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| 8-K - Hoku Corp | v176433_8-k.htm |
CONSULTING
AGREEMENT
This
Consulting Agreement, entered into as of March 1, 2010, by and between Dustin
Shindo, an individual, (hereinafter called “Consultant”),
and Hoku Scientific, Inc., a corporation organized and existing under the laws
of the State of Delaware, and having an office and place of business at 1288 Ala
Moana Blvd., Suite 220, Honolulu, Hawaii 96814 (hereinafter called (“Hoku”).
Recitals
WHEREAS,
Hoku’s business relates to clean energy technology research, development and
commercialization, including photovoltaic systems and polysilicon;
and
WHEREAS,
the Consultant is a founder and the Chairman of the Board, President, and Chief
Executive Officer of Hoku, and has extensive business contacts and relationships
that may benefit Hoku’s business; and
WHEREAS,
the Consultant has tendered his resignation from all current positions with Hoku
and its affiliates, effective at the close of business on March 31,
2010;
WHEREAS,
Hoku desires to utilize Consultant’s services in connection with Hoku’s business
after March 31, 2010, upon the conditions hereinafter set forth:
NOW
THEREFORE, in consideration of the value exchanged and terms as stated herein,
the parties hereto mutually agree as follows:
Agreement
1. Engagement. Hoku agrees to engage
Consultant on the compensation basis indicated below to perform the services
stated herein, and Consultant hereby accepts this engagement by
Hoku.
2. Independent
Contractor. The
parties intend and agree that Consultant is acting and will act as an
independent contractor and not as an employee of Hoku in the performance of
services required under this Agreement.
3. Services. Consultant
agrees to work on certain special projects that may from time to time be
requested by Hoku and agreed to by Consultant. Examples of such
projects could include business development in Japan and involvement in various
financing activities.
4. Compensation
Basis. As compensation for Consultant’s services, Consultant
will receive the following: (A) during each of the first six months
of Consultant’s continuous service under this Agreement, a monthly retainer
equal to $40,000 + Hawaii GET; (B) during each of the seventh through twelfth
month of Consultant’s continuous services under this Agreement, a monthly
retainer equal to $10,000 + Hawaii GET; and (C) all restricted stock awards
previously granted to Consultant during the term of his continuous service as an
employee of Hoku, which remained outstanding as of March 31, 2010 (“Consultant’s
Stock Awards”), shall continue to vest in accordance with their terms as
long as Consultant continues to provide services to Hoku pursuant to this
Agreement. All monthly retainers shall be due and payable on the
first business day of each calendar month. In addition, Hoku shall
reimburse Consultant for up to $2,000 per month in out-of -pocket travel and
other expenses incurred by Consultant in performing the Services. Any
amount in excess of $2,000 shall require the preapproval of the
CEO. Airline tickets, as required, shall be approved by the CEO, and
purchased directly by Hoku.
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5. Duty to Report: Control
Group. Consultant shall report to Scott Paul, president and
CEO of Hoku in the performance of services. Only Scott Paul shall be
authorized to request services of Consultant or to receive services from
Consultant.
6. Confidentiality. Consultant
understands that Hoku continually obtains and develops valuable proprietary and
confidential information concerning its business, business relationships and
financial affairs (the “Confidential
Information”) which may become known to Consultant in connection with
Consultant’s involvement with Hoku. By way of illustration, but not
limitation, Confidential Information may include Inventions (as hereafter
defined), trade secrets, technical information, know-how, research and
development activities of Hoku, product and marketing plans, customer and
supplier information and information disclosed to Hoku or to Consultant by third
parties of a proprietary or confidential nature or under an obligation of
confidence. Confidential Information is contained in various media,
including without limitation, patent applications, computer programs in object
and/or source code, flow charts and other program documentation, manuals, plans,
drawings, designs, technical specifications, laboratory notebooks, supplier and
customer lists, internal financial data and other documents and records of
Hoku. Confidential Information also includes any knowledge of
developments and business methods, which may in themselves be generally known
but whose use by Hoku is not generally known.
