EXHIBIT 10.3
 
EMPLOYMENT AGREEMENT

 
This EMPLOYMENT AGREEMENT (the “Agreement”) is entered  on July 31st,, 2012
__________ (the “Effective Date”), by and between ZAP, a California
company  (the “Employer”, also referred to as the “Company”) and Chuck
SCHILLINGS (the “Executive”).

WHEREAS, the Executive is currently employed as Chief Operating Officer of ZAP;
and

WHEREAS, the Employer and the Executive desire to enter into this Agreement to
set out the terms and conditions for the employment relationship of the
Executive as Co-CEO of ZAP effective July 31st, 2012, reporting to the board of
directors of ZAP.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:

1.           Employment Agreement.  On the terms and conditions set forth in
this Agreement, the Employer agrees to employ the Executive and the Executive
agrees to be employed by the Employer.  Terms used herein with initial
capitalization not otherwise defined are defined in Section 22. The scope of
responsibilities and reporting structure is described in Attachment 1. The
Executive is employed at will, and either the Employer or Executive can
terminate employment with 60 days’ notice unless the Executive was terminated
for cause. The Executive is employed as Co-CEO of ZAP responsible for ZAP USA
operations and ZAP and Jonway Auto’s international marketing and sales, as well
as customer support, reporting to the board.

2.           Compensation; Benefits; Restricted Stock Grant.

(a)           Base Salary.  During the Employment Period, the Employer shall pay
to the Executive a base salary (the “Base Salary”), per the attachment.  The
Base Salary shall be reviewed by the Compensation Committee of the Board of
Directors no less frequently than annually and shall be adjusted in the
discretion of the Compensation Committee of the Board of Directors, and any such
adjusted Base Salary shall constitute the “Base Salary” for purposes of this
Agreement.  The Base Salary shall be paid in substantially equal installments in
accordance with the Employer’s regular payroll procedures.

(b)           Annual Bonus. Upon profitability and contingent on the Company’s
successful delivery to forecasted quarterly financial plan, an annual bonus may
be granted if proposed by the Compensation Committee of the Board of Directors
and approved by the Board of Directors of the Company.
 
(c)           Withholding; Employer Compensation Plans.  All compensation
provided to the Executive pursuant to Section 6 shall be (1) in accordance with
the Employer’s compensation plans and policies, and (2) less applicable
deductions and withholding as determined by the Employer.
 
(d)           Stock Option Grant. Upon his joining into the Company,  the
Executive will receive a stock option to purchase 400,000 shares of the
Company’s Common Stock at a price per share equal to the fair market value per
share of the Common Stock on the date of grant, which is specified as the
Executive’s effective date as Co-CEO, subject to board approval.  25% of the
shares subject to the option shall vest 12 months after the date vesting begins
subject to Executive’s continuing employment with the Company, and the remaining
shares shall vest annually over the next three years in equal annual amounts
subject to Executive’s continuing employment with the Company (“Standard Vesting
Terms”).  No right to any stock or stock equivalent is earned or accrued until
such time that vesting occurs, nor does the grant confer any right to continue
vesting or employment.  In addition, contingent on the achievement of certain
targets to be determined by the Board of Directors and subject to approval of
the Board of Directors, the Executive shall have the right to earn additional
options or option equivalents to purchase up to 150,000 shares of the Company’s
Common Stock at a price per share equal to the fair market value per share of
the Common Stock on the date of grant, as determined by the Company's Board of
Directors.  Any such awards will vest on Standard Vesting Terms.  The
Executive’s participation in any employee share or option plan is subject to
compliance with the applicable laws and regulations.  The Company reserves the
right to alter the terms of any employee share or option plan offered to the
Executive to comply with regulatory requirements. This stock option is governed
by the Company’s Employee Stock Option Plan.
 
 
 

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3.           Position and Responsibilities.

(a)           Position.  The Executive shall serve as Co-Chief Executive Officer
responsible for ZAP’s US operations and support of ZAP and Jonway Auto’s
international sales, marketing and customer support, reporting to the Employer’s
Board of Directors, although the Employer may change the Executive’s title and
supervisor(s) in its reasonable discretion.  The Executive’s responsibilities
shall include those duties designated by the Employer.

(b)           Best Efforts.  The Executive shall devote the Executive’s
reasonable best efforts and full business time to the performance of the
Executive’s duties hereunder and the advancement of the business and affairs of
the Employer and the Company Affiliates.

4.           Place of Performance.  During the Employment Period, the Executive
shall be based primarily at an office of the Employer designated by the Employer
(currently Santa Rosa, California), except for reasonable travel on the
Employer’s business consistent with the Executive’s position.

