EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of April, 1997 by and between ASTROPOWER, INC.
(the "Company"), a Delaware corporation with offices at Xxxxx Xxxx, Xxxxxx,
Xxxxxxxx 00000-0000, and XXXXX X. XXXXXXX ("Xxxxxxx"), an individual residing at
0 Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000.
W I T N E S S E T H:
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WHEREAS, the Company intends to further improve, develop and commercially
exploit certain inventions and technology relating to photovoltaic solar cells
and related optoeletronic devices and to otherwise engage in the business of
developing, manufacturing, marketing and selling solar cells, modules, panels,
systems for solar electric applications and optoeletronic devices and performing
government-funded and other research and technology development.
WHEREAS, Xxxxxxx has certain experience and abilities in the business of the
Company and has been rendering services to AstroPower, Inc. since July 1, 1989.
WHEREAS, the Company wishes to continue to employ Xxxxxxx and Xxxxxxx wishes to
continue to render services to the Company on the terms and conditions
hereinafter provided;
NOW THEREFORE, in consideration of the mutual promises and covenants set forth
below, the Company and Xxxxxxx hereby agree to this Employment Agreement (the
"Agreement") effective as of April 1, 1997.
1. Employment of Xxxxxxx. The Company agrees to employ Xxxxxxx and Xxxxxxx
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agrees to render services to the Company for the period stated in paragraph 2(a)
below and upon the other terms and conditions hereinafter provided.
2. Term, Position, Responsibilities, Duties, Authority, Time and Location.
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(a) Term of Employment. The term of Xxxxxxx'x employment under this
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Agreement shall commence as of the date first above written for a term of three
(3) years ending March 31, 2000 the "Initial Term" and will continue in effect
(the "Extended Term") after the Initial Term until either the Company or Xxxxxxx
elects to terminate the Agreement by written notice to the other party, which
written
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notice must be given six (6) months in advance of the effective date of such
termination, unless terminated prior thereto in accordance with the provisions
of this Agreement. For example if the Company or Xxxxxxx desires to terminate
the Agreement as of April 1, 2000, the party which desires to terminate the
Agreement must furnish written notice to that effect by October 1, 1999.
(b) Position, Responsibilities Duties and Authority. The Company shall
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employ Xxxxxxx as President and Chief Executive Officer of the Company to
develop, manage, administer and direct the business of the Company. Xxxxxxx
will have overall operating and management responsibility for the Company
consistent with his background and experience. Xxxxxxx shall continue to serve
as a Director of the Company and shall also serve as a Director of any
subsidiaries of the Company if so elected by their respective shareholders.
Xxxxxxx shall, at all times, have such executive powers and authority as shall
reasonably be required to enable him to discharge his duties in a efficient
manner; provided, however, that Xxxxxxx shall at all times be subject to the
authority of the Board of Directors of the Company.
(c) Time. Except for illness and reasonable vacation periods, Xxxxxxx will
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devote all his business time, attention, skill and efforts to the faithful
performance of his duties hereunder and the promotion of the Company's
interests. Xxxxxxx shall not be prevented from participating in charitable and
similar activities and may have personal business investments which may from
time to time require minor portions of his time so long as such activities are
not done in a manner inconsistent with his obligations hereunder.
Subject to the provisions of paragraph 6(b) herein, Xxxxxxx shall not be
prevented from investing or trading in investments for his own account including
real estate, stocks, bonds, securities, commodities or other forms of
investments.
(d) Location. Xxxxxxx shall not be required without his consent to
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perform his duties hereunder (except for reasonable travel in connection with
the performance of such duties) at any place other than Newark, Delaware, or
within a radius of 20 miles thereof. Xxxxxxx shall not be required to perform
any services which will necessitate moving his residence from the greater
Newark, Delaware area.
(e) Vacation. Xxxxxxx shall be entitled to reasonable paid vacation
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periods aggregating not less that four weeks in any calendar year during the
term of this Agreement.
3. Compensation.
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(a) Base Salary. For the services to be rendered by Xxxxxxx during the
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term of this Agreement both as an officer and Director of the Company or
any of its subsidiaries, the Company shall pay to Xxxxxxx a Base Salary
("Base Salary")
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of $175,000 per annum payable in equal monthly or such other installments
in accordance with the general practice of the Company. The Board of
Directors of the Company (or a Compensation Committee thereof ) will review
Xxxxxxx'x salary from time to time not less than annually, and may, but
shall not be obligated to, award increases in salary without the necessity
of an express written amendment of this Agreement, so long as such
increases are in writing and signed by a member of the Board of Directors
who has been so authorized by the Board of Directors.
