EXECUTIVE EMPLOYMENT AGREEMENT
This
EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) dated June 20, 2007 effective
June 1, 2007 (the “Effective Date”) by and between Solar Thin Films, Inc., a
Delaware corporation (the “Company”), and Xxxxx X. Xxxxx, an individual (the
“Executive”).
The
Company desires to employ the Executive, and the Executive wishes to accept
such
employment with the Company, upon the terms and conditions set forth in this
Agreement.
NOW
THEREFORE, in consideration of the foregoing facts and mutual agreements set
forth below, the parties, intending to be legally bound, agree as
follows:
1. Employment.
The
Company hereby agrees to employ Executive, and Executive hereby accepts such
employment and agrees to perform Executive’s duties and responsibilities in
accordance with the terms and conditions hereinafter set forth.
1.1 Duties
and Responsibilities.
Executive shall serve as Chief Executive Officer. During the Employment Term
(as
defined below), Executive shall perform all duties and accept all
responsibilities incident to such positions and other appropriate duties as
may
be assigned to Executive by the Company’s Board of Directors from time to time.
The Company shall retain full direction and control of the manner, means and
methods by which Executive performs the services for which he is employed
hereunder and of the place or places at which such services shall be rendered.
1.2 Employment
Term.
The
term of Executive’s employment under this Agreement shall commence as of the
Effective Date and shall continue for 36 months, unless earlier terminated
in
accordance with Section 4 hereof. The term of Executive’s employment shall be
automatically renewed for successive one (1) year periods until the Executive
or
the Company delivers to the other party a written notice of their intent not
to
renew the “Employment Term,” such written notice to be delivered at least sixty
(60) days prior to the expiration of the then-effective “Employment Term” as
that term is defined below. The period commencing as of the Effective Date
and
ending 36 months thereafter or such later date to which the term of Executive’s
employment under the Agreement shall have been extended by mutual written
Agreement is referred to herein as the “Employment Term.”
1.3 Extent
of Service.
During
the Employment Term, Executive agrees to use Executive’s best efforts to carry
out the duties and responsibilities under Section 1.1 hereof and to devote
substantially all Executive’s business time, attention and energy thereto.
Executive further agrees not to work either on a part-time or independent
contracting basis for any other business or enterprise during the Employment
Term without the prior written consent of the Company’s Board of Directors (the
“Board”), which consent shall not be unreasonably withheld.
1.4 Base
Salary.
The
Company shall pay Executive a base salary (the “Base Salary”) at the annual rate
of $225,000 (U.S.), payable at such times as the Company customarily pays its
other senior level executives (but in any event no less often than monthly).
The
Base Salary shall be subject to all state, federal and local payroll tax
withholding and any other withholdings required by law.
1.5 Shares
of Common Stock.
The
Company shall issue Executive shares of common stock of the Company valued
at
$100,000 (U.S.) per year, which shall be issued on a quarterly basis. The number
of shares of to be issued on a quarterly basis shall be determined by dividing
$100,000 (U.S.) by $0.533 (the average closing bid price for the 20 trading
days
immediately prior to the date hereof)(the “Issuance Price”), which quotient
shall in turn be divided by four. The Issuance Price shall remain in effect
during the Employment Term and for any extension period.
1.6 Compensation
Pursuant to the Executive Officer Compensation Plan.
Executive shall be eligible to participate in the Company’s Executive Officer
Incentive Plan (the “Incentive Plan”), attached hereto as Exhibit
A,
as
adopted by the Board of Directors of the Company. The Company’s Compensation
Committee, or the Board of Directors in absence of the Compensation Committee,
shall establish the formula to be used to determine the amount of the
compensation to be paid to the Executive under the Incentive Plan.
