Document:

exv10w1

 

Exhibit
10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into by and between INTERNATIONAL
FUEL TECHNOLOGY, INC., a Nevada corporation (the “Company”), and STUART D. BEATH (the “Employee”),
and is dated as of July 2, 2007.

RECITALS

WHEREAS, the Chief Executive Officer (“CEO”) of Company, in consultation with the Board of
Directors, has determined that it is in the best interest of the Company and its shareholders to
employ the Employee in the position set forth below, and the Employee desires to serve in that
capacity, and;

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and promises
herein contained, and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company and Employee hereby agree as follows:

1. Employment Period. The Company shall employ the Employee, and the Employee shall serve
the Company, on the terms and conditions set forth in this Agreement, for the period commencing on
June 30, 2007 and ending on June 30, 2009 (“Employment Period”).

2. Position and Duties.

	(a)	 	The Employee shall serve as Chief Financial Officer (“CFO”) of the Company, reporting to the
Chief Executive Officer (“CEO”), with such duties, responsibilities and authorities as are
customarily assigned to such position, and such other duties and responsibilities not
inconsistent therewith as may be assigned to him from time to time by the CEO of the Company.
	 
	(b)	 	During the Employment Period, and excluding any periods of vacation and sick leave to which
the Employee is entitled, the Employee shall devote his full-time efforts to the business and
affairs of the Company and use his best efforts to carry out such responsibilities faithfully
and efficiently. It shall not be considered a violation of the foregoing for the Employee to
(i) serve on corporate, civic or charitable boards or committees or (ii) deliver lectures or
fulfill speaking engagements so long as such activities do not interfere with the performance
of his responsibilities as an employee of the Company in accordance with this Agreement or
violate the provisions of Section 7 of this Agreement.
	 
	(c)	 	Employee’s responsibilities shall include, but not be limited to, those customarily
required by the CFO of a publicly-traded company.

3. Compensation.

	(a)	 	Base Salary. During the Employment Period the Employee shall receive an annual base
salary (the “Annual Base Salary”) at the rate of One Hundred Thousand Dollars ($100,000.00),
such base salary to be reviewed annually during the Employment Period concomitant with a
review of the performance of Employee. The Annual Base Salary shall be payable bi-weekly by
wire transfer to an account designated by Employee to Company.
	 
	(b)	 	Stock Options. The Employee shall receive options to purchase shares in the Company
in accordance with the attached Stock Option Agreement, a copy of which is attached hereto and
incorporated herein by reference.
	 
	(c)	 	Other Benefits. During the Employment Period: (i) the Employee and his family shall
be entitled to participate in all benefit programs of the Company, including, but not limited
to, health and dental insurance coverage or reimbursement of the Employee’s reasonable cost to
maintain same to be added to the Annual Base Salary; and (ii) the Employee and/or the
Employee’s family, as the case may be, shall be eligible for participation in, and shall
receive all benefits under, all welfare benefit plans, practices, policies and programs
provided by the Company, including, but not limited to any comprehensive dental plan,
retirement plans and profit sharing programs the Company may provide to any other employees
from time to time.

 

 

	(d)	 	Expenses. During the Employment Period, the Employee shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by the Employee in carrying out the
Employee’s duties under this Agreement, provided that the Employee complies with the policies,
practices and procedures of the Company for submission of expense reports, receipts and
similar documentation of such expenses.

	(e)	 	Fringe Benefits. During each year of the Employment Period commencing on the date of
the Agreement, the Employee shall be entitled to 25 paid days of vacation and other fringe
benefits, in each case, on such terms and conditions as are determined by the Board of
Directors of the Company.

4. Termination of Employment.

	(a)	 	Probationary Period. Either Company or Employee may terminate the Agreement at any
time within ten (10) days after the expiration of the first ninety (90) days of the Agreement
(“Probationary Period”) by giving written notice to the other party. If termination is by the
Company, then upon the giving of such notice, Employee shall be paid any accrued salary for
the pay period in which the notice is proffered.
	 