(b) Incentive Compensation. In addition to the Base Salary provided for
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in paragraph (a) above, the Company will establish an incentive
compensation plan ("the Plan") for Xxxxxxx'x benefit to be effective for
the calendar year beginning January 1, 1997 and each subsequent calendar
year or half calendar year thereafter, during his period of employment with
the Company. The Plan would provide for the establishment on an annual
basis of certain financial or other objectives for the Company, such
financial or other objectives to be determined jointly by the Board of
Directors and Xxxxxxx. The 1997 plan would be structured in a fashion such
that Xxxxxxx'x incentive compensation would be equal to $50,000 if the
financial or other objectives contemplated by the Plan are achieved. For
subsequent years, Xxxxxxx'x incentive compensation would be no less than
$50,000 if the contemplated financial or other objectives are achieved. The
incentive compensation to Xxxxxxx would decline proportionately to zero at
the point at which the results do not exceed an agreed upon percentage of
the objectives. For 1998 and subsequent years, the financial or other
objectives and the range of incentive compensation payable would be
established near the beginning of each year but in no event later than
February 28th.
Incentive compensation (if any) will be paid within 21 days of the
signing of the report on the Company's financial statement by the Company's
independent auditors for the calendar year in respect of which such
incentive compensation is to be paid and within 21 days of the signing by
the Company's chief financial officer of a certificate stating that such
statements have been prepared in accordance with generally accepted
accounting principles consistently applied (except as noted) and fairly
present the financial condition of the Company at the date thereof and for
the periods covered thereby, for any half calendar year in respect of which
such incentive compensation is to be paid.
Copies of the foregoing financial statements shall be delivered to
Xxxxxxx within the aforesaid 21 day period whether or not an incentive
compensation payment is due and payable.
(c) Expenses. The Company agrees to pay or reimburse Xxxxxxx for all
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reasonable and adequately documented travel, entertainment and other
business expenses incurred by him in performing his obligations under this
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Agreement in accordance with company-wide procedures as in effect from time
to time.
(d) Automobile. In recognition of Xxxxxxx'x need for an automobile
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for business purposes, the Company will provide Xxxxxxx a monthly
automobile allowance of $450 in connection with his use of an automobile in
the performance of his duties hereunder and Xxxxxxx shall pay for all
maintenance, repairs, insurance, oil and gas and all costs incident
thereto. The Company will reimburse Xxxxxxx for all business related travel
involving the use of his automobile at a rate per mile in accordance with
Company-wide policy as in effect from time-to-time.
(e) Grant of Stock Options. In addition to the Base Salary and
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Incentive Compensation provided for in paragraphs (a) and (b) above,
effective for the twelve month period beginning April 1, 1997 and each
subsequent twelve month period of employment with the Company Xxxxxxx is
herewith granted an option pursuant to the Company's 1989 Stock Option Plan
to purchase 150,000 shares of the Company's Common Stock during the Initial
Term and 100,000 shares of the Company's Common Stock during the Extended
Term, all at an exercise price of $4.00 per share. Such options shall vest
at the rate of 50,000 shares per year on the last day of the year following
completion of his employment during the prior twelve month period. The
foregoing options are to be equally divided as between Incentive Stock
Options and Non-Qualified Stock Options. Upon vesting the options shall be
exercisable at any time and from time to time in whole or in part for a
period of 5 years from the date of grant with respect to Incentive Stock
Options and 10 years with respect to Non-Qualified Stock options.
In the event Xxxxxxx is employed for less than a full calendar year the
options shall vest as to a pro rata portion of 50,000 shares based on the
actual number of months he is employed. The Company agrees to reserve up to
250,000 shares under its 1989 Stock Option Plan (the "Plan") for issuance
to Xxxxxxx in connection with the options granted hereunder. This
reservation of shares is exclusive of any other shares reserved for
issuance under the Plan to Xxxxxxx under previously granted options. The
Company hereby undertakes to seek shareholder approval to increase the
number of shares available for issuance under the Plan, if such increase is
required to fulfill its obligations hereunder, at its next Annual or
Special Meeting of Stockholders and to recommend such approval to its
stockholders.