5.           Compliance with Employer’s Policies.  The Executive agrees to
observe and comply with the policies and rules of the Employer unless such
compliance is inconsistent with the terms of this Agreement.
 
7.           Expenses.  The Executive is authorized to incur reasonable and
necessary expenses in the performance of the Executive’s duties hereunder.  The
Employer shall reimburse the Executive for all such expenses reasonably and
actually incurred in accordance with policies which may be adopted from time to
time by the Employer upon periodic presentation by the Executive of an itemized
account, including reasonable substantiation, of such expenses.

8.           Confidentiality, Non-Disclosure and Non-Competition Agreement.  The
Employer and the Executive acknowledge and agree that during the Executive’s
employment with the Employer, the Executive has had access to, will have access
to, and may assist in developing Company Confidential Information.  The Employer
and the Executive further acknowledge and agree that the Executive will occupy a
position of trust and confidence with respect to the Employer’s affairs and
business and the affairs and business of the Company Affiliates.  The Executive
agrees that the following obligations are necessary to preserve the confidential
and proprietary nature of Company Confidential Information and to protect the
Employer and the Company Affiliates against harmful solicitation of employees
and customers, harmful competition and other actions by the Executive that would
result in serious adverse consequences for the Employer and the Company
Affiliates:

(a)           Non-Disclosure.  During and after the Executive’s employment with
the Employer, the Executive will not disclose or transfer to any person or
entity or use for the Executive’s or any other person’s or entity’s benefit any
Company Confidential Information other than as authorized in writing by the
Employer or within the scope of the Executive’s duties with the
Employer.  Anything herein to the contrary notwithstanding, the provisions of
this Section 8(a) shall not apply when disclosure is required by law or by any
court, arbitrator, or administrative or legislative body (including any
committee thereof) with actual or apparent jurisdiction to order the Executive
to disclose or make accessible any information.

(b)           Materials.  The Executive will not remove any Company Confidential
Information or any other property of the Employer or any Company Affiliate from
the Employer’s premises or make copies of such materials except for normal and
customary use in the Employer’s business.  The Employer acknowledges that the
Executive, in the ordinary course of the Executive’s duties, may use and store
Company Confidential Information at home and other locations.  The Executive
will return to the Employer or destroy (at Employer’s election) all Company
Confidential Information and copies thereof and all other property of the
Employer or any Company Affiliate at any time upon the request of the Employer
and in any event immediately upon termination of the Executive’s employment for
any reason.  Anything to the contrary notwithstanding, nothing in Section 8(b)
shall prevent the Executive from retaining a home computer, papers and other
materials of a personal nature, including information relating to compensation
or reimbursement of expenses, information that is necessary for tax purposes,
and copies of plans, programs and agreements relating to the Executive’s
employment.

(c)           Publicity.  During the Employment Period, the Executive hereby
grants to the Employer the right to use, in a reasonable and appropriate manner,
the Executive’s name and likeness, without additional consideration, on, in and
in connection with technical, marketing or disclosure materials, or any
combination thereof, published by or for the Employer or any Company Affiliate.

(d)           Non-Disparagement.  After the Executive’s employment with the
Employer, the Executive will not make to any person or entity, including without
limitation the media, any false, disparaging, or derogatory statements or
comments about the Employer, any Company Affiliate, its or their business
affairs, or any of its or their current or former employees.

(e)           Acknowledgment.  The Executive acknowledges that the covenants in
Section 8 have a unique, very substantial and immeasurable value to the
Employer, that the Executive has sufficient assets and skills to provide a
livelihood for the Executive and the Executive’s family for the full duration of
these covenants, and that, as a result of the foregoing, if the Executive
breaches any such covenant, monetary damages would be an insufficient remedy for
the Employer and equitable enforcement of such covenant would be proper.

 
 

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(f)           Enforcement.  The Executive acknowledges that in the event of any
breach or threatened breach by the Executive of any of the covenants in Section
8, the business interests of the Employer will be irreparably injured, the full
extent of the damages to the Employer will be impossible to ascertain, monetary
damages may not be an adequate remedy for the Employer, and the Employer will be
entitled to enforce such covenants by temporary, preliminary, or permanent
injunctive relief or other equitable relief, without the necessity of posting
bond or security, which the Executive expressly waives.