Consultant
acknowledges that all Confidential Information, whether or not in writing and
whether or not labeled or identified as confidential or proprietary, is and
shall remain the exclusive property of Hoku or the third party providing such
information to Consultant or Hoku. Consultant agrees that Consultant
shall use, publish and disclose Confidential Information only in the performance
of Consultant’s duties for Hoku and in accordance with Hoku’s policy with
respect to the protection of Confidential Information. Consultant
agrees not to use or disclose such Confidential Information for Consultant’s own
benefit or for the benefit of any other person or business
entity. The obligations assumed under this provision shall last
during the term of this Agreement and shall survive indefinitely after the
termination of this Agreement.
Consultant
agrees to protect the confidentiality of Confidential Information in
Consultant’s possession. Upon the termination this Agreement or at
any time upon Hoku’s request, Consultant shall return immediately to Hoku any
and all materials containing any Confidential Information then in Consultant’s
possession or under Consultant’s control.
Confidential
Information shall not include information which (a) is or becomes generally
known within Hoku’s industry through no fault of Consultant; (b) was known to
Consultant at the time it was disclosed as evidenced by Consultant’s written
records at the time of disclosure, except where such knowledge was gained during
Consultant’s previous employment with Hoku; (c) is lawfully and in good faith
made available to Consultant by a third party who did not derive it from Hoku
and who imposes no obligation of confidence on Consultant’s; or (d) is required
to be disclosed by a governmental authority or by order of a court of competent
jurisdiction, provided that such disclosure is subject to all applicable
governmental or judicial protection available for like material and minimum of
30 days advance notice is given to Hoku.
6.1. Insider
Trading. Consultant understands that he will have access to
material non-public information regarding Hoku, and agrees to be bound by the
terms of Hoku’s Insider Trading Policy attached hereto as Exhibit
A, and Hoku’s Policy Regarding Stock Trading by Directors, Officers and
Other Designated Insiders attached hereto as Exhibit
B.
7. Other
Agreements. Consultant hereby represents to Hoku that, except
as may be identified on Exhibit
C, Consultant is not bound by any agreement or any other previous or
existing business relationship which conflicts with or prevents the full
performance of Consultant’s duties and obligations to Hoku (including
Consultant’s duties and obligations under this or any other agreement with Hoku)
during the term of this Agreement.
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Consultant
understands that Hoku does not desire to acquire from Consultant any trade
secrets, know-how or confidential business information Consultant may have
acquired from others. Therefore, Consultant agrees that during the
term of this Agreement, Consultant will not improperly use or disclose any
proprietary information or trade secrets of any former or concurrent employer,
or any other person or entity with whom Consultant has an agreement or to whom
Consultant owes a duty to keep such information in confidence. Those
persons or entities with whom Consultant has such agreements or to whom
Consultant owes such a duty are identified on Exhibit
C. If there is no Exhibit
C attached, or if there is nothing listed on it, Consultant represents
that there are no such agreements or person or entities.
8. Non-solicitation. Consultant agrees during
the term of this Agreement, and for a period of three years after the
termination or cessation of this engagement, for any reason, Consultant shall
not directly or indirectly recruit, solicit or hire any employee of Hoku, or
induce or attempt to induce any employee of Hoku to discontinue his or her
employment relationship with Hoku. The foregoing restriction shall
not be applicable to Consultant’s brother, Ryan Shindo.
9. State and Federal
Laws. Consultant and Hoku are each responsible for making
their own tax payments with respect to the funds credited or allocated to
it. Each party will comply fully with all applicable Federal, State,
and Local Laws, ordinances, rules and regulations. Each party’s
obligations under this paragraph will survive termination of this
Agreement.