The Registration Rights provided to Founders pursuant to Section 11 of
the Series A Preferred Stock Purchase Agreement dated September 20th, 1989
shall be applicable to any shares acquired by Xxxxxxx pursuant to the
exercise of any stock options to be granted pursuant to this Agreement.
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4. Participation in Benefit Plans. The payments provided under this Agreement
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for Xxxxxxx are in addition to any benefits to which Xxxxxxx (or his
beneficiaries or estate) may be or become entitled to under any fringe benefit,
medical, dental or group insurance, pension, profit sharing, welfare or other
benefit plan or program of the Company, and during the period of his employment
under this Agreement, Xxxxxxx shall be eligible for all benefits and emoluments
for which key executives are eligible under every such plan or program to the
extent permissible under the general terms and provisions of such plans or
programs and in accordance with the provisions thereof.
5. Other Income. To the extent that Xxxxxxx receives royalty income from the
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University of Delaware (the "University"), or from any other source whatsoever,
royalty income shall remain the property of Xxxxxxx and shall not serve as an
offset or credit to any compensation due Xxxxxxx pursuant to this Agreement.
6. Additional Obligations of Xxxxxxx.
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(a) Confidential Information. Xxxxxxx shall not knowingly disclose or
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reveal to any unauthorized person or, except on behalf of the company, make use
of any records, contracts, writings, data, knowledge or other information
pertaining to the business of the Company, its divisions, subsidiaries or
affiliates, obtained by him from any source whatsoever as a result of his
relationship with the Company, whether or not in written or other recorded form,
other than information which is a matter of public record, including, without
limitation, any customer or client lists, or information which relates to the
Company's personnel, present operations, or future planning, and Xxxxxxx
confirms that such information constitutes the exclusive property of the
Company. Xxxxxxx agrees that, at the time of terminating his relationship with
the Company, he will deliver to the Company all notes, notebooks, memoranda,
files, lists, records, documents and, in general, any and all material relating
to the Company's business or that of its divisions, subsidiaries or affiliates.
(b) Competition and Conflicts of Interest. Xxxxxxx while employed by the
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Company and for a period of one year from the date of termination of such
employment, shall not knowingly act or conduct himself to the detriment of the
Company, its subsidiaries or affiliates, or in a manner which is inimical or
contrary to their interests; specifically, but without limitation, he shall not
(i) 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 his employment under this
Agreement, or (ii) (and until the second anniversary from the date of
termination) directly or indirectly solicit, raid, entice, induce, or approach
any person who is or was, within six months prior to Xxxxxxx'x termination of
employment with the Company, an employee of the Company or of any of its
subsidiaries or affiliates to become employed by any other person, firm or
corporation.
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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, or
otherwise, any business, individual, partnership, firm, corporation or other
entity which is a 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 6(b) shall
prohibit Xxxxxxx from acquiring or holding any issue of stock or securities of
and such entity which has any securities listed or national securities exchange,
or quoted in the daily listing of over-the-counter market securities unless he
and members of his immediate family collectively own, directly or indirectly,
more than 2% of any class of voting securities of any such entity at any one
time.
(c) Discoveries and Inventions. If Xxxxxxx, while employed by the
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Company, makes, either solely or jointly with others, any discovery,
improvement, or invention which pertains or relates in any way to the business,
products, publications, or processes of the Company, such discovery,
improvement, or invention (whether or not of patentable nature) shall be the
exclusive property of the Company. Xxxxxxx shall execute and deliver to the
Company, without further compensation, any and all documents which the Company
deems necessary or appropriate to prepare or prosecute applications for patents
upon such discovery, improvement, or invention, to assign and transfer to the
Company his entire right, title, and interest in and to such discovery,
improvement, or invention, and patents therefor, and otherwise more fully and
perfectly to evidence the Company's ownership thereof.
(d) Failure to Perform Obligations. Xxxxxxx recognizes and acknowledges
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that the possible restrictions on his activities under this Agreement including,
without limitation, this paragraph 6, are required for the reasonable protection
of the Company.
(e) Life Insurance. At any time during the term of this Agreement, the
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Company shall have the right to insure Xxxxxxx'x 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. Xxxxxxx shall have no interest in any such
policy, but shall cooperate with the Company in taking out such insurance by
submitting to physical examination, by supply all information required by the
insurance company, and by executing all necessary documents, provided no
financial obligation is imposed upon him by any such documents.
