Exhibit 10.1
New Energy Technologies,
Inc.
9192
Red Branch Rd., Suite 110
Columbia, MD 21045
Telephone: (800) 213-0689 • Facsimile (240)
390-0603
December 17, 2010
Mr. Andrew Farago
6631 NW 43
rd
Terrace
Boca Raton, FL 33496
Re: Your
At-Will Employment by New Energy Technologies, Inc.
Dear Andrew:
This letter (the “
Agreement
”) sets forth the terms and
conditions of your at-will employment by New Energy Technologies, Inc. (the
“
Company
”). For the
purposes of this Agreement, capitalized terms used but not otherwise defined in
this Agreement shall have the meanings ascribed
thereto in
Paragraph 21
hereof.
1.
Position and Duties.
(a) Executive
Positions.
You shall be employed by the Company as its
Chief Operating Officer and/or such other positions as the Company’s Board of
Directors (the “
Board
”) may from time to time
designate (collectively, the “
Executive Positions
”);
in performance of your duties, you shall be subject to the direction of, and be
reporting directly to the Company’s President and CEO, and the Company's Board
of Directors; anything herein to the contrary notwithstanding, if requested by
the Board, you will immediately resign from the Executive Positions.
(b) Full
Time Efforts
. Except during vacations, holidays and other leave
time, you agree to devote your full time efforts, professional attention,
knowledge, and experience as may be necessary to carry on your duties
pursuant to this agreement and the fulfillment of your responsibilities in
accordance with the Executive Positions. For purposes of clarity,
except with respect to subsidiaries of the Company, you may not render executive
services to, or serve as a director of, any other Person without the prior
approval of the Board. However, nothing in this
Paragraph 1(a)
shall be construed as preventing you from
pursuing any of the following: (i) investing and managing your personal
assets and investments, so long as such assets and investments are not in
businesses which are in direct competition with the Company or otherwise present
a conflict of interest with the Company; (ii) trading securities as an
associated person of a registered broker-dealer as long as you do not trade
securities of the Company or in violation of the Company's inside information
policy and (iii) participating in civic, charitable, religious, industry and
professional organizations and functions.
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New Energy
Technologies, Inc.
Andrew Farago
December 17,
2010
Re: At Will Employment
Agreement
Page | 2
(c)
Travel.
You shall be available
to travel as the needs of the Company’s Business require.
(d) Code
of Ethics.
During your employment with the Company
you agree to adhere to the Company’s
Code
of Ethics and Business Conduct,
a copy of which is attached
hereto as
Appendix A.
2.
At-Will Employment.
Anything herein to the contrary notwithstanding, your employment with and by the
Company is an “at-will employment” arrangement and may be terminated by you or
the Company at any time, with or without cause, and for any reason whatsoever,
upon written notice as provided in
Paragraph 10
hereof..
3.
Compensation.
You shall be compensated by the Company for your services hereunder as
follows:
(a) Salary
.
(i)
Initial Salary.
Commencing December 17, 2010 (the “
Start Date
”), you shall be paid a
monthly salary of $12,500.00 (and as modified from time to time hereunder, the
“
Monthly Payment
”)
($150,000.00 per year), subject to applicable tax withholding, the salary is
payable in 24 installments of $6,250 each on the 15th and last day of each
calendar month during the term of this Agreement. The Monthly Payment
shall be prorated for any partial months during the term of this Agreement.
(ii)
Salary Adjustment
. If during the term of this Agreement the
Company consummates either an equity or debt financing or series of financings
(collectively, a “
Financing
”) pursuant to which it
either directly or through a subsidiary receives net proceeds (after deduction
of the costs of such financing, inclusive of commissions and or finder’s fees)
of not less than $7,000,000 , the Monthly Payment shall be increased to
$20,833.34 (approximately $250,000 per year), payable as set forth in clause (i)
above, commencing with the first Monthly Payment due immediately following the
consummation of the Financing.
(iii) Periodic
Review.
The salary component of your compensation
hereunder shall be subject to periodic review and adjustment in accordance with
the Company's salary review policies and practices then in effect for its senior
management.
(b)
Stock Options.
As
an incentive to enter into and undertake employment pursuant to this Agreement,
and
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New Energy
Technologies, Inc.
Andrew Farago
December 17,
2010
Re: At Will Employment
Agreement
Page | 3
to
meet certain Company milestones you will be granted stock options as
follows:
(i) Number, Vesting and Exercise
Price.
Subject to your execution and delivery of
this Agreement and the definitive Stock Option Agreement substantially in the
form of
Appendix B
hereto (the “
Stock Option Agreement
”)
you shall receive a total of 1,500,000 options (the “
Options
”) to purchase up to an
aggregate of 1,500,000 shares of the Company’s common stock; the Options are
subject to and shall have such further restrictions, vesting requirements and
exercise provisions as are set forth in the Stock Option Agreement. Subject to
the foregoing the Option shall vest:
1. as to 100,000 when, as a result of your direct efforts, you are able to
develop, to the satisfaction of the Board of Directors, a comprehensive business
plan, plan of operations, product roll-out strategy, various financial models
associated with the business plan, and other such corporate finance tools
required by the Company.
2. as to 250,000 when the Company
appoints or elects at least two new Directors to its Board of Directors, who
have been recommended by you. The Company agrees to act in good faith and
consider candidates recommended by you.
3. as to 250,000 when, as a result of
your direct efforts and contribution , the Company receives non-compensated
analyst coverage.
4. as to 250,000 when, as a result of
your direct efforts and contribution, the Company is able to achieve a
listing on either the AMEX or NASDAQ stock exchange.
5. as to 150,000 when, as a result of
your direct efforts and contribution, the Company enters into a product
development relationship whereby a third-party industry partner makes a
significant financial investment, as determined at the Board’s discretion,
directed towards the development of the Company’s products.
6. as to 100,000 shares for each
calendar year of service in an Executive Position for the next five years
(500,000 shares in the aggregate), which shall vest as follows:
(a) as to 100,000 shares on
December 17, 2011;
(b) as to 100,000 shares on
December 17, 2012;
(c) as to 100,000 shares on
December 17, 2013;
(d) as to 100,000 shares on
December 17, 2014; and
(e) as to 100,000 shares on
December 17, 2015.
All
determinations and calculations with respect to the satisfaction of the
conditions to the vesting of any of the foregoing options shall be made by the
Board or any committee thereof to which the Board has delegated such authority,
in good faith in accordance with applicable law,
3
New Energy
Technologies, Inc.
Andrew Farago
December 17,
2010
Re: At Will Employment
Agreement
Page | 4
the
Articles of Incorporation and By-laws of the Company, in its sole discretion,
and shall be final, conclusive and binding on all persons, including you and the
personal representative of your estate.
(ii) Form S-8. The Company shall as soon as practicable following
the date hereof and subject to satisfaction of any and all applicable regulatory
requirements and shareholder approval, file a Form S-8 with the Securities and
Exchange Commission registering the shares of common stock issuable upon
exercise of the Options and keep such registration statement in effect until the
sale of all shares of common stock issuable under the Options or expiration of
the 10-year term.
(iii) Term of
the Options
. Subject to the earlier termination
provisions set forth in the Stock Option Agreement, the Option shall have a term
of ten (10) years from the date hereof. The granting of the Options shall
be effective only upon delivery of a fully executed Stock Option
Agreement.
4. Additional
Benefits
.
(a) Vacation.
You shall be entitled to two weeks of paid
vacation each calendar year. Vacation will accrue on January 1 of each
year No vacation period will accrue with respect to the 2010 calendar
year. No compensation shall be paid for accrued but untaken
vacation.
(b) Medical
Insurance.
During the term of this Agreement, the
Company agrees to pay you a monthly stipend of $1,000.00 per month in addition
to your annual salary to cover medical insurance premiums until such time that
the Company can make available an alternative medical insurance plan.
(c)
Other Expenses.
You shall be entitled to reimbursement for
reasonable travel and other out-of-pocket expenses necessarily incurred in the
performance of your duties hereunder, upon submission and approval of written
statements and bills in accordance with the then regular procedures of the
Company (collectively, “
Business Expense
Reimbursement
”).
