for a three month period (subject to set-off) (“Severance Pay”).  Notwithstanding anything herein to the contrary, the Employee shall not be entitled to the Severance Pay unless he executes and delivers to the Corporation a general release of claims in such form as determined by the Corporation (the “Release”) and such Release becomes effective and irrevocable within sixty (60) days following the date of termination or resignation.  Any Severance Pay required under this Section 7(c) shall commence on the first payroll date coincident or immediately following the sixtieth (60th) day following the Employee’s date of termination.  Notwithstanding anything herein to the contrary, each payment of Severance Pay shall be deemed to be a separate payment within the meaning of Section 409A of the Code and the regulations thereunder. Health benefits will also be maintained for Employee (or his dependents in the event of termination pursuant to subparagraph (i)) by Company during severance period.  No unvested options shall vest beyond the termination date, except where previously noted in Section 3(b) or at the discretion of the Stock Option Plan Administrator.  For purposes of payments under this Agreement that are subject to (and not exempt from) Section 409A of the Code that are payable upon the Employee’s “termination of employment,” such term shall instead mean “separation from service” within the meaning of Section 409A and the Treasury Regulations promulgated thereunder.

 

  

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(d)           Notwithstanding anything to the contrary in this Agreement, if the Employee is determined by the Corporation to be a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i) at the time of the Employee’s separation from service with the Corporation and if any payment or benefit to which the Employee become entitled to under this Agreement would be considered deferred compensation subject to interest and 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, no such payment or benefit payable or provided to the Employee prior to the earlier of (i) the expiration of the three (3) month period following the date of the Employee’s “separation from service” (as such term is defined by Code Section 409A and the regulations promulgated thereunder), or (ii) the date of the Employee’s death, but only to the extent such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2).  The payments and benefits to which the Employee would otherwise be entitled during the first three (3) months following separation from service shall be accumulated and paid or provided, as applicable, in a lump sum, on the date that is three (3) months and one day following the Employee’s separation from service (or if such date does not fall on a business day of the Corporation, the next following business day) and any remaining payments or benefits will be paid in accordance with the normal payment dates specified for them herein.

 

8.             NON-DISPARAGEMENT

 

The Employee agrees that during the Term, or any renewal or extension thereof, or at any time thereafter, the Employee will not make any statements, comments or communications in any form, oral, written or electronic to any persons, including but not limited to any “Media” (as defined below) or any customer, client, investor or supplier of the Corporation or any of its Affiliates, which would constitute libel, slander or disparagement of the Corporation or any of its Affiliates, including, without limitation, any such statements, comments or communications that criticize, ridicule or are derogatory to the Corporation or any of its Affiliates; provided, however, that the terms of this Section 8 shall not apply to communications between the Employee and, as applicable, the Employee’s attorneys or other persons with whom communications would be subject to a claim of privilege existing under common law, statute or rule of procedure.  The Employee further agrees that the Employee will not in any way solicit any such statements, comments or communications from others.  For the purposes of this Agreement, the term “Media” includes, without limitation, any news organization, station, publication, show, website, web log (blog), bulletin board, chat room and/or program (past, present and/or future), whether published through the means of print, radio, television and/or the Internet or otherwise, and any member, representative, agent and/or employee of the same.

 

  

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9.             NOTICES

 

Any notice or other communication under this Agreement shall be in writing and shall be deemed to have been given: when delivered personally against receipt therefor; one (1) day after being sent by Federal Express or similar overnight delivery; or three (3) days after being mailed registered or certified mail, postage prepaid, return receipt requested, to either party at the address set forth above, or to such other address as such party shall give by notice hereunder to the other party.

 

10.           SEVERABILITY OF PROVISIONS

 

If any provision of this Agreement shall be declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part, such provision shall be interpreted so as to remain enforceable to the maximum extent permissible consistent with applicable law and the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enforceable, and no provision shall be deemed dependent upon any other covenant or provision unless so expressed herein.

