Form of Employment Agreement between STF Technologies, Zrt and Attila Horvath
Form
of
Employment Agreement
between
STF
Technologies, Zrt
and
Xxxxxx
Xxxxxxx
STF
Technologies Zrt
Xxxxxxx
Xxxxx ut 29
X-0000
Xxxxxxxx
Xxxxxxx
(the
"Company")
and
Xxxxxx
Xxxxxxx
_____________________
____________________
Hungary
(the
"Executive”)
have
today entered into the following
Employment
Agreement
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1
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General
Duties of the Executive; Reporting
Functions
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1.1
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With
effect from ___________ __ 2008 (which is the date of entry into
work) and
for a period expiring on December 31, 2014, the Executive is employed
as
member of the Board of Directors and Chief Operating Officer of the
Company. In addition, the Executive shall also serve (for no additional
compensation other than as provided in this Agreement) as the Chief
Operating Officer of Buda Solar Technologies Co., Ltd., a wholly-owned
subsidiary of the Company, hereinafter “BudaSolar”).
The Executive shall be fully liable for the termination of his position
and/or his employment deriving from that in case he (either as executive
to be appointed or as a shareholder of the Company) acts against
or omits
to provide the declaration, approvals, vote(s) necessary for the
extension
of his position at the Company as Chief Operating
Officer.
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1.2
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The
Executive shall be the Chief Operating Officer of the Company and
of
BudaSolar primarily responsible for the manufacture and sale of PV
Equipment, sales leadership and dealings with the distributors, dealers
and representatives of the Company, management transition, product
line
integration and corporate strategy. In addition, the Executive shall
have
authority and responsibility over key aspects of the operations of
the
Company and BudaSolar, particularly with respect to areas of research,
product development, product strategy, product fulfillment and day-to-day
operations.
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2
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1.3
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The
Executive shall report to the President of the Company and the General
Manager of BudaSolar and to the Board of Directors of the Company
and
BudaSolar. The Executive shall also be subject to the operating
instructions and guidelines laid down Board of Directors of the Company
which are annexed hereto as Exhibit
A
and made a part hereof (the “Operating
Guidelines”).
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1.4
|
The
Employee shall perform work at the premises of the Company.
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1.5
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Subject
to the provisions of this Article I, the Company’s rights in respect of
the Executive shall be exercised by the Board of Directors of the
Company.
In case the Articles of Association of the Company or the procedures
for
reporting established by the Board of Directors of the Company provides
otherwise, the Executive shall be informed of such change in the
person
exercising Employer’s rights in writing. In case of decisions passed by
the Board of Directors regarding the exercising of the Company’s rights
over the Executive, the Executive shall not vote and shall not be
considered at the establishment of a quorum of
directors.
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1.6
|
The
Employer and the Executive acknowledge that the Executive is considered
as
an executive employee under the terms of Clause 188 Paragraph (1)
of the
Labor Code.
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1.7
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As
used in this Agreement:
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| (a) |
The
term “Affiliate”
shall mean any individual, firm, corporation, partnership or other
entity
(each a “Person”)
controlled by, controlling or under common control with, any other
Person.
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| (b) |
The
term “Company
Group”
shall mean the Company and its consolidated direct and indirect
Subsidiaries, including without limitation,
BudaSolar.
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| (c) |
The
term “Company
Group EBITDA”
shall mean the net income of the Company Group for each of the five
“Measuring Years” (as that term is defined in Clause 4.2 below), before
deduction for interest, taxes, depreciation of tangible assets and
amortization of intangible assets, all as determined by the auditors
for
Solar Thin engaged to audit the consolidated financial statements
of Solar
Thin, including its Company Group.
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| (d) |
The
term “HUF”
mean Hungarian Florint.
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| (e) |
The
term “PV
Equipment”
means the machinery, equipment, software and computer hardware required
to
be installed at a PV Facility to enable a Person to manufacture and
produce PV Modules;
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| (f) |
The
term “PV
Facility”
means a turn-key manufacturing facility including PV Equipment,
converters, land and building to enable a Person to produce PV Modules;
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3
| (g) |
The
term “PV
Modules”
means amorphous silicon (“aSi”)
photovoltaic solar panels or modules capable of producing solar
power’
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| (h) |
The
term “Subsidiary”
shall mean BudaSolar and any other Person more than a majority of
the
share capital of which is owned directly or indirectly (through another
Subsidiary) by the Company.