(d) D&O
Insurance; Officer Liability.
The Company has delivered to
your a complete accurate copy of its policy of directors and officers liability
insurance as currently in effect and the Company covenants that it will maintain
such policy in force as long as the you are an officer of the Company,
subject however, to such changes therein as may be required by the carrier in
order to maintain such insurance in place. The Company will use its best
efforts to obtain the consent of the Board to expand the coverage provided by
the Policy to include “Side A” coverage in an amount of no less than $1,000,000.
Furthermore, the Company covenants that it will use its best efforts to obtain
the consent of its Board and its principal shareholders to amend, if necessary,
the Articles of Incorporation to provide to officers the same limitation of
liability available to directors, and it will as promptly as possible thereafter
use its best efforts to so amend the Articles of Incorporation.
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New Energy
Technologies, Inc.
Andrew Farago
December 17,
2010
Re: At Will Employment
Agreement
Page | 5
(e)
Miscellaneous.
In addition to the other benefits set
forth in this Paragraph 4, you may also participate, subject to Board approval,
in all other present and future employee benefit plans of the Company for its
senior executive staff, provided that you meet the eligibility requirements for
participation in any such plans. The Company shall use commercially
reasonable efforts to provide you with directors’ and officers’ liability
insurance under the policies for such insurance arranged by the Company from
time to time upon such terms and in such amounts as the Board may reasonably
determine in its discretion. The Company shall, to the full extent
permitted by, and subject to, applicable law, defend you, indemnify you and hold
you harmless as to all suits, actions, and claims made against you arising out
of your actions as an officer and/or employee of the Company.
5.
Your Representations and
Warranties.
You represent and warrant to the Company
that:
(a)
The
execution, delivery and performance by the Executive of this Agreement do not
conflict with or result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default under any contract, agreement
or understanding, whether oral or written, to which you are a party or of which
you or should be aware and that there are no restrictions, covenants, agreements
or limitations on his right or ability to enter into and perform the terms of
this Agreement, and agrees to indemnify and save the Company and its affiliates
harmless from any liability, cost or expense, including attorney’s fees, based
upon or arising out of any such restrictions, covenants, agreements, or
limitations that may be found to exist;
(b)
You
are under no physical or mental disability that would hinder your performance of
duties under this Agreement;
(c)
Except as set forth in
Appendix C
attached hereto, you are not party to any ongoing
civil or criminal proceedings, and have not been party such proceedings within
the past ten years, and do not know of any such proceeding that may be
threatened or pending against you; and
(d)
You
are not currently engaged in activities and will not knowingly engage in future
activities that may cause embarrassment to the Company or tarnish the reputation
or public image of the Company, including but not necessarily limited to
association with or party to: any criminal behavior(s) such as drug use,
theft, or any other potential or active violation of law; political controversy,
civil disobedience, or public protest; lewd, lascivious behavior.
6.
Discoveries and
Works.
All Discoveries and Works which are made or conceived by you during your
employment by the Company, solely, jointly or with others, that relate to the
Company's present or anticipated activities, or are used or useable by the
Company within the scope of this
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New Energy
Technologies, Inc.
Andrew Farago
December 17,
2010
Re: At Will Employment
Agreement
Page | 6
Agreement shall be owned by the
Company. You shall (a) promptly notify, make full disclosure to, and
execute and deliver any documents requested by the Company, as the case may be,
to evidence or better assure title to Discoveries and Works in the Company, as
so requested, (b) renounce any and all claims, including but not limited to
claims of ownership and royalty, with respect to all Discoveries and Works and
all other property owned or licensed by the Company, (c) assist the Company in
obtaining or maintaining for itself at its own expense United States and foreign
patents, copyrights, trade secret protection or other protection of any and all
Discoveries and Works, and (d) promptly execute, whether during his employment
with the Company or thereafter, all applications or other endorsements necessary
or appropriate to maintain patents and other rights for the Company and to
protect the title of the Company thereto, including but not limited to
assignments of such patents and other rights. Any Discoveries and
Works which, within one year after the expiration or termination of your
employment with the Company, are made, disclosed, reduced to tangible or written
form or description, or are reduced to practice by you and which pertain to the
business carried on or products or services being sold or delivered by the
Company at the time of such termination shall, as between you and, the Company,
be presumed to have been made during your employment by the
Company. You acknowledge that all Discoveries and Works shall be
deemed “works made for hire” under the U.S. Copyright Act of 1976, as amended 17
U.S.C. Sect. 101
7.
Intellectual Property.
(a) Assignment.
(i)
You
agree to make full written disclosure to the Company and will hold in trust for
the sole right and benefit of the Company, and hereby assign to the Company, or
its designee, all of your right, title and interest in and to any Intellectual
Property. Without limiting the foregoing, all copyrightable works
that you create during your employment with the Company shall be considered
“work made for hire.”
(ii)
Any
interest in Intellectual Property which you now, or hereafter during the period
you are employed by the Company, may own or develop relating to the fields in
which the Company may then be engaged shall belong to the Company; you hereby
assign and agree to assign to the Company (or as otherwise directed by the
Company) all of your right, title and interest in and to all Work Product,
including without limitation all patent, copyright, trademark and other
intellectual property rights therein and thereto. If you have any such
rights that cannot be assigned to the Company, you waive the enforcement of such
rights, and if you have any rights that cannot be assigned or waived, you hereby
grant to the Company an exclusive, irrevocable, perpetual, worldwide, fully paid
license, with right to sublicense through multiple tiers, to such rights.
Such rights shall include the right to make, use, sell, improve, commercialize,
reproduce, distribute, perform, display, transmit, manipulate in any manner,
create derivative works based on, and otherwise exploit or utilize in any manner
the subject intellectual property.
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(iii)
Your
obligation to assign your rights to Intellectual Property under
this
Paragraph 7
shall not apply to any
inventions and all Discoveries and Works expressly identified in the
attached
Appendix D
attached hereto which were developed prior to
the your performance of services hereunder for the Company, provided
however that inventions to be developed by the you during the term of the
Consultant's agreement may be subsequently added to the Schedule upon the mutual
agreement of the you and the Company that such inventions are outside the scope
of the Agreement. You acknowledges that there are, and may be, future
rights that the Company may otherwise become entitled to with respect to the
Intellectual Property that do not yet exist, as well as new uses, media, means
and forms of exploitation throughout the universe exploiting current or future
technology yet to be developed, and you specifically intends the foregoing
assignment of rights to the Company to include all such now known or unknown
uses, media and forms of exploitation. You agree to cooperate with the
Company, both during and after the term of your employment , in the procurement
and maintenance of the Company’s rights to the Intellectual Property and to
execute, when requested, any and all applications for domestic and foreign
patents, copyrights and other proprietary rights or other documents and to
do such other acts (including without limitation the execution and delivery of
instruments of further assurance or confirmation) requested by the Company to
assign the Intellectual Property to the Company, to permit the Company to
enforce any patents, copyrights or other proprietary rights to the Intellectual
Property and to otherwise carry out the purpose of this Agreement.
(iv)
If the Company
is unable because of your mental or physical incapacity or for any other reason
to secure any signature for any of the assignments, licenses or other reasonably
requested documents pertaining to the intellectual property rights referenced
herein within ten (10) days of the delivery of said documents to you, then you
hereby irrevocably designate and appoint the Company and its duly authorized
officers and agents as your agent and attorney in fact, to act for and on your
behalf and stead and to execute and file said documents and do all other
lawfully permitted acts to further the perfection, defense and enjoyment of the
Company’s rights relating to the subject Intellectual Property with the same
legal force and effect as if executed by you. You stipulate and agree that
such appointment is a right coupled with an interest, and will survive your
incapacity or unavailability at any future time.
(b)
Maintenance of Records.
You agree to keep and maintain adequate and
current written records of all Intellectual Property made by you (solely or
jointly with others) during the term of your employment with the Company.
The records will be in the form of notes, sketches, drawings, electronic or
digital data, and any other format that may be specified by the Company.
The records will be available to, and remain the sole property of, the Company
at all times.
