DANIEL S. SHUGAR AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
10.20
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AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This
Agreement amends and restates the employment agreement entered into as of
November 1, 2005 (the “Effective Date”) by and between PowerLight Corporation, a
California corporation (the “Company”) and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (“Executive”) to
reflect the proposed acquisition of the Company by SunPower Corporation, a
Delaware corporation (“SunPower”) and merger (the “Merger”) of the Company with
and into Pluto Acquisition Corporation LLC, a Delaware LLC (“PowerLight LLC”)
pursuant to the Agreement and Plan of Merger dated November 15, 2006 among the
Company, SunPower, PowerLight LLC and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ as Shareholders’
Representative. This Agreement as amended and restated shall be
effective as of one business day following the date the Merger is consummated
(the “Amendment Date”), and if the Merger does not occur such amendments shall
be without effect. After the Amendment Date, all references to the
Company shall be to PowerLight LLC.
1. Duties and Scope of
Employment.
(a) Positions and
Duties. As of the Amendment Date, Executive will serve as
President of the Company, a subsidiary of SunPower. Executive will
render such business and professional services in the performance of his duties,
consistent with Executive’s position within the Company, as will reasonably be
assigned to him by the Chief Executive Officer of the Company (the
“Supervisor”). The period of Executive’s employment under this
Agreement is referred to herein as the “Employment Term.”
(b) Obligations. During
the Employment Term, Executive will devote Executive’s full business efforts and
time to the Company. Executive acknowledges that the performance of
his duties may require reasonable business travel. For the duration
of the Employment Term, Executive agrees not to actively engage in any other
employment, occupation, or consulting activity for any direct or indirect
remuneration without the prior approval of the Supervisor (which approval will
not be unreasonably withheld); provided, however, that Executive may, without
the approval of the Supervisor, serve in any capacity with any civic,
educational, or charitable organization, provided such services do not interfere
with Executive’s obligations to the Company.
2. At-Will
Employment. Executive and the Company agree that Executive’s
employment with the Company constitutes “at-will”
employment. Executive and the Company acknowledge that,
notwithstanding the term described in Section 3, this employment relationship
may be terminated at any time, upon written notice to the other party, with or
without good cause or for any or no cause, at the option either of the Company
or Executive. However, as described in this Agreement, Executive may
be entitled to severance benefits depending upon the circumstances of
Executive’s termination of employment. Upon the termination of
Executive’s employment with the Company for any reason, in addition to the
severance compensation provided elsewhere in this Agreement, Executive will be
entitled to payment of all accrued but unpaid vacation, expense reimbursements,
and other benefits due to Executive through his termination date under any
Company-provided or paid plans, policies, and arrangements. Executive
agrees to resign from all positions that he holds with the Company (other than
his position, if any, as a member of the Board of Directors
of SunPower (the “Board”)) immediately following the termination of
his employment if the Supervisor so requests.
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3. Term of
Agreement. This Agreement will have an initial term of three
years commencing on the Effective Date. On the third anniversary of
the Effective Date, and on each three-year anniversary thereafter, this
Agreement automatically will renew for an additional three-year term unless the
Company provides Executive with notice of non-renewal at least 120 days prior to
the date of automatic renewal.
4. Compensation.
(a) Base
Salary. Commencing as of the date when the Company implements
its Company-wide salary increases for 2007, the Company will pay Executive an
initial monthly salary of $20,278.17 as compensation for his services (the “Base
Salary”). The Base Salary will not be subject to further increase as
a result of SunPower’s separate implementation of its own company-wide salary
increases for 2007. The Base Salary will be paid periodically in
accordance with SunPower’s normal payroll practices and be subject to the usual,
required withholding. Executive’s salary will be subject to review,
and adjustments will be made based upon SunPower’s standard
practices.