 

11.           ENTIRE AGREEMENT MODIFICATION

 

This Agreement contains the entire agreement of the parties relating to the subject matter hereof, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement which are not set forth herein.  No modification of this Agreement shall be valid unless made in writing and signed by the parties hereto.

 

12.           BINDING EFFECT

 

The rights, benefits, duties and obligations under this Agreement shall inure to, and be binding upon, the Corporation, its successors and assigns, and upon Employee and his legal representatives.  This Agreement constitutes a personal service agreement, and the performance of Employee’s obligations hereunder may not be transferred or assigned by Employee.

 

13.           NON-WAIVER

 

The failure of either party to insist upon the strict performance of any of the terms, conditions and provisions of this Agreement shall not be construed as a waiver or relinquishment of future compliance therewith, and said terms, conditions and provisions shall remain in full force and effect.  No waiver of any term or condition of this Agreement on the part of either party shall be effective for any purpose whatsoever unless such waiver is in writing and signed by such party.

 

14.           GOVERNING LAW

 

This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New Jersey without regard to principles of conflict of laws.

 

15.           HEADINGS

 

The headings of paragraphs are inserted for convenience and shall not affect any interpretation of this Agreement.

 

  

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

 

	 	 
SOLIGENIX, INC.

	 	 	 
	
 

	
By: 

	/s/ Christopher J. Schaber 
	 	 	 
Christopher J. Schaber, Ph.D.

Chief Executive Officer

	 	 	 
	 	EMPLOYEE:
	 	 	 
	 	By:	/s/ Richard Straube
	 	 	Richard Straube, MD

 

 

 9ex10-1.htm

Exhibit 10.1

 

  EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”), which is dated January 8, 2014 (the “Effective Date”), is made by and between Ideal Power Inc., a Delaware corporation, located at 5004 Bee Creek Road, Suite 600, Spicewood, Texas, 78669 and hereinafter referred to as “Company”, and R. Daniel Brdar, whose address is 109 Lake Ridge Road, Southbury, Connecticut 06488, hereinafter referred to as “Executive.”  The purpose of this Agreement is to confirm the terms of the employment relationship between Company and Executive.

RECITALS

WHEREAS, Company wishes to retain the services of Executive, and Executive wishes to render services to Company, as its Chief Executive Officer and, until otherwise removed in accordance with Article IV, Section 4 of Company’s bylaws, the Chairman of the Board of Directors (for which position no additional compensation will be paid);

WHEREAS, Company and Executive wish to set forth in this Agreement the duties and responsibilities that Executive has agreed to undertake on behalf of Company, and the responsibilities that Company will owe to Executive.

THEREFORE, in consideration of the foregoing and of the mutual promises contained in this Agreement, Company and Executive (who are sometimes individually referred to as a “Party” and collectively referred to as the “Parties”) agree as follows:

AGREEMENT

1.           TERM.

Company hereby employs Executive as Company’s Chief Executive Officer pursuant to the terms of this Agreement and Executive hereby accepts employment with Company pursuant to the terms of this Agreement.  This Agreement is effective on January 8, 2014, and will continue until December 31, 2016 (the “Initial Term”).  Before the expiration of the second year of the Initial Term, the Compensation Committee will review Executive’s performance and, if Executive’s performance is satisfactory, the term of Executive’s employment will be extended for an additional year (the “Extension”).  During the third year of the Initial Term and each one year Extension thereafter, the Compensation Committee will review Executive’s performance and, if it is satisfactory, continue Executive’s employment for an additional one year Extension.  In this Agreement the word “Term” shall, depending on the context used, refer to the Initial Term or to any subsequent Extension.  Irrespective of the foregoing, this Agreement may be terminated pursuant to Section 11 or Section 12 below.

