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EXHIBIT 10.14
9 SEPTEMBER 2004
(1) MARK DRAPER
AND
(2) OCEAN POWER
TECHNOLOGIES LTD
----------
SERVICE AGREEMENT
(BY WAY OF DEED)
----------
Wilmer Cutler Pickering Hale and Dorr LLP
Alder Castle
10 Noble Street
London EC2V 7QJ
Tel: +44 (0)20 7645 2400
Fax: +44 (0)20 7645 2424
Ref: 00000-000
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INDEX
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1.
TITLE..................................................................
1
2. JOB
DUTIES.............................................................
1
3. OUTSIDE
INTERESTS......................................................
2
4. FREEDOM TO TAKE UP
EMPLOYMENT WITH THE COMPANY......................... 2
5. PERIOD OF
CONTINUOUS EMPLOYMENT:.......................................
2
6.
TERM...................................................................
2
7. PLACE OF
WORK..........................................................
3
8.
SALARY.................................................................
3
9.
EXPENSES...............................................................
3
10.
BENEFITS...............................................................
3
11. HOURS OF
WORK..........................................................
6
12.
HOLIDAYS...............................................................
6
13. DEDUCTIONS FROM
WAGES..................................................
7
14. DATA
PROTECTION........................................................
7
15. SICKNESS OR
INJURY.....................................................
7
16.
CONFIDENTIALITY........................................................
8
17. DELIVERY UP OF THE COMPANY'S
PROPERTY.................................. 9
18. INTELLECTUAL PROPERTY RIGHTS, INVENTIONS AND MORAL
RIGHTS.............. 10
19. GARDEN
LEAVE...........................................................
11
20.
SUSPENSION.............................................................
11
21.
TERMINATION............................................................
11
22.
OFFICES................................................................
12
23. RESTRICTIONS AFTER TERMINATION OF
EMPLOYMENT........................... 12
24. DISCIPLINARY AND GRIEVANCE
PROCEDURES.................................. 14
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25. COLLECTIVE
AGREEMENTS..................................................
15
26. PARTICULARS OF
EMPLOYMENT..............................................
15
27.
SECURITY...............................................................
15
28. ENTIRE
AGREEMENT.......................................................
15
29.
NOTICES................................................................
16
30. THIRD
PARTIES..........................................................
16
31.
INTERPRETATION.........................................................
16
32. GOVERNING
LAW..........................................................
18
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Date of Deed: 9 September 2004
PARTIES:
(1) Ocean Power
Technologies Ltd of Alder Castle, 10 Noble Street, London, EC2V
7QJ
(the "Company")
(2) Mark Draper of
Borrowell House, Borrowell Lane, Kenilworth, Warwickshire,
CV8
1ER
1. TITLE
1.1 You will be
employed as the Company's Chief Executive with responsibility
for
the Company's operations in the UK and Europe.
1.2 You will be a
Director of the Board.
2. JOB
DUTIES
You agree that you will:-
2.1 unless you are
absent from work due to ill health, incapacity, injury or at
the
Company's request, devote the whole of your working time, attention
and
abilities to your duties under this agreement;
2.2 faithfully and
diligently perform your duties to the best of your ability
and
use your best endeavours to promote the interests of the Company
and
any
Group Company;
2.3 without payment of
additional salary or remuneration, accept any offices or
directorships in the Company or any Group Company and perform such
other
additional duties in relation to the business of the Company or any
Group
Company as may from time to time be reasonably vested in or
assigned to you
by
the Board and/or the CEO (as defined in clause 31 of this
agreement).
2.4 obey the
reasonable directions of the Company and comply with any lawful
rules or regulations issued by the CEO and/or the Board from time
to time;
2.5 keep the CEO (or
the board of any other Group Company for whom you are
carrying out your duties), folly informed and in a timely manner of
any
activities you are undertaking on the Company's or any Group
Company's
behalf, in such form as the CEO and/or the Board may reasonably
require;
2.6 agree to carry out
your duties and exercise your powers jointly with any
other person appointed by the CEO and/or the Board in their
discretion to
act
jointly with you in a temporary capacity, in the event that you
are
absent for more than 2 consecutive months, due to illness or for
any other
reason, and for the duration of the absence.
2.7 promptly disclose
to the CEO and/or the Board full details of any
wrongdoing, which you become aware of, by any employee of the
Company or
any
Group Company where that
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wrongdoing is material to that employee's employment by the
relevant
company or to the interests or reputation of the Company or any
Group
Company.