10. Term &
Termination. This Agreement shall take effect on April 1, 2010
(the “Effective
Date”), and shall terminate on the one-year anniversary of the Effective
Date. This Agreement and its related terms may be extended upon
mutual consent by both parties.
10.1. This
Agreement may be terminated at any time during the term hereof by notice in
writing to the other party in which case termination shall be effective fifteen
(15) calendar days after receipt of such notice by the other party or at such
later date as may be mutually agreed to by the parties.
10.2. This
Agreement may be terminated immediately by Hoku if Consultant violates Hoku’s
Insider Trading Policy attached hereto as Exhibit
A, or Hoku’s Policy Regarding Stock Trading by Directors, Officers and
Other Designated Insiders attached hereto as Exhibit
B.
10.3. It
is expressly agreed that upon termination of this Agreement all rights and
obligations of the parties hereunder shall cease and terminate except for
responsibilities with respect to confidentiality, non-solicitation, the payment
of Consultant’s pre-approved expenses. It is further acknowledged and
understood by Consultant that the vesting of Consultant’s Stock Awards shall
cease immediately upon the expiration or earlier termination of this
Agreement. Notwithstanding anything to the contrary herein, following
the expiration or termination of this Agreement, Consultant shall not trade in
the securities of Hoku until any Confidential Information which is material is
publicly disseminated by Hoku or otherwise becomes clearly and objectively
immaterial to an investor’s decision to trade in such
securities.
10.4. Notwithstanding
the foregoing, in the event that this Agreement is terminated by the Company for
any reason other than Consultant’s material breach of any material term of this
Agreement, or pursuant to Section 10.2 above, then Consultant shall immediately
upon such termination receive all compensation that would have been due pursuant
to Section 4 above through the end of the one-year term of this Agreement, and
all unvested restricted stock awards that otherwise would have vested during the
one-year term of this Agreement shall immediately vest.
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11. Modification. This
Agreement shall not be modified except by agreement, in writing, signed by a
duly authorized officer of Hoku and by Consultant.
12. Arbitration. Consultant
and Hoku agree that any dispute or claim arising out of this Agreement shall be
subject to final and binding arbitration, pursuant to Chapter 658A, Hawaii
Revised Statutes. The arbitration shall be conducted by one arbitrator who is a
member of Dispute Prevention & Resolution "DPR"). The
arbitration shall be held in Honolulu, Hawaii. The arbitrator shall have
authority to determine the arbitrability of any claim and enter a final and
binding judgment at the conclusion of any proceedings in respect of the
arbitration. The arbitrator shall apply Hawaii substantive law in all respects.
In the event no Hawaii law exists on a particular issue, the arbitrator shall
apply California law.
13. Non-assignability. This
Agreement shall be interpreted under the laws of the State of
Hawaii. This agreement constitutes the entire agreement of the
parties and may not be assigned by Consultant and shall be binding on or inure
to the benefit of the parties hereto.
14. General.
14.1. In
the event that any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other
provisions of this Agreement, and all other provisions shall remain in full
force and effect. If any of the provisions of this Agreement is held
to be excessively broad, it shall be reformed and construed by limiting and
reducing it so as to be enforceable to the maximum extent permitted by
law.
14.2. No
delay or omission by Hoku in exercising any right under this Agreement will
operate as a waiver of that or any other right. No waiver or consent
given by Hoku on any occasion will be construed as a bar to or continuing waiver
of any right on any other occasion.
14.3. Consultant
acknowledges that the restrictions contained in this Agreement are necessary for
the protection of the business and goodwill of Hoku and are reasonable for such
purpose. Consultant agrees that any breach of this Agreement by
Consultant will cause irreparable damage to Hoku and that in the event of such
breach, Hoku shall be entitled, in addition to monetary damages and to any other
remedies available to Hoku under this Agreement and at law, to equitable relief,
including injunctive relief.
14.4. This
Agreement may be executed in one or more counterparts with each copy being
deemed an original and all of which shall constitute one and the same
instrument.