1.7 Options.
The
Company’s Board will make an initial grant of options to the Executive as
follows:
(a) an
incentive ten year option, in the form attached hereto as Exhibit
B
(the
“Option”), to purchase up to 3,000,000 additional shares of common stock at an
exercise price equal to the Issuance Price, which shall be exercisable on a
cashless basis and vest quarterly on a pro-rata basis over a period of two
years
commencing on the date hereof (the “Vesting Schedule”). In the event that the
Executive is terminated for Cause (as defined below), upon death or disability
as set forth in Section 4.2 of this Agreement or the Executive terminates the
Agreement pursuant to Section 4.4 of this Agreement, then the Option shall
terminate and all shares of common stock that are not considered Earned Option
Shares shall be immediately cancelled without any further action of the Company.
All shares issued upon exercise of the Option shall be affixed with a legend
stating that they are restricted; and
(b) The
option agreement will contain a provision that in the event there shall have
been a Change in Control (as defined below) of the Company while the Executive
is an employee of the Company and the Executive’s employment by the Company
thereafter shall have been terminated by the Company (the “Termination Date”) or
by the Executive for Good Reason (as defined below), within two years of the
date upon which the Change in Control shall have occurred, unless such
termination is as a result of (i) the Executive’s death; (ii) the Executive’s
Disability; (iii) the Executive’s Retirement (termination in accordance with the
Company’s Retirement Plan applicable to its
employees or in accordance with any other retirement arrangements which have
been entered into with the Executive) or (iv) the Executive’s termination for
Cause, all unvested stock options shall immediately and irrevocably vest and
the
exercise period of such options shall be automatically extended to the later
of
the longest period permitted by the Company’s stock option plans or ten years
following the Termination Date. For
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purposes
of the option agreement, a “Change in Control” shall be deemed to have occurred
if (i) there shall be consummated (A) any consolidation or merger of the Company
in which the Company is not the continuing or surviving corporation or pursuant
to which shares of the Company’s Common Stock would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the Company’s Common Stock immediately prior to the merger have
substantially the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (B) any sale, lease, exchange
or
other transfer (in one transaction or a series of related transactions) of
all
or substantially all the assets of the Company; (ii) the stockholders of the
Company shall approve any plan or proposal for the liquidation or dissolution
of
the Company, or (iii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)), other
than the Company or any employee benefit plan sponsored by the Company, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act) of securities of the Company representing 51% or more of the combined
voting power of the Company’s then outstanding securities ordinarily (and apart
from rights accruing in special circumstances) having the right to vote in
the
election of directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise. “Good Reason” shall mean
any of the following events unless it occurs with the Executive’s express prior
written consent:
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(i)
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any
assignment to the Executive by the Company of any duties inconsistent
with, or any diminution of, the Executive’s position, duties, titles,
offices, responsibilities and status with the Company immediately
prior to
a Change in Control of the Company, or any removal of the Executive
from
or any failure to reelect the Executive to any of such positions
or
offices, except in connection with the termination of the Executive’s
employment for Disability, Retirement or Cause or as a result of
the
Executive’s death;
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(ii)
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any
reduction by the Company in the Executive’s base salary as in effect on
the date hereof or as the same may be increased from time to time
during
the term of the Agreement or the Company’s failure to increase (within 15
months of the Executive’s last increase in base salary) the Executive’s
base salary after a Change in Control of the Company in an amount
which is
at least equal, on a percentage basis, to the average percentage
increase
in base salary for all officers of the Company effected during the
preceding 12 months;
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any
failure by the Company to continue in effect any benefit or incentive
plan
or arrangement (including,
without limitation, the Company’s Retirement Plan, Stock Option Plan for
Key Employees, Employee Stock Purchase Plan, 401(k) Savings Plan,
group
life insurance plan, medical, dental accident and disability insurance
plans, annual bonus and contingent bonus arrangement, and any plan
or
arrangement to receive and exercise stock
appreciation rights, or to acquire stock or other securities of the
Company) in which the Executive is participating at the time of a
Change
in Control of the Company (or to substitute and continue other plans
providing the Executive with substantially similar benefits) hereinafter
referred to as “Benefit Plans”), the taking of any action by the Company
which would adversely affect the Executive’s participation in or
materially reduce the Executive’s benefits under any such Benefit Plan or
deprive the Executive of any material employee benefit enjoyed by
the
Executive at the time of a Change in Control of the Company, or any
failure by the Company to provide the Executive with the number of
paid
vacation days to which the Executive is entitled in accordance with
the
vacation policies in effect at the time of a Change of Control of
the
Company;
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(iv)
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a
substantial increase in business travel obligations of the Executive
over
such obligations as they existed at the time of a Change in Control
of the
Company;
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(v)
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any
material breach by the Company of any provision of the stock option
agreement;
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(vi)
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any
failure by the Company to obtain the assumption of the stock option
agreement by any successor or assign of the Company;
or
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(vii)
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any
purported termination of the Executive’s employment after a Change in
Control which is not effected pursuant to a Company Notice of Termination
and, for purposes of the stock option agreement, no such purported
termination shall be effective. For purposes of the stock option
agreement, a “Company Notice of Termination” shall mean a written notice
which shall indicate the specific termination provision in this Agreement
relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so
indicated.