	(b)	 	Death or Disability. The Employee’s employment shall terminate automatically upon the
Employee’s death during the Employment Period. The Company shall be entitled to terminate the
Employee’s employment because of the Employee’s Disability during the Employment Period.
“Disability” means that (i) the Employee has been unable, for a period of 180 days to perform
the Employee’s duties under this Agreement, as a result of physical or mental illness or
injury, and (ii) a physician selected by the Company or its insurers, and acceptable to the
Employee or the Employee’s guardian or legal representative, has determined that the
Employee’s incapacity is total and permanent. A termination of the Employee’s employment by
the Company for Disability shall be communicated to the Employee by written notice, and shall
be effective on the 30th day after receipt of such notice by the Employee (the “Disability
Effective Date”), unless the Employee is able to, and does, return to full-time performance of
the Employee’s duties before the Disability Effective Date.
	 
	(c)	 	By the Company.

	(i)	 	The Company may terminate the Employee’s employment during the Employment Period for Cause or
without Cause. For the purposes of the Agreement, “Cause” shall mean:

	 	A.	 	any fraud, embezzlement or other dishonesty of the Employee
that materially and adversely affects the Company’s business or reputation; or
	 
	 	B.	 	the Employee’s conviction for a felony or entering into a plea
of nolo contendere with respect to a felony; or
	 
	 	C.	 	disclosure to any party outside the Company any of the
Confidential Information as hereinafter defined; or
	 
	 	D.	 	any actions taken by Employee deemed by the Company’s CEO to be
detrimental to the well-being of the Company; or
	 
	 	E.	 	the refusal by Employee to perform his material duties and
obligations hereunder; or Employee’s willful and intentional misconduct in the
performance of his material duties and obligations.

	(ii)	 	A termination of employment by the Company for Cause
shall be effectuated by giving the Employee written notice (“Notice of
Termination for Cause”) of the termination. Termination of employment by
the Company for Cause shall be effective on the date when the Notice of
Termination for Cause is given, unless the notice sets forth a later date
(which date shall in no event be later than thirty (30) days after the
notice is given).

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	(iii)	 	A termination of the Employee’s employment by the
Company without Cause shall be effected by giving the Employee written
notice of the termination, and Employee shall be paid accrued salary for
the pay period in which the notice is given.

(d) By the Employee.

	 	(i)	 	The Employee may terminate employment in the event of a Good Cause Shown.
“Good Cause Shown” means:

	 	A.	 	the assignment to the Employee of any duties
inconsistent in any respect with paragraph (a) of Section 2 of the
Agreement, other than actions that are not taken in bad faith and are
remedied by the Company within fifteen (15) days after receipt of
notice thereof from the Employee;
	 
	 	B.	 	any failure by the Company to comply with any
provision of Section 3 of this Agreement, other than failures that are
not taken in bad faith and are remedied by the Company within fifteen
(15) days after receipt of notice thereof from the Employee; or
	 
	 	C.	 	the occurrence of a Non-Negotiated Change in
Control of the Company. For purposes of this Agreement, “Non-Negotiated
Change in Control” shall mean any one or more of the following
occurrences:

	 	(I)	 	Any individual, corporation
(other than the Company, any trustees or other beneficiary
holding securities under any employee benefit plan of the
Company, or any Company owned, directly or indirectly, by the
Stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company),
partnership, trust, association, pool, syndicate, or any other
entity or any group of persons acting in concert becomes the
beneficial owner (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934) of securities of the Company
possessing more than one-half (1/2) of the voting power for the
election of directors of the Company;
	 
	 	(II)	 	There shall be consummated any
consolidation, merger, or other business combination involving
the Company or the securities of the Company in which holders of
voting securities of the Company immediately prior to such
consummation own, as a group, immediately after such
consummation, voting securities of the Company (or, if the
Company does not survive such transaction, voting securities of
the entity surviving such transaction) having less than one-half
(1/2) of the total voting power in an election of directors of
the Company (or such other surviving corporation); or
	 
	 	(III)	 	There shall be consummated any
sale, lease, exchange, or other transfer (in one transaction or
a series of related transactions) of all, or substantially all,
of the assets of the Company (on a consolidated basis) to a
party which is not controlled by or under common control with
the Company.