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1.8
|
The
Executive shall perform his duties in accordance with Hungarian law
and
more particularly within the provisions of all statutes governing
the
operation of businesses located in Hungary, this Agreement, the
Shareholders Agreement signed by the shareholders of the Company,
the
Articles of association and by-laws of the Company, the rules of
procedure
of the Board of Directors of the Company and in accordance with such
general and special directions and instructions which may be given
to him
by the Board of Directors of the Company, or the General Meeting
of the
Company from time to time.
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1.9
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The
business of the Company, BudaSolar and the Company Group shall be
managed
by the Board of Directors of the Company. In such connection, transactions
and decisions which require the approval and consent of the Board
of
Directors of the Company shall include, the
following:
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(a)
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the
sale of the business of the Company, or any part
thereof;
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(b)
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the
purchase of any businesses;
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(c)
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the
establishment or closing of branches, divisions or
subsidiaries;
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(d)
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any
material structural changes with respect to the organisation, employees
or
business activities of the Company;
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(e)
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except
as previously approved by the board of directors as part of the annual
Budget and Plan contemplated by the Operating Guidelines, the purchase,
sale, lease or charge of real
property;
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(f)
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except
as previously approved by the board of directors as part of the annual
Budget and Plan contemplated by the Operating Guidelines, the purchase,
sale, lease or charge of any equipment having a value in excess of
USD
$25,000;
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(g)
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the
taking up of loans or other credit
facilities;
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(h)
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the
making of loans or entering into any credit
facilities;
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(i)
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the
granting of guarantees or other forms of indemnities or
security;
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4
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(j)
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the
conclusion of any contracts which obligates the Company or BudaSolar
for
USD $100,000 or more, or which cannot otherwise be unilaterally cancelled
by the Company or BudaSolar on 60 days notice or less, including
without
limitation, the acceptance of all purchase orders for PV Equipment,
PV
Facilities or PV Modules;
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(k)
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except
as previously approved by the board of directors as part of the annual
Budget and Plan contemplated by the Operating Guidelines, the increase
in
compensation of any employees, or the establishment of general or
special
pension schemes, profit sharing schemes or bonus schemes with the
employees of the Company;
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(l)
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any
transaction involving any officer or director of the Company;
or
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(m)
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the
issuance of any securities, equity or other ownership interests or
rights
thereto of the Company or any other member of the Company Group.
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2
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Additional
Duties of the Executive
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2.1
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The
weekly working time of the Employee shall be 40 hours.
The Employee defines his work schedule himself. The Executive shall
devote
the whole of his time, attention and abilities in the service of
the
Company, except for such time devoted to his duties as Chief Operating
Officer of BudaSolar,
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2.2
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Without
prior written consent of the Board of Directors of the Company, the
Executive may not undertake other activities whether they are remunerated
or not, except of academic or teaching activities which do not interfere
with the Executive’s duties and obligations to the Company, BudaSolar and
the Company Group.
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3
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Power
to sign for the Company
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3.1
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Subject
at all times to the Operating Guidelines and the approval of the
President
of the Company, the Executive is authorised to sign on behalf of
the
Company and BudaSolar in all matters concerning the day-to-day business
of
the Company and BudaSolar, and subject to the power to sign for the
Company and BudaSolar set out in the relevant articles of association.
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4
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Remuneration
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| 4.1 |
Salary. The
Executive's annual gross salary shall be the HUF amount equal to
USD
$200,000 per annum, payable in monthly installments of HUF equal
to (U.S.)
$16,666.66 each (the “Monthly
Salary”);
which Monthly Salary shall be payable in arrears within five days
after
the last business day of each month in HUF. The basis of the calculation
of the HUF amount shall be the daily USD/HUF exchange rate of the
Hungarian National Bank set out on the last business day of each
month.
The annual gross salary shall be subject to annual review by the
board of
directors of the Company. Such annual gross salary and Monthly
Salary
shall be paid to the Executive in
HUF.
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5
| 4.2 |
Annual
Bonus.
