Executive Incentive,
Change of Control Retention and Severance
Agreement
This Executive
Incentive, Change of Control Retention and Severance Agreement (the
" Agreement ") is made and entered into as of
August 19, 2008 (the " Effective Date "), by and
between Solar Enertech Corp. (
“Company”) and Leo S. Young (the "
Executive "). Capitalized terms used in this
Agreement shall have the meanings set forth in Section 5
below.
1.
Purpose . The purpose of this Agreement is to encourage
Executive to remain in the employ of the Company and to continue to
devote Executive's full attention to the success of the Company
including in the event of a Change of Control, as such term is
defined in Section 5 of this Agreement.
2.1 Base
Salary . The Company plans to increase base salary for the
Executive in relation to improvements in the operating and
financial performance of the Company consistent with the forecasts
and plans agreed upon between the Board of Directors and the
Executive. For the Fiscal Year 2009, contingent on achievement of
certain operating and financial metrics to be agreed upon between
the Board of Directors and the Executive, the base salary is
planned to increase as follows:
Current base
salary: $200,000 per annum
January 2009
base salary: $250,000 per annum
For the Fiscal
Year 2010, assuming fiscal 2009 performance metrics were met and
contingent on achievement of certain operating and financial
metrics to be agreed upon between the Board of Directors and the
Executive, the base salary is planned to increase as
follows:
January 2010
base salary: $300,000 per annum
In the event
fiscal 2009 performance metrics are not met, the parties agree to
revisit appropriate adjustments to this Section 2.1.
2.2 Stock
Options . Contingent on achievement of certain operating and
financial metrics to be agreed upon between the Board of Directors
and the Executive, the Company plans to award (subject to Board
approval) options to purchase up to 1.5 million shares of the
Company’s common stock to Executive. Any grants shall
become fully vested twelve (12) months after the date of grant if
the Executive is currently employed by the Company. The exercise
price shall be equal to the market price of the Company’s
common stock on the date of the grant and shall be exercisable
until the earlier of (a) the third (3 rd )
anniversary of the date of vesting and (b) sixty (60) days from the
date at which the Executive ceases to be employed by the
Company.
2.3 Personal
Travel to USA . The Company will provide 2 weeks of paid
vacation for each 6 month period of employment under this Agreement
and the Company will pay for round trip business class airfare
to/from China and the United States for the either the Executive or
his spouse.
3.
Severance for reasons other than
Cause . In the event of
Executive’s involuntary severance from service for reasons
other than Cause, or due to the event of a Diminution of
Responsibilities, then, provided that Executive complies with
Section 7 below prior to the forty-fifth (45
th ) day following such termination, Executive
shall receive a lump sum cash payment in an amount equal to
eighteen (18) months of Executive's then effective base salary
(less applicable withholding), paid on the first payroll date which
is forty-five (45) days after the date of termination.
4.
Termination Upon Change of
Control . The provisions
set forth in this Section 4 shall apply in lieu of those in
Section 3 in the event of the Executive’s Termination
Upon a Change of Control. In the event of Executive's Termination
Upon a Change of Control, Executive shall receive the following
payments and benefits:
4.1 Accrued
Salary and Vacation, and Benefits . Executive shall receive all
salary and accrued vacation (less applicable withholding) earned
through Executive's termination date, and the benefits, if any,
under Company benefit plans to which Executive may be entitled
pursuant to the terms of such plans.
4.2 Stock
Award Acceleration . Provided that Executive complies with
Section 7 below, all outstanding stock options granted and
restricted stock issued by the Company to Executive prior to the
Change of Control shall become fully vested and exercisable
immediately prior to the effective date of the Termination Upon a
Change of Control.
4.3 Cash
Severance Payment . Provided that Executive complies with
Section 7 below prior to the forty-fifth (45
th ) day following such termination, Executive
shall receive a lump sum cash payment in an amount equal to
eighteen (18) months of Executive's then effective base salary
(less applicable withholding), paid on the first payroll date which
is forty-five (45) days after the date of termination.
5.
Definitions
.
Capitalized terms used in this Agreement shall have the meanings
set forth in this Section 5.
5.1 "
Cause " means Executive's (a) failure to perform any
reasonable and lawful duty of Executive's position or failure to
follow the lawful written directions of the Board of Directors; (b)
commission of an act that constitutes misconduct and is injurious
to the Company or any subsidiary; (c) conviction of, or pleading
"guilty" or "no contest" to, a felony under the laws of the United
States or any state thereof; (d) committing an act of fraud
against, or the misappropriation of property belonging to, the
Company or any subsidiary; (e) commission of an act of dishonesty
in connection with Executive's responsibilities as an employee and
affecting the business or affairs of the Company; (f) material
breach of any confidentiality, proprietary information or other
agreement between Executive and the Company or any subsidiary; or
(g) failure or refusal to carry out the reasonable directives of
the Board of Directors.
5.2 " Change
of Control " means (a) 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
trustee or