14.5. This
Agreement shall be construed as a sealed instrument and shall in all events and
for all purposes be governed by, and construed in accordance with, the laws of
the State of Hawaii without regard to any choice of law principle that would
dictate the application of the laws of another jurisdiction.
(Signature
Page Immediately Follows)
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IN
WITNESS WHEREOF, the parties hereto have duly executed this Consulting Agreement
in duplicate the day and year first above written.
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“HOKU”
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“CONSULTANT”
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HOKU
SCIENTIFIC, INC.
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By:
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/s/Scott Paul
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/s/ Dustin Shindo
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Scott
Paul
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Dustin
Shindo
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Chief
Operating Officer
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Exhibit
A
HOKU
SCIENTIFIC, INC.
POLICY
AGAINST TRADING ON THE BASIS
OF
INSIDE INFORMATION
During
the course of your employment with Hoku Scientific, Inc. (the “Company”),
you may receive important information that is not yet publicly available, i.e.,
not disclosed to the public in a press release or SEC filing (“inside
information”), about the Company or about other publicly-traded companies
with which the Company has business dealings. Because of your access
to this information, you may be in a position to profit financially by buying or
selling or in some other way dealing in the Company’s stock or stock of another
publicly-traded company, or to disclose such information to a third party who
does so (a “tippee”).
For
anyone to use such information to gain personal benefit, or to pass on, or
“tip,” the information to someone who does so, is illegal. There is
no “de minimis” test. Use of inside information to gain personal
benefit and tipping are as illegal with respect to a few shares of stock as they
are with respect to a large number of shares. You can be held liable
both for your own transactions and for transactions effected by a tippee, or
even a tippee of a tippee. Even the appearance of insider trading in
stock must be avoided to preserve the Company’s reputation of adhering to the
highest standards of conduct.
As a
practical matter, it is sometimes difficult to determine whether you possess
inside information. The key to determining whether nonpublic
information you possess about a public company is “inside information” is
whether dissemination of the information would be likely to affect the market
price of the company’s stock or would be likely to be considered important by
investors who are considering trading in that company’s
stock. Certainly, if the information makes you want to trade, it
would probably have the same effect on others. Both positive and
negative information can be material. If you possess “inside
information,” you must refrain from trading in a company’s stock, advising
anyone else to do so or communicating the information to anyone else until you
know that the information has been disseminated to the
public. “Trading” includes engaging in short sales, transactions in
put or call options, hedging transactions and other inherently speculative
transactions.
Additionally,
you may not discuss material, non-public information about the Company with
anyone outside the Company. This prohibition covers spouses, family
members, friends, business associates, or persons with whom we are doing
business (except to the extent that such persons are covered by a non-disclosure
agreement and the discussion is necessary to accomplish a business purpose of
the Company). You may not participate in “chat rooms” or other
electronic discussion groups on the Internet concerning the activities of the
Company or other companies with which the Company does business, even if you do
so anonymously. You may never recommend to another person that he or
she buy or sell our stock.
Although
by no means an all-inclusive list, information about the following items may be
considered to be “inside information” until it is publicly
disseminated:
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1.
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financial
results or forecasts;
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Exhibit
A
page 6 of
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2.
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major
new products or processes;
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3.
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acquisitions
or dispositions;
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4.
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pending
public or private sales of debt or equity securities or declaration of a
stock split;
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5.
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major
contract awards or cancellations;
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6.
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scientific
results;
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7.
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top
management or control changes;
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8.
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possible
tender offers;
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9.
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significant
write-offs;
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10.
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significant
litigation;
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11.
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impending
bankruptcy;
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12.
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gain
or loss of a significant customer or
supplier;
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13.
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pricing
changes or discount policies;
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14.
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corporate
partner relationships; and
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15.
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notice
of issuance of patents.
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This policy continues to apply to your
transactions in the Company’s stock even after you have terminated
employment. If you are in possession of material nonpublic
information when your employment terminates, you may not trade in the Company’s
stock until the information has become public or is no longer
material.