(b) Annual
Bonus. Executive shall be eligible to participate in
SunPower’s Key Employee Bonus Plan (“KEBP”). Executive’s target bonus
will be determined from time to time by the Supervisor in accordance with the
KEBP (“Target Bonus”); provided, however, that Executive’s initial Target Bonus
shall be 50% of the Base Salary. The actual bonus paid may be higher
or lower than the Target Bonus for over- or under-achievement of goals as
determined by the Supervisor. Executive’s annual bonus, if any, will
be payable each quarter and/or year upon completion of a performance review by
the Supervisor.
(c) Equity
Compensation. Executive may be entitled to participate in
SunPower’s equity incentive programs, as determined from time to time by the
Board and/or its compensation committee (including being considered in
connection with SunPower’s annual evergreen equity incentive granting program
commencing in 2007).
(d) Additional
Compensation. The Company shall provide Executive with a
vehicle which shall be, at the Company’s discretion, either owned or leased by
the Company for Executive’s business and personal use.
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5. Employee
Benefits. During the Employment Term, Executive will be
eligible to participate in accordance with the terms of all SunPower employee
benefit plans, policies, and arrangements that are applicable to other senior
executives of SunPower, as such plans, policies, and arrangements may
exist from time to time.
6. Expenses. The
Company will reimburse Executive for reasonable travel, entertainment, and other
expenses incurred by Executive in the furtherance of the performance of
Executive’s duties hereunder, in accordance with SunPower’s expense
reimbursement and other policies as in effect from time to time.
7. Severance.
(a) Termination Without Cause or
Resignation for Good Reason . If Executive’s employment is
terminated by the Company without Cause or by Executive for Good Reason, then,
subject to Section 8, Executive will receive: (i) a lump-sum payment equal to
Executive’s monthly Base Salary in effect immediately prior to the date of
Executive’s employment termination (“Termination Date”) multiplied by
twenty-four (24), (ii) in the event the Termination Date following a completed
fiscal year for which Executive’s annual bonus relating to such prior completed
fiscal year has not been paid as of the Termination Date, a lump-sum payment
equal to the actual bonus that would have been paid for
such completed fiscal year (iii) a lump-sum payment equal to
Executive’s Target Bonus in effect immediately prior to the Termination Date
divided by twelve (12) and multiplied by the number of whole calendar months
between the commencement of the then current fiscal year and the Termination
Date, and (iv) Company-paid coverage for Executive and Executive’s eligible
dependents under the Company’s Benefit Plans for twenty-four (24) months, or, if
earlier, until Executive is eligible for similar benefits from another employer
(provided Executive validly elects to continue coverage under applicable
law).
(b) Voluntary Termination
without Good Reason; Termination for Cause. If Executive’s
employment with the Company terminates voluntarily by Executive without Good
Reason or is terminated for Cause by the Company, then (i) all further vesting
of Executive’s outstanding equity awards will terminate immediately, (ii) all
payments of compensation by the Company to Executive hereunder will terminate
immediately (except as to amounts already earned), and (iii) Executive will be
paid all expense reimbursements and other benefits due to Executive through his
termination date under any Company-provided or paid plans, policies, and
arrangements.
(c) Termination due to Death or
Disability. If Executive’s employment terminates by reason of
death or disability, then (i) Executive will be entitled to the payments
described in Section 7(a)(ii) and (iii) above, (ii) all provisions regarding
forfeiture, restrictions on transfer, and the Company’s or SunPower’s (as
applicable) rights of repurchase, in each case otherwise applicable to shares of
restricted stock held by such Executive pursuant to the Equity Restriction
Agreement between Executive and the Company, dated of even date herewith, shall
lapse as of the effective date of such termination (iii) Executive will be
entitled to receive other benefits only in accordance with the Company’s then
applicable plans, policies, and arrangements, and (iv) Executive’s outstanding
equity awards will terminate if and to the extent provided under the applicable
award agreement(s). For purpose of this Section 7(c) only, the term
disability shall refer to Executive’s failure to perform the
essential functions of Executive’s position for a period of
six (6) months, with or without reasonable accommodation, due to a
disability,
which, in the opinion of a qualified physician, is reasonably likely to be
continuous or permanent for the remainder of Executive’s life.