Not less than 120 days after the end of each of the five (5) following
calendar years: (a) 1 January 2009 and ending 31 December 2009 (the
“2009
Calendar Year”),
(b) 1 January 2010 and ending 31 December 2010 (the “2010
Calendar Year”),
(c) 1 January 2011 and ending 31 December 2011 (the “2011
Calendar Year”),
(d) 1 January 2012 and ending 31 December 2012 (the “2012
Calendar Year”),
and (e) 1 January 2013 and ending 31 December 2013 (the “2013
Calendar Year”),
the Executive and Istvan Krafscik (“Krafscik”)
shall be entitled to receive and share (in equal 50/50 amounts) a
bonus
(the “Annual
Bonus”)
which shall equal five percent (5%) of the amount, if any, by which
the
“Company
Group EBITDA”
(as defined below) shall exceed
the
minimum amounts set forth below in each of the five calendar years
indicated below (the “Measuring
Years”);
provided, however that in no event shall the Annual Bonus payable
in each
Measuring Year in question exceed the Maximum Bonus set forth below
:
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2009 Calendar Year
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2010 Calendar Year
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2011 Calendar Year
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||||||||
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Minimum EBITDA
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$
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2,000,000
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$
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5,000,000
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$
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8,000,000
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||||
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Maximum
Bonus
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$
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1,000,000
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$
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1,500,000
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$
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2,000,000
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||||
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2012 Calendar Year
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2013 Calendar Year
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|||||
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Minimum
EBITDA
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$
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2,000,000
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$
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5,000,000
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|||
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Maximum
Bonus
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$
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2,500,000
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$
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3,000,000
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|||
The
foregoing Annual Bonus and Maximum Bonus, although expressed in United States
dollars,
shall be calculated in HUF and paid to the Executive and Xxxxxxx in HUF at
the
actual USD/HUF exchange rate published by the Hungarian National Bank on the
day
of the payment.
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5
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Motor
Car
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5.1
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The
Company shall provide the Executive with a car of a type which the
Company
deems suitable for the Executive's position and area of responsibility.
In
connection with the commencement of the employment a car will be
made
available to the Executive and any subsequent replacements must be
approved by the Board of Directors. The value of the car shall be
in the
range of HUF 15,000,000 (approximately USD $90,000). The Company
shall
cover all operating costs of said car related to use in Hungary or
to
business use abroad. If the Executive uses the car for private purposes
outside Hungary, the Executive shall pay all expenses related thereto.
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6
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5.2
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If
this Agreement is terminated with or without notice and regardless
of the
reason therefor, the Executive shall return the car to the Company
on the
day from which his duties are suspended. The Executive is not entitled
to
exercise a retention right or lien on the car. Instead, the Executive
shall receive a monthly amount equivalent to the fiscal value of
the free
car arrangement described in Clause 5.1 until the end of the period
for
which the Executive receives
salary.
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6
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Telephone
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6.1
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The
Company will provide the Executive with free mobile telephone, to
be used
primarily for business purposes. Any and all costs payable after
the use
of the phone shall be borne by the Company.
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6.2
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If
this Agreement is terminated with or without notice and regardless
of the
reason therefor, the Executive shall deliver the mobile telephone
back to
the Company on the day from which his duties are suspended. The Executive
is not entitled to exercise a retention right or lien on the mobile
telephone. Instead, the Executive shall receive a monthly amount
equivalent to the fiscal value of the free mobile telephone described
in
Clause 6.1 until the end of the period for which the Executive receives
salary. The Executive is entitled to keep and use the same telephone
number after the termination.
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7
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Other
Expenses
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7.1
|
The
Company shall reimburse the Executive for all reasonable expenses
incurred
in connection with travelling and entertainment on behalf of the
Company
in accordance with the relevant rules of the Company in force from
time to
time. The Executive shall not later than the first working day of
each
month submit a statement of his travelling and other expenses together
with invoices for the previous month to the Company. [At the same
time the
Executive shall submit a copy of this material to a board member
designated by the Board of Directors to approve such statements.
The Board
of Directors shall be entitled to establish a budget for such expenses.]
Should the Company’s EBITDA be positive then in case of traveling over the
distance of 3000 km the Executive is entitled to business class tickets.
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7
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8
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Holidays
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8.1
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The
Executive shall be entitled to paid annual holidays according to
the
relevant provisions of the Hungarian Labor
Code.
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8.2
|
The
Executive shall decide the periods for his holidays after due
consideration of the Company's business and after prior notification
of
the Board of Directors of the
Company.
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8.3
|
The
Executive shall take his annual holidays within each current holiday
year
and any holidays not taken in any holiday year cannot be carried
forward
as transferred to a subsequent holiday year. No special holiday pay
is
payable to the Executive. In case of termination, the Executive shall
take
any accrued holidays during the period of notice and shall not be
entitled
to any kind of compensation if he has not been able to take holidays
accrued prior to the termination date of this Agreement except for
the
case when the accrued holidays exceed the term of the notice while
the
Executive has to work. In this case the Executive is entitled to
compensation for such excess.
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9
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Sickness
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The
Executive is entitled to receive his salary during any periods of
sickness
as set out by the Hungarian Labor
Code.
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10
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Insurance
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10.1
|
The
Company shall take out accident insurance covering the Executive
fully
against personal accident in Hungary and abroad whether during working
hours or on holidays.
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10.2
|
The
insurance shall include coverage in respect of accidental death or
accidental permanent disablement.
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11
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Confidentiality
etc.