	 	(ii)	 	A termination of employment by the Employee for Good Cause Shown shall be
effectuated by giving the Company written notice (“Notice of Termination for Good
Cause Shown”) of the termination, setting forth the conduct of the Company that
constitutes Good Cause Shown. Absent a remedy or cure by Company within applicable
time frames, a termination of employment by the Employee for Good Cause Shown shall
be effective on the fifth business day following the date when the Notice of
Termination for Good Cause Shown is given, unless

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	 	 	 	the notice sets forth a later date (which date shall in no event be later than
thirty (30) days after the notice is given).
	 
	 	(iii)	 	A termination of the Employee’s employment by the Employee without Good
Cause Shown shall be effected by giving the Company written notice of the termination
at least sixty (60) days prior to the termination date.

	(e)	 	No Waiver. The failure to set forth any fact or circumstance in a Notice of
Termination for Cause or a Notice of Termination for Good Cause Shown shall not constitute a
waiver of the right to assert, and shall not preclude the party giving notice from asserting,
such fact or circumstance in an attempt to enforce any right under or provision of this
Agreement.
	 
	(f)	 	Date of Termination. The “Date of Termination” means (i) June 30, 2009; (ii) the date
of the Employee’s death; (iii) the Disability Effective Date; (iv) the date on which the
termination of the Employee’s employment by the Company for Cause or by the Employee for Good
Cause Shown is effective; (v) the date on which the Company gives the Employee notice of a
termination of employment without Cause, or; (vi) 60 days after the Employee gives the Company
notice of a termination of employment without Good Cause Shown, as the case may be.

5. Obligations of the Company upon Termination.

	(a)	 	Other Than for Cause, Death or Disability. If, during the Employment Period, the
Company terminates the Employee’s employment, other than during the Probationary Period, or
other than for Cause, Death or Disability, or the Employee terminates his employment for Good
Cause Shown, the Company shall (i) pay the Employee’s accrued but unpaid portion of the Annual
Base Salary (the “Accrued Obligations”) to the Employee in a lump sum in cash within thirty
(30) days after the Date of Termination, and (ii) continue to pay the Annual Base Salary for
the remainder of the Employment Period. The payments provided pursuant to this paragraph (a)
of Section 5 are intended as liquidated damages for a termination of the Employee’s employment
by the Company other than for Cause or Disability or for the actions of the Company leading to
a termination of the Employee’s employment by the Employee for Good Cause Shown, and shall be
the sole and exclusive remedy therefore.
	 
	(b)	 	Death or Disability. If the Employee’s employment is terminated by reason of the
Employee’s death or Disability during the Employment Period, the Company shall pay the Accrued
Obligations to the Employee or the Employee’s estate or legal representative, as applicable,
in a lump sum in cash within thirty (30) days after the Date of Termination. In addition, if
the Employee’s employment is terminated by reason of Disability, the Company will continue to
pay to Employee until the earlier of: (i) expiration of the Employment Period, (iii) for the
six (6) months after a determination of disability has been made or (ii) the date of
Employee’s death, the Annual Base Salary, less any amounts received by Employee under any
disability insurance coverage maintained for Employee by the Company.
	 
	(c)	 	Cause; Other than for Good Cause Shown. If the Employee’s employment is terminated by
the Company for Cause during the Employment Period, or if the Employee terminates his
employment during the Employment Period other than for Good Cause Shown, the Company shall pay
Employee the salary accrued for the pay period in which the termination occurs, unless
termination is for Cause and the cause involves fraud, embezzlement or disclosure of
Confidential Information as hereinafter defined, in which case Company shall not be liable for
any payments to Employee.

6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Employee’s continuing or future participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies for which the Employee may qualify, nor shall
anything in this Agreement limit or otherwise affect such rights as the Employee may have under any
contract or agreement with the Company or any of its affiliated companies. Vested benefits and
other amounts that the Employee is otherwise entitled to receive under any plan, policy, practice
or program of, or any contract or agreement with, the Company or any of its affiliated companies on
or after the Date of Termination shall be payable in accordance with such plan, policy, practice,
program, contract or agreement, as the case may be, except as explicitly modified by this
Agreement.

