Document:

ptx_ex104.htm

EXHIBIT 10.4

EMPLOYMENT AND NON-COMPETE AGREEMENT

THIS EMPLOYMENT AND NON-COMPETE AGREEMENT (this “Agreement”) is entered into and effective as of the 1st day of June, 2008 (the “Effective Date”), by and between ZYBER PHARMACEUTICALS, INC., a Louisiana corporation (“Employer”), and COOPER COLLINS, a resident of the lawful age of majority of the state of Texas (“Employee”), who hereby agree as follows:

WHEREAS Employer desires to employ Employee, and Employee desires to accept employment with Employer, subject to the terms and conditions hereinafter set forth,

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employer and Employee, intending to be legally bound, hereby agree as follows:

1.   Period of Employment.  Employer shall employ Employee, and Employee shall serve Employer during the period commencing on the Effective Date, and continuing through and including May 31, 2011 (the “Term”).

2.   Duties and Responsibilities.  Employee shall be employed by Employer as the President of Employer.  As such, Employee shall have such duties as the president of a corporation generally has and as specified in the by-laws of Employer and hold such other offices and have such other duties and responsibilities as may from time to time be reasonably assigned to him by Employer’s Board of Directors (the “Board”) or by any officer of Employer superior to Employee.  Employee shall report directly to the Board.  As President, Employee shall supervise, control, and have general responsibility of the day to day operations of the business of Employer.  Additionally, Employee’s employment by Employer during the Term shall be subject to, and limited by, the following conditions:

(a)   Employee shall be available to provide a minimum of forty-five (45) hours per week of services to Employer.  Employee shall provide such services upon request of Employer, but Employer shall not be obligated to request that such services be provided.  So long as Employee is employed by Employer, Employee shall devote Employee’s time, attention, skill and ability during normal and usual business hours (and outside those hours when reasonably necessary to fulfill Employee’s duties hereunder) to the faithful and diligent performance of the duties and responsibilities described herein.

(b)   Employee shall (i) devote his full time, energy and attention during regular business hours to the benefit and business of Employer in performing his duties pursuant to this Agreement; (ii) not be employed by any other person or entity on a full-time basis; and (iii) not undertake any other activities (individually or collectively), that conflict or materially interfere with the performance of Employee’s duties hereunder.

  

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(c)   Employee’s services shall be performed at Employer’s offices in Magnolia Texas, as well as at such other locations and subject to such travel requirements as reasonably necessary to the performance of Employee’s duties hereunder.

3.   Compensation.  As compensation for the Services to be rendered pursuant to this Agreement, during the Term:

(a)   Employer shall pay to Employee an annual salary of Two Hundred Sixty-Four Thousand and No/100 ($264,000) Dollars (the “Salary”), payable in accordance with Employer’s normal salary payment schedule.

(b)   In addition to the Salary, within ninety (90) days of the Effective Date, Employer hereby agrees to establish a bonus compensation package for Employee, pursuant to which bonus compensation payments (“Bonus Payments”) may be earned by and paid to Employee.  The amount of any such Bonus Payments shall be as provided in a separate bonus package plan.  The purpose of the Bonus Payments will be to reward Employee for productive efforts in past years, and to encourage efficient work production in forthcoming years, to act as an incentive for performance, and to make the total compensation paid annually to Employee equal to the reasonable value of his services to the extent Employer is financially able to pay such compensation without incurring losses.  Such Bonus Payments may be payable at any time or times during the year the Board may determine.  In making its determination of the amount of the Bonus Payments to be paid, the Board shall take into account the amount, if any, provided for payment to Employee in the form of deferred compensation.

(c)   Employer shall provide Employee with health insurance coverage paid by Employer, and thereafter, the right to make COBRA insurance payments for health coverage by Employer’s then insurance provider for the maximum period permissible by law.

(d)   As additional consideration, Employer shall cause the Board to declare and issue a dividend, which shall be non-taxable to Employee, on or before March 16, 2009, to Employee, in an amount sufficient to pay all income tax liability which may be owed by Employee resulting from his ownership of common stock of Employer for the period from January 1, 2008 though the May 31, 2008 (the “Tax Amount”); provided, however, that the parties agree that Employer may, for the purposes of fulfilling its obligations under this Section 3(c), pay the Tax Amount directly to the appropriate taxing authorities, and in such case, Employer shall provide sufficient evidence of the same to Employee on or before March 16, 2009.

(e)   Employer shall reimburse Employee for all reasonable, ordinary, and necessary business expenses incurred in the performance of Employee’s duties hereunder in accordance with and subject to the terms and conditions of Employer’s then prevailing expense policy, a copy of which has been provided to Employee.  As a condition precedent to obtaining such reimbursement, Employee shall provide to Employer any and all statements, bills or receipts evidencing the expenses for which Employee seeks reimbursement, and such other related information or materials as Employer may from time to time reasonably require.

  

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4.   Termination.  Unless Employee’s employment is terminated pursuant to this Section, Employer shall continue to employ Employee and Employee shall continue to serve Employer throughout the Term.  Upon expiration of the Term, this Agreement shall automatically terminate without further action by Employee or Employer, and thereafter, if Employer and Employee both desire that Employee remain employed by Employer, then Employee shall be an “employee-at-will”, with no contractual rights, and as such, either party may terminate the employer-employee relationship at any time.

(a)   This Agreement shall terminate automatically upon Employee’s death.