7. Disability or Death.
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(a) In the event Xxxxxxx shall be unable to perform his duties here under
by virtue of illness or physical or mental incapacity or disability from any
cause
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or causes whatsoever and Xxxxxxx shall fail to perform such duties for a period
aggregating 180 calendar days within any 360 calendar day period, the Company
shall have the right upon 30 days notice, in writing, to terminate Xxxxxxx'x
employment hereunder. Xxxxxxx shall be entitled to receive all compensation and
benefits due hereunder during said 180 calendar day period and his Base Salary
(as that may have been increased as provided herein) for the longer of what
would have been the remaining term of this Agreement or 2 years from the date of
termination pursuant to this paragraph. However, if prior to the expiration of
said 30 day notice Xxxxxxx has resumed his duties, he shall continue to be so
employed and continue to receive all compensation and benefits due hereunder.
Xxxxxxx agrees that upon request of the Company he will submit to an appropriate
medical examination by a doctor designated by the Company to confirm his
disability, provided, however, that in no event will Xxxxxxx be considered
disabled pursuant to any long term disability plan carried by the Company.
(b) In case of Xxxxxxx'x death, this Agreement shall terminate and the
Company shall be obligated to pay to his estate, for the longer of what would
have been the remaining term of this Agreement or 2 years from the date of
death: (I) his Base Salary (as that may have been increased as provided
herein), and (ii) a pro rata portion of his incentive compensation or any other
payments which he may have earned pursuant to any benefit plan then in effect,
corresponding to the portion of the twelve month period which elapsed to the
date of death.
Any amounts payable by the Company to Xxxxxxx pursuant to paragraph (a) and
(b) shall be reduced by any payments made to Xxxxxxx on account of any Workers
Compensation benefits received by Xxxxxxx or long term disability insurance
payments made to Xxxxxxx pursuant to any disability insurance policies carried
by and paid for by the Company and in the case of death, by any death benefits
paid to Xxxxxxx'x estate from any life insurance policy on his life carried by
and paid for by the Company.
8. Termination.
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(a) Xxxxxxx'x employment here under shall: (I) automatically terminate
upon the expiration of his term of employment or upon his death, and (ii) may
terminate at the option of the Company upon written notice to Xxxxxxx (a)
because of his fraud, misappropriation, or the like with respect to the Company;
(b) because of his disability as set forth in paragraph 7(a) herein, or (c) if
he shall have materially breached any of his covenants herein.
(b) If Xxxxxxx'x employment is terminated by the Company for any reason
other than as set forth above, which termination can only occur by a 2/3 vote of
the Company's Board of Directors with Xxxxxxx not eligible to vote, he shall be
entitled to continue to receive his Base Salary (as that may have been increased
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as provided herein) and all employee benefits consistent with Section 89 of the
Internal Revenue Code of 1986, for the shorter of one year from the date of such
termination or what would have been the remaining term of the Agreement.
In the event of a termination of employment under this Paragraph 8(b),
Xxxxxxx shall not be under any obligation to seek other employment and there
shall not be any offset against amounts due Xxxxxxx under this Paragraph 8(b) on
account of any remuneration attributable to any subsequent employment that
Xxxxxxx may obtain; provided that any health or welfare benefits attributable to
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subsequent employment which Xxxxxxx may receive shall offset any obligation of
the Company to provide such benefits after termination of Xxxxxxx'x employment
with the Company. Any amounts due Xxxxxxx under this Paragraph 8(b) are in the
nature of severance payments or liquidated damages, or both, and are not in the
nature of a penalty.
(c) If Xxxxxxx voluntarily terminates his employment hereunder, he shall
not be entitled to receive any compensation or benefits after the date of such
termination other than as may be required by law.
(d) Xxxxxxx agrees that with respect to any termination of his employment
here under, whether by the Company or by Xxxxxxx, he shall resign as an officer
of the Company and any of its subsidiaries.
9. Rights and Benefits Upon Termination Resulting From a Change in Control. In
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the event of termination resulting from a Change in Control, Xxxxxxx shall be
entitled to the following:
(1) Options. Any unexercised options to purchase shares of the Company's
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Common Stock shall continue to be exercisable in accordance with their
terms and any unvested options to purchase shares of the Company's Common
Stock held by Xxxxxxx shall vest in full upon the occurrence of a Change in
Control and shall be exercisable in accordance with their terms.