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7. Confidential Information. During his Term of Employment, the Company will disclose to
the Employee and Employee shall have access to confidential, proprietary commercial, business
and/or technical information relating to the Company’s technology, know-how, data, formulae,
processes, designs, studies, findings, inventions, ideas, chemical information, production
information and cost information (“Confidential Information”). The Employee shall not communicate,
divulge or disseminate Confidential Information in full or partially in any manner, medium, shape
or form at any time during the Employee’s employment with the Company except with the prior written
consent of the Company at the Company’s sole and absolute discretion or as otherwise required by
law or legal process. This provision shall forever survive the termination of employment of
Employee for any reason whatsoever.

8. Covenant Against Competition. During the Term of Employment with the Company and for a
period of two (2) years following (i) Employee terminating his employment other than for Good Cause
Shown, or (ii) Company terminating his employment with Cause, Employee will not, directly or
indirectly, own, manage, operate, control, be employed by, perform services for, consult with,
solicit business for, participate in, or be connected with the ownership, management, operation, or
control of any business which uses surfactant chemical technology as an additive for fuels or lubes
to improve efficiency or performance and/or reduce emissions.

9. Covenant Against Solicitation. During the Term of Employment with the Company and for a
period of one (1) year from the Employee’s Termination of Employment from the Company for any
reason whatsoever, Employee will not, directly or indirectly, solicit other employees of the
Company for employment with, consultants to or agents of any business which performs services or
sells products materially similar to or competitive with those provided and sold by the Company.

10. No Mitigation. In no event shall the Employee be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the Employee under any of the
provisions of this Agreement and such amounts shall not be reduced, regardless of whether the
Employee obtains other employment.

11. Successors.

	(a)	 	This Agreement is personal to the Employee and, without the prior written consent of the
Company at the sole and absolute discretion of the Company, shall not be assignable by the
Employee.
	 
	(b)	 	This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

	 12.	 	Miscellaneous.

	(a)	 	Arbitration: Any dispute, controversy or claim arising
out of or relating to this contract, or the breach thereof, shall be
settled by arbitration. Any arbitration shall be concluded under the
Commercial Rules of the American Arbitration Association (“AAA”) and
judgement upon the award rendered by the arbitrator shall be final and
binding and may be enforced before any court having jurisdiction. The AAA
shall not be involved in the arbitration in any manner.
	 
	 	 	The parties shall mutually agree upon an arbitrator. In the event the
parties are unable to agree, then each party shall appoint an arbitrator of
their choosing within five (5) days and the two arbitrators shall appoint
the arbitrator within ten (10) days. Such arbitrator shall arbitrate the
case no less than sixty (60) days after the failure of a mediation, if any,
or the appointment of the arbitrator. Such arbitrator shall be self
administered and conducted on an ad hoc basis.
	 
	 	 	The arbitration shall take place at a mutually agreed upon time in St.
Louis, Missouri, at the office of the arbitrator or a location designated by
the arbitrator, and shall be governed by the laws of the State of Missouri.

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	 	The arbitrator shall be required to render an award in writing within thirty
(30) days after the close of the hearing or the post hearing briefs’ due
date, should either party request to file a post hearing brief, and shall
state the reasons for reaching that award.
	 
	 	In all matters submitted to arbitration, each party shall bear the entire
cost and expense of its own witnesses and representation. The expenses of
the arbitrator and all other expenses of arbitration shall be shared
equally. The arbitrator shall award fees and expenses to the prevailing
party, where appropriate.
	 
	 	Notwithstanding anything in this Agreement to the contrary, the Company and
Employee shall be entitled to seek injunctive or similar equitable relief in
any court of competent jurisdiction in order to enforce Company’s and
Employee’s obligations hereunder.

	(b)	 	The formation, construction, and performance of this Agreement shall be construed in
accordance with the laws of the United States of America, State of Missouri and any action or
proceeding brought in connection with the enforcement of the terms hereof shall be brought
exclusively in Saint Louis County, Missouri or the U.S. District Court for the Eastern
District of Missouri. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified except by a
written agreement executed by the parties hereto or their respective successors and legal
representatives.
	 