(b)   For purposes of this Agreement, Employee shall be deemed to be under a disability if Employee shall be unable, by virtue of illness or physical or mental incapacity or disability (from any cause or causes whatsoever), to perform Employee’s essential job functions hereunder, whether with or without reasonable accommodation, in substantially the manner and to the extent required hereunder prior to the commencement of such disability, for a period exceeding thirty (30) days (a “Disability”).  In light of the unique nature of Employee’s services, and the undue burden on Employer that would result from Employee’s long term absence, Employer shall have the right to terminate Employee’s employment hereunder in the event Employee shall remain under a Disability for a period exceeding thirty (30) days, such termination to occur at the end of any calendar month during the continuance of such disability, upon at least thirty (30) days’ prior written notice to Employee.

(c)   Additionally, Employer shall have the right to terminate Employee’s employment for “Cause” at any time and without prior notice and without payment of any severance allowance or further compensation beyond the date of termination.  For purposes of this Agreement, “Cause” shall include: (i) material default or other material breach by Employee of Employee’s obligations hereunder; (ii) failure by Employee to perform diligently and competently Employee’s duties hereunder; or (iii) fraud, libel, slander, dishonesty, or any other act by Employee that is detrimental to Employer or its good will or damaging to its relationships with its customers, suppliers, or employees, including, without limitation, (A) use of alcohol or illegal drugs such as to interfere with the performance of Employee’s obligations hereunder, (B) conviction of or, plea of guilty or no contest to a felony or any crime involving moral turpitude, dishonesty, or theft; and (C) material failure by Employee to comply with applicable laws or governmental regulations with respect to Employer operations or the performance of Employee’s duties.

(d)   Additionally, (i) in the event Employer terminates this Agreement for Cause, or (ii) in the event Employee terminates this Agreement prior to the expiration of the Term, then in either such case, Employee shall be required to pay to Employer a termination fee equal to ten percent (10%) of the total aggregate amount of Employee’s Salary, plus ten percent (10%) of the total aggregate amount all Bonus Payments paid and/or accrued to Employee.

(e)   Employer may terminate Employee’s employment without Cause at any time and without prior notice.  In the event of such termination, Employer shall pay to Employee an amount equal to the balance of the then unpaid portion of the Salary, net of all required and usual deductions.

 

  

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(f)   In the event of termination of this Agreement for any reason, the payments (if any) required to be provided to Employee pursuant to this Section shall be in full and complete satisfaction of any and all obligations owing to Employee pursuant to this Agreement.

5.   Confidential Information.  Both during and after the Term, Employee shall not, directly or indirectly, divulge, publish, communicate, or make available to any person, corporation, or other entity (except in performing Employee’s duties hereunder), or use for Employee’s own or any other person or entity’s purposes or benefit, any trade secret, confidential business information, or any other information, know how, designs, specifications, techniques, methods, concepts, inventions, developments, discoveries, improvements, knowledge, or data of Employer which is not generally known to the public (separately and collectively, “Confidential Information”) (including, but not limited to, Confidential Information relating to research, product development or design, manufacturing or manufacturing processes, maintenance or repair processes, purchasing, product or material costs, sales or sales strategies or prospects, pricing or pricing strategies, advertising or promotional programs, product information, or mailing or customer lists, finances (including prices, costs, and revenues), and other business arrangements, plans, procedures and strategies), and shall use Employee’s best efforts to prevent the publication or disclosure by any other person or entity of any such Confidential Information.  Employer shall not be under any obligation to identify specifically by any notice or other action any Confidential Information to which this Section shall apply.  The confidentiality obligations of Employee hereunder shall specifically apply to any such Confidential Information obtained by Employee prior to the Effective Date as a result of (a) Employee’s former ownership of the stock of Employer, (b) Employee’s employment with Employer prior to the Effective Date, (c) Employee’s prior position as an officer and/or member of the Board, or (d) any other source.  While Employee is employed by Employer, all documents and Confidential Information compiled, received, held or used by Employee in connection with the business of Employer shall remain Employer’s property, and shall be delivered by Employee to Employer upon the termination of Employee’s employment, for whatever reason, or at any earlier time requested by Employer.

6.   Unfair Competition.

(a)   As a condition of employment with Employer, and as a material inducement to Employer to employ Employee hereunder, Employee agrees that, while Employee is employed by Employer, Employee shall not, directly or indirectly, whether or not for compensation, and whether or not as an employee, be engaged in or have a financial interest in any business competing with the Business of Employer (as defined below) within the parishes, counties, states and other jurisdictions set forth on Exhibit A attached hereto and incorporated herein by reference (the “Non-Compete Territories”), for a period of two (2) years after the latter to occur of (i) termination of this Agreement (i.e. until after May 31, 2011), or (ii) the last date on which Employee is employed by Employer, whether as an employee-at-will or otherwise.

  

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(b)   For purposes of this Agreement, Employee shall be deemed to be engaged in or to have a financial interest in a business competing with the Business of Employer if Employee is an employee, officer director, consultant, independent contractor, proprietor, or partner of any person, partnership, corporation, trust or other entity which is engaged in the Business of Employer, or if Employee directly or indirectly performs services for such entity or if Employee owns an equity interest, or interest convertible into equity, in any such entity/business competing with the Business of Employer; provided, however, that the foregoing shall not prohibit Employee or a member of Employee’s immediate family from owning, for the purpose of passive investment, less than two percent (2%) of any class of securities of any publicly held corporation.