Anyone
who effects transactions in the Company’s stock or the stock of other public
companies engaged in business transactions with the Company (or provides
information to enable others to do so) on the basis of inside information is
subject to both civil liability and criminal penalties, as well as disciplinary
action, including possibly the immediate termination of employment, by the
Company. An employee who has questions about these matters should
speak with his or her own attorney or to the Company’s General
Counsel, at (808) 682-7800.
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Exhibit
A
page 7 of
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Exhibit
B
HOKU
SCIENTIFIC, INC.
POLICY
REGARDING STOCK TRADING BY DIRECTORS, OFFICERS
AND
OTHER DESIGNATED INSIDERS
The Board
of Directors of Hoku Scientific, Inc. (the “Company”)
believes that officers, directors and employees of the Company should have a
meaningful investment in the Company. As stockholders themselves,
officers, directors and employees are more likely to represent the interests of
other stockholders. Likewise, officers and employees may perform more
effectively with the incentive of stock options or stock ownership.
However,
from time to time, officers, directors, persons who are “observers” at meetings
of the Board of Directors of the Company and employees will be aware of
information that could be material to a stockholder’s investment decision, but
which in the best interests of the Company should not be disclosed until some
later time. Hindsight can be remarkably acute, and an accusation can
always be made that at any particular time a purchase or sale of securities by
an insider was motivated by undisclosed favorable or unfavorable
information. In such circumstances, the appearance of impropriety can
be as problematic as an actual abuse, both to the Company and to the insider
involved.
The Board
of Directors has therefore determined that it would be useful to establish this
policy for securities transactions by officers, directors, persons who have been
designated by the Company as “observers” at meetings of the Board of Directors
of the Company (“Observers”)
and all employees.
A. Window
Period.
Generally, except as set forth in this policy, officers, directors,
Observers and employees may buy or sell securities of the Company only during a
“window period.” Window periods shall generally commence on the
second business day after general public release of material information about
the Company, such as customer contracts and annual and quarterly
revenues. The “window” generally closes on the first day of the last
month of the quarter, and may be closed early or may not open if, in the
judgment of the Company’s Chief Executive Officer, or his or her designee, there
exists undisclosed information that would make trades by members of the
Company’s officers, directors, Observers and employees
inappropriate. An officer, director, Observer or employee who
believes that special circumstances require him or her to trade outside the
window period should consult with the Company’s General
Counsel. Permission to trade outside the “window” will be granted
only where the circumstances are extenuating and there appears to be no
significant risk that the trade may subsequently be
questioned. Trading by an officer or employee that is outside of the
permitted “window period,” or trading without pre-clearance (described in
further detail in paragraph B below) constitutes cause for termination of
employment.
1. Exception
to Window Period.
a. Option
Exercises. Directors, Observers, officers and other employees
may exercise options granted under the Company’s stock option plans without
restriction to any particular period. However, the subsequent sale of
the stock acquired upon the exercise of options is subject to all provisions of
this policy.
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Exhibit
B
page 8 of
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b. 10b5-1 Automatic
Trading Programs. In addition, purchases or sales of the
Company’s securities made pursuant to, and in compliance with, a written plan
established by a director, Observer, officer or employee that meets the
requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”) (a “Plan”) may
be made without restriction to any particular period provided that (i) the Plan
was established in good faith, in compliance with the requirements of Rule
10b5-1, at the time when such individual was not in possession of material
nonpublic information about the Company and the Company had not imposed any
trading blackout period, (ii) the Plan was reviewed by the Company prior to
establishment, solely to confirm compliance with this policy and the securities
laws, and (iii) the Plan allows for the cancellation of a transaction and/or
suspension of such Plan upon notice and request by the Company to the individual
if any proposed trade (a) fails to comply with applicable laws (i.e., exceeding the number of
shares that may be sold under Rule 144) or (b) would create material adverse
consequences for the Company. The Company shall be notified of any
amendments to the Plan or the termination of the Plan.