3. OUTSIDE
INTERESTS
3.1 Without prejudice
to clause 2 above, you agree that during your employment,
you
will not be engaged, interested or concerned in any activity,
office or
outside business interests without the consent of the Board. Should
you
wish
to hold any non-executive director positions in other companies,
you
must
first seek the consent of the Board. Such consent will not be
unreasonably withheld. You will disclose in writing to the Board
any such
activities, offices or outside business interests you may currently
have,
or
which you subsequently wish to undertake and in the event that the
Board
requires you to cease
the same or decline an opportunity, you will do so
forthwith. For the avoidance of doubt consent will not be given
inter alia
in
relation to any activities, offices or business interests which in
the
view
of the Board, are similar to, or compete directly or indirectly
with
the
business of the Company or any Group Company, or which could in
the
view
of the Board, give rise to a conflict of interest or interfere
with
the
efficient performance of your duties.
3.2 Subject to clause
3.1 you may, however, hold (directly or through nominees
including your spouse, partner or minor children) by way of bona
fide
personal investment, any units of any authorised unit trust, and up
to 3%
of
the issued shares, debentures or other securities of any private
company
or
of any class of company whose shares are listed on a recognised
investment exchange or dealt in the Alternative Investment Market.
Any
existing shareholding in excess of the 3% threshold acquired before
the
commencement of your employment with the Company may only be
retained with
the
consent of the Board, such consent not to be unreasonably
withheld.
4. FREEDOM TO
TAKE UP EMPLOYMENT WITH THE COMPANY
You undertake that any notice period you are required to give or to
serve with a
previous employer has expired and that by entering into or
performing any of
your duties for the Company, you will not be in breach of any other
obligation
binding on you.
5. PERIOD OF
CONTINUOUS EMPLOYMENT:
Your period of continuous employment for the purposes of the
Employment Rights
Act 1996 will commence on 27 September 2004. No employment with a
previous
employer counts as part of your period of continuous employment
with the
Company.
6. TERM
6.1 Subject to clause
21 below and the remainder of this clause 6, your
employment is terminable by either party giving to the other not
less than
12
months' written notice.
6.2 Subject to its
rights under clause 21, the Company may in its absolute
discretion choose to terminate your employment at any time and make
you a
payment in lieu of notice equivalent to your basic salary over
any
unexpired period of notice plus an additional
2
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25%
of your base salary in accordance with the provisions set out in
clause
10.1. This will be paid less tax, national insurance contributions
and
other deductions required by law.
6.3 In the event that
your employment is (a) terminated by reason of a Change
of
Control, or (b) you resign due to a diminution in your position as
a
result of a Change of Control, up to six (6) months after the date
the
Company enters into a contract binding it to a Business Sale,
Merger or
Sale
constituting a Change of Control (provided your employment is
not
summarily terminated in accordance with clause 21 of this
Agreement), you
will
be entitled to a payment equal to that set out at clause 6.2
above.
This
payment will be made net of tax, national insurance contributions
and
other deductions required by law.
No
additional severance payments will be payable under the agreement
in
such
circumstances. The payment detailed in this clause 6.3 will be
paid
within 7 days of your termination or resignation.
7. PLACE OF
WORK
Your place of work will initially be the Company's main office in
Warwickshire,
wherever it may be situated, the location of which may change from
time to time.
Further, you may be required from time to time, to perform your
duties at the
premises of customers of the Company and will be expected to travel
on the
business of the Company to the US and/or anywhere in the world.
8. SALARY
You will be paid a basic salary of L136,000 per annum paid less
tax,
national insurance contributions and any other deductions required
by law. Your
salary will accrue on a day-today basis and will be payable monthly
in arrears
on or about the last business day of the month. Your salary is paid
in respect
of your duties both for the Company and any other Group Company for
whom you are
required to work and includes any directors' fees to be paid to
you.
Adjustments to your compensation will be considered on the
anniversary of your
commencement of employment, or more often if the Board considers
fit.
9. EXPENSES
You will be reimbursed all out-of-pocket expenses reasonably and
properly
incurred by you on the business of the Company or any Group Company
provided you
produce to the Company such evidence of actual payment of the
expenses concerned
as the Company reasonably requires.