(c)   Employee agrees and acknowledges that, by virtue of Employee’s employment and position with Employer, Employee shall have access to and maintain an intimate knowledge of Employer’s activities and affairs, including Confidential Information, trade secrets, confidential business information, and other confidential matters.  As a result of such access and knowledge, and because of the special, unique, and extraordinary services that Employee is capable of performing for Employer or one of its competitors, Employee acknowledges that the Services to be rendered by Employee pursuant to this Agreement are of a character giving them a peculiar value, the loss of which cannot adequately or reasonably be compensated solely by money damages.  Consequently, Employee agrees that any breach or threatened breach by Employee of Employee’s obligations under this Section, or of Section 5 or Section 7 of this Agreement, would cause irreparable injury to Employer, and that Employer shall be entitled to (i) preliminary and permanent injunctions enjoining Employee from violating such provisions, and (ii) money damages in the amount of fees, compensation, benefits, profits or other remuneration earned by Employee or any competitor as a result of any such breach, together with interest, and costs and attorneys’ fees and paralegals’ fees expended to collect such damages or secure such injunctions.  Nothing in this Agreement, however, shall be construed to prohibit Employer from pursuing any other remedy, Employer and Employee having agreed that all such remedies shall be cumulative.

(d)   For purposes of this Agreement, the term “Business of Employer” shall mean the development, marketing, sale, and/or licensing of pharmaceutical products and the related intellectual property rights with respect thereto (“Products”).  The term “Products” shall include products similar in targeted effect and use to Employer’s current line of adult strength liquids and tablets, pediatric medications, upper respiratory medications, women’s health medications, nutritional products, pain relief products and medications, antibiotics, gastroenterology products and medications, and any other products developed, sold, marketed, licensed or used by Employer during Employee’s employment by Employer.

7.   Solicitation of Employees.  As a condition of employment with Employer, and as a further material inducement to Employer to employ Employee hereunder, Employee agrees that, while Employee is employed by Employer, and for a period of two (2) years thereafter, Employee shall not, directly, or indirectly (as an employee, member shareholder, agent or contractor for another person or entity), solicit, hire or induce the termination from employment with Employer of any person who was employed by Employer, or induce such person to accept employment other than with Employer.

  

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 8.   Inventions.  Employee hereby agrees that any and all improvements, inventions, discoveries, developments, creations, formulae, processes, methods, or designs, and any documents, things, or information relating thereto, whether patentable or not (individually and collectively, “Work Product”) within the scope of or pertinent to any field of business or research in which Employer is engaged or (if such is known to or ascertainable by Employee) considering engaging, which Employee may conceive or make, or may have conceived or made during Employee’s employment with Employer or during Employee’s former ownership of stock in Employer, whether alone or with others, at any time within or without normal working hours, shall be and remain the sole and exclusive property of Employer.  Employer shall have the full right to use, assign, license or transfer all rights to or relating to Work Product.  Employee shall, whenever requested to do so by Employer (whether during Employee’s employment or thereafter), at Employer’s expense, execute any and all applications, assignments, or other instruments, and do all other things (including giving testimony in any legal proceeding) which Employer may deem necessary or appropriate in order to (a) apply for, obtain, maintain, enforce, or defend letters patent or copyright registrations of the United States or any, other country for any Work Product, or (b) assign, transfer, convey, or otherwise make available to Employer any right, title or interest which Employee might otherwise have in any Work Product.  Employee shall promptly communicate, disclose, and, upon request, report upon and deliver all Work Product to Employer, and shall not use or permit any Work Product to be used for any purpose other than on behalf of Employer, whether during Employee’s employment or thereafter.

  9.   Additional Obligations.  Both during and after the Term, Employee shall, upon reasonable notice, furnish Employer with such information as may be in Employee’s possession, and cooperate with Employer, as may reasonably be requested by Employer (and, after the Term, with due consideration for Employee’s obligations with respect to any new employment or business activity) in connection with any litigation in which Employer is or may become a party.  Employer shall reimburse Employee for all reasonable expenses incurred by Employee in fulfilling Employee’s obligations under this Section.

10.   Policies and Procedures.  Employer shall have the authority to establish from time to time the policies and procedures to be followed by Employee in handling the business of the Employer.

11.   Mediation.  With respect to any disputes arising out of or related to this Agreement, the parties will first submit any such matter to non-binding mediation to take place in the Parish of Orleans, Louisiana.  The parties shall share equally all initial costs of mediation.  If mediation is not successful, the parties may thereafter bring any additional legal action or proceeding with respect to this Agreement in the District Court for the Parish of Ascension, State of Louisiana, in accordance with the terms and conditions of Section 12 below.

12.   Choice of Venue; Waiver of Right to Jury Trial.  Except as provided in Section 11 hereof with respect to the venue for mediation, any legal action or proceeding with respect to this Agreement shall be brought in the District Court for the Parish of Ascension, State of Louisiana.  The parties hereto hereby waive the right to a jury trial in any action, proceeding or counterclaim arising out of, or related to, the terms, conditions or enforcement of this Agreement, or any other aspect of the acts, transactions or occurrences described herein, or the transactions contemplated by or related to this Agreement.  The prevailing party (upon the issuance of a final, non-appealable judgment or order) shall be required to be reimbursed by the other party for its or his reasonable attorneys’ and paralegals’ fees, experts’ fees and costs and fees related to the dispute, including costs of mediation or other legal proceeding, in addition to any other relief to which that party may be entitled.