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(d) Sole Right to
Severance. This Agreement is intended to represent Executive’s
sole entitlement to severance payments and benefits in connection with the
termination of his employment. To the extent Executive is entitled to
receive severance or similar payments and/or benefits under any other Company
plan, program, agreement, policy, practice, or the like, severance payments and
benefits due to Executive under this Agreement will be so reduced.
(e) Timing of
Payments. If, as of the Termination Date, Executive is a
“specified employee” within the meaning of Treasury Regulation §1.409A, as
determined by SunPower’s legal counsel, the lump-sum payments specified in
Sections 7(a) and 7(b) (and the amounts still due under Section 9(b))shall be
paid on the first business day on or after the six-month anniversary of the
Termination Date, or, if earlier, on notification of Executive’s
death.
8. Conditions to Receipt of
Severance; No Duty to Mitigate.
(a) Separation Agreement and
Release of Claims. The receipt of any severance pursuant to
Section 7 will be subject to Executive signing and not revoking a separation
agreement and release of claims in a form reasonably acceptable to the
Company. Such agreement will provide (among other things) the
provisions of Section 8(c). No severance will be paid or provided
until the separation agreement and release agreement becomes
effective.
(b) Nonsolicitation. In
the event of a termination of Executive’s employment that otherwise would
entitle Executive to the receipt of severance pursuant to Section 7, Executive
agrees that, during the one (1) year period following the Termination Date,
Executive, directly or indirectly, whether as employee, owner, sole proprietor,
partner, director, member, consultant, agent, founder, co-venturer or otherwise,
will (i) not solicit, induce, or influence any person to modify his or her
employment or consulting relationship with the Company or SunPower (the
“No-Inducement”), and (ii) not solicit business from any of the Company’s or
SunPower’s substantial customers and users (the “No-Solicit”). If
Executive breaches the No-Inducement or the No-Solicit, in addition to any other
rights or remedies available to the Company and SunPower, all continuing
payments and benefits to which Executive otherwise may be entitled pursuant to
Section 7 and/or Section 9(a) will cease immediately.
(c) Nondisparagement. In
the event of a termination of Executive’s employment that otherwise would
entitle Executive to the receipt of severance pursuant to Section 7, Executive
agrees to refrain from any disparagement, criticism, defamation, slander of the
Company or SunPower, its directors, its executive officers, or its employees, or
tortious interference with the contracts and relationships of the Company or
SunPower. The foregoing restrictions will not apply to any statements
that are made truthfully in response to a subpoena or other compulsory legal
process.
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(d) No Duty to
Mitigate. Executive will not be required to mitigate the
amount of any payment contemplated by this Agreement, nor will any earnings that
Executive may receive from any other source reduce any such
payment.
9. Acceleration of Vesting Upon
Change of Control.
(a) If
Executive’s employment is terminated by the Company without Cause or by
Executive for Good Reason, and the termination is in Connection with a Change of
Control, then, subject to Section 8, (x) all of such Executive’s unvested
options granted from and after the date the Merger is consummated will become
fully vested and exercisable as of the date of such termination of employment
and remain exercisable for the time period otherwise applicable to such options
following such termination of employment pursuant to the applicable option plan
and option agreement and (y) all provisions regarding forfeiture, restrictions
on transfer, and the Company’s or SunPower’s (as applicable) rights of
repurchase, in each case otherwise applicable to shares of restricted stock held
by such Executive and granted from and after the date the Merger is consummated,
shall lapse as of the effective date of such termination of
employment.
(b) Section 280G
Limitation. If any payment or benefit Executive would receive
pursuant to Section 7 and/or Section 9(a), but determined without regard to any
additional payment required under this Section 9(b), (collectively, the
“Payment”) would (i) constitute a “parachute payment” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and
(ii) be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties payable with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then Executive’s benefits under this Agreement
shall be either: (1) delivered in full, or (2) delivered as to such
lesser extent which would result in no portion of such benefits being subject to
the Excise Tax, whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the Excise Tax, results in
the receipt by Employee on an after-tax basis, of the greatest amount of
benefits, notwithstanding that all or some portion of such benefits may be
taxable under Section 4999 of the Code.