(c) Patent and Copyright
Registrations.
You agree to assist the Company, or its
designee, at the Company’s expense, in every proper way to secure the Company’s
rights in the Intellectual Property Items and any copyrights, patents, mask work
rights or other intellectual property rights relating thereto in any and all
countries, including the disclosure to the Company of all pertinent information
and data with respect thereto and the execution of all applications,
7
specifications, oaths, assignments and all other
instruments which the Company shall deem necessary in order to apply for and
obtain such rights and in order to assign and convey to the Company, its
successors, assigns and nominees the sole and exclusive rights, title and
interest in and to such Intellectual Property Items, and any copyrights,
patents, mask work rights or other intellectual property rights relating
thereto.
8.
Non-competition and Non-Solicitation
and Non-Circumvention.
(a) Non-competition.
Except as authorized by the Board, during your
employment by the Company and for a period of one (1) year thereafter, you will
not (except as an officer, director, stockholder, employee, agent or consultant
of the Company or any subsidiary or affiliate thereof) either directly or
indirectly, whether or not for consideration, (i) in any way, directly or
indirectly, solicit, divert, or take away the business of any person who is or
was a customer of the Company, or in any manner influence such person to cease
doing business in part or in whole with Company; (ii) engage in a Competing
Business; (iii) except for investments or ownership in public entities,
mutual funds and similar investments, none of which constitute more than 5% of
the ownership or control of such entities, own, operate, control, finance,
manage, advise, be employed by or engaged by, perform any services for, invest
or otherwise become associated in any capacity with any person engaged in a
Competing Business; or (iv) engage in any practice the purpose or effect of
which is to intentionally evade the provisions of this covenant. For
purposes of this section, “
Competing Business
”
means any company or business which is engaged directly or indirectly in any
business carried on or planned to be carried on (if such plans were developed
while you were employed by the Company) by the Company or any of its
subsidiaries or affiliates
(b)
The
following activities shall not be deemed to be Competitive to the Company’s
business, unless the parties mutually agree to modify based upon developments
within the Company:
(i) A renewable energy
design and installation business which shall not make use of the Company’s
products and technologies or the Company’s products and technologies under
development and shall not compete against the Company. You may engage in
design and installation businesses which include but are not limited to the
installation of solar photovoltaic modules, thermal panels, or wind
turbines.
(ii) A renewable energy operating
business (i.e. owner, operator or management of any renewable energy
installation) which shall not make use of the Company’s products and
technologies or the Company’s products and
8
technologies under development and shall not
compete against the Company.
(iii) Notwithstanding, Company
acknowledges that you may have other existing outside interests. Provided
such:
a. interests
do not affect your ability to competently perform obligations hereunder,
and
b. Entities
do not compete with any Company business, Company hereby consents to allow you
to continue to provide services to such other entities. You agree to not
compete with any Company business, or with the Company’s current products and
technologies and technologies under development.
(c)
Non-Solicitation and
Non-Circumvention
. For a period of one year following your
employment with the company, you will not directly or indirectly, whether for
your account or for the account of any other individual or entity, solicit or
canvas the trade, business or patronage of, or sell to, any individuals or
entities that were investors, customers or employees of the Company during the
period during which you were employed by the Company, or prospective customers
with respect to whom a sales effort, presentation or proposal was made by the
Company or its affiliates, during the one year period prior to the termination
of your employment. Without limiting the foregoing, you shall not,
directly or indirectly, (i) solicit, induce, enter into any agreement with, or
attempt to influence any individual who was an employee or consultant of the
Company at any time during the time you were employed by the Company, to
terminate his or her employment relationship with the Company or to become
employed you or any individual or entity by which you are employed or (ii)
interfere in any other way with the employment, or other relationship, of any
employee or consultant of the Company or its affiliates.
(d)
Requirement to Safeguard Confidential
Information.
All Confidential Information of the
Company is expressly acknowledged by you to be the sole property of the Company,
and the disclosure of the Confidential Information shall not be deemed to confer
any rights with respect to such Confidential Information on you. You
will exercise reasonable care to ensure the confidentiality of the Confidential
Information. All confidential information which you may now possess,
or may obtain or create prior to the end of the period you are
employed by the Company, relating to the business of the Company, or any
customer or supplier of the Company, or any agreements, arrangements, or
understandings to which the Company is a party, shall not be disclosed or made
accessible by you to any other person or entity either during or after the
termination of your employment or used by Executive except during your
employment by the Company in the business and for the benefit of the Company,
without the prior written consent of the Company. Nothing herein shall be
construed as an obligation of the Company to consent to the terms and conditions
of any such request and under no circumstances shall any such approval be deemed
to waive, alter or modify the terms and conditions of this
9
Agreement. You shall return all tangible
evidence of such confidential information to the Company prior to or at the
termination of your employment.
9.
Enforcement.
(a)
Provisions Reasonable.
It is acknowledged and agreed
that:
(i)
both before and since the Start Date the Company has operated and competed and
will operate and compete in a global market, with respect to the Company’s
Business;
(ii)
competitors of the Company are located in countries around the world;
(iii)
in order to
protect the Company adequately, any enjoinder of competition would have to apply
world-wide;
(iv)
during the
course of your employment by the Company, both before and after the Start Date,
on behalf of the Company, you have acquired and will acquire knowledge of, and
you have come into contact with, initiated and established relationships with
and will come into contact with, initiate and establish relationships with, both
existing and new clients, customers, suppliers, principals, contacts and
prospects of the Company, and that in some circumstances you have been or may
well become the senior or sole representative of the Company dealing with such
persons; and
(v)
in light
of the foregoing, the provisions of
Paragraphs 6, 7 and 8
are reasonable and necessary for the proper
protection of the business, property and goodwill of the Company and the
Company’s Business.
(b)
Enforcement
. Nothing herein
contained shall be construed as prohibiting the Company or you from pursuing any
remedies available for any breach or threatened breach of this
Agreement. A waiver by the Company or you of any breach of any
provision hereof shall not operate or be construed as a waiver of a breach of
any other provision of this Agreement or of any subsequent breach.
10.
Termination.
(a)
Manner of Termination.
The Company and you may terminate this
Agreement, with or without cause, for any reason whatsoever, by providing
written notice (the “
Termination Notice
”),
in accordance with Paragraph 17, to the other specifying the date of
termination (the “
Termination Date
”).
(b)
Effect of Termination.
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(i)
Payments.
In the event
this Agreement is terminated pursuant to
Paragraph 10
(a)
your rights and the Company's obligations
hereunder shall cease as of the effective date of the termination; provided,
however, that the Company shall pay the you (i) your Monthly Salary,
prorated through the Termination Date, (ii) your Business Expense Reimbursements
through the Termination Date, (iii) your Medical Insurance and any other
benefits due to you, prorated through the Termination Date, (iv) and, if
terminated by the Company, and subject to your compliance with the requirements
of
Paragraphs 10 (b)(iii) and
(iv),
the “
Severance
Payment
” as defined and calculated pursuant
to
Paragraph 10 (b)(ii)
and
(v)
your
accrued but unused vacation. All payments (other than the Severance
Payment, which will be made as set forth in
Paragraph 10(b) (ii)
,
will be made in accordance with the Company’s regular payroll procedures through
the Termination Date; and the full payment all of payments and benefits due to
you upon termination shall completely and fully discharge and constitute a
release by you of any and all obligations and liabilities of the Company to you,
including, without limitation, the right to receive Base Salary, options and all
other compensation or benefits provided for in this Agreement, and you shall not
be entitled to any further compensation, options, or severance compensation of
any kind, and shall have no further right or claim to any compensation, options,
benefits or severance compensation under this Agreement or otherwise against the
Company or its affiliates, from and after the date of such termination, except
as provided by the terms of the Stock Option Agreement, any benefit plan under
which you are participating.
(ii)
Severance.