	(c)	 	All notices and other communications under this Agreement shall be in writing and shall be
given by hand delivery to the other party, by overnight courier with addressee signature
required or by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

If to the Employee:

Stuart D. Beath

12229 Prince Towne Drive

St. Louis, MO 63141

If to the Company:

International Fuel Technology, Inc.

Attention: Mr. Thomas M. Powell

7777 Bonhomme, Suite 1920

St. Louis, MO 63105

or to such other address as either party furnishes to the other in writing in accordance with this
paragraph (b) of Section 12. Notices and communications shall be effective when actually received
by the addressee.

	(d)	 	The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. If any provision of this
Agreement shall be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain valid and
enforceable and continue in full force and effect to the fullest extent consistent with law.
	 
	(e)	 	Notwithstanding any other provision of this Agreement, the Company may withhold from amounts
payable under this Agreement all federal, state, local and foreign taxes that are required to
be withheld by applicable laws or regulations.
	 
	(f)	 	The failure of the Employee or the Company to insist upon strict compliance with any
provision of, or to assert any right under, this Agreement shall not be deemed to be a waiver
of such provision or right or of any other provision of or right under this Agreement.
	 
	(g)	 	The Employee and the Company acknowledge that this Agreement supersedes any other agreement
between them concerning the subject matter hereof.

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	(h)	 	This Agreement may be executed in one or more counterparts, each of which shall be deemed an
original, and which together shall constitute one instrument.

IN WITNESS WHEREOF, the Employee has hereunto set the Employee’s hand and, pursuant to the
authorization of its Board of Directors, the Company has caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above written.

\s\ Stuart D. Beath                              

STUART D. BEATH

INTERNATIONAL FUEL TECHNOLOGY, INC.

By:\s\ Jonathan R. Burst                              

Name: Jonathan R. Burst

Title: President and Chief Executive Officer

7exv10w2

 

Exhibit
10.2

NON-STATUTORY STOCK OPTION AGREEMENT

     This STOCK OPTION AGREEMENT (“Agreement”) dated July 2, 2007, (“Grant Date”) is between
INTERNATIONAL FUEL TECHNOLOGY, INC. (the “Company”), a Nevada corporation, and STUART D. BEATH a(n)
employee of the Company (the “Optionee”).

     In consideration of the foregoing and of the mutual undertakings set forth in this Agreement,
the Company and the Optionee agree as follows:

SECTION 1. Grant of Option

     The Company hereby grants (the “Grant”) to the Optionee an option to purchase 200,000 shares
of Common Stock of the Company at a purchase price per share equal to or above the closing price
per share of the Company’s common stock quoted on the OTC market on the last trading date prior to
the Grant Date (herein called “Option”) pursuant to the Company’s Amended and Restated 2001 Long
Term Incentive Plan (the “Plan”). The Option shall be classified as a Non-statutory Stock Option as
defined in the Plan. The Optionee and the Company agree that in order for the Option Grant to be
legally binding, both the Optionee and the Company must sign this Agreement.

     Exercisability:

     1.1 The Option shall vest and become exercisable as follows:

     200,000 shares at an exercise price of $0.75 per share vesting 100% twenty-four (24)
months from the Grant Date.

     1.2 The Option may be partially exercised from time to time within the limitations on
exercisability set forth in Section 2.

     1.3 Subject to Section 4, the Option shall expire and cease to be exercisable after June 30,
2012.

SECTION 2. Method of Exercise

     The Option or any part thereof may be exercised by (i) Optionee giving written notice to the
Company, which notice shall state the election to exercise the Option and the number of whole
shares of Common Stock with respect to which the Option is being exercised and (ii) Optionee
providing the Company with full payment for the aggregate exercise price for the shares being
purchased. The Optionee may also exercise any part of the Option in a cashless transaction with a
registered broker-dealer acting on behalf of the Optionee.

 

 

SECTION 3. Termination of Option

     3.1 Unvested Options. If the Optionee ceases to be an Employee or Consultant of the Company
due to termination by the Company for Cause or termination by the Optionee for other than Good
Reason (other than upon the Optionee’s Disability or death), all non-vested Options will
automatically expire. If termination of employment by the Company is not for Cause or termination
by Optionee is for Good Reason (other than upon the Optionee’s Disability or death), all Options
vest immediately. Such vested Options will then expire according to the provisions set forth in
Section 3.2 below.