10. BENEFITS
10.1 BONUS. You are eligible to participate in the Company's bonus
plan (the
"Plan"). Based on the successful achievement by the Company of
pre-determined goals and targets of the Company and the Parent
Company (as
defined in 31 of this agreement), and dependant on your own
individual
performance as assessed by the Company in its discretion, you
3
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may
qualify for a bonus of up to 50% of your base salary. The Plan
results
and
payments will be determined following the plan year after the
Company's
annual audited results have been completed and announced. The Plan
may be
varied from time to time in the discretion of the Company, and the
goals
and
targets are likely to vary from year to year. The fact that a bonus
is
paid
in one year is no guarantee that bonuses will be paid in
subsequent
years. If your employment is terminated part way through a plan
year you
will
be entitled to 50% of the bonus as described above, which will be
25%
of
your base salary. Bonuses are paid less tax, national insurance
contributions and other deductions required by law.
10.2 PENSION. The Company will, subject to Inland Revenue limits
and the rules
of
the particular plan both of which may vary from time to time,
contribute
15%
of your basic salary in equal monthly instalments to a personal
pension
plan
nominated by you. There is no contracting out certificate in
relation
to
your employment.
10.3 PRIVATE MEDICAL EXPENSES INSURANCE. The Company does not
currently operate
a
private health insurance scheme. The Company shall, however,
reimburse
you
for up to a maximum of L2,000 per annum, which may be paid
monthly, in respect to the costs associated with your current
private
health insurance premiums, which cover you and your eligible
dependents.
The
Company will consider at least once each calendar year to increase
this
amount to take into account indexation and the rising cost of
premiums. Any
agreement to increase the Company's contribution to your private
premiums
will
be set out in writing.
If
the Company sets up a Company private health insurance scheme in
the
future, you will be given the choice as to whether to remain with
your
private scheme or transfer to the Company scheme. If you transfer
to the
Company scheme you agree that the Company may cease reimbursing you
for any
costs associated with your current private health insurance
premiums and
subject to your meeting any conditions of eligibility, you will be
covered
by
such a scheme subject to the rules of the scheme, which may vary
from
time
to time. The Company may vary, withdraw or replace the scheme with
a
broadly equivalent one if it so chooses. This is a benefit in
respect of
which you will be liable to pay income tax.
10.4 LIFE ASSURANCE. The Company does not currently operate a life
assurance
scheme. The Company shall, however, reimburse you for up to a
maximum of
L85
per month, with respect to the costs associated with your
current
private life assurance premiums, which provide for 4 x your salary.
The
Company will consider at least once each calendar year to increase
this
amount to take into account indexation and the rising cost of
premiums. Any
agreement to increase the Company's contribution to your private
premiums
will
be set out in writing.
If
the Company sets up a Company life assurance scheme in the future,
you
will
be given the choice as to whether to remain with your private
scheme
or
transfer to the Company scheme. If you transfer to the Company
scheme
you
agree that the Company may cease reimbursing you for any costs
associated with your current life assurance premiums. Your
participation in
the
Company scheme is subject to your meeting any conditions of
4
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eligibility (including medical examinations to the satisfaction of
the
relevant insurers and producing and completing any relevant
paperwork) you
will
be covered free of charge by the Company's life assurance
scheme
subject to the rules of the scheme which may vary from time to
time.
10.5 PERMANENT/DISABILITY HEALTH INSURANCE: The Company does not
currently
operate a permanent/disability health insurance scheme (the
"Scheme"). The
Company shall, however, reimburse you for up to a maximum of L195
per
month, with respect to the costs associated with your current
private
Scheme. The Company will consider at least once each calendar year
to
increase this amount to take into account indexation and the rising
cost of
premiums. Any agreement to increase the Company's contributions to
your
private premiums will be set out in writing.
If
the Company sets up such a Scheme in the future, you will be given
the
choice as to whether you continue on your existing private scheme
or
transfer to the Company Scheme. If you transfer to the Company
Scheme, you
agree that the Company will cease reimbursing you for your current
private
premiums and you agree to abide by the terms of the Scheme, which
may vary
from
time to time.
10.6 SHARE OPTIONS: The Company will grant to you options as
detailed in the
options offer letter dated 9 September 2004, subject to the rules
of the
Ocean Power Technologies, Inc. 2001 Stock Plan (the "Plan") which
may be
varied, amended or supplemented from time to time.