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11.1
|
The
Executive shall keep secret and shall not at any time whether during
this
employment or after the termination thereof for whatever reason use
for
his own and/or any other person's advantage or disclose to any third
party
any information about the Company, BudaSolar the Company Group, Solar
Thin
or other group companies' internal matters, including especially
in
relation to the financial situation, business activities, customers
and
employees, in so far as such information is confidential or a business
secret.
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8
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11.2
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The
Executive shall promptly communicate to the Company all ideas, inventions,
modifications, improvements, processes, formulae, materials, know-how,
designs, models, prototypes, trademarks, sketches, drawings, plans
and
other matters (intellectual property) (whether or not capable of
protection by any contractual, statutory or other form of protection
of
intellectual property) which at any time during the term of the
Executive's employment the Executive alone or jointly with others
may
devise or discover in the course of the Executive's performance for
the
Company Group of his duties. Subject to the provisions under Hungarian
laws such intellectual property rights including all financial rights
deriving there from shall belong to the Company Group Company or
the
respective Company Group company without payment of any additional
consideration. The Parties agree that any fees that could otherwise
be
payable to the Executive are considered as covered by the remuneration
of
the Executive set out in this agreement as well as his share capital
equity in the Company, especially with view to the fact that the
development of the above mentioned intellectual property comprises
an
obligation of the Executive arising from his employment with the
Company.
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11.3
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The
Executive undertakes to sign such statements and permits as are required
by the Company and the Company Group for the purpose of transferring,
registering or obtaining the above mentioned rights in the name of
the
Company and the Company Group.
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11.4
|
Upon
termination of his employment for whatever reason the Executive shall
return to the Company all material, reports, manuals, correspondence,
files, customer lists and other material belonging to the Company.
The
Executive shall not be entitled to exercise a retention right or
lien on
such materials.
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12
|
Termination;
Severance Pay
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12.1
|
The
employment shall automatically terminate 31 December 2014 as set
out in
Clause 1.1.
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| 12.2 |
(a) Beyond
the case in Clause 12.1. the employment relationship can be terminated
prior to 31 December 2014 by (i) mutual agreement, by (ii) extraordinary
termination, or (iii) upon exercise of the “Call Option” or the “Buy-Out
Option” (as those terms are defined in the Share Exchange Agreement) and
the payment to the Executive in cash of the full Call Option Price
or
Buy-Out Option Price (as those terms are defined in the Share Exchange
Agreement).
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(b) In
the
event that:
(i)
the
Call Option or the Buy-Out Option is exercised and paid in full and
the
Company thereafter elects to terminate the employment of the Executive pursuant
to clause (iii) of Clause 12.2(a) above for reasons other
than an
extraordinary termination, or
(ii)
the
Executive shall terminate this Agreement by reason of the occurrence of one
or
more events described in Clause 12.2(d) below,
9
then
and
in either event, the non-competition provisions set forth in Section 8.4 of
the
Share Exchange Agreement shall terminate.
(c)
The
Company or the Executive may terminate the employment relationship by
extraordinary termination in the event that the other party (i) willfully or
by
gross negligence commits a grave violation of any substantive obligations
arising from the employment relationship, or (ii) otherwise engages in conduct
rendering further existance of the employment relationship impossible.
For
the
avoidance of doubt, the Company shall have grounds for extraordinary termination
of the employment of the Executive, if the Executive (a) is convicted of any
crime or other felony, (b) misappropriates any funds, business, opportunity
or
other benefit belonging to the Company, (c) engages in any competitive
activities, (d) fails to devote his full business and professional time to
the
affairs of the Company and the Company Group, (e) is in material breach of
his
obligations under this Agreement or otherwise fails or refuses, after written
notice of not less than twenty (20) days, to following the reasonable requests
and direction of the Board of Directors of the Company, or (f) engages in any
other act or omission that would constitute gross negligence, fraud or
dereliction of his duties hereunder. In any of these events committed by the
Executive, the Executive shall be entitled to receive no further benefits
(including Annual Bonus) under this Agreement from and after the date of
termination.
(d) Grounds
for extraordinary termination by the Executive are limited to (i) a material
change without just cause in the nature of the Executive’s duties hereunder,
(ii) the failure by the Company to timely pay the compensation to which the
Executive shall be entitled to receive under this Agreement, (iii) after the
expiration of all periods to cure any such default, the failure of Solar Thin
Films, Inc. to perform the material covenants and agreements on its part to
be
performed under Section
8.5
of the
Share Exchange Agreement (the “Buy-out Right”) or Section
8.6
of the
Share Exchange Agreement (the “Call Option”), or (iv) after the expiration of
all periods to cure any such default, the failure of Solar Thin Films, Inc.
or
the Company to perform any of the material covenants and agreements on their
part to be performed under the Shareholders Agreement among the Company and
its
shareholders, including the Executive.