In the event of a
termination of this Agreement by the Company you will be entitled to a severance
payment (the “
Severance Payment
”)
equal to one Monthly Payment, in effect on the date of the Company’s Termination
Notice, for every four (4) month period that you have been employed by the
Company pursuant to this Agreement up to a maximum aggregate Severance Payment
equal to six (6) Monthly Payments, provided that (a) you have delivered to
the Company the General Release substantially in the form of
Appendix E
hereto and (b) a written statement of your compliance with the provisions of
this
Paragraph 10
,
including but not limited to clauses
(iii)
and
(iv)
hereof. The Severance
Payment shall be subject to any applicable tax withholdings.
(iii)
Resignation.
The termination of this Agreement pursuant to
this
Paragraph 10
shall constitute your resignation from any
and all Executive Positions and, if applicable, as a Director of the Company
effective as of the Termination Date.
(iv) Return of Documents and
Property.
Upon the expiration or termination of
your employment with the Company, or at any time upon the request of the
Company, you (or your heirs or personal representatives) shall deliver to the
Company in good order (a) all documents and materials (including, without
limitation, computer files) containing Trade Secrets and Confidential
Information relating to the business and affairs of the Company or its
affiliates; (b) all documents, materials, equipment and other property
(including, without limitation, computer files, computer programs, computer
operating systems, computers, printers, scanners, pagers, telephones, credit
cards and ID cards) belonging to the Company or its affiliates, which
11
in
either case are in the possession or under the your control (or the control of
your heirs or personal representatives); and (c) all corporate records of the
Company, including minute books, accounting related materials, audit related
materials, attorney correspondence, and any other such records which may be in
your possession.
(v)
Survival of Certain Provisions
. Notwithstanding
anything to the contrary contained herein, if this Agreement is terminated the
provisions of
Paragraphs 5, 6, 7, 8, 9, 10, 12 and
13
of this Agreement shall survive such
termination and continue in full force and effect.
(vi)
Relinquishment of Authority.
Notwithstanding anything to the
contrary set forth herein, upon written notice to you, the Company may
immediately relieve you of all your duties and responsibilities hereunder and
may relieve you of authority to act on behalf of, or legally bind, the
Company. However, such action by the Company shall not alter the Company’s
obligations to you with regard to the procedure for a termination.
11.
Successors and Assigns.
This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns. In view of the
personal nature of the services to be performed under this Agreement by you, you
shall not have the right to assign or transfer any of your rights, obligations
or benefits under this Agreement, except as otherwise noted herein.
12. No
Reliance on Representations.
You acknowledge that you are not relying, and have not
relied, on any promise, representation or statement made by or on behalf of the
Company which is not set forth in this Agreement.
13.
Entire Agreements; Amendments.
This Agreement and the Stock Option Agreement set
forth our entire understanding with respect to your employment by the Company,
supersede all existing agreements between you and the Company concerning such
employment, and may be modified only by a written instrument duly executed by
each of you and the Company.
14.
Waiver.
Any waiver by either party of a breach of any provision
of this Agreement shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a waiver
or deprive
12
that
party of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement. Any waiver must be in
writing.
15.
Construction.
You and the Company have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by you and the Company and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. The word “including” shall mean including without
limitation. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa. The headings in this Agreement are solely for the
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
16.
Severability.
Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
17.
Notices.
All notices, demands or requests made pursuant to,
under or by virtue of this Agreement must be in writing and sent to the party to
which the notice, demand or request is being made by (i) certified mail, return
receipt requested, (ii) nationally recognized overnight courier delivery, (iii)
by facsimile transmission provided confirmation of transmission is mechanically
or electronically generated and kept on file by the sending party or (iv) hand
delivery as follows:
To the Company:
New Energy Technologies,
Inc.
9192 Red Branch Rd., Suite
110
Columbia, MD 21045
Attention: President and Chief
Executive Officer
13
Fax: (240) 390-0603
With a copy (which shall not constitute
notice) to:
Joseph Sierchio, Esq.
Sierchio & Company, LLP
430 Park Avenue, Suite 702
New York, NY 10022
Fax: (212) 246-3039
To you:
Andrew Farago
6631 NW 43rd Terrace
Boca Raton, FL 33496
Facsimile:
561-910-1215
or to such other address, facsimile
number, or email address, as is specified by a party by notice to the other
party given in accordance with the provisions of this
Paragraph 17
. Any notice given in accordance with the
provisions of this
Paragraph 17
shall be deemed given (i) three (3) business
days after mailing (if sent by certified mail), (ii) one (1) business day after
deposit of same with a nationally recognized overnight courier service (if
delivered by nationally recognized overnight courier service), or (iii) on the
date delivery is made if delivered by hand or facsimile.
18.
Counterparts; Delivery by Facsimile.
(a)
This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one or
more counterparts have been signed by you and the Company and delivered to the
other, it being understood that you and the Company need not sign the same
counterpart. This Agreement may be executed by facsimile signature and a
facsimile signature shall constitute an original for all purposes.
(b)
This
Agreement, the agreements referred to herein, and each other agreement or
instrument entered into in connection herewith or therewith or contemplated
hereby or thereby, and any amendments hereto or thereto, to the extent signed
and delivered by means of a facsimile machine, shall be treated in all manner
and respects as an original agreement or instrument and shall be considered to
have the same binding legal effect as if it were the original signed version
thereof delivered in person. At the request of any party hereto or to any
such agreement or instrument, each other party hereto or thereto shall
re-execute original forms thereof and deliver them to all other parties.
No party hereto or to any such agreement or
14
instrument shall raise the use of a facsimile
machine to deliver a signature or the fact that any signature or agreement or
instrument was transmitted or communicated through the use of a facsimile
machine as a defense to the formation or enforceability of a contract and each
such party forever waives any such defense.
19.
Disclosure and Avoidance of Conflicts of Interest.
During your employment with the Company, you will promptly, fully and frankly
disclose to the Company in writing:
(a)
the
nature and extent of any interest you or your Affiliates (as hereinafter
defined) have or may have, directly or indirectly, in any contract or
transaction or proposed contract or transaction of or with the Company or any
subsidiary or affiliate of the Company;
(b)
every
office you may hold or acquire, and every property you or your Affiliates may
possess or acquire, whereby directly or indirectly a duty or interest might be
created in conflict with the interests of the Company or your duties and
obligations under this Agreement;
(c)
the
nature and extent of any conflict referred to in subsection (b) above;
and
(d)
you
acknowledge that it is the policy of the Company that all interests and
conflicts of the sort described herein be avoided, and you agree to comply with
all policies and directives of the Board from time to time regulating,
restricting or prohibiting circumstances giving rise to interests or conflicts
of the sort described herein. During your employment with the Company,
without Board approval, in its sole discretion, you shall not enter into any
agreement, arrangement or understanding with any other person or entity that
would in any way conflict or interfere with this Agreement or your duties or
obligations under this Agreement or that would otherwise prevent you from
performing your obligations hereunder, and you represent and warrant that you or
your Affiliates have not entered into any such agreement, arrangement or
understanding.
20. Code
Section 409A.
This Agreement shall be interpreted, construed and administered in a manner that
satisfies the requirements of Sections 409A of the Internal Revenue Code of
1986, as amended from time to time and the Treasury Regulations thereunder (the
“
Code
”), and any payment
scheduled to be made hereunder that would otherwise violate Section 409A of
the Code shall be delayed to the extent necessary for this Agreement and such
payment to comply with Section 409A of the Code.
21.
Definitions.
For purposes of this
Agreement, the following terms shall have the meanings ascribed to
15
them
below:
“
Affiliate
” means, with respect to any
Person, any other Person directly or indirectly controlling, controlled by, or
under common control with such Person.
“
Company’s Business
”
means the Company’s Business as conducted during the term of this Agreement and
all products planned, researched, developed, tested, manufactured, sold,
licensed, leased or otherwise distributed or put into use by the Company or any
of its Affiliates, together with all services provided or planned by the Company
or any of its Affiliates, during your relationship with the Company.