If
on termination of this Agreement whether lawfully or in breach
of
contract, you lose any of the rights or benefits under the Plan or
in
relation to any options you held immediately prior to such
termination of
this
Agreement ("Other Options") which you would not have lost had
the
Agreement not been terminated (for example, you are not employed as
at a
vesting date and therefore such options which would have vested on
that
date
lapse) you shall not be entitled by way of damages, to be
compensated
for
the loss of rights or benefits under the Plan or in respect of
any
Other Options.
You
agree that if the Company so requires you will either (at the
Company's
discretion):
(i) complete and execute an irrevocable agreement (in such form
as
determined by the Company from time to time) under which you
will
indemnify the Company and any Group Company, against the whole of
any
employer's national insurance contributions arising in respect of
any
gains which are treated as remuneration derived from your
employment
by virtue of Section 4(4)(a) Social Security Contributions and
Benefits Act 1992 ("Share Option Gains"); or
(ii) enter into a joint election with the Company or any Group
Company
(in such form as decided by the Company from time to time) for
the
whole of any liability
for employer's National Insurance contributions
arising in respect of any Share Option Gains to be transferred to
you,
within 21 days of the Company's written request for you to do
so.
5
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10.7 In relation to clauses 10.3, 10.4 and 10.5 above, if a sum
payable by the
Company under these clauses by way of a reimbursement of the cost
of your
private insurance premiums shall be subject to a UK income tax
liability,
the
Company shall pay to you an additional sum representing up to
100/60 x
40%
of the amount set out in clauses 10.3, 10.4 and 10.5 respectively.
For
the
avoidance of doubt, you will not be entitled to such sums if you
decide
to
join a Company plan or scheme as detailed in clauses 10.3, 10.4 and
10.5
above and on your joining such a Company plan or scheme such
reimbursements
will
cease.
11. HOURS OF WORK
Your normal office hours are 9.00am to 6.00pm Monday to Friday,
however, you
agree to work such additional hours without overtime or additional
remuneration
as may be necessary for the proper and efficient performance of
your duties. You
agree that the limit on average weekly working time set out in
Regulation 4(1)
of the Working Time Regulations 1998 will not apply to you,
although you may
withdraw your consent on giving the Company three months prior
written notice.
12. HOLIDAYS
12.1 The Company's holiday year runs from 1 January to 31
December.
12.2 You will be entitled to 30 days' paid holiday leave in each
holiday year in
addition to English public holidays.
12.3 You may carry forward 5 days untaken holiday to a subsequent
holiday year.
In
the holiday year in which your employment terminates, however,
any
holiday carried over from the previous year will be
automatically
terminated.
12.4 All holiday must be taken at times agreed at least one month
in advance
with
the CEO having regard to the needs of the Company (or any
relevant
Group Company's business). For the avoidance of doubt Regulations
15(1) to
15(4) of the Working Time Regulations 1998 (dealing with dates when
leave
is
taken) will not apply to your employment.
12.5 For the holiday year during which your employment commences or
terminates,
your
holiday entitlement will be calculated on a pro rata basis.
12.6 On the termination of your employment with the Company, the
Company may at
its
discretion:
(a)
pay you in lieu of
some or all of your accrued holiday, save that if
you are dismissed for gross misconduct, the Company shall be under
no
obligation to pay you holiday pay in respect of accrued but
untaken
holiday in excess of any minimum holiday entitlement required by
law
for the year in question. Any holiday pay will be paid less
applicable
tax, national insurance contributions and other deductions required
by
law; or
6
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(b)
deduct from your final
salary payment (or in the event that this is
insufficient) require you to pay to the Company an amount
representing
salary paid during holiday taken but not accrued by the date of
termination of your employment.
(c) require you to take some or all of
any holiday entitlement during your
notice period (if you are dismissed with notice in accordance
with
clause 6 of this agreement), which will have accrued to you by
the
date of termination of your employment, which you have not yet
taken.
13. DEDUCTIONS FROM
WAGES
Without prejudice to any other rights open to the Company, you
agree that the
Company may deduct from any wages due to you, (including Company
sick pay) sums
representing; the amount of any outstanding loans or advances made
to you by the
Company; any other sums owing from you to the Company; any
overpayment of salary
or expenses or payment made to you by mistake or through
misrepresentation; and
any other sums authorised to be deducted by Section 13 of the
Em