     3.2 Vested Options. In the event that an Optionee of a Non-statutory Stock Option ceases to
be an Employee or Consultant of the Company for any reason (other than upon such Optionee’s death),
the Optionee may exercise all vested Options (to the extent that the Optionee was entitled to
exercise such Options as of the date of termination) within the expiration of the term of the
Options as set forth in the Option Agreement. If, however, the Optionee is terminated for Cause,
the Optionee may exercise all vested Options only within such period of time ending on the earlier
of (i) the date three months following such termination or (ii) the expiration of the term of the
Options as set forth in the Option Agreement. If, after termination, the Optionee does not
exercise the Options within the time period specified herein, the Options shall terminate.

     3.3 Upon the Optionee’s death or Disability, the Options shall terminate pursuant to the terms
and conditions set forth in the Plan.

     3.4 References herein to an individual’s “employment” shall include any and all periods during
which such individual (i) is a common law employee of the Company, or (ii) serves as an officer or
director of, or consultant to, the Company, but is not otherwise a common law employee of the
Company. The Optionee shall be deemed to have terminated employment when the Optionee completely
ceases to be employed (within the meaning of the preceding sentence) by the Company. The Board of
Directors (“Board”) of the Company may in its discretion determine (i) whether any leave of absence
constitutes a termination of employment within the meaning of this Agreement, and (ii) the impact,
if any, of any such leave of absence on the Option granted under this Agreement.

SECTION 4. Non-assignability

     No right granted to the Optionee under the Plan or this Agreement shall be assignable or
transferable (whether by operation of law or otherwise and whether voluntarily or involuntarily),
other than by will or by the laws of descent and distribution. During the life of the Optionee,
all rights granted to the Optionee under the Plan or under this Agreement shall be exercisable only
by the Optionee.

SECTION 5. Withholding Taxes

     Whenever under the Plan shares of Common Stock are to be delivered upon exercise of the
Option, the Company shall be entitled to require as a condition of delivery that the Optionee remit
an amount sufficient to satisfy all federal, state and other governmental withholding tax
requirements related thereto.

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SECTION 6. Adjustments on Changes in Capitalization

     In the event of any increase or decrease, after the date of this Agreement, in the number of
issued shares of Common Stock resulting from the subdivision or combination of shares of Common
Stock or other capital adjustments, or the payment of a stock dividend, or other increase or
decrease in such shares affected without receipt of consideration by the Company, the number of
shares subject to the Option and the purchase price set forth in Section 1.1 shall be
proportionately adjusted, provided, however, that any Option to purchase fractional shares
resulting from any such adjustment shall be eliminated.

SECTION 7. Change of Control

     In the event that the Company undergoes a Change of Control, then all outstanding Options will
vest immediately and be exerciseable for a period of one year from the date upon which the Change
of Control occurs.

     For all purposes under the Plan, “Change of Control” shall mean (i) a merger or consolidation
of the Corporation with or into another entity, or the exchange of securities (other than a merger
or consolidation) by the holders of the voting securities of the Corporation and the holders of
voting securities of any other entity, in which the shareholders of the Corporation immediately
before the transaction do not own 50% or more of the combined voting power of the voting securities
of the surviving entity or its parent immediately after the transaction; (ii) a dissolution of the
Corporation; (iii) a transfer of all or substantially all of the assets of the Corporation in one
transaction or a series of transactions occurring within a twelve month period to a “Person” or
“Group” (as defined below); (iv) a transaction or a series of transactions occurring in which a
Person or Group becomes the beneficial owner, directly or indirectly, of securities of the
Corporation representing more than 50% of the combined voting power of the Corporation’s then
outstanding securities; or (v) a majority of the members of the Corporation’s Board is replaced
during any twelve month period by directors whose appointment or election is not endorsed by a
majority of the Corporation’s Board prior to the date of the appointment or election; provided,
however, that a “Change of Control” shall not be deemed to have occurred if the ownership of 50% or
more of the combined voting power of the surviving corporation, asset transferee, or Corporation
(as the case may be), after giving effect to the transaction or series of transactions, is directly
or indirectly held by (A) a trustee or other fiduciary under an employee benefit plan maintained by
the Corporation or any Subsidiary, (B) one or more of the “executive officers” of the Corporation
that held such positions prior to the transaction or series of transactions, or any entity, Person
or Group under their control, or (C) one or more members of “senior management” as designated by
the Chief Executive Officer from time to time, that held such positions prior to the transaction or
series of transactions, or any entity, Person or Group under their control. As used herein,
“Person” and “Group” shall have the meanings set forth in Sections 13(d)(3) and/or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (“1934 Act”), and “executive officer” shall have the
meaning set forth in Rule 3b-7 promulgated under the 1934 Act. “Group” shall further be determined
by the Plan Administrator to constitute “more than one person acting as a group.”