  

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13.   Confidentiality.  The terms and conditions of this Agreement shall be confidential.  Neither Employer or Employee shall disclose, directly or indirectly, this Agreement or any of its terms and conditions, or any documents provided by Employer to Employee pursuant to this Agreement, to any other person or entity without the express written consent of the other unless required by law, court order, formal process of a governmental agency or to enforce the terms of this Agreement; provided, however, that the parties acknowledge and agree that only to the extent necessary to purse legal claims, to effect the transactions contemplated by this Agreement and any agreements or transactions contemplated herein, this Section shall not preclude the parties from disclosing this Agreement and its terms to the parties’ respective lawyers and accountants for the limited purposes set forth herein.

14.   Governing Law.  This Agreement shall be construed in accordance with, and governed by, the Laws of the State of Louisiana applicable to agreements to be performed entirely in the State of Louisiana without regard to its conflicts of law rules.

15.   Headings.  The subject headings of the sections of this Agreement are included for purposes of convenience only, and shall not control or affect the meaning, construction or interpretation of any of its provisions.

16.   Notice.  Any notice or other communication required or permitted under this Agreement by either party hereto to the other shall be in writing, and shall be deemed effective upon (a) personal delivery, if delivered by hand, (b) three days after the date of deposit in the mails, postage prepaid, if mailed by certified or registered mail, or (c) the next business day, if sent by a prepaid overnight courier service, and in each case addressed as follows:

 

	If to Employee, to:   	Cooper Collins 

32126 Edgewater Drive

Magnolia, Texas 77354

	 	
 

 

	With a copy to:       	
Law Office of Eddie Pullaro

1054 West Tunnel Blvd.

Houma, Louisiana 70360

Attn:  Eddie N. Pullaro, Esq.

	 	 
	 If to Employer, to:   	
Zyber Pharmaceuticals, Inc.

1838 Fern St.

New Orleans, Louisiana 70118

Attn:  James E. Smith, Jr.

 

  

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	With a copy to:       	
Elkins, P.L.C. 

201 St. Charles Ave; Ste. 4400 

New Orleans, Louisiana 70170 

Attn: Jordan B. Monsour, Esq.

 

Either party may change the address or addresses to which notices are to be sent by giving notice of such change of address in the manner provided by this Section

17.   Binding Effect; Successors.  This Agreement shall be binding upon and shall inure to the benefit of Employer and its successors and assigns, and shall inure to the benefit of and be binding upon Employee and his executors, administrators, heirs and legal representatives.  Because Employee’s Services hereunder are special, personal and unique in nature, Employee may not transfer, sell or otherwise assign his rights, obligations or benefits under this Agreement.  Nothing in this Agreement shall preclude Employer from assigning, in full or part, this Agreement to any affiliate of Employer, or preclude Employer from consolidating or merging into or with, or transferring all or substantially all of its assets to, another entity which assumes this Agreement and all obligations and undertakings of Employer hereunder; provided, however, said assignment shall be in a writing reasonably satisfactory to Employee and the assignee shall assume all obligations of Employer hereunder, and provided further, that Employer shall not be released from, and shall continue to be liable with respect to, its obligations hereunder as fully as if such assignment had not been made.

18.   Waiver.  No waiver of a default by either party of any term, covenant or condition hereof to be performed or observed by the other party shall be construed as, or operate as, a waiver of any subsequent default of the same or any other term, covenant or condition hereof.  No provision of this Agreement can be waived unless such waiver is expressed in writing and signed by all of the parties hereto.

19.   Construction.  The language of this Agreement shall be construed as a whole, according to its fair meaning and intent and not strictly for or against any party, regardless of who drafted or was principally responsible for drafting the Agreement or any specific term or condition hereof.  The parties to this Agreement have had sufficient time to consult legal counsel and negotiate changes regarding the terms hereof.  This Agreement shall be deemed to have been drafted by both parties to this Agreement, and neither shall urge otherwise.

20.   Severability.  The provisions of this Agreement are severable.  The parties intend that if any provision of this Agreement should be adjudged invalid or unenforceable in any jurisdiction, then such provision shall, as to such jurisdiction only, be ineffective to the extent of such invalidity or unenforceability without invalidating the remaining provisions hereof, provided such invalidity does not materially prejudice either party in its or his rights and obligations contained in the valid provisions of this Agreement, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

21.   No Conflict.  Employee represents and warrants that Employee is not subject to any agreement, order, judgment or decree of any kind which would prevent Employee from entering into this Agreement or performing fully Employee’s obligations hereunder.

  

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22.   Counterparts; Entire Agreement; Modification.  This Agreement may be executed in multiple counterparts, all of which together shall constitute one and the same instrument.  Signatures by facsimile shall be considered valid and binding on the parties hereto.  This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral or written agreements, representations, and understandings of the parties.  No supplement, modification or amendment to this Agreement shall be binding unless executed in writing by all parties to this Agreement.

 

[COUNTERPART SIGNATURES ON THE FOLLOWING PAGES]

 

  

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COUNTERPART SIGNATURE PAGE TO

EMPLOYMENT AND NON-COMPETE AGREEMENT

BY AND BETWEEN

ZYBER PHARMACEUTICALS, INC.

AND

COOPER COLLINS

THUS DONE AND SIGNED, at New Orleans, Louisiana, in the presence of me, Notary Public, and the undersigned competent witnesses on the 1st day of June, 2008, after a due reading of the whole.

 

	WITNESSES: 	
EMPLOYER:

 

	 
	  

Print Name: _____________________________________

	ZYBER PHARMACEUTICALS, INC.	 
	 	 	
