EXHIBIT 10.4
ASTROPOWER, INC.
Xxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000-0000
May 1, 0000
Xx. Xxxxxx X. Xxxxxx
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Dear Xxxxxx:
We are pleased to offer you an agreement of employment (the "Agreement") as
follows:
1. EFFECTIVE DATE.
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This Agreement will be effective as of May 1, 1996 ("Effective Date").
2. DUTIES.
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You shall be President and CEO of the Company's Solar Power Business
with overall responsibility and authority for the day-to-day operations of such
business and you shall perform such executive duties and assume such executive
and decision making responsibilities with regard to the business of the Company
as may be assigned to you from time to time by the Board of Directors of the
Company. You shall serve at the pleasure of the Board of Directors of the
Company. As used herein any action with respect to this Agreement and your
employment hereunder to be authorized or taken by the Board of Directors shall
be by a majority of the Board of Directors then in office.
3. COMPENSATION AND BENEFITS.
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(a) Compensation.
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(1) Salary. Commencing as of the Effective Date hereof and
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continuing throughout this Agreement, you will be compensated at the rate of
$155,000 per annum, which will be paid to you, in accordance with the payroll
practices of the Company.
(2) Bonus.
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(i) You shall be entitled to receive a bonus of $30,000
upon the closing of the first financing resulting in not less than $2 million
of gross proceeds to the
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Employment Agreement
May 1, 1996
(ii) You shall be entitled to a bonus for calendar year
1996 ranging from $0 to $50,000 measured against a set of performance goals to
be agreed upon by you and the Compensation Committee of the Board of Directors.
Such goals are to be established no later than 30 days from the execution of
this Agreement. Payment to you of any bonus due to you pursuant to the
foregoing shall be made within 20 days after the availability of the Company's
audited profit and loss statement for the year 1996 prepared in accordance with
generally accepted accounting principles consistently applied.
The Board of Directors of the Company (or a Compensation Committee thereof)
will review your salary and bonus from time to time not less than annually, and
may, but shall not be obligated to, award increases in salary and award bonuses
without the necessity of an express written amendment of this Agreement, so long
as such increases and/or bonuses are in writing and signed by a member of the
Board of Directors who has been so authorized by the Board of Directors.
(3) Granting of Stock Options. Because we feel that a key manager of
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any business should have an owner's interest in the success of that business,
which is best measured by the long term increases in the value of that business,
in consideration of future services to be rendered to the Company by you, the
Company will enter into an agreement with you as of the date hereof with respect
to granting you options to acquire 250,000 shares of the Company's Common Stock,
subject to the following essential terms and conditions: The options will vest
and be exercisable as follows:
(i) Vesting.
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All of the options will vest upon the effective date of a
Registration Statement covering the Company's first bona fide, firm commitment,
public offering of Common Stock ("Public Offering") or if the Company merges or
consolidates into or with, or sells or transfers all or substantially all of its
assets to, or transfers all of its capital stock to, another corporation or
entity which is not an affiliate of the Company ("Sale"), provided that such
Public Offering or Sale results in gross proceeds to the Company of at least
$12,000,000, at a price per share of at least $7.50
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Employment Agreement
May 1, 1996
(as adjusted for stock splits, stock dividends, recapitalizations and similar
events); or if the holders of the Company's outstanding shares of Series A
Preferred Stock and Series B Preferred Stock agree to convert such shares into
shares of the Company's Common Stock notwithstanding that such Public Offering
or Sale results in a price per share of less than $7.50 and gross proceeds of
less than $12,000,000 (the "Public Offering").
If the Company terminates your employment within twelve month's prior to
such Public Offering or Sale and you were not terminated for Specified Cause,
you shall continue to be vested with respect to all your options upon the
effective date of the Registration Statement relating to the Public Offering or
the effective date of a Sale. If you voluntarily terminate your employment
prior to such Public Offering or Sale you shall forfeit all rights to your
options to purchase 250,000 shares.
(ii) Exercise Provisions
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Subject to the provisions of this Agreement relating to
termination for Specified Cause, all vested options will be exercisable at any
time and from time to time, in whole or in part at a price of $3 per share, (the
fair market value at May 1, 1996) as follows:
(a) for a period of two years from the completion of
the Public Offering or Sale if your employment with the Company was terminated
by the Company, other than for Specified Cause, within twelve months prior to
such Public Offering or Sale.
(b) for a period of seven years from the completion of
the Public Offering or Sale provided, you are an employee of the Company at the
time of such exercise.
(c) for a period equal to the lesser of two years from
the termination of your employment with the Company, or seven years from the
completion of the Public Offering or Sale provided, that you were an employee of
the Company at the time of the completion of the Public Offering or Sale and
that you were not terminated by the Company for Specified Cause.
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Employment Agreement
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(iii) Anfi-dilution Provisions
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The option will contain anti-dilution provisions in the
event there is any change in the outstanding Common Stock by reason of a stock
dividend, split-up or reclassification and the aggregate number and kind of
shares available under the option and the option price shall be appropriately
adjusted by the Board of Directors of the Company.