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(c) the
Board
or any committee appointed by the Board in exercising its unrestricted
discretion may grant such additional options to the Executive each year of
the
Employment Term as it deems appropriate.
1.8 Other
Benefits.
During
the Employment Term, Executive shall be entitled to participate in all employee
benefit plans and programs made available to the Company’s senior level
executives as a group or to its employees generally, as such plans or programs
may be in effect from time to time (the “Benefit Coverages”), including, without
limitation, medical, dental, hospitalization, short-term and long-term
disability and life insurance plans, accidental death and dismemberment
protection and travel accident insurance. Executive shall be provided office
space and staff assistance appropriate for Executive’s position and adequate for
the performance of her duties.
1.9 Reimbursement
of Expenses; Vacation; Sick Days and Personal Days.
Executive shall be provided with reimbursement of expenses related to
Executive’s employment by the Company on a basis no less favorable than that
which may be authorized from time to time by the Board, in its sole discretion,
for senior level executives as a group. Executive shall be entitled to vacation
and holidays in accordance with the Company’s normal personnel policies for
senior level executives, but not less than three (3) weeks of vacation per
calendar year, provided Executive shall not utilize more than ten (10)
consecutive business days without the express consent of the Chief Executive
Officer. Unused vacation time will be forfeited as of December 31 of each
calendar year of the Employment Term. Executive shall be entitled to no more
than an aggregate of ten (10) sick days and personal days per calendar
year.
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1.10 No
Other Compensation.
Except
as expressly provided in Sections 1.4 through 1.9, Executive shall not be
entitled to any other compensation or benefits.
2. Confidential
Information.
Executive recognizes and acknowledges that by reason of Executive’s employment
by and service to the Company before, during and, if applicable, after the
Employment Term, Executive will have access to certain confidential and
proprietary information relating to the Company’s business, which may include,
but is not limited to, trade secrets, trade “know-how,” product development
techniques and plans, formulas, customer lists and addresses, financing
services, funding programs, cost and pricing information, marketing and sales
techniques, strategy and programs, computer programs and software and financial
information (collectively referred to as “Confidential Information”). Executive
acknowledges that such Confidential Information is a valuable and unique asset
of the Company and Executive covenants that he will not, unless expressly
authorized in writing by the Company, at any time during the course of
Executive’s employment use any Confidential Information or divulge or disclose
any Confidential Information to any person, firm or corporation except in
connection with the performance of Executive’s duties for the Company and in a
manner consistent with the Company’s policies regarding Confidential
Information. Executive also covenants that at any time after the termination
of
such employment, directly or indirectly, he will not use any Confidential
Information or divulge or disclose any Confidential Information to any person,
firm or corporation, unless such information is in the public domain through
no
fault of Executive or except when required to do so by a court of law, by any
governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction to order Executive to divulge, disclose
or
make accessible such information. All written Confidential Information
(including, without limitation, in any computer or other electronic format)
which comes into Executive’s possession during the course of Executive’s
employment shall remain the property of the Company. Except as required in
the
performance of Executive’s duties for the Company, or unless expressly
authorized in writing by the Company, Executive shall not remove any written
Confidential Information from the Company’s premises, except in connection with
the performance of Executive’s duties for the Company and in a manner consistent
with the Company’s policies regarding Confidential Information. Upon termination
of Executive’s employment, the Executive agrees to return immediately to the
Company all written Confidential Information (including, without limitation,
in
any computer or other electronic format) in Executive’s possession.