(c) The
accounting firm engaged by the Company for general audit purposes as of the day
prior to the effective date of the Change of Control shall perform the foregoing
calculations. If the accounting firm so engaged by the Company is
also serving as accountant or auditor for the individual, entity or group which
will control the Company upon the occurrence of a Change of Control, the Company
shall appoint a nationally recognized accounting firm other than the accounting
firm engaged by the Company for general audit purposes to make the
determinations required hereunder. The Company shall bear all
expenses with respect to the determinations by such accounting firm required to
be made hereunder.
(d) The
accounting firm engaged to make the determinations hereunder shall provide its
calculations, together with detailed supporting documentation, to the Company
and Executive within thirty (30) calendar days after the date on which such
accounting firm has been engaged to make such determinations or such other time
as requested by the Company or Executive. Any good faith
determinations of the accounting firm made hereunder shall be final, binding,
and conclusive upon the Company and Executive.
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10. Definitions.
(a) Benefit
Plans. For purposes of this Agreement, “Benefit Plans” means
plans, policies, or arrangements that SunPower sponsors (or participates in) and
that immediately prior to Executive’s termination of employment provide
Executive and Executive’s eligible dependents with medical, dental, or vision
benefits. Benefit Plans do not include any other type of benefit
(including, but not by way of limitation, financial counseling, disability, life
insurance, or retirement benefits). A requirement that the Company
provide Executive and Executive’s eligible dependents with (or reimburse for)
coverage under the Benefit Plans will not be satisfied unless the coverage is no
less favorable than that provided to Executive and Executive’s eligible
dependents immediately prior to Executive’s termination of employment; provided,
however, that the Company may reduce coverage under the Benefit Plans if such
reduction is applicable to all other senior executives of SunPower and its
subsidiaries. Subject to the immediately preceding sentence, the
Company may, at its option, satisfy any requirement that the Company provide (or
reimburse for) coverage under any Benefit Plan by instead providing (or
reimbursing for) coverage under a separate plan or plans providing coverage that
is no less favorable or by paying Executive a lump-sum payment which is, on an
after-tax basis, sufficient to provide Executive and Executive’s eligible
dependents with equivalent coverage under a third party plan that is reasonably
available to Executive and Executive’s eligible dependents.
(b) Cause. For
purposes of this Agreement, “Cause” means (i) acts or omissions
constituting gross negligence or willful misconduct on
the part of Executive with respect to Executive’s obligations or otherwise
relating to the business of Company, (ii) Executive’s (A) felony
conviction of, or felony plea of nolo contendere for, fraud,
misappropriation or embezzlement, or a felony
crime of moral
turpitude, or (B) conviction of fraud, misappropriation or embezzlement,
(iii) Executive’s violation or breach of any fiduciary duty, or (iv) Executive’s
violation or breach of any contractual duty to the Company which duty is
material to the performance of the Executive’s duties or results in material
damage to the Company or its business; provided that if any of the foregoing
events is capable of being cured, the Company will provide notice to Executive
describing the nature of such event and Executive will thereafter have thirty
(30) days to cure such event.