(iv) Piggyback Registrations
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You shall be entitled to unlimited piggyback registration
rights for a period of 2 years from the Public Offering.
(v) Prior Options
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The qualified incentive stock options to purchase 80,000
shares of the Company's Common Stock provided for in the Company's letter to you
of May 25, 1995 shall continue in full force and effect in accordance with their
terms.
(b) Employee Benefit Plans. You will be eligible to participate in
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any employee benefit plans or programs of the Company as presently provided to
senior executives of the Company and as in effect from time to time during your
period of employment, subject to the requirements for eligibility and benefits
specified therein for all persons entitled to participate in any such plan or
plans.
(c) Vacation. You will be entitled to vacations in accordance with
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the Company vacation policy as in effect from time to time, but unused vacation
time may not be accrued and carried over to another period.
(d) Expenses. You will be paid or reimbursed by the Company for local
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commuting expenses and temporary living expenses to the extent and in the same
manner as you are presently being paid or reimbursed by the Company for such
expenses. The Company will also pay or reimburse you for a reasonable number of
round trips to California to be made by either you or your wife.
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4. TERMINATION.
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The Company will have the right to terminate your employment by
written notice for "Specified Cause". As used herein, the term for "Specified
Cause" means (i) the material misappropriation of assets of the Company or
perpetration of a fraud against the Company; (ii) the conviction of any crime
involving moral turpitude which constitutes a felony in the jurisdiction
involved and with respect to which appeals have been exhausted; (iii) habitual
intoxication which impairs the performance of your duties or illegal use of
habit forming substances; (iv) as defined in paragraph 8 herein, your
disability; or (v) the willful violation or breach of any material provision of
this Agreement. The Board of Directors of the Company will not terminate your
employment during the Term for "Specified Cause" as hereinabove defined in
subparagraphs (iii), (iv) or (v), unless (a) you have first received written
notice stating with specificity the nature of the breach of such provisions and
affording you an opportunity to correct the act or acts complained of within 30
days of the actual receipt of notice thereof by you, and (b) you have failed to
correct such act or acts, or, in the case of an act that cannot be corrected
within such 30 days, failed to commence and continue in good faith to correct
such act.
If the Board of Directors of the Company elects to terminate your
employment for any reason other than for Specified Cause, the Company shall be
obligated to pay you as severance 9 months salary, payable in accordance with
the regular payroll policies of the Company. In addition you shall receive any
accrued salary, vacation pay or other accrued payments.
5. COMPETITION AND CONFLICTS OF INTEREST.
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While you are employed by the Company and after the termination of
your employment as set forth below in this paragraph 5, you shall not knowingly
act or conduct yourself to the detriment of the Company, its subsidiaries or
affiliates. Specifically, but without limitation, you shall not (1) knowingly
engage in competition with the Company in any of the businesses in which it may
have been engaged at any time during the period of your employment under this
Agreement, unless such
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Employment Agreement
May 1, 1996
business is discontinued, or (ii) knowingly directly or indirectly solicit,
raid, entice, induce, or approach any employee of the Company, or of any of its
subsidiaries or affiliates, to become employed by any other person, firm or
corporation. For this purpose, the phrase "engaging in competition" shall mean
directly or indirectly owning, managing, operating, joining, controlling or
participating in or being connected with, as an officer, employee, partner,
stockholder, consultant, advisor or otherwise, any business, individual,
partnership, firm, corporation or other entity which is at the time engaged
principally or significantly in a business which is at the time directly or
indirectly in competition with the business of the Company; provided, however
that nothing in this paragraph shall prohibit you from acquiring or holding any
issue of stock or securities of any such entity which has any securities listed
on a national securities exchange, or quoted in the daily listing of over the
counter market securities unless you and members of your immediate family
collectively own, directly or indirectly, more than 5% of any class of voting
securities of any such entity at any one time.
The foregoing restrictions shall be operative only in the event you
voluntarily terminate your employment prior to the completion of the Public
Offering or if your employment is terminated by the Company for specified Cause,
and they shall terminate at the expiration of six months from such termination
of your employment, unless you have been employed for less than six months in
which event they shall terminate at the expiration of that number of months
equal to the number of months you were employed by the Company.
6. RETURN OF MATERIALS.
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Upon the termination of your employment with the Company, regardless
of the date, cause or manner of such termination, you will return to the Company
all non-public printed and other materials furnished to you by the Company or
any customer of the Company, including, without limitation, all tangible
"Confidential Information" described in paragraph 7 below. Such return shall be
made as soon as practicable after the termination of your employment. In no
event will you retain or
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Employment Agreement
May 1, 1996
reproduce copies of any such non-public printed or other materials for your use
following the termination of your employment.