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12.3
|
If
the Company terminates the employment of the Executive in for any
reason
other
than as described in Clause 12.2. then the Executive shall be entitled
to
receive severance pay equal to
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(a)
his
Monthly Salary (payable in equal monthly installments) for a period equal to
the
duration of the five (5) year period of the Executive’s non-competition
agreement set forth in the Stock Exchange Agreement (unless the Company and
the
Executive mutually agreement to terminate such non-competition agreement; in
which event severance pay shall be limited to three months salary commencing
from the date of termination of such non-competition agreement), and
10
(b)
any
Annual Bonus to which the Executive would otherwise be entitled to receive
in
the Measuring Year in which such termination occurs but at least an Annual
Bonus
equal to the amount of the Annual Bonus received by the Executive through the
twelve (12) month period prior such termination.
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12.4
|
In
case of termination the Company is obliged to hand over the salary,
the
reimbursement of the remaining vacation leave, certifications to
the
Executive that are due to the Executive according to the rules of
the
Labor Code on the last working day of the
Executive.
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12.5
|
On
the information set forth in Clause 76 (7) of the Labour
Code:
|
1.
Standard work order: The Executive has flexible work order.
2.
Other
components of the salary: Annual Bonus according to Clause 4.2 of the
Agreement.
3.
Day of
payment: in arrears within five days after the end of the last business day
of
each month.
4.
Date
of entry into work: see Clause 1.1 of the Agreement.
5.
Calculation method and the granting of ordinary holiday: see Clause 8.2 and
8.3
of the Agreement. The Executive is entitled to holiday days per year established
by Clause 131 of the Labour Code.
6.
Notice
period: none.
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12.6
|
The
provisions of this agreement shall be governed by and construed in
accordance with the laws of Hungary (excluding any conflict of law
rule or
principle that would refer to the laws of another jurisdiction) Any
dispute, controversy or claim arising out of or relating to this
agreement, or the breach, termination or invalidity thereof, shall
be
settled exclusively in Hungarian
Court.
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The
balance of this page intentionally left blank - signature page
follows
11
IN
WITNESS WHEREOF, this Agreement has been executed the date any year first above
written in Budapest, Hungary.
|
STF
TECHNOLOGIES, ZRT.
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|
The
Executive:
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|
XXXXXX
XXXXXXX
|
The
undersigned does hereby guaranty the payment and performance of the Employer
under the above Employment Agreement.
_______________________________
Xxxxx
X.
Xxxxx, President
12
OPERATING
GUIDELINES
1. On
or
before January 1st
in each
year (commencing 2009), the President of the Company and the Executive shall
submit an annual budget and business plan for research, sales, marketing,
product development and strategy, and operations, including product fulfilment
(the “Budget
and Plan”)
to the
Board of Directors of the Company for approval. If approved (or modified by
the
Board of Directors), the Executive (subject to the approval of the President
of
the Company) shall have the authority to operate and make expenditures within
such approved Budget and Plan. As part of the Budget and Plan, the Executive
shall submit to the Chief Executive Officer of Solar Thin Films, Inc., the
President of the Company and the Board of Directors of the Company proposed
pricing and sales terms for all PV Equipment to be sold and marketed by the
Company. Any deviation from such approved Budget and Plan shall require the
Board of Directors of the Company.
2. Subject
to the approval of the President of the Company, the Executive will have
authority to negotiate PV Equipment sales within the parameters of all such
pricing and sales terms and to execute contracts and purchase orders with
respect thereto on behalf of the Company and BudaSolar; provided,
that
the final terms and conditions of all PV Equipment sales contracts and other
purchase orders shall be reviewed and approved in advance of signing by the
Executive by the Board of Directors of the Company or by the Chief Executive
Officer of Solar Thin Films, Inc. (pursuant to authority expressly granted
to
such person by or by the Board of Directors of the Company).
3. The
finance and accounting group of the Company will report to the Chief Financial
Officer of Solar Thin. Responsibility for auditing, reporting and compliance
will reside with the Chief Financial Officer of Solar Thin, and the Controller
or other senior financial officer of the Company will have a reporting
relationship to the Chief Financial Officer of Solar Thin Films, Inc.. With
respect to the day-to-day accounting and finance functions such as purchasing,
receiving, cash management, cost accounting, the Controller or other senior
financial officer of the Company will report through the Executive or such
other
senior officer of the Company as designated by the Executive.
13