(c) Change of
Control. For purposes of this Agreement, “Change of Control”
means (i) a sale of all or substantially all of the Company’s or SunPower’s
assets, (ii) any merger, consolidation, or other business combination
transaction of the Company or SunPower with or into another corporation, entity,
or person, other than a transaction in which the holders of at least a majority
of the shares of voting capital stock of the Company or SunPower outstanding
immediately prior to such transaction continue to hold (either by such shares
remaining outstanding or by their being converted into shares of voting capital
stock of the surviving entity) a majority of the total voting power represented
by the shares of voting capital stock of the Company or SunPower (or the
respective surviving entity) outstanding immediately after such transaction,
(iii) the direct or indirect acquisition (including by way of a tender or
exchange offer) by any person, or persons acting as a group, of beneficial
ownership or a right to acquire beneficial ownership of shares representing a
majority of the voting power of the then outstanding shares of capital stock of
the Company or SunPower, (iv) a contested election of directors, as a result of
which or in connection with which the persons who were directors before such
election or their nominees cease to constitute a majority of the Board, or (v) a
dissolution or liquidation of the Company or
SunPower. Notwithstanding anything to the contrary in the foregoing,
any pro rata distribution (or retirement and pro rata issuance) of shares of
SunPower stock held by SunPower’s corporate parent, Cypress Semiconductor, Inc.
(“Cypress”) to the existing public shareholders of Cypress (in proportion to
their shareholdings of Cypress) shall not constitute a Change of
Control.
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(d) Disability. For
purposes of this Agreement, Disability shall have the same defined meaning as in
the Company’s long-term disability plan.
(e) Good
Reason. For purposes of this Agreement, “Good Reason” means
the occurrence of any of the following without Executive’s express prior written
consent: (i) a material reduction in Executive’s position (other than as a
result of a change of the Company from a subsidiary to a division of SunPower)
or duties after the Amendment Date, (ii) a material breach of this Agreement,
which the Company
has not cured within thirty (30) days after receipt of written notice of such
breach from Executive, (iii) a reduction in Executive’s Base Salary and
Target Bonus excluding a reduction that is applied to substantially all of the
Company’s and SunPower’s other senior executives; provided, however, that for
purposes of this clause (iii) whether a reduction in Target Bonus has occurred
shall be determined without any regard to any actual bonus payments made to
Executive, (iv) a material reduction in the aggregate level of benefits made
available to Executive other than a reduction that also is applied to
substantially all of the Company’s and SunPower’s other senior executives, or
(v) a relocation of Executive’s primary place of business for the performance of
his duties to the Company to a location that is more than thirty-five (35) miles
from the Company’s current business location in Berkeley,
California.
(f) In Connection with a Change
of Control. For purposes of this Agreement, a termination of
Executive’s employment with the Company is “in Connection with a Change of
Control” if Executive’s employment terminates during the period beginning three
(3) months prior to a Change of Control and ending eighteen (18) months
following a Change of Control.
11.
Indemnification and
Insurance. Executive will be covered under the Company’s
insurance policies and, subject to applicable law, will be provided
indemnification to the maximum extent permitted by the Company’s bylaws and
Articles of Incorporation, with such insurance coverage and indemnification to
be in accordance with the Company’s standard practices for senior executive
officers but on terms no less favorable than provided to any other Company
senior executive officer or director.
12.
Confidential
Information. Executive acknowledges that the Employee
Proprietary Information and Inventions Agreement between Executive and the
Company (the “Confidential Information Agreement”) will continue in
effect. During the Employment Term, Executive agrees to execute any
updated versions of the Company’s form of Confidential Information Agreement
(any such updated version also referred to as the “Confidential Information
Agreement”) as may be required of substantially all of the Company’s executive
officers.
13. Assignment. This
Agreement will be binding upon and inure to the benefit of (a) the heirs,
executors, and legal representatives of Executive upon Executive’s death, and
(b) any successor of the Company. Any such successor of the Company
will be deemed substituted for the Company under the terms of this Agreement for
all purposes. For this purpose, “successor” means any person, firm,
corporation, or other business entity which at any time, whether by purchase,
merger, or otherwise, directly or indirectly acquires all or substantially all
of the assets or business of the Company. None of the rights of
Executive to receive any form of compensation payable pursuant to this Agreement
may be assigned or transferred except by will or the laws of descent and
distribution. Any other attempted assignment, transfer, conveyance,
or other disposition of Executive’s right to compensation or other benefits will
be null and void.