7. CONFIDENTIAL INFORMATION.
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In connection with your performance of services for the Company, you
may obtain knowledge of "Confidential Information", as hereinafter defined
relating to the business of the Company (or any of its subsidiaries or
affiliated companies). As used herein, "Confidential Information" means any
information or compilations of information (including, without limitation,
names, addresses or needs of customers of the Company) which is, or is designed
to be, used in the business of the Company or any of its subsidiaries or
affiliated companies or results from its (or their) research or development
activities. Except in the performance of services hereunder, you shall not
knowingly (a) publish any article with respect thereto; (b) remove from the
premises of the Company or aid in such removal, any such Confidential
Information (or reproduction of any such Confidential Information) or any
property or material related thereto (including information stored in
computerized reports or systems); or (c) sell, exchange or give away or
otherwise disclose or dispose of any such Confidential Information now or
hereafter owned by the Company whether or not the same shall or may have been
originated, discovered, or developed by you.
8. DISABILITY.
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In the event you shall be unable to perform your duties hereunder by
virtue of illness or physical or mental incapacity or disability from any cause
or causes whatsoever for an aggregate period of six months within any 12 month
period, the Company shall have the right upon 30 days notice, in writing, to
terminate your employment hereunder, provided, however, that if prior to the
expiration of such 30 day notice you have resumed your duties on a full time
basis, you shall continue to be so employed and receive all compensation and
benefits due, but if within the three month period following your return to
full-time service you are absent by reason of the pre-existing cause of
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May 1, 1996
incapacity or disability for an aggregate of 30 days, the Company shall have the
right to terminate your employment forthwith. You agree that upon request of
the Company, you will submit to an appropriate medical examination by a doctor
designated by the Company and at its cost to confirm the existence of an illness
or physical or mental incapacity or disability.
9. LIFE INSURANCE.
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(a) At any time during the term of this Agreement, the Company shall
have the right, but not the obligation, to insure your life for the sole benefit
of the Company. The amount of such insurance and the type of policy taken out
shall be determined by the Company and all premiums payable thereon shall be the
obligation of the Company. You shall have no interest in any such policy. You
agree to cooperate with the Company in taking out such insurance by submitting
to physical examination, by supplying all information required by the insurance
Company, and by executing all necessary documents, provided no financial
obligation is imposed upon you.
10. INDEMNIFICATION.
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The Company shall, to the fullest extent permitted by Section 145 of
the General Corporation Law of the State of Delaware, as the same may be amended
and supplemented, indemnify you against any and all of the expenses,
liabilities, or other matters referred to in or covered by said section.
11. NOTICES.
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All notices and other communications between you and the Company
related to this Agreement shall be in writing, and except as otherwise expressly
provide herein, shall be deemed to have been duly given when placed in the
United States mail by certified mail, return receipt request, postage prepaid,
addressed to such party as follows:
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Employee Agreement
May 1, 1996
As to the Company: Attn: Board of Directors
AstroPower, Inc.
Xxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
As to Xxxxxx X. Xxxxxx: 000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Either party may change his or its address (and in the case of the Company
the name of the person(s) to whose attention communications hereunder shall be
directed) from time to time by serving notice thereof upon the other party as
provided herein. The provisions of paragraphs 7 and 8 above shall survive the
termination of your employment with the Company regardless of the date, cause or
manner of such termination, and neither the termination of your employment nor
the termination of this Agreement shall impair or otherwise affect your
obligation to strictly observe the terms and conditions of paragraphs 6 and 7.
12. ENTIRE AGREEMENT.
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This letter contains the entire understanding and agreement by and
between the Company and you related to your employment by the Company and all
prior or contemporaneous oral or written agreements or instruments are merged
herein. No amendment to or modification of this Agreement shall be effective
unless the same is in writing and signed by you and the Company. No waiver by a
party to this Agreement of any breach by the other party of any provision of
this Agreement shall be deemed to be a waiver of any later or other breach or as
a waiver of any such or other provision of this Agreement.
13. INVALIDITY.
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If any provision of this Agreement is declared invalid or
unenforceable as a matter of law, such invalidity or unenforceability shall not
affect or impair the validity or enforceability of any other provision of this
Agreement or the remainder of this Agreement as a whole.
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Employment Agreement
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14. PARTIES IN INTEREST.
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Except as otherwise expressly provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon you and the Company,
and our respective legal representatives, successors and assigns, all as and to
the extent provided herein, and no other person shall acquire or have any right
under of by virtue of this Agreement.
15. LAW APPLICABLE.
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Should any question arise at any time as to the validity,
construction, interpretation or performance of this Agreement it shall be
construed and enforced in accordance with the LAWS of the State of Delaware.
If the foregoing terms and conditions of employment are acceptable to you,
we would appreciate your signing both copies of this letter which are enclosed,
and retaining one copy for your file and returning the other copy to us for our
file.
We are all looking forward to a successful long-term business relationship.
Very truly yours,
ASTROPOWER, INC.
BY: /S/ XXXXX X. XXXXXXX
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Name: Xxxxx X. Xxxxxxx
Title: President
ACCEPTED AND AGREED TO THIS
17 Day of May, 1996
BY: /S/ XXXXXX X. XXXXXX
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