2.           GENERAL DUTIES.

Executive shall devote his entire productive time, ability, and attention to Company’s business during Executive’s employment.  Executive shall report to Company’s Board of Directors (the “Board”) and agrees to keep the Board fully informed with regard to critical issues affecting the value and reputation of Company.  Furthermore, in his capacity as Chief Executive Officer, Executive shall be primarily responsible for the exercise of the powers and the discharge of the duties of Company that are not reserved to the Board, and shall have authority and control over all personnel of Company, shall be responsible for managing the overall operations of Company and shall act as the main point of communication between the Board and Company’s operations.  Executive shall do and perform all services, acts, or things necessary or advisable to discharge his duties under this Agreement, and such other duties as are commonly performed by an employee of his rank in a publicly traded corporation or which may, from time to time, be prescribed by Company through the Board.  Executive agrees to cooperate with and work to the best of his ability with Company’s management team, which includes the Board and the officers and other employees, to continually improve Company’s reputation in its industry for quality products and performance.

  

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For a limited time, which shall be determined by the Board, Executive will act as the Chairman of the Board without additional compensation.  Executive acknowledges that he may be removed as Chairman of the Board in accordance with Article IV, Section 4 of Company’s bylaws.  Executive further acknowledges that any removal from the office of Chairman of the Board will not constitute a breach of this Agreement and will not entitle Executive to severance or any other payment under this Agreement.

3.           NONSOLICITATION AND PROPRIETARY PROPERTY AND CONFIDENTIAL INFORMATION PROVISIONS.

As a condition of his employment with Company, Executive has executed a Proprietary Information and Inventions Agreement, the terms of which are included by reference into this Agreement.

           4.           COMPLIANCE WITH SECURITIES LAWS.

Executive acknowledges that he is subject to the provisions of Sections 10 and 16 of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder.  Executive acknowledges that Sections 10 and 16 and the rules and regulations promulgated thereunder may prohibit Executive from selling or transferring his securities in Company.  Executive agrees that he will comply with Company’s policies, as stated from time to time, relating to selling or transferring Company’s securities.

5.           COMPENSATION.

(a)           Annual Salary.  Company shall pay to Executive an annual base salary in the amount of $300,000.  The salary paid during Executive’s employment shall be referred to in this Agreement as the “Annual Salary”.  The Annual Salary shall be subject to any tax withholdings and/or employee deductions that are applicable.  The Annual Salary shall be paid to Executive in equal installments in accordance with the periodic payroll practices of the Company for its employees.  The Annual Salary will be subject to review and adjustment at the discretion of the Board no less frequently than annually.

(b)           Bonus.   At least annually, Executive and the Compensation Committee of the Board of Directors shall meet to establish (i) performance standards and goals (“Standards and Goals”) to be met by Executive and (ii) cash bonus targets based on the Standards and Goals that are achieved.  The Standards and Goals will support a cash bonus of 60% of Executive’s Annual Salary, provided, however, that Executive will receive a cash bonus of no less than 25% of the Annual Salary for the first year of the Term.  The Standards and Goals and the bonus targets shall be mutually agreed to by Executive and the Compensation Committee.  Nothing in this subsection (b) shall prevent Executive and the Compensation Committee from mutually agreeing to alternatives to the computation of the bonus to be paid to Executive in accordance with this subsection (b) (the “Bonus”), which may be implemented and paid to Executive in place of the Bonus described herein.  The Bonus shall be subject to any applicable tax withholdings and/or employee deductions.

(c)           Cost of Living Adjustment.  Commencing as of January 1, 2015, and on each January 1st thereafter, the then effective Annual Salary shall be increased (but not decreased) by an amount which shall reflect the increase, if any, in the cost of living during the previous 12 months by adding to the Annual Salary an amount computed by multiplying the Annual Salary by the percentage by which the level of the Consumer Price Index for the Austin Metropolitan Area, as reported on January 1st of the new year by the Bureau of Labor Statistics of the United States Department of Labor has increased over its level as of January 1st of the prior year.