“
Confidential
Information
” shall mean any and all information in
addition to Trade Secrets used by, or which is in the possession of the Company
and relating to the Company’s business or assets specifically including, but not
limited to, information relating to the Company’s products, services,
strategies, pricing, customers, representatives, suppliers, distributors,
technology, finances, employee compensation, computer software and hardware,
inventions, developments, in each case to the extent that such information is
not required to be disclosed by applicable law or compelled to be disclosed by
any governmental authority. Notwithstanding the foregoing, the terms
“
Trade Secrets
”
and “
Confidential Information
” do
not include information that (i) is or becomes generally available to or known
by the public (other than as a result of a disclosure by the Executive),
provided, that the source of such information is not known by you to be bound by
a confidentiality agreement with the Company; or (ii) is independently developed
by you without violating this Agreement.
“
Discoveries and Works
”
includes, by way of example but without limitation, Trade Secrets and other
Confidential Information, patents and patent applications, service marks, and
service mark registrations and applications, trade names, copyrights and
copyright registrations and applications and all materials, information,
inventions, discoveries, developments, methods, compositions, concepts, ideas,
writings, computer code and the like (whether or not patentable or copyrightable
or constituting trade secrets) conceived, made, created, developed or reduced to
practice by you (whether alone or with others, whether or not during normal
business hours and whether on or off Company premises) during the term of this
Agreement that relate to either the Company’s Business or any prospective
activity of the Company or any of its Affiliates.
“Intellectual Property
”
means with respect to the Company’s Business, all U.S. and foreign (a) patents
and patent applications and all reissues, renewals, divisions, extensions,
provisional patents, continuations and continuations in part thereof, (b)
inventions (regardless of whether patentable), invention disclosures, trade
secrets, proprietary information, industrial designs and registrations and
applications, mask works and applications and registrations, (c) copyrights and
copyright applications and corresponding rights, (d) trade dress, trade names,
logos, URLs, common law trademarks and service marks, registered trademarks and
trademark applications, registered service marks and service mark applications,
(e) domain name rights and registrations, (f) databases, customer lists, data
collections and rights therein, (g) confidentiality
16
rights or other intellectual property rights of any
nature, in each case throughout the world; (h) ideas, processes, trademarks,
service marks, inventions, designs, technologies, computer hardware or software,
original works of authorship, formulas, discoveries, patents, copyrights,
copyrightable works, products, marketing and business ideas, and all
improvements, know-how, data, rights, and claims related to the foregoing; and
(i)
Discoveries and
Works.
“
Person
”
means any natural person, corporation, company, limited or general partnership,
joint stock company, joint venture, association, limited liability company,
trust, bank, trust company, land trust, business trust or other entity or
organization.
“
Trade Secrets
”
shall mean all confidential and proprietary information belonging to the Company
(including current client lists and prospective client lists, ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works, financial and
marketing plans and customer and supplier lists and information.
22. Further
Assurances.
The parties will execute such further
instruments and take such further actions as may be reasonably necessary to
carry out the intent of this Agreement.
23.
Governing Law.
All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, County of New York for the
adjudication of any dispute hereunder or in connection herewith or therewith, or
with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper. Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address for such notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
17
If you agree to, and accept employment in accordance with, the foregoing terms
and conditions, please sign a copy of this Agreement where indicated below and
return it to the Company.
Sincerely,
New Energy Technologies,
Inc.
By:
_____________________________________
Name: John A. Conklin
Title: President and
Chief Executive Officer
Acceptance
On this 17
th
day of
December, 2010, I, Andrew Farago agree to and accept employment with New Energy
Technologies, Inc. on the terms and conditions set forth in this
Agreement.
_____________________________________
Andrew Farago
18
Appendix A
Company Code of Ethics and Business
Conduct
OVERVIEW
New Energy Technologies, Inc. (“New
Energy”) has adopted a Code of Ethics that applies to all Officers, Directors,
and Employees of the company and its affiliates (herein collectively referred to
as, “Employee” or “Employees”).
In so doing, this Code of Ethics
demands the highest standards of business conduct required of all
Employees.
The Code is part of New Energy’s
ongoing effort to comply with applicable laws and have an effective program in
place to prevent and detect violations of law; this code is an effort to train
and educate New Energy Employees about ethical business practices.
OBJECTIVE
A key New Energy objective is to
conduct business operations in the most ethical manner possible. New Energy
cares about its Employees, shareholders, clients, suppliers and the communities
in which it conducts business operations. During the course of meeting its
business objectives, New Energy believes that it is essential for all Employees
to understand and comply with the Code of Ethics and in so doing, participate in
New Energy’s way of operating its business.
STANDARD OF CONDUCT
New Energy insists that all aspects of
its business operations be conducted with honesty, integrity, fairness and with
respect for those affected by its business activities. Similarly, New Energy
expects the same in its relationships among those with whom it does
business.
All Employees are expected to maintain
and promote integrity and honesty in all business transactions. Employees must
conduct themselves according to the highest ethical standards and are expected
to apply ethical business practices in the administrative and financial affairs
of New Energy business operations.
There is no Code of Ethics that can
expect to define suitable behavior for each situation, nor should it seek to do
so. As such, Employees are expected to exercise vigilance and make considered
judgment of what is right and proper in any particular situation.
While carrying out the business
operations of New Energy, Employees are expected to be accountable, truthful,
trustworthy, conscientious, and committed to the highest standards of ethical
business practices. As such, Employees are required to avoid all impropriety as
well as the appearance of impropriety when conducting New Energy business
operations.
ACCURACY AND COMPLETENESS OF ACCOUNTING
RECORDS
19
New Energy’s accounting and supporting
documents must accurately and completely describe and represent the nature and
result of New Energy’s business operations. The results and activities of New
Energy’s operations must be presented in a fair and unbiased manner.
New Energy business transactions must
be appropriately authorized as well as completely and accurately recorded on the
Company’s books. Proposed budgets, financial assessments, evaluations and fiscal
presentations must fairly present all information relevant to the business
transaction. Furthermore, at no time will the Company establish or maintain cash
funds or asset accounts which are unrecorded.
Misappropriation, wrongful allocation,
or improper use of the Company’s assets and property, or the false entry to
records and reports by any Employee or by others must be reported to Board of
New Energy.
ACCURATE AND TIMELY
COMMUNICATION
New Energy expects Employees to be
completely truthful and forthright in all internal and external interactions and
communications, whether with shareholders, clients, government agencies, or
others.
Employees will ensure that all
statements are accurate and complete with no misrepresentations which may
mislead or misinform. In all cases, Employees are expected to provide full,
prompt and accurate disclosure to governmental agencies.
MAINTAINING AND RETAINING
RECORDS
In order to maintain the security and
integrity of New Energy’s record-keeping and reporting systems, all Employees
must adhere to applicable records retention procedures and fully understand how
to document and transact entries that fall within their jurisdiction.
All Employees are expected to comply
fully with audits and provide timely response to requests for records or other
materials from or on behalf of New Energy auditors or management.
COMPLYING WITH THE LAW
New Energy Employees are expected to
fully comply with both the letter and the spirit of the laws and regulations of
the countries in which the Company conducts business.
New Energy Employees are expected to
act in accordance with the accepted business practices in commercial markets and
adhere to the contractual terms and conditions applicable to any business
transaction.
All Employees must commit to abiding by
all applicable laws and regulations.
The breach of rules, regulations,
ethical standards, and laws cannot be justified by the pursuit of
20
profit or the departure from acceptable practice by
competitors.
INSIDER TRADING
New Energy Employees are strictly
prohibited by law from buying or selling the Company’s shares or any other
public security as a result of inside information.
Furthermore, it is against the law and
unethical to provide such information about New Energy to other individuals or
companies so that they may gain.
In accordance with the Code of Ethics,
Employees are strictly prohibited from trading in shares of New Energy, clients
or suppliers as a result of any inside information.
ENVIRONMENTAL ISSUES
New Energy is committed to running its
business in an environmentally sound and sustainable manner. New Energy’s
objective is to ensure that its business operations have the minimum adverse
environmental impact commensurate with the legitimate needs of its business
operations.
DISCLOSURE OF PERSONAL
INTEREST
New Energy Employees are expected to
fully disclose any personal interest(s) which could impinge or might reasonably
be considered by others to conflict with their business dealings with
industry.