 

 

	 
	
 

	
By: 

	/s/James E. Smith, Jr. 	 
	 	Name: James E. Smith, Jr.	 
	Print Name: ______________________________________                              	Its:       Sole Shareholder	 
	 	 	 	 

                                                                                   

 

[COUNTERPART SIGNATURES ON THE FOLLOWING PAGE]

 

  

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COUNTERPART SIGNATURE PAGE TO

EMPLOYMENT AND NON-COMPETE AGREEMENT

BY AND BETWEEN

ZYBER PHARMACEUTICALS, INC.

AND

COOPER COLLINS

THUS DONE AND SIGNED, at New Orleans, Louisiana, in the presence of me, Notary Public, and the undersigned competent witnesses on the 1st day of June, 2008, after a due reading of the whole.

 

	
WITNESSES: 

______________________________________________

	
EMPLOYER:

 

	 
	Print Name: _____________________________________	 	 
	 	 	
 

 

	 
	
 

	
By: 

	/s/ Cooper Collins   	 
	_______________________________________________	 	COOPER COLLINS	 
	Print Name: ______________________________________                              	            	 
	 	 	 	 

 

  

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EXHIBIT A

Non-Compete Territories

 

I.  LOUISIANA PARISHES:

Acadia Parish, Allen Parish, Ascension Parish, Assumption Parish, Avoyelles Parish, Beauregard Parish, Bienville Parish, Bossier Parish, Caddo Parish, Calcasieu Parish, Caldwell Parish, Cameron Parish, Catahoula Parish, Claiborne Parish, Concordia Parish, De Soto Parish, East Baton Rouge Parish, East Carroll Parish, East Feliciana Parish, Evangeline Parish, Franklin Parish, Grant Parish, Iberia Parish, Iberville Parish, Jackson Parish, Jefferson Davis Parish, Jefferson Parish, La Salle Parish, Lafayette Parish, Lafourche Parish, Lincoln Parish, Livingston Parish Madison Parish, Morehouse Parish, Natchitoches Parish, Orleans Parish, Ouachita Parish, Plaquemines Parish, Pointe Coupee Parish, Rapides Parish, Red River Parish, Richland Parish, Sabine Parish, St. Bernard Parish, St. Charles Parish, St. Helena Parish, St. James Parish, St. John The Baptist Parish, St. Landry Parish, St. Martin Parish, St. Mary Parish, St. Tammany Parish, Tangipahoa Parish, Tensas Parish, Terrebonne Parish, Union Parish, Vermilion Parish, Vernon Parish, Washington Parish, Webster Parish, West Baton Rouge Parish, West Carroll Parish, West Feliciana Parish, and Winn Parish.

II.  ALABAMA COUNTIES:

Autauga County, Baldwin County, Barbour County, Bibb County, Blount County, Bullock County, Butler County, Calhoun County, Chambers County, Cherokee County, Chilton County, Choctaw County, Clarke County, Clay County, Cleburne County, Coffee County, Colbert County, Conecuh County, Coosa County, Covington County, Crenshaw County, Cullman County Dale County, Dallas County, De Kalb County, Elmore Count, Escambia County, Etowah County, Fayette County, Franklin County, Geneva County, Greene County, Hale County, Henry County, Houston County, Jackson County, Jefferson County, Lamar County, Lauderdale County, Lawrence County, Lee County, Limestone County, Lowndes County, Macon County, Madison County, Marengo County, Marion County, Marshall County, Mobile County, Monroe County, Montgomery County, Morgan County, Perry County, Pickens County, Pike County, Randolph County, Russell County, Shelby County, St. Clair County, Sumter County, Talladega County, Tallapoosa County, Tuscaloosa County, Walker County, Washington County, Wilcox County, and Winston County.

  

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TEXAS COUNTIES:

Anderson County, Andrews County, Angelina County, Aransas County, Archer County, Armstrong County, Atascosa County, Austin County, Bailey County, Bandera County, Bastrop County, Baylor County, Bee County, Bell County, Bexar County, Blanco County, Borden County, Bosque County, Bowie County, Brazoria County, Brazos County, Brewster County, Briscoe County, Brooks County, Brown County, Burleson County, Burnet County, Caldwell County, Calhoun County, Callahan County, Cameron County, Camp County, Carson County, Cass County, Castro County, Chambers County, Cherokee County, Childress County, Clay County, Cochran County, Coke County, Coleman County, Collin County, Collingsworth County, Colorado County, Comal County, Comanche County, Concho County, Cooke County, Coryell County, Cottle County, Crane County, Crockett County, Crosby County, Culberson County, Dallam County, Dallas County, Dawson County, De Witt County, Deaf Smith County, Delta County, Denton County, Dickens County, Dimmit County, Donley County, Duval County, Eastland County, Ector County, Edwards County, El Paso County, Ellis County, Erath County, Falls County, Fannin County, Fayette County, Fisher County, Floyd County, Foard County, Fort Bend County, Franklin County, Freestone County, Frio County, Gaines County, Galveston County, . Garza County, Gillespie County, Glasscock County, Goliad County, Gonzales County, Gray County, Grayson County, Gregg County, Grimes County, Guadalupe County, Hale County, Hall County, Hamilton County, Hansford County, Hardeman County, Hardin County, Harris County, Harrison County, Hartley County, Haskell County, Hays County, Hemphill County, Henderson County, Hidalgo County, Hill County, Hockley County, Hood County, Hopkins County, Houston County, Howard County, Hudspeth County, Hunt County, Hutchinson County, Irion County, Jack County, Jackson County, Jasper County, Jeff Davis County, Jefferson County, Jim Hogg County, Jim Wells County, Johnson County, Jones County, Karnes County, Kaufman County, Kendall County, Kenedy County, Kent County, Kerr County, Kimble County, King County, Kinney County, Kleberg County, Knox County, La Salle County, Lamar County, Lamb County, Lampasas County, Lavaca County, Lee County, Leon County, Liberty County, Limestone County, Lipscomb County, Live Oak County, Llano County, Loving County, Lubbock County, Lynn County, Madison County, Marion County, Martin County, Mason County, Matagorda County, Maverick County, McCulloch County, McLennan County, McMullen County, Medina County, Menard County, Midland County, Milam County, Mills County, Mitchell County, Montague Montgomery County, Moore County, Morris County, Motley County, Nacogdoches County, Navarro County, Newton County, Nolan County, Nueces County, Ochiltree County, Oldham County, Orange County, Palo Pinto County, Panola County, Parker County, Parmer County, Pecos County, Polk County, Potter County, Presidio County, Rains County, Randall County, Reagan County, Real County, Red River County, Reeves County, Refugio County, Roberts County, Robertson County, Rockwall County, Runnels County, Rusk County, Sabine County, San Augustine County, San Jacinto County, San Patricio County, San Saba County, Schleicher County, Scurry County, Shackelford County, Shelby County, Sherman County, Smith County, Somervell County, Starr County, Stephens County, Sterling County, Stonewall County, Sutton County, Swisher County, Tarrant County, Taylor County, Terrell County, Terry County, Throckmorton County, Titus County, Tom Green County, Travis County, Trinity County, Tyler County, Upshur County, Upton County, Uvalde County, Val Verde County, Van Zandt County, Victoria County, Walker County, Waller County, Ward County, Washington County, Webb County, Wharton County, Wheeler County, Wichita County, Wilbarger County, Willacy County, Williamson County, Wilson County, Winkler County, Wise County, Wood County, Yoakum County, Young County, Zapata County, and Zavala County.

  

13aebr_ex1016.htm

    Exhibit 10.16

     

    REVOLVING
LINE OF CREDIT AGREEMENT

     

    This
Revolving Line of Credit Agreement (the "Loan Agreement"), dated as of August
17, 2009 is by and between INTERNATIONAL BIODIESEL, INC., a Nevada corporation
(the “Borrower”) and LAIRD Q. CAGAN ("Lender”). 

     

    in
consideration of the mutual covenants, representations, warranties and
agreements herein contained, the parties hereto agree as follows:

     

    1. DEFINITIONS.

     

    a.   “Guarantee”
means any guarantee of the payment or performance of any Indebtedness or other
obligation and any other arrangement whereby credit is extended to one obligor
on the basis of any promise of another Person, whether that promise is expressed
in terms of an obligation to (i) pay the Indebtedness or other liabilities of
such obligor, (ii) purchase an obligation owed by such obligor, (iii) purchase
goods and services from such obligor pursuant to a take-or-pay contract, or (iv)
maintain the capital, working capital, solvency or general financial condition
of such obligor, whether or not any such arrangement is listed on the balance
sheet of such other Person or referred to in a footnote thereto, but shall not
include endorsements of items for collection in the ordinary course of
business.  The amount of any Guarantee shall be equal to the amount of
the obligation so guaranteed or, if not a fixed or determined amount, the
maximum amount guaranteed.

     

    b.   “Indebtedness”
means at a particular time, without duplication, (i) any indebtedness for
borrowed money or issued in substitution for or exchange of indebtedness for
borrowed money, (ii) any indebtedness evidenced by any note, bond, debenture or
other debt security, (iii) any indebtedness for the deferred purchase price of
property or services with respect to which a Person is liable, contingently or
otherwise, as obligor or otherwise (other than trade payables and other current
liabilities incurred in the ordinary course of business), (iv) any commitment by
which a Person assures a creditor against loss (including, without limitation,
contingent reimbursement obligations with respect to letters of credit), (v) any
obligations for which a Person is obligated pursuant to a Guarantee, (vi) any
obligations under capitalized leases with respect to which a Person is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or with respect
to which obligations a Person assures a creditor against loss, (vii) any
indebtedness secured by a Lien on a Person’s assets and (viii) any unsatisfied
obligation for “withdrawal liability” to a “multiemployer plan” as such terms
are defined under ERISA.

     

    c.   “Person”
means an individual, a partnership, a corporation, a limited liability company,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    2. Lender
hereby establishes for a period extending to July 1, 2011 (the "MATURITY DATE")
a revolving line of credit (the "CREDIT LINE") for Borrower in the principal
amount of Five Million Dollars ($5,000,000.00) (the "CREDIT LIMIT"). In
connection herewith, Borrower shall execute and deliver to Lender a Promissory
Note (the “Note”) in the amount of the Credit Limit and in form and content
satisfactory to Lender. All sums advanced on the Credit Line or pursuant to the
terms of this Loan Agreement (each an "ADVANCE") shall become part of the
principal of said Note.

     

    THE
OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A SECURITY AGREEMENT (THE
“SECURITY AGREEMENT”) DATED AS OF THE DATE HEREOF AND EXECUTED BYAE BIOFUELS,
INC. FOR THE BENEFIT OF THE LENDER.  ADDITIONAL RIGHTS OF THE LENDER
ARE SET FORTH IN THE SECURITY AGREEMENT.