3. Non-Competition;
Non-Solicitation.
3.1 Non-Compete.
The
Executive hereby covenants and agrees that during the term of this Agreement
and
for a period of one year following the end of the Employment Term, the Executive
will not, without the prior written consent of the Company, directly or
indirectly, on his own behalf or in the service or on behalf of others, whether
or not for
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compensation,
engage in any business activity, or have any interest in any person, firm,
corporation or business, through a subsidiary or parent entity or other entity
(whether as a shareholder, agent, joint venturer, security holder, trustee,
partner, consultant, creditor lending credit or money for the purpose of
establishing or operating any such business, partner or otherwise) with any
Competing Business in the Covered Area. For the purpose of this Section 3.1,
(i)
“Competing Business” means any company or entity (whether or not organized for
profit) that is engaged in the production of manufacturing equipment for the
photovoltaic or solar industry (ii) “Covered Area” means all geographical areas
of the United States, Hungary, Germany, China and other foreign jurisdictions
where Company then has offices and/or sells its products or services directly
or
indirectly through distributors and/or other sales agents. Notwithstanding
the
foregoing, the Executive may own shares of companies whose securities are
publicly trades, so long as such securities do not constitute more than one
percent (1%) of the outstanding securities of any such company.
3.2 Non-Solicitation.
The
Executive further agrees that as long as the Agreement remains in effect and
for
a period of one (1) year from its termination, the Executive will not divert
any
business of the Company and/or its affiliates or any customers or suppliers
of
the Company and/or the Company’s and/or its affiliates’ business to any other
person, entity or competitor, or induce or attempt to induce, directly or
indirectly, any person to leave his or her employment with the
Company.
3.3 Remedies.
The
Executive acknowledges and agrees that his obligations provided herein are
necessary and reasonable in order to protect the Company and its affiliates
and
their respective business and the Executive expressly agrees that monetary
damages would be inadequate to compensate the Company and/or its affiliates
for
any breach by the Executive of his covenants and agreements set forth herein.
Accordingly, the Executive agrees and acknowledges that any such violation
or
threatened violation of this Section 3 will cause irreparable injury to the
Company and that, in addition to any other remedies that may be available,
in
law, in equity or otherwise, the Company and its affiliates shall be entitled
to
obtain injunctive relief against he threatened breach of this Section 3 or
the
continuation of any such breach by the Executive without the necessity of
proving actual damages.
4. Termination.
4.1 By
Company.
The
Company, by action of the Board, may, in its discretion and at its option,
terminate the Executive’s employment with or without Cause, and without
prejudice to any other right or remedy to which the Company or Executive may
be
entitled at law or in equity or under this Agreement. In the event the Company
desires to terminate the Executive’s employment without Cause, the Company shall
give the Executive not less than sixty (60) days advance written notice.
Termination of Executive’s employment hereunder shall be deemed to be “for
Cause” in the event that Executive violates any provisions of this Agreement, is
guilty of any criminal act other than minor traffic violations, is guilty of
willful misconduct or gross neglect, or gross dereliction of his duties
hereunder or refuses to perform his duties hereunder after notice of such
refusal to perform such duties or directions given to Executive by the
Board.
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4.2 By
Executive’s Death or Disability.
This
Agreement shall also be terminated upon the Executive’s death and/or a finding
of permanent physical or mental disability, such disability expected to result
in death or to be of a continuous duration of no less than twelve (12) months,
and the Executive is unable to perform his usual and essential duties for the
Company.