B. Pre-Clearance
or Advance Notice of Transactions. In addition to the
requirements of paragraph A above, officers, directors, Observers and
employees may not
engage in any transaction in the Company’s securities, including any purchase or
sale in the open market, loan, pledge, or other
transfer of beneficial ownership, without first obtaining pre-clearance of the
transaction from the Company’s Chief Executive Officer, or his or her designee,
at least two (2) trading days in advance of the proposed transaction. The Chief Executive
Officer, or his designee will then determine whether the transaction may proceed
and, if so, will direct a Compliance Officer to assist in complying with the
reporting requirements under Section 16(a) of the Exchange
Act. Pre-cleared transactions not completed within five (5) business
days shall require new pre-clearance under the provisions of this
paragraph. The Company may, at its discretion, shorten such period of
time, even after pre-clearance has been granted, if new material information
about the Company arises. To the extent possible,
advance notice of upcoming transactions effected pursuant to an established
10b5-1 automatic trading plan under paragraph A(1)(b) above shall be given to
the General Counsel. Upon the completion of
any transaction, any officer, director, Observer or employee who is subject to
the Company’s Section 16 Compliance Program must immediately notify the
appropriate persons as set forth in Section 3 of the Company’s
Section 16 Compliance Program so that the Company may assist in the Section
16 reporting obligations.
C. Prohibition
of Speculative Trading. No officer,
director, Observer or employee may engage in short sales, transactions in put or
call options, certain hedging transactions or other inherently speculative
transactions with respect to the Company’s stock at any time.
D. Covered
Insiders. The provisions
outlined in this policy apply to all officers, directors, Observers and
employees of the Company. Generally, any entities or family members
whose trading activities are controlled or influenced by any of such persons
should be considered to be subject to the same restrictions.
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Exhibit
B
page 9 of
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E. Short-Swing
Trading/Section 16 Reports. Officers and directors
subject to the reporting obligations under Section 16 of the Exchange Act should
take care not to violate the prohibition on short-swing trading (Section 16(b)
of the Exchange Act) and the restrictions on sales by control persons
(Rule 144), and should file all appropriate Section 16(a) reports
(Forms 3, 4 and 5), all of which have been enumerated and described in a
separate Section 16 Compliance Memorandum. In accordance with
Regulation BTR under the Exchange Act, no director or executive officer of the
Company shall, directly or indirectly, purchase, sell or otherwise acquire or
transfer any equity security of the Company (other than an exempt security)
during any “blackout period’’ (as defined in Regulation BTR) with respect to
such equity security, if such director or executive officer acquires or
previously acquired such equity security in connection with his or her service
or employment as a director or executive officer. This prohibition shall not
apply to any transactions that are specifically exempted from Section 306(a)(l)
of the Sarbanes-Oxley Act of 2002 (as set forth in Regulation BTR), including
but not limited to, purchases or sales of the Company’s securities made pursuant
to, and in compliance with, a written plan established by a director or
executive officer that meets the requirements of Rule 10b5-1 under the Exchange
Act; compensatory grants or awards of equity securities pursuant to a plan that,
by its terns, permits executive officers and directors to receive automatic
grants or awards and specifies the terms of the grants and awards; or
acquisitions or dispositions of equity securities involving a bona fide gift or
by will or the laws of descent or pursuant to a domestic relations order. The
Company shall timely notify each director and executive officer of any blackout
periods in accordance with the provisions of Regulation BTR.
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Exhibit
B
page 10
of 11
Exhibit
C
Prior
Agreements
[Initial
One]
/DS/ No
prior agreements
_____
The following is a complete list of all prior agreements to which I am bound
that conflict with or prevent the full performance of my duties and obligations
to Hoku during the term of this Agreement:
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Exhibit
C
page 11
of 11