     

    3. ADVANCES.
Any request for an Advance may be made from time to time and in such amounts as
Borrower may choose; provided, however, any requested Advance will not, when
added to the outstanding principal balance of all previous Advances, exceed the
Credit Limit. Requests for Advances may be made orally or in writing by such
officer of Borrower authorized by it to request such Advances. Until such time
as Lender may be notified otherwise, Borrower hereby authorizes its Chief
Executive Officer, President or any Vice President to request Advances. Lender
may refuse to make any requested Advance if an event of default has occurred and
is continuing hereunder either at the time the request is given or the date the
Advance is to be made, or if an event has occurred or condition exists which,
with the giving of notice or passing of time or both, would constitute an event
of default hereunder as of such dates.  The funds from the Advances
will be used by the Borrower for operating expenses in connection with the
operations of the Borrower.

     

    4. INTEREST.
All sums advanced pursuant to this Loan Agreement shall bear interest from the
date each Advance is made until paid in full at the rate of ten percent (10%)
per annum, simple interest (the "EFFECTIVE RATE").

     

    5. REPAYMENT.
The entire unpaid principal balance, together with any accrued interest and
other unpaid charges or fees hereunder, shall be due and payable on the Maturity
Date. All payments shall be made to Lender at such place as Lender may, from
time to time, designate. All payments received hereunder shall be applied,
first, to any costs or expenses incurred by Lender in collecting such payment or
to any other unpaid charges or expenses due hereunder; second, to accrued
interest; and third, to principal. Borrower may prepay principal at any time
without penalty.

     

    6. REPRESENTATIONS
AND WARRANTIES. In order to induce Lender to enter into this Loan Agreement and
to make the advances provided for herein, Borrower represents and warrants to
Lender as follows:

     

    a.   Borrower
is a duly organized, validly existing, and in good standing under the laws of
the State of Utah with the power to own its assets and to transact business in
California, and in such other states where its business is
conducted.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

      b.   Borrower
has the authority and power to execute and deliver any document required
hereunder and to perform any condition or obligation imposed under the terms of
such documents.

       

      c.   The
execution, delivery and performance of this Loan Agreement and each document
incident hereto will not violate any provision of any applicable law,
regulation, order, judgment, decree, article of incorporation, by-law,
indenture, contract, agreement, or other undertaking to which Borrower is a
party, or which purports to be binding on Borrower or its assets and will not
result in the creation or imposition of a lien on any of its
assets.

       

      d.   There is
no action, suit, investigation, or proceeding pending or, to the knowledge of
Borrower, threatened, against or affecting Borrower or any of its assets which,
if adversely determined, would have a material adverse affect on the financial
condition of Borrower or the operation of its business.

    

     

    7. EVENTS OF
DEFAULT. An event of default will occur if any of the following events
occurs:

     

    a.   Failure
to pay any principal or interest hereunder within sixty (60) days after the same
becomes due.

     

    b.   Any
representation or warranty made by Borrower in this Loan Agreement or in
connection with any borrowing or request for an Advance hereunder, or in any
certificate, financial statement, or other statement furnished by Borrower to
Lender is untrue in any material respect at the time when made.

     

    c.   The
Borrower or AE Biofuels, Inc., a Nevada corporation (the “Parent Company”)
defaults (i) in payment of any amounts under any indenture, loan agreement or
other instrument under which any evidence of Indebtedness of the Borrower or the
Parent Company exceeding $100,000 in principal amount has been or hereafter may
be issued, (ii) in compliance with the terms, covenants or other provisions of
any such indenture, loan agreement or other instrument and the effect of such
default in compliance is to permit the acceleration of the stated maturity of
such Indebtedness (whether or not actually accelerated) or (in the case of
demand obligations) results in demand for payment of such
Indebtedness;

     

    d.   The
Borrower or the Parent Company shall default in the performance or observance of
any provision of any agreement or commitment (other than those relating to
Indebtedness) and such default has or might have a Material Adverse
Effect;

     

    e.   Default
by Borrower in the observance or performance of any other covenant or agreement
contained in this Loan Agreement, other than a default constituting a separate
and distinct event of default under this Section 7.

     

    f.   Filing by
Borrower of a voluntary petition in bankruptcy seeking reorganization,
arrangement or readjustment of debts, or any other relief under the Bankruptcy
Code as amended or under any other insolvency act or law, state or federal, now
or hereafter existing.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

      g.   Filing of
an involuntary petition against Borrower in bankruptcy seeking reorganization,
arrangement or readjustment of debts, or any other relief under the Bankruptcy
Code as amended, or under any other insolvency act or law, state or federal, now
or hereafter existing, and the continuance thereof for sixty (60) days
undismissed, unbonded, or undischarged.

       

      h.   Notwithstanding
the foregoing, no event of default shall have occurred until ten (10) days after
notice thereof has been given by the Lender to Borrower in accordance with
Section 9 below.

    

     

    8. REMEDIES.
Upon the occurrence and during the continuance of an Event of Default as defined
above, Lender may (i) declare the entire unpaid principal balance, together with
accrued interest thereon, to be immediately due and payable; and (ii) exercise
all rights and remedies available under this Agreement, the Security Agreement
and applicable law. Lender may suspend or terminate any obligation it may have
hereunder to make additional Advances. To the extent permitted by law, Borrower
waives any rights to presentment, demand, protest, or notice of any kind in
connection with this Loan Agreement. No failure or delay on the part of Lender
in exercising any right, power, or privilege hereunder will preclude any other
or further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided herein are cumulative and not
exclusive of any other rights or remedies provided at law or in equity. Borrower
agrees to pay all costs of collection incurred by reason of the default,
including court costs and reasonable attorney's fees.