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SECTION 8. Right of Discharge Reserved

     Nothing in the Plan or in this Agreement shall confer upon the Optionee the right to continue
in the employment, or service of the Company, or affect any right which the Company may have to
terminate the employment or service of the Optionee.

SECTION 9. No Rights as a Stockholder

     The Optionee shall not have any rights as a stockholder with respect to any shares subject to
the Option until the date of the issuance of a stock certificate to Optionee for such shares.
Except for adjustments made pursuant to Section 7, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities
or oilier property) for which the record date is prior to the date such stock certificate is
issued.

SECTION 10. Definition of Common Stock

     The term “Common Stock” as used in this Agreement means the shares of voting common stock of
the Company, par value $0.01 per share, as constituted on the date of this Agreement and any other
shares into which such common stock shall thereafter be changed by reason of recapitalization,
merger, consolidation, split-up, combination, exchange of shares or the like.

SECTION 11. Section Headings

     The section headings contained herein are for the purpose of convenience only and are not
intended to define or limit the contents of said sections.

SECTION 12. Notices

     Any notice to be given to the Company or the Committee hereunder shall be in writing and shall
be addressed to the Company at 7777 Bonhomme Avenue, Suite 1920, St. Louis, Missouri 63105, or at
such other address as the Company may hereafter designate to the Optionee by notice as provided
herein. Any notice to be given to the Optionee hereunder shall be addressed to the Optionee at the
address set forth beneath Optionee’s signature hereto, or at such other address as the Optionee may
hereafter designate to the Company by notice as provided herein. Notices hereunder shall be deemed
to have been duly given when personally delivered or mailed by registered or certified mail to the
party entitled to receive the same.

SECTION 13. Successors and Assigns

     This Agreement shall be binding upon and inure to the benefit of the parties hereto and the
successors and assigns of the Company, the heirs and personal representatives of the Optionee.

4

 

SECTION 14. Other Payments Or Awards

     Nothing contained in this Agreement shall be deemed in any way to limit or restrict the
Company from making any award or payment to the Optionee under any other plan, arrangement or
understanding, whether now existing or hereafter in effect.

SECTION 16. Modification Of Agreement

     At any time and from time to time the Company may modify, extend or renew the Option; provided
that no such modification, extension or renewal may (i) impair the Optionee’s rights under the
Option in any respect (without the Optionee’s consent) or (ii) conflict with applicable rules under
the Securities Act of 1934.

SECTION 17. Governing Law

     This Agreement will be governed by and construed in accordance with the laws of the State of
Missouri without regard to the conflict of laws provisions.

SECTION 18. Defined Terms

     All capitalized terms shall be defined in accordance with the definitions of such terms as set
forth in the Plan, unless otherwise indicated herein.

5

 

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

	 	 	 	 	 
	 

	 	INTERNATIONAL FUEL TECHNOLOGY, INC.
	 	 
	 
	 
	 	/s/
Jonathan R. Burst, CEO	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	OPTIONEE	 	 
	 
	 
	 	/s/ Stuart D. Beath
	 	 
	 

	 	 	 	 
	 

	 	Stuart D. Beath	 	 
	 

	 	Address:	 	 

6

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