New Energy Employees must not engage in
personal activities and financial interests that may conflict with their
responsibilities and obligations to the Company or give assistance to
competitors, in conflict with the interests of New Energy or its
clients.
Under all circumstances, Employees must
obtain the formal consent of New Energy management if they intend to become
partners, shareholders, or Directors, or participants in companies outside the
New Energy corporate structure.
PERSONAL DISCRETION AND
CONFIDENTIALITY
At all times, Employees are expected to
respect the confidentiality of information received during the course of
business dealings and must never use such information for personal benefit or
gain.
Employees are expected to give
information during the course of business which is truthful, complete and fair
and never intended to mislead.
Employees cannot disclose New Energy
trade secrets, confidential or proprietary information, or any other such
information without the written, formal authorization of management. Such
information may not be disclosed as a means of making profit, gains or
benefits.
At no time can Employees use Internet
bulletin boards, chat rooms, messaging services, or other
21
electronic systems to discuss issues, affairs, or
opinions related to New Energy or any of its industries, or to respond to
comments about the Company. New Energy considers electronic postings to be the
same as “speaking to the media”.
FAIR COMPETITION
New Energy is committed to vigorous yet
fair competition and supports the development of appropriate competition laws.
Each Employee must avoid any business arrangement that might prevent the
effective operation of fair competition.
COMPLIANCE WITH THE COMPANY’S CODE OF
ETHICS
New Energy’s Board of Directors is
responsible for ensuring that the standards outlined in the Code of Ethics are
fully communicated to all Employees and are similarly understood and adhered
to.
Should the Company experience loss of
business as a result of adhering to the Code of Ethics, the Board of Directors
will not criticize, condemn or complain.
Likewise, should a real or suspected
breach of the Company’s Code of Ethics be brought to the attention of the
Company, the Board of Directors will ensure that the reporting Employee does not
suffer as a consequence of doing so.
The Company’s Code of Ethics are
reflective of New Energy’s ethical standards and expectations. Accordingly,
Employees are expected to fulfill the Company’s ethical commitments in a way
that is clearly visible to all those with whom New Energy conducts its
business.
At all times, Employees are expected to
fully comply with the standards established in the Code of Ethics and ensure
that their personal conduct is always above reproach.
New Energy expects each Employee to
ensure that the conduct of others around him or her is in compliance with the
Code of Ethics and that any breach of the same is duly reported to
management.
All breaches of the law or violations
of regulations and the standards of conduct listed in this Code of Ethics may
lead to serious consequences for the Employee concerned; New Energy Employees
have a legal, moral, and ethical duty to report any such real or suspected
violation to the Board of Directors and regulatory authorities.
“CODE OF ETHICS”
ENFORCEMENT
New Energy Employees understand and
acknowledge that a breach of the Code of Ethics can result in severe
disciplinary action, including but not necessarily limited to
termination.
22
The Company’s Code of Ethics will be
fairly enforced at all levels, without prejudice.
ANNUAL ACKNOWLEDGEMENT
Each Employee will be required to sign
a statement annually that he or she has read and understands New Energy’s Code
of Ethics. This statement will also require that the Employee state that he or
she is in full compliance with the Code.
EMPLOYEE CERTIFICATION AND
ACKNOWLEDGEMENT
I acknowledge and certify that I have
read and understood the information set forth in the Code of Ethics of New
Energy Technologies, Inc. and will comply with these principles in my daily work
activities. I am not aware of any violation of the standards of New Energy’s
Code of Ethics.
Date:___________________________________
Name
(print):___________________________________
Position:___________________________________
Address:___________________________________
Signature:___________________________________
23
Appendix B
THIS NONSTATUTORY STOCK OPTION AGREEMENT (“
Agreement
”) is made and entered into
as of December 17, 2010, by and between New Energy Technologies, Inc. a Nevada
corporation (the “
Company
”), and
Andrew Farago
(“
Recipient
”):
This Stock Option Agreement has been executed and delivered pursuant to the
Employment Agreement dated December 17, 2010 between the Recipient and the
Company (the “
Employment Agreement
”).
In consideration of the covenants herein set forth, the parties hereto agree as
follows:
1. Option Grant
(a) Date option grant authorized:
December 17, 2010 (the “
Grant Date
”)
(c) Number of shares:
1,500,000
(d) Exercise Price:
$X.XX
2. Acknowledgements.
(a) Recipient is the Chief Operating
Officer of the Company (the “
Company/Recipient
Relationship
”).
(b) The Board has this day approved
the granting of this Option subject to the execution of this Agreement;
and
(c) The Board has
authorized the granting to Recipient of a non-statutory stock option
(“
Option
”) to 1,500,000 purchase
shares (the “
Option Shares
”)
of common stock of the Company (“
Common
Stock
”)
upon the terms and conditions hereinafter stated and pursuant to an exemption
from registration under the Securities Act of 1933, as amended (the
“
Securities Act
”).
3. Option Shares;
Price.
The Company hereby grants to
Recipient the right to purchase, upon and subject to the terms and conditions
herein stated, the Option Shares for cash (or other consideration as is
authorized hereunder) at the price per Option Share set forth
in
Section 1
above (the
“
Exercise Price
”),
such price being not less than [e.g., 100%] of the fair market value per share
of the Option Shares covered by this Option as of the date of
grant.
4. Term of Options; Continuation of
Service
.
Subject to the early
termination provisions set forth in
Sections 7 and
8
of this Agreement, these Options shall
expire, and all rights hereunder to purchase the Option Shares shall terminate
10 years from the Grant Date. Nothing contained herein shall be construed to
interfere in any way with the right of the Company, or its shareholders, or the
Board, to remove
24
or
not elect Recipient as an officer and or a director of the Company, or to
increase or decrease the compensation of Directors from the rate in effect at
the date hereof.
5.
Vesting of Option and Filing of Form
S-8.
Subject to the provisions
of
Sections 7 and 8
of this Agreement, these Options shall become
exercisable during the term that Recipient serves in the Company/Recipient
Relationship as follows:
|
|
Number of Option Shares as to which the
Option may vest:
|
Milestone that must be achieved in order for
vesting to occur
|
|
a.
|
100,000
|
When,
as a result of your direct
efforts, you are able to develop, to the satisfaction of the Board of
Directors, a comprehensive business plan, plan of operations, product
roll-out strategy, various financial models associated with the business
plan, and other such corporate finance tools required by the
Company.
|
|
b.
|
250,000
|
When
the Company appoints or elects at
least two new Directors to its Board of Directors, who have been
recommended by you.
|
|
c.
|
250,000
|
When,
as a result of your direct
efforts and contribution , the Company receives non-compensated analyst
coverage.
|
|
e.
|
250,000
|
When,
as a result of your direct
efforts and contribution, the Company is able to achieve a listing
on either the NYSE/AMEX or NASDAQ stock exchange.
|
|
f.
|
150,000
|
When,
as a result of your direct
efforts and contribution, the Company enters into a product development
relationship whereby a third-party industry partner makes a significant
financial investment, as determined at the Board’s discretion, directed
towards the development of the Company’s products.
|
|
g.
|
500,000
|
Provided that you are then employed by the
Company, as follows:
(a) as to 100,000 shares on
December 17, 2011;
(b) as to 100,000 shares on
December 17, 2012;
(c) as to 100,000 shares on
December 17, 2013;
(d) as to 100,000 shares on
December 17, 2014; and
(e) as to 100,000 shares on
December 17, 2015.
|
All
determinations and calculations with respect to the satisfaction of the
conditions to
25
the
vesting of any of the foregoing options shall be made by the Board or any
committee thereof to which the Board has delegated such authority, in good faith
in accordance with applicable law, the Articles of Incorporation and By-laws of
the Company, in its sole discretion, and shall be final, conclusive and binding
on all persons, including you and the personal representative of your
estate.
(ii) Form S-8. The Company shall as soon as practicable following
the date hereof and subject to satisfaction of any and all applicable regulatory
requirements and shareholder approval, file a registration statement on Form S-8
with the Securities and Exchange Commission registering the shares of common
stock issuable upon exercise of the Options and keep such registration statement
in effect until the sale of all shares of common stock issuable under the
Options or expiration of the 10-year term.