     

    9. NOTICE.
All notices, demands or other communications to be given or delivered pursuant
to the terms of this Loan Agreement shall be in writing and shall be deemed to
have been given when delivered personally to the recipient, sent to the
recipient by reputable overnight courier services (charges prepaid) or mailed to
the recipient by certified or registered mail, return receipt requested and
postage prepaid, addressed to the party to which notice is being given as
follows:

     

    If to
Borrower:

    

    International
Biodiesel, Inc.

    20400
Stevens Creek Blvd., Suite 700

    Cupertino,
CA 95014

    Attn:  Chief
Executive Officer

    

    If to
Lender:

    

    Laird Q.
Cagan

    10600 N.
De Anza Blvd., Suite 250

    Cupertino,
CA 95014

     

    10. GENERAL
PROVISIONS. All representations and warranties made in this Loan Agreement and
the Note and in any certificate delivered pursuant thereto shall survive the
execution and delivery of this Loan Agreement and the making of any loans
hereunder. This Loan Agreement will be binding upon and inure to the benefit of
Borrower and Lender, their respective successors and assigns, except that
Borrower may not assign or transfer its rights or delegate its duties hereunder
without the prior written consent of Lender. This Loan Agreement, any Note
issued pursuant hereto, and all documents and instruments associated herewith
will be governed by and construed and interpreted in accordance with the laws of
the State of California. Time is of the essence hereof. This Loan Agreement will
be deemed to express, embody, and supersede any previous understanding,
agreements, or commitments, whether written or oral, between the parties with
respect to the general subject matter hereof. This Loan Agreement may not be
amended or modified except in writing signed by the parties.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, this Loan Agreement has been duly executed by the parties
hereto as of the 17 day of August,
2009.

    
    

     

    
      	BORROWER:	 
	 	 	 
	INTERNATIONAL
      BIODIESEL, INC.	 
	 	 	 
	By:	/s/ Eric
      McAfee	 
	Title: 	President/CEO	 
	 	
               

               

               

               

            	 
	LENDER:	 
	 	/s/ Laird Q.
      Cagan	 
	 	Laird Q.
    Cagan	 

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    THIS NOTE
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OR ASSIGNED TO ANY US
PERSON AND EVERY PURCHASER OR SUBSEQUENT HOLDER OF THIS NOTE WILL BE REQUIRED TO
CERTIFY THAT IT IS NOT A US PERSON AND IS NOT ACQUIRING THE SECURITIES FOR THE
ACCOUNT OR BENEFIT OF ANY US PERSON.

    

    THE NOTE
EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT OR ANY OTHER APPLICABLE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR ANY OTHER APPLICABLE SECURITIES LAW, INCLUDING STATE
SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION THEREFROM, OR IN A TRANSACTION NOT
SUBJECT THERETO.

     

    
      	 	PROMISSORY
      NOTE	 
	 	 	 
	$5,000,000.00   	 	 
	August 17, 2009	 	Cupertino,
      California

    

     

    This Promissory Note (the "NOTE") is
made and executed as of the date referred to above, by and between International
Biodiesel, Inc., a Nevada corporation (the "BORROWER"), and Laird Q. Cagan
("LENDER"). By this Note, the Borrower promises and agrees to pay to the order
of Lender, at 10600 N. De Anza Blvd., Suite 250, Cupertino, CA 95014 at such
other place as Lender may designate in writing, the principal sum of Five
Million and 00/100 Dollars ($5,000,000.00), or the aggregate unpaid principal
amount of all advances made by Lender to Borrower pursuant to the terms of a
Revolving Line of Credit Agreement (the "LOAN AGREEMENT") of even date herewith,
whichever is less, together with interest thereon on the dates set forth in the
Loan Agreement.  Borrower shall pay accrued interest on the
outstanding principal balance under the Note at the interest rates and on the
dates specified in the Loan Agreement.   This Note is subject to
the provisions of the Loan Agreement.

     

    THE OBLIGATIONS DUE UNDER THIS NOTE ARE
SECURED BY A SECURITY AGREEMENT (THE “SECURITY AGREEMENT”) DATED AS OF THE DATE
HEREOF AND EXECUTED FOR THE BENEFIT OF THE LENDER.  ADDITIONAL RIGHTS
OF LENDER ARE SET FORTH IN THE SECURITY AGREEMENT.

     

    Upon the occurrence and during the
continuance of any one or more Events of Default, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable, all as provided in the Loan Agreement.

     

    Unless otherwise defined herein, terms
defined in the Loan Agreement and used herein shall have the meanings given to
them in the Loan Agreement.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    The
Borrower hereof waives presentment for payment, protest, demand, notice of
protest, notice of dishonor, and notice of nonpayment, and expressly agrees that
this Note, or any payment hereunder, may be extended from time to time by the
Lender without in any way affecting its liability hereunder.

     

    This Note
and the rights and obligations of the parties under this Note shall be governed
by and construed and enforced in accordance with the laws of
California.

     

    
       

      
        	BORROWER:	 
	 	 	 
	
                INTERNATIONAL
      BIODIESEL, INC.

                a
      Nevada corporation

              	 
	 	 	 
	By:	/s/ Eric
      McAfee	 
	Title: 	President/CEO	 
	 	
                 

                 

                 

                 

              	 
	LENDER:	 
	 	/s/ Laird Q.
      Cagan	 
	 	Laird Q.
    Cagan	 

      

    

     

    
      
        
        

      

      
        7

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