  

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(d)           Participation In Employee Benefit Plans.  Executive shall have the same rights, privileges, benefits and opportunities to participate in any of Company’s employee benefit plans which may now or hereafter be in effect on a general basis for executive officers or employees.  During Executive’s employment, Company shall provide, at Company’s sole expense, health insurance (including dental) benefits for Executive, his spouse and children, under the same policy or policies generally available to other executive officers of Company.  At the discretion of the Board, Company may also provide, at its sole expense (i) disability insurance which, in the event of Executive’s disability, will replace no less than 60% of the Annual Salary being paid to Executive at the time the disability occurred and (ii) life insurance in an amount to be agreed upon by the Board and Executive.  Irrespective of the foregoing, Company may change any benefits contractor, or discontinue any benefit without replacement, in its sole discretion, and any such change or discontinuance will not be a breach of this Agreement.  In the event Executive receives payments from the disability insurer, Company shall have the right to offset such payments against the Annual Salary otherwise payable to Executive during the period for which such payments are made.

6.           EQUITY COMPENSATION.

In accordance with that certain offer letter dated December 19, 2013 (the “Employment Offer”), Company has issued to Executive an option (the “Inducement Option”) to purchase 250,000 shares of Company’s common stock.  The per share exercise price is equal to the closing price of Company’s common stock on January 8, 2014.  The right to purchase the common stock will vest in equal increments over 4 years, on the 31st day of December, beginning on December 31, 2014.  The term of the Inducement Option is 10 years.  Beginning with the 2015 calendar year and continuing through the 2018 calendar year, Executive will receive, for each year in which the Standards and Goals are met, an additional option to purchase 50,000 shares of Company’s common stock (the “Target Option”).  Therefore, assuming the Standards and Goals are met in all four years, Executive will receive Target Options covering an additional 200,000 shares of common stock.  The per share exercise price will be equal to the closing price of the common stock on the day the Compensation Committee determines that the Standards and Goals have been met.  The right to purchase the shares subject to each Target Option will vest in equal increments over a period of four years, beginning on the 31st day of December in the year in which the Standards and Goals are met.  The Target Option will have a term of 10 years and will be subject to the terms of the Company’s 2013 Equity Incentive Plan.

7.           REIMBURSEMENT OF EXPENSES/PAYMENT OF RELOCATION EXPENSES.

(a)           Reimbursement of Business Expenses.  Company shall promptly reimburse Executive for all reasonable business expenses incurred by Executive in connection with the business of Company.  However, each such expenditure shall be reimbursable only if Executive furnishes to Company adequate records and other documentary evidence required by federal and state statutes and regulations issued by the appropriate taxing authorities for the substantiation of each such expenditure as an income tax deduction.

(b)           Moving and Temporary Living Allowance.  Company shall provide to Executive a moving and temporary living allowance of $40,000.

8.           PAID TIME OFF.

Executive shall be entitled to four weeks of paid time off each year; provided, however, failure to use paid time off by the end of the year in which it is earned will prevent the accumulation of additional paid time off in excess of four weeks.

  

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9.           INDEMNIFICATION OF LOSSES.

So long as Executive’s actions were taken in good faith and in furtherance of Company’s business and within the scope of Executive’s duties and authority, Company shall indemnify and hold Executive harmless to the full extent of the law from any and all claims, losses and expenses sustained by Executive as a result of any action taken by him to discharge his duties under this Agreement, and Company shall defend Executive, at Company’s expense, in connection with any and all claims by stockholders or third parties.

10.           PERSONAL CONDUCT.

Executive agrees promptly and faithfully to comply with all present and future policies, requirements, directions, requests and rules and regulations of Company in connection with Company’s business.  Executive further agrees to conform to all laws and regulations and not at any time to commit any act or become involved in any situation or occurrence tending to bring Company into public scandal, ridicule or which will reflect unfavorably on the reputation of Company.