6. Exercise.
(a) These Options shall be exercised, as to
the vested shares, by delivery to the Company of (a) written notice of exercise
stating the number of Option Shares being purchased (in whole shares only) and
such other information set forth on the form of Notice of Exercise attached
hereto as
Exhibit A
hereto, (b) a check or cash in the amount of
the Exercise Price of the Option Shares covered by the notice, unless Recipient
elects to exercise the cashless exercise option set forth
in
Section 6(b)
below, in which case no payment will be
required (or such other consideration as has been approved by the Board of
Directors
consistent with the Plan
).
These Options shall are not assignable or
transferable, except by will or by the laws of descent and distribution, and
shall be exercisable only by Recipient during his or her lifetime.
.
(b) Anything herein to the contrary
notwithstanding, to the extent and only to the extent vested, the Options may
also be exercised (as to the Option Shares vested) at such time by means of a
“
cashless exercise
” in
which the Recipient shall be entitled to receive a certificate for the number of
Option Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A)
,
where:
(A)
equals the average of
the closing price of the Company’s Common Stock, as reported (in order of
priority) on the Trading Market on which the Company’s Common Stock is then
listed or quoted for trading on the Trading Date preceding the date of the
election to exercise; or, if the Company’s Common Stock is not then listed or
traded on a Trading Market, then the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith by the
Recipient and the Company, the fees and expenses of which shall be paid by the
Company for the three (3) Trading Days immediately preceding the date of such
election;
(B)
equals the Exercise
Price of the Option, as adjusted from time to time in accordance herewith;
and
(X)
equals the number of
vested Option Shares issuable upon exercise of these Options in accordance with
the terms of the Options by means of a cash exercise rather than a
26
cashless exercise (or, if the Option is being
exercised only as to a portion of the shares as to which it has vested, the
portion of the Options being exercised at the time the cashless exercise is made
pursuant to this
Section 6
).
For
purposes of this Agreement:
“
Trading Day
”
means a day on which the Common Stock is traded on a Trading Market.
“
Trading Market
”
means, in order of priority, the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the
American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market,
the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin
Board or the Pink Sheets.
(c) No
fractional shares shall be issued upon exercise of this Option. The
Company shall, in lieu of issuing any fractional share, pay the Recipient
entitled a sum in cash equal to such fraction multiplied by the then effective
Exercise Price.
7.
Termination of Service.
If the Employment Agreement
is terminated, the Company agrees that all vested options may continue to be
exercised until 5:00pm New York on the date of the second anniversary of the
termination date of the Employment Agreement (the “
Termination Date
”). All unvested Options shall terminate and
this Agreement shall be of no further force or effect as of the Termination
Date.
8.
Death of Recipient.
If the Recipient shall die
during the term of the Employment Agreement, Recipient’s personal representative
or the person entitled to Recipient’s rights hereunder may at any time within
the then remaining exercise period, exercise this Option and purchase Option
Shares to the extent, but only to the extent, that Recipient could have
exercised this Option as of the date of Recipient’s death; following the
expiration of the aforesaid then remaining exercise period, this Agreement shall
terminate in its entirety and be of no further force or effect.
9.
No Rights as
Shareholder
.
Recipient shall have no
rights as a shareholder with respect to the Option Shares covered by any
installment of this Option until the effective date of issuance of the Option
Shares following exercise of this Option, and no adjustment will be made for
dividends or other rights for which the record date is prior to the date such
stock certificate or certificates.
10. Recapitalization.
(a)
Subdivision or consolidation of shares
. Subject to any required
action by the shareholders of the Company, the number of Option Shares covered
by this Option, and the
27
Exercise Price thereof, shall be proportionately
adjusted for any increase or decrease in the number of issued shares resulting
from a subdivision or consolidation of shares or the payment of a stock
dividend, or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company; provided however that
the conversion of any convertible securities of the Company shall not be deemed
having been “effected without receipt of consideration by the
Company”.
(b)
Reorganizations, Mergers etc.
(i) In the event of a proposed
dissolution or liquidation of the Company, a merger or consolidation in which
the Company is not the surviving entity, or a sale of all or substantially all
of the assets or capital stock of the Company (collectively, a “
Reorganization
”):
(1) then, subject to Clause (b)(ii) below, any and all shares as to which the
Option had not yet vested shall vest upon the date (the “
Reorganization Vesting Date
”)
that the Company provides the Recipient with the
Reorganization Notice
(as
defined below); and provided, however, that there has been no termination of the
Employment Agreement Recipient shall have the right to exercise this Option to
the extent of all shares subject to the Option, for a period commencing on the
Reorganization Vesting Date and terminating on the date of the consummation of
such Reorganization. Unless otherwise agreed to by the Company. The Option
shall terminate upon the consummation of the Reorganization and may not be
exercised thereafter as to any shares subject thereto. The Company shall notify
Recipient in writing (the “
Reorganization Notice
”),
at least 30 days prior to the consummation of such Reorganization, of its
intention to consummate a Reorganization.
(2) anything herein to the contrary notwithstanding, the exercise of the Option
or any portion thereof pursuant to this
Section 10(b)
will be consummated simultaneously with the
consummation of the Reorganization. If after the Company provides the
Reorganization Notice to the Recipient the Company provides the Recipient with a
further written notice notifying the Recipient that the Reorganization will not
be consummated, then the Option will return to its status prior to the
Reorganization Notice and the shares as to which the Option vested solely by
virtue of this
Section 10(b)
(i) will revert to an unvested
status.
(ii) Subject to any required action by
the shareholders of the Company, if the Company shall be the surviving entity in
any merger or consolidation, these Options thereafter shall pertain to and apply
to the securities to which a Recipient of Option Shares equal to the Option
Shares subject to these Options would have been entitled by reason of such
merger or consolidation, and the installment provisions of
Section 5
shall continue to
apply.
(iii) In the event of a change in the shares
of the Company as presently constituted, which is limited to a change of all of
its authorized Stock without par value into the same number of shares of Stock
with a par value, the shares resulting from any such change shall be deemed to
be the Option Shares within the meaning of these Options.
(iv) To the extent that the foregoing
adjustments relate to shares or securities
28
of
the Company, such adjustments shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as hereinbefore
expressly provided, Recipient shall have no rights by reason of any subdivision
or consolidation of shares of Stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class, and the number and price of Option Shares subject to this Option
shall not be affected by, and no adjustments shall be made by reason of, any
dissolution, liquidation, merger, consolidation or sale of assets or capital
stock, or any issue by the Company of shares of stock of any class or securities
convertible into shares of stock of any class.
(v) The grant of these Options shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve or liquidate or to sell or transfer
all or any part of its business or assets.
11. Taxation upon Exercise of
Option.
Recipient understands that,
upon exercise of these Options, Recipient may recognize income, for Federal and
state income tax purposes, in an amount equal to the amount by which the fair
market value of the Option Shares, determined as of the date of exercise,
exceeds the Exercise Price. The acceptance of the Option Shares by Recipient
shall constitute an agreement by Recipient to report such income in accordance
with then applicable law and to cooperate with Company in establishing the
amount of such income and corresponding deduction to the Company for its income
tax purposes. Withholding for federal or state income and employment tax
purposes will be made, if and as required by law, from Recipient’s then current
compensation, or, if such current compensation is insufficient to satisfy
withholding tax liability, the Company may require Recipient to make a cash
payment to cover such liability as a condition of the exercise of these
Options.
12.
Modification, Extension and Renewal of
Options.
The Board or a duly
appointed committee thereof, may modify, extend or renew this Option or accept
the surrender thereof (to the extent not theretofore exercised) and authorize
the granting of a new option in substitution therefore (to the extent not
theretofore exercised), subject at all times to the Code and applicable
securities laws. Notwithstanding the foregoing provisions of
this
Section 12
, no modification shall,
without the consent of the Recipient, alter to the Recipient’s detriment or
impair any rights of Recipient hereunder.
13.
Investment Intent;
Restrictions on Transfer.