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14. Notices. All
notices, requests, demands, and other communications called for hereunder will
be in writing and will be deemed given (a) on the date of delivery if delivered
personally, (b) one day after being sent by a well established commercial
overnight service, or (c) four days after being mailed by registered or
certified mail, return receipt requested, prepaid and addressed to the parties
or their successors at the following addresses, or at such other addresses as
the parties may later designate in writing:
If to the
Company:
Attn: Chief Executive
Officer
SunPower
Corporation
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If to
Executive, at the last known residential address on file with the
Company.
15. Severability. If
any provision hereof becomes or is declared by a court of competent jurisdiction
to be illegal, unenforceable, or void, this Agreement will continue in full
force and effect without said provision.
16. Arbitration. The
Parties agree that any and all disputes arising out of the terms of this
Agreement, their interpretation, and any of the matters herein released, shall
be subject to binding arbitration in Alameda County before the American
Arbitration Association under its National Rules for the Resolution of
Employment Disputes, supplemented by the California Code of Civil
Procedure. The Parties agree that the prevailing party in any
arbitration shall be entitled to injunctive relief in any court of competent
jurisdiction to enforce the arbitration award. The Parties hereby agree to waive
their right to have any dispute between them resolved in a court of law by a
judge or jury. This paragraph will not prevent either party
from seeking injunctive relief (or any other provisional remedy) from any court
having jurisdiction over the Parties and the subject matter of their dispute
relating to Executive’s obligations under this Agreement and the Confidentiality
Information Agreement.
17.
Integration and
Existing Agreement. All of the Company’s and Executive’s
respective rights and obligations under the original Agreement dated as of the
Effective Date shall continue in effect and survive the amendments made herein
with respect to all periods and events occurring through the date the Merger is
consummated. This Agreement as amended and restated, together with
the Confidential Information Agreement and Executive’s equity award agreements,
represents the entire agreement and understanding between the parties as to the
subject matter herein and supersedes all prior or contemporaneous agreements
whether written or oral, except as provided for in the preceding
sentence. In the event of any conflict between this Agreement and the
Confidential Information Agreement or Executive’s equity award agreements, this
Agreement shall prevail. No waiver, alteration, or modification of
any of the provisions of this Agreement will be binding unless in writing that
specifically references this Section and is signed by duly authorized
representatives of the parties hereto. Notwithstanding the preceding
sentence, both the Company and Executive agree to amend this Agreement with
respect to the timing of payments if the Board determines that an amendment is
necessary to prevent the imposition of additional tax liability under Section
409A of the Internal Revenue Code of 1986, as amended.
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18. Waiver of
Breach. The waiver of a breach of any term or provision of
this Agreement, which must be in writing, will not operate as or be construed to
be a waiver of any other previous or subsequent breach of this
Agreement.
19. Survival. The
Confidential Information Agreement, and the Company’s and Executive’s
responsibilities under Sections 6, 7, 8, 9, 10, 11, 14, 15, 16, 17, 19 and 22
will survive the termination of this Agreement.
20.
Headings. All
captions and Section headings used in this Agreement are for convenient
reference only and do not form a part of this Agreement.
21. Tax
Withholding. All payments made pursuant to this Agreement will
be subject to withholding of applicable taxes.
22. Governing
Law. This Agreement will be governed by the laws of the State
of California (with the exception of its conflict of laws
provisions).
23. Acknowledgment. Executive
acknowledges that he has had the opportunity to discuss this matter with and
obtain advice from his private attorney, has had sufficient time to, and has
carefully read and fully understands all the provisions of this Agreement, and
is knowingly and voluntarily entering into this Agreement.
24. Counterparts. This
Agreement may be executed in counterparts, and each counterpart will have the
same force and effect as an original and will constitute an effective, binding
agreement on the part of each of the undersigned.
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IN
WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of
the Company by a duly authorized officer, as of November 15, 2006.
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COMPANY:
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EXECUTIVE:
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PowerLight
LLC
By: SunPower
Corporation, its sole member
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By:
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/s/
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/s/
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Name:
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Its:
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Chief
Financial Officer
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