11.           TERMINATION FOR CAUSE.

The Board may terminate Executive for cause immediately, without notice, if Company reasonably concludes that Executive has committed fraud, theft, embezzlement, misappropriation of Company funds or other property, or any felony.  The Board may also terminate Executive for cause for any of the following:

(a)           Breach by Executive of any material provision of this Agreement;

(b)           Violation by Executive of any statutory or common law duty of loyalty to Company; or

 (c)           A material violation by Executive of Company's employment policies; or

(d)           Commission of such acts of dishonesty, gross negligence, or willful misconduct as would prevent the effective performance of Executive’s duties or which result in material harm to Company or its business.

The Board may terminate this Agreement for cause by giving written notice of termination to Executive, provided, however, if the Board declares Executive to be in default of this Agreement under subsection (a) above because Executive fails to substantially perform his material duties and responsibilities under this Agreement, the Board shall deliver a written demand for substantial performance of such duties and responsibilities to Executive.  Such demand must identify the manner in which the Board believes that Executive has not substantially performed his duties, and Executive shall have a period of 30 days to correct the deficient performance.  Upon termination for cause, the obligations of Executive and Company under this Agreement shall immediately cease.  Such termination shall be without prejudice to any other remedy to which Company may be entitled either at law, in equity, or under this Agreement.  If Executive’s employment is terminated pursuant to this Section 11, Company shall pay to Executive (i) Executive’s accrued but unpaid Annual Salary and the value of unused paid time off through the effective date of the termination; (ii) Executive’s accrued but unpaid Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination.  Executive shall not be entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law.

  

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12.           TERMINATION WITHOUT CAUSE.

(a)           Death.  Executive’s employment shall terminate upon the death of Executive.  Upon such termination, the obligations of Executive and Company under this Agreement shall immediately cease.

(b)           Disability.  The Board reserves the right to terminate Executive’s employment upon 30 days written notice if, for a period of 90 days, Executive is prevented from discharging his substantial or material duties due to any physical or mental disability.

(c)           Election By Executive.  Executive’s employment may be terminated at any time by Executive upon not less than 30 days written notice by Executive to the Board.

(d)           Election By Company.  Executive’s employment may be terminated at any time by Company upon not less than 30 days written notice by the Board to Executive.

(e)           Termination Due to a Change in Control.  Executive’s employment may be terminated upon a Change in Control.  For purposes of this Agreement, the term “Change in Control” shall mean the sale or disposition by Company to an unrelated third party of substantially all of its business or assets, or the sale of the capital stock of Company in connection with the sale or transfer of a Controlling Interest in Company to an unrelated third party, or the merger or consolidation of Company with another corporation as part of a sale or transfer of a Controlling Interest in Company to an unrelated third party.  For purposes of this definition, the term “Controlling Interest” means the sale or transfer of Company’s securities representing greater than 50% of the voting power.  It will be presumed that a termination is a termination under this subsection (e) rather than a termination under subsection (d) (Election by Company) if Executive’s employment is terminated during the period that begins when negotiations for the Change in Control begin and ends on the six month anniversary of the closing of the Change in Control transaction and such termination is not a termination for cause pursuant to Section 11 or a termination resulting from Executive’s death, disability or election pursuant to subsections (a), (b) or (c) of this Section 12.

If Executive’s employment is terminated pursuant to subsections (a), (b), or (c) of this Section 12, Company shall pay to Executive (i) Executive’s accrued but unpaid Annual Salary and the value of unused paid time off through the effective date of the termination; (ii) Executive’s accrued but unpaid Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination.  Executive shall not be entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law.

If Executive’s employment is terminated pursuant to subsection (d) of this Section 12, Company shall pay to Executive (i) Executive’s accrued but unpaid Annual Salary and the value of unused paid time off through the effective date of the termination; (ii) Executive’s accrued but unpaid Bonus, if any; (iii) business expenses incurred prior to the effective date of termination; and (iv) severance (the “Severance Payment”) consisting of one year’s Annual Salary, less legal deductions.  Company may elect in its sole discretion whether to pay the Severance Payment in one lump sum or on regular pay days for the one year period following termination of Executive’s employment.  For a termination under subsection (d), Executive shall be entitled to continue to participate in employee benefit plans described in Section 5(d), at Company’s sole expense, for a period of one year following termination of Executive’s employment.