Unless and until the Option Shares represented by this Option are registered
under the Securities Act,
(a) all certificates
representing the Option Shares and any certificates subsequently issued in
substitution therefore and any certificate for any securities issued pursuant to
any stock split, share reclassification, stock dividend or other similar capital
event shall bear legends in substantially the following form:
“THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER
29
THE
SECURITIES ACT OF 1933 (THE ‘SECURITIES ACT’) OR UNDER THE APPLICABLE OR
SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN
MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY
STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT
CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED DECEMBER XX, 2010 BETWEEN THE
COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE
SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN CONDITIONS.”
and/or such other legend or legends as
the Company and its counsel deem necessary or appropriate. Appropriate stop
transfer instructions with respect to the Option Shares have been placed with
the Company’s transfer agent.
(b) Recipient
represents and agrees that if Recipient exercises this Option in whole or in
part, Recipient will in each case acquire the Option Shares upon such exercise
for the purpose of investment and not with a view to, or for resale in
connection with, any distribution thereof; and that upon such exercise of this
Option in whole or in part Recipient (or any person or persons entitled to
exercise this Option under the provisions of
Sections 7 and 8
of this Agreement) shall furnish to the
Company a written statement to such effect, satisfactory to the Company in form
and substance. If the Option Shares represented this Option are registered under
the Securities Act, either before or after the exercise this Option in whole or
in part, the Recipient shall be relieved of the foregoing investment
representation and agreement and shall not be required to furnish the Company
with the foregoing written statement.
14.
Stand-off Agreement
. Recipient agrees that, in
connection with any registration of the Company’s securities under the
Securities Act, and upon the request of the Company or any underwriter managing
an underwritten offering of the Company’s securities, Recipient shall not sell,
short any sale of, loan, grant an option for, or otherwise dispose of any of the
Option Shares (other than Option Shares included in the offering) without the
prior written consent of the Company or such managing underwriter, as
applicable, for a period (the “
Restrictive
Period
”) as may be specified by the Company or such
underwriter or managing underwriter;
provided
,
however
,
that the Restrictive
Period shall not exceed one year following the effective date of registration of
such offering.
15.
Construction.
You and the
Company have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by you and the
Company and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
“including” shall mean including without limitation.
Whenever the context may require, any pronouns used
in this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.
The headings in this Agreement are solely
for the convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
16.
Notices.
Any and all
notices (including, but not limited to the Notice of Exercise)
30
or
other communications or deliveries required or permitted to be provided
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (a) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number set forth on the signature pages
attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b)
the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the
2
nd
Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for
such notices and communications shall be as set forth on the signature pages
attached hereto.
17. Agreement
Not Subject to Plan; Applicable Law.
These Options are not granted pursuant to the Plan
and shall be interpreted to comply therewith. A copy of such Plan is available
to Recipient, at no charge, at the principal office of the Company. Any
provision of this Option inconsistent with the Plan shall be considered void and
replaced with the applicable provision of the Plan. This Option has been
granted, executed and delivered in the State of Nevada, and the interpretation
and enforcement shall be governed by the laws thereof and subject to the
exclusive jurisdiction of the courts therein.
[SIGNATURE PAGE FOLLOWS]
31
IN WITNESS WHEREOF
the parties hereto have executed
this Stock Option Agreement as of the date first above written.
New Energy Technologies, Inc.
By:
_______________________________________
Name: John A. Conklin
Title: President and Chief Executive Officer
Address and Facsimile For Notices:
|
|
9192 Red Branch Rd., Suite 110
Columbia, MD 21045
Facsimile: (240) 390-0603
|
Recipient
______________________________________
Andrew Farago
6631 NW 43
rd
Terrace
Boca Raton, FL 33496
Facsimile:
561-910-1215
32
Exhibit A
NOTICE OF EXERCISE OF STOCK OPTION
TO:
NEW ENERGY TECHNOLOGIES, INC.
9192 Red Branch Rd., Suite 110
Columbia, MD 21045
ATTENTION:
President and Chief Executive Officer
The undersigned hereby elects to purchase ______________ shares (the “
Purchased Option Shares
”) of the Company pursuant to the terms of the Stock Option Agreement Dated December XX, 2010 between the undersigned and New Energy Technologies, Inc. and the undersigned (the “
Option Agreement
”), herewith tenders payment of the aggregate exercise price in full, together with all applicable transfer taxes, if any, for the Purchased Option Shares, by (check applicable box):
[ ] in lawful money of the United States; or
[ ] [if permitted] the cancellation of such number of Option Shares as is necessary, in accordance with the formula set forth in
Section 6(b)
of the Option Agreement with respect to the maximum number of Option Shares purchasable pursuant to the cashless exercise procedure set forth
Section 6(b).
Please issue a certificate or certificates representing said Option Shares in the name of the undersigned as is specified below and forward the same to the address set forth below.
__________________________________
Signature of Recipient
Print Name of Recipient: _______________________________________
Address For Delivery of Option Shares:
___________________________________
___________________________________
___________________________________
1
Appendix C
Litigation List
1
Appendix D
List of Prior Works and Discoveries
1
Appendix E
FORM OF EXECUTIVE RELEASE
Certain capitalized terms used in this Release are defined in the Employment Agreement dated as of December XX, 2010 between New Energy Technologies, and Andrew Farago (the “
Agreement
”) which I have executed and of which this Release is a part.
I hereby confirm my obligations under Paragraphs 6, 7 and 8 of the Agreement.
Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to the date I execute this Release, including, but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of disputed compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“
ADEA
”); the federal Employee Retirement Income Security Act of 1974, as amended; the federal Americans with Disabilities Act of 1990; tort law; contract law; statutory law; common law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing;
provided
,
however,
that nothing in this paragraph shall be construed in any way to release the Company from its obligation to indemnify me pursuant to the Company’s indemnification obligation pursuant to agreement or applicable law.
I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA. I also acknowledge that the consideration given under the Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; (C) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven (7) days following the execution of this Release by the parties to revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Release is executed by me.
1
Executive
_____________________
Andrew Farago
Acknowledgement
State of ____________________________________}
County of __________________________________ } SS.
On this _____________ day of __________, 20____before me _________________ the undersigned officer, personally appeared Andrew Farago to me personally known and known to me to be the same person(s) whose name(s) is (are) signed to the foregoing instrument, and acknowledged the execution thereof for the used and purposed therein set forth.
IN WITNESS WHEREOF I have hereunto set my hand and official seal.
_______________________________________________
Notary Public/Commissioner of Oaths
(SEAL)
My Commission Expires
2
Mr. Farago has 16 years of investment, hedge fund, and legal experience in renewable and alternative energy. He is credited with helping grow assets under management from $20 million to over $800 million during his tenure at RNK Capital, LLC, a New York based investment management company, exclusively focused on energy, clean-tech, and the trading of environmental credits. In addition to operations and finance, Mr. Farago has negotiated and structured the purchase and sale of Renewal Energy Credits (RECs) with total notional value exceeding $40 million.
Today’s news follows validation of the Company’s early power production model by Dr. Steven S. Hegedus, a widely-published expert and authority in photovoltaics. Dr. Hegedus is credited with more than 90 scientific publications related to thin film solar cell fabrication, characterization, manufacturing methods and reliability studies. Dr. Hegedus also serves as Principal Investigator of industry-funded programs targeting improved power output of solar cells through chemical processes. Working through commercial partnerships, Dr. Steven S. Hegedus has developed technologies to help characterize the stability of organic photovoltaic modules under varying environmental conditions, an important hurdle in ensuring long-term performance. He is the co-editor of the Handbook of Photovoltaic Science and Engineering.
The prospect of creating the world’s first-of-its-kind SolarWindow™, currently under development, is made possible when researchers spray the Company’s novel, electricity-generating, see-thru coatings onto glass surfaces. Unique to SolarWindow™, these coatings remain see-thru when applied to glass, and generate electricity under both natural and artificial light conditions. As part of its ongoing efforts to develop SolarWindow™ for commercial use, New Energy recently obtained an exclusive worldwide commercial license to numerous discoveries important to achieving transparency and ease of manufacturing.