(2) Severance Compensation.
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(a) a lump sum cash payment on the date of termination equal to one years
base salary (as that may have been increased as provided herein) and
the greater of his incentive compensation for the previous year or
$50,000.
(b) ( i ) his Base Salary (as that may have been increased as provided
herein), and (ii) his minimum incentive compensation or any other
payments which he could have earned pursuant to any benefit plan then
in effect, from the date of termination resulting from a Change in
Control to what would have been the remaining term of this agreement.
All other benefits and plans shall continue without modification for
the term of this Agreement.
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(3) Change in Control. For the purpose of this Agreement, a "Change in
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Control" shall be deemed to have occurred: If any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") other than a person or group of persons who are
affiliates (as such term is defined in Rule 12b-2 of the Rules and Regulations
promulgated under the Exchange Act) of the Company on the date hereof is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 33% or
more of the combined voting power of the Company's then outstanding securities;
if as the result of, or in connection with, any tender or exchange offer,
merger or other business combination, sale of assets or contested election, or
any combination of the foregoing transactions (a "Transaction") the persons who
were Directors of the Company immediately before the Transaction shall cease to
constitute a majority of the Board of the Company or any successor to the
Company; or ( c ) if there is a Change in Control of a nature that, in the
opinion of counsel for the Company, would be required to be reported in response
to Item 1 of Form 8-K under the Exchange Act, unless three-quarters of the Board
of Directors, as constituted immediately prior to the date of the Change in
Control, decide in their reasonable discretion that no Change in Control has
occurred, Xxxxxxx not being eligible to vote in his capacity as a Director.
10. Injunctive and Other Relief. Xxxxxxx and the Company recognize that the
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services to be rendered under this Agreement by Xxxxxxx are special, unique, and
of extraordinary character, and that in the event of the breach of the
provisions of paragraph 6(a) or 6(b) herein, the Company will be without
adequate remedy at law and will therefore be entitled to specifically enforce
such restrictions by temporary or permanent injunctive or mandatory relief
obtained in an action or proceeding instituted in any court of competent
jurisdiction without the necessity of proving damages and without prejudice to
any other remedies which it may have at law or in equity.
11. Binding Agreement. This Agreement shall be binding upon, and inure to the
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benefit of, Xxxxxxx and the Company and their heirs, executors, administrators
and, successors and assigns. This Agreement, and Xxxxxxx'x rights and
obligations here under, may not be assigned by Xxxxxxx.
12. Modification and Waiver.
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(a) Amendment of Agreement. This Agreement may not be modified or amended
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except by an instrument in writing signed by the parties hereto.
(b) Waiver. No term or condition of this Agreement shall be deemed to
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have been waived, nor shall there by any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
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not constitute a waiver of such term continuing waiver unless specifically
stated therein, and each such waiver shall operate only as to the specific term
or condition waived and shall not constitute a waiver of such term or condition
for the future or as to any act other than that specifically waived.
13. Notices. Any notice or other communication required or permitted to be
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given by any party hereto shall be given in writing either by (a) personal
delivery or, (b) by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
To Xxxxxxx: 0 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
To Company: AstroPower, Inc.
Xxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000-0000
ATTN: Secretary
or to such other address as may be designated in writing by the parties from
time to time during the term of this Agreement. All notices shall be effective
upon receipt after delivery in accordance with the above provisions.
14. Exhibits. All Exhibits attached hereto are hereby incorporated by
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reference into, and made a part of, this Agreement.
15. Provisions Separable. The provisions of this Agreement are independent of
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and separable from each other, and no provisions shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.
16. Entire Agreement. This Agreement contains the entire understanding among
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the parties hereto with respect to the subject matter hereof, and supersedes the
Xxxxxxx Agreement, as well as prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written
except as herein contained.
17. Paragraph Headings. The paragraph headings in this Agreement are for
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convenience only; they form no part of this Agreement and shall not affect its
interpretation.
18. Governing Law. This Agreement has been executed and delivered in the State
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of Delaware, and its validity, interpretation, performance, and enforcement
shall be governed by the laws of said State.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and Xxxxxxx has signed this Agreement, all as of the day and year first above
written.
ATTEST: ASTROPOWER, INC,
BY
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TITLE
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WITNESS:
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Xxxxx X. Xxxxxxx
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