If Executive’s employment is terminated pursuant to subsection (e) of this Section 12, Executive shall be entitled to receive (i) Executive’s accrued but unpaid Annual Salary and the value of unused paid time off through the effective date of the termination; (ii) Executive’s accrued but unpaid Bonus, if any; (iii) business expenses incurred prior to the effective date of termination; and (iv) an amount equal to the Annual Salary for one year.  In addition, any equity award that was scheduled to vest following the termination of Executive’s employment will vest immediately upon the termination of Executive’s employment pursuant to subsection (e).

  

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In the event of a termination of Executive’s employment pursuant to subsections (a), (b), (c) and (d) above, all other rights Executive has under any benefit or stock option plans and programs shall be determined in accordance with the terms and conditions of such plans and programs.

With the exception of the terms of this Section 12 and any obligations, duties and responsibilities Executive has under the Proprietary Information and Inventions Agreement, upon termination of Executive’s employment the obligations of Executive and Company under this Agreement shall immediately cease.

13.           MISCELLANEOUS.

(a)           Preparation of Agreement.  It is acknowledged by each Party that such Party either had separate and independent advice of counsel or the opportunity to avail itself or himself of same.  In light of these facts it is acknowledged that no Party shall be construed to be solely responsible for the drafting hereof, and therefore any ambiguity shall not be construed against any Party as the alleged draftsman of this Agreement.

(b)           Cooperation.  Each Party agrees, without further consideration, to cooperate and diligently perform any further acts, deeds and things and to execute and deliver any documents that may from time to time be reasonably necessary or otherwise reasonably required to consummate, evidence, confirm and/or carry out the intent and provisions of this Agreement, all without undue delay or expense.

(c)           Interpretation.

(i)           Entire Agreement/No Collateral Representations.  Each Party expressly acknowledges and agrees that this Agreement, including all exhibits attached hereto: (1) is the final, complete and exclusive statement of the agreement of the Parties with respect to the subject matter hereof; (2) supersedes any prior or contemporaneous agreements, promises, assurances, guarantees, representations, understandings, conduct, proposals, conditions, commitments, acts, course of dealing, warranties, interpretations or terms of any kind, oral or written (collectively and severally, the “Prior Agreements”), and that any such prior agreements are of no force or effect except as expressly set forth herein; and (3) may not be varied, supplemented or contradicted by evidence of Prior Agreements, or by evidence of subsequent oral agreements.  Any agreement hereafter made shall be ineffective to modify, supplement or discharge the terms of this Agreement, in whole or in part, unless such agreement is in writing and signed by the Party against whom enforcement of the modification or supplement is sought.

(ii)           Waiver.  No breach of any agreement or provision herein contained, or of any obligation under this Agreement, may be waived, nor shall any extension of time for performance of any obligations or acts be deemed an extension of time for performance of any other obligations or acts contained herein, except by written instrument signed by the Party to be charged or as otherwise expressly authorized herein.  No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or a waiver or relinquishment of any other agreement or provision or right or power herein contained.

(iii)           Remedies Cumulative.  The remedies of each Party under this Agreement are cumulative and shall not exclude any other remedies to which such Party may be lawfully entitled.

(iv)           Severability.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be determined to be invalid, illegal or unenforceable under present or future laws effective during the term of this Agreement, then and, in that event: (A) the performance of the offending term or provision (but only to the extent its application is invalid, illegal or unenforceable) shall be excused as if it had never been incorporated into this Agreement, and, in lieu of such excused provision, there shall be added a provision as similar in terms and amount to such excused provision as may be possible and be legal, valid and enforceable, and (B) the remaining part of this Agreement (including the application of the offending term or provision to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable) shall not be affected thereby and shall continue in full force and effect to the fullest extent provided by law.