4.3 Compensation
on Termination.
In the
event the Company terminates Executive’s employment with Cause, all payments
under this Agreement shall cease, except for Base Salary to the extent already
accrued. In the event of termination by reason of Executive’s death and/or
permanent disability, Executive or his executors, legal representatives or
administrators, as applicable, shall be entitled to an amount equal to
Executive’s Base Salary accrued through the date of termination and for an
additional one year period, plus a pro rata share of any annual bonus to which
Executive would otherwise be entitled for the year which death or permanent
disability occurs. Upon termination of Executive without Cause, the Executive
shall receive, in full settlement of any claims Executive may have related
to
his employment by the Company, Base Salary for a period of one year from the
date of termination, provided Executive is in full compliance with the
provisions of Sections 2 and 3 of this Agreement; provided, however, Executive
shall not be entitled to receive any other compensation under Section 1 of
this
Agreement.
5. General
Provisions.
5.1 Modification:
No Waiver.
No
modification, amendment or discharge of this Agreement shall be valid unless
the
same is in writing and signed by all parties hereto. Failure of any party at
any
time to enforce any provisions of this Agreement or any rights or to exercise
any elections hall in no way be considered to be a waiver of such provisions,
rights or elections and shall in no way affect the validity of this Agreement.
The exercise by any party of any of its rights or any of its elections under
this Agreement shall not preclude or prejudice such party from exercising the
same or any other right it may have under this Agreement irrespective of any
previous action taken.
5.2 Notices.
All
notices and other communications required or permitted hereunder or necessary
or
convenient in connection herewith shall be in writing and shall be deemed to
have been given when hand delivered or mailed by registered or certified mail
as
follows (provided that notice of change of address shall be deemed given only
when received):
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If
to the Company, to:
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00
Xxxxxxxx Xxxxxxxxx
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Xxx
Xxxxx, Xxx Xxxx 00000
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If
to Executive, to:
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Xxxxx
X. Xxxxx
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000
Xxxxx Xxxxxx
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| Xxxxxxxxxxx XX 00000 |
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Or
to
such other names or addresses as the Company or Executive, as the case may
be,
shall designate by notice to each other person entitled to receive notices
in
the manner specified in this Section.
5.3 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York.
5.4 Further
Assurances.
Each
party to this Agreement shall execute all instruments and documents and take
all
actions as may be reasonably required to effectuate this Agreement.
5.5 Severability.
Should
any one or more of the provisions of this Agreement or of any agreement entered
into pursuant to this Agreement be determined to be illegal or unenforceable,
then such illegal or unenforceable provision shall be modified by the proper
court or arbitrator to the extent necessary and possible to make such provision
enforceable, and such modified provision and all other provisions of this
Agreement and of each other agreement entered into pursuant to this Agreement
shall be given effect separately from the provisions or portion thereof
determined to be illegal or unenforceable and shall not be affected
thereby.
5.6 Successors
and Assigns.
Executive may not assign this Agreement without the prior written consent of
the
Company. The Company may assign its rights without the written consent of the
executive, so long as the Company or its assignee complies with the other
material terms of this Agreement. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of the Company, and the Executive’s rights
under this Agreement shall inure to the benefit of and be binding upon his
heirs
and executors. The Company’s subsidiaries and controlled affiliates shall be
express third party beneficiaries of this Agreement.
5.7 Entire
Agreement.
This
Agreement supersedes all prior agreements and understandings between the
parties, oral or written. No modification, termination or attempted waiver
shall
be valid unless in writing, signed by the party against whom such modification,
termination or waiver is sought to be enforced.
5.8 Counterparts;
Facsimile.
This
Agreement may be executed in one or more counterparts, each of which shall
for
all purposes be deemed to be an original, and all of which taken together shall
constitute one and the same instrument. This Agreement may be executed by
facsimile with original signatures to follow.
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IN
WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed
this Agreement as of the date first written above.
By:
_______________________
Name:
Title:
__________________________
Xxxxx
X.
Xxxxx
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