EXECUTIVE EMPLOYMENT
AGREEMENT
This EXECUTIVE
EMPLOYMENT AGREEMENT (the “Agreement”) dated October
31, 2006 (the “Effective Date”) by and between Solar
Thin Films, Inc., a Delaware corporation (the
“Company”), and Csaba Toro, 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
$200,000 (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 $1.36 (the average closing bid price
for the 20 trading days immediately prior to the Effective
Date)(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
immediately; provided , however , the Executive shall
only be permitted to sell 83,334 shares (the “Earned Option
Shares”) of common stock of the Company, on a public or
private basis, that have been issued upon exercise of the Option
per month. Such sales shall be cumulative. For example, upon the
completion of three (3) months of employment with the Company, the
Executive will be permitted to sell 250,002 shares of common stock
of the Company that have been issued upon exercise of the Option.
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 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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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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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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(iii)
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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 Contr
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