 

  

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(v)           No Third Party Beneficiary.  Notwithstanding anything else herein to the contrary, the parties specifically disavow any desire or intention to create any third party beneficiary obligations, and specifically declare that no person or entity, other than as set forth in this Agreement, shall have any rights hereunder or any right of enforcement hereof.

(vi)           Headings; References; Incorporation; Gender.  The headings used in this Agreement are for convenience and reference purposes only, and shall not be used in construing or interpreting the scope or intent of this Agreement or any provision hereof.  References to this Agreement shall include all amendments or renewals thereof.  Any exhibit referenced in this Agreement shall be construed to be incorporated in this Agreement.  As used in this Agreement, each gender shall be deemed to include the other gender, including neutral genders or genders appropriate for entities, if applicable, and the singular shall be deemed to include the plural, and vice versa, as the context requires.

(d)           Enforcement.

(i)           Applicable Law.  This Agreement and the rights and remedies of each Party arising out of or relating to this Agreement (including, without limitation, equitable remedies) shall be solely governed by, interpreted under, and construed and enforced in accordance with the laws (without regard to the conflicts of law principles thereof) of the State of Texas, as if this agreement were made, and as if its obligations are to be performed, wholly within the State of Texas.

(ii)           Consent to Jurisdiction and Venue.  Any action or proceeding arising out of or relating to this Agreement shall be filed in and heard and litigated solely before the state courts of Texas within Travis County.

(iii)           Attorneys’ Fees.  If court proceedings are required to enforce any provision of this Agreement, the substantially prevailing or successful Party shall be entitled to an award of the reasonable and necessary expenses of litigation, including reasonable attorneys’ fees.

(e)           No Assignment of Rights or Delegation of Duties by Executive.  Executive’s rights and benefits under this Agreement are personal to him and therefore (i) no such right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer; and (ii) Executive may not delegate his duties or obligations hereunder.

(f)           Notices.  Unless otherwise specifically provided in this Agreement, all notices, demands, requests, consents, approvals or other communications (collectively and severally called “Notices”) required or permitted to be given hereunder, or which are given with respect to this Agreement, shall be in writing, and shall be given by: (A) personal delivery (which form of Notice shall be deemed to have been given upon delivery), (B) by private overnight delivery service (which forms of Notice shall be deemed to have been given upon confirmed delivery by the delivery agency), or (C) by mailing in the United States mail by registered or certified mail, return receipt requested, postage prepaid (which forms of Notice shall be deemed to have been given upon the 5th business day following the date mailed).  Notices shall be addressed to the address hereinabove set forth in the introductory paragraph of this Agreement, or to such other address as the receiving Party shall have specified most recently by like Notice, with a copy to the other Parties hereto.  Any Notice given to the estate of a Party shall be sufficient if addressed to the party as provided in this subsection.

(g)           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument, binding on all parties hereto.  Any signature page of this Agreement may be detached from any counterpart of this Agreement and reattached to any other counterpart of this Agreement identical in form hereto by having attached to it one or more additional signature pages.

  

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(h)           Execution by All Parties Required to be Binding; Electronically Transmitted Documents.  This Agreement shall not be construed to be an offer and shall have no force and effect until this Agreement is fully executed by all Parties hereto.  If a copy or counterpart of this Agreement is originally executed and such copy or counterpart is thereafter transmitted electronically by facsimile or similar device, such facsimile document shall for all purposes be treated as if manually signed by the Party whose facsimile signature appears.

  

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IN WITNESS WHEREOF, the parties have executed this Agreement.

 

 

	 	
Company:

 

 

IDEAL POWER INC.

	 	
 

 

By: /s/ Lon E. Bell

	 	 
	 	
Its: Chairman

Compensation Committee

	 	 
	 	
 

 

Executive:

	 	
 

 

/s/ R. Daniel Brdar

R. Daniel Brdar

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