(g)           Modification; Severability.  If any of the restrictions contained
in Section 8 are determined by any court of competent jurisdiction or other
adjudicator to be unenforceable in any respect, then the Executive and the
Employer agree that the court or adjudicator shall interpret and modify such
restriction(s) to the maximum extent in all respects as to which it/they may be
enforceable.  The Executive and the Employer further agree that such modified
restriction(s) shall be enforced by the court or adjudicator.  In the event that
modification is not possible, then the Executive and the Employer agree that,
because each of the Executive’s obligations in Section 8 is a separate and
independent covenant, any unenforceable obligation shall be severed and all
remaining obligations shall be enforced.

(h)           Conflicting Obligations and Rights.  The Executive agrees to
inform the Employer of any apparent conflicts between the Executive’s work for
the Employer and any obligations the Executive may have to preserve the
confidentiality of another’s proprietary information or related materials before
using the same on the Employer’s behalf.  The Employer shall receive such
disclosures in confidence and consistent with the objectives of avoiding any
conflict of obligations and rights or the appearance of any conflict of
interest.

9.             Termination of Employment.  Executive’s employment with the
Employer is for no specified period and constitutes at will employment.  As a
result, Executive is free to resign at any time, for any reason or for no
reason.  Similarly, the Employer is free to conclude its employment relationship
with Executive at any time, with or without cause, and with or without notice.

10.           Indemnification.  During the Employment Period and thereafter, the
Employer shall provide the Executive with coverage under its current directors’
and officers’ liability policy to the same extent that it provides such coverage
to other similarly situated executives.

11.           Attorney’s Fees.  In the event of any dispute relating to or
arising from this Agreement, the prevailing party in such dispute shall be
entitled to recover from the non-prevailing party any and all costs and expenses
(including without limitation attorneys’ fees and other charges of counsel)
incurred in connection with litigating such dispute.

12.           Severability.  The invalidity or unenforceability of any one or
more provisions of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall remain in
full force and effect.

13.           Survival.  It is the express intention and agreement of the
parties hereto that certain provisions in this Agreement shall survive according
to their terms the termination of the Executive’s employment.

15.           Assignment.  The rights and obligations of the parties to this
Agreement shall not be assignable or delegable, except that (i) in the event of
the Executive’s death, the personal representative or legatees or distributees
of the Executive’s estate, as the case may be, shall have the right to receive
any amount owing and unpaid to the Executive hereunder and (ii) the rights and
obligations of the Employer hereunder shall be assignable and delegable to any
Company Affiliate or in connection with any subsequent merger, consolidation,
sale of all or substantially all of the assets or equity interests of the
Employer or similar transaction involving the Employer or a successor
corporation.  The Employer shall require any successor to the Employer to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Employer would be required to perform it if no such
succession had taken place.

16.           Binding Effect.  Subject to any provisions in this Agreement
restricting assignment, this Agreement shall be binding upon the parties hereto
and shall inure to the benefit of the parties and their respective heirs,
devisees, executors, administrators, legal representatives, successors and
assigns.

17.           Amendment; Waiver.  This Agreement shall not be amended, altered
or modified except by an instrument in writing duly executed by the party
against whom enforcement is sought.  Neither the waiver by either of the parties
hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure of either of the parties, on one or more occasions,
to enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall thereafter be construed as a waiver of any subsequent
breach or default of a similar nature, or as a waiver of any such provisions,
rights or privileges hereunder.

18.           Headings.  Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.

 
 

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19.           Governing Law.  This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of California (but not
including any choice of law rule thereof that would cause the laws of another
jurisdiction to apply).  With regard to any claims, complaints or proceedings
brought related to the parties’ obligations under this Agreement, at all times
each party hereto irrevocably submits to the exclusive jurisdiction of any state
or federal court sitting in San Francisco, California.

20.           Entire Agreement.  This Agreement constitutes the entire agreement
between the parties respecting the subject matter herein, there being no
representations, warranties or commitments except as set forth herein.

21.           Counterparts.  This Agreement may be executed in two counterparts,
each of which shall be an original and all of which shall be deemed to
constitute one and the same instrument.

22.           Definitions.

“Company Affiliate” means any entity controlled by, in control of, or under
common control with, the Employer.

“Company Confidential Information” means information known to the Executive to
constitute trade secrets or proprietary information belonging to the Employer,
CapitalSource Inc. or any Company Affiliate or other confidential financial
information, operating budgets, strategic plans or research methods, personnel
data, projects or plans, or non-public information regarding the terms of any
existing or pending lending transaction between the Employer or Company
Affiliate and an existing or pending client or customer (as the phrase “client
or customer” is defined in Section 8(d), in each case, received by the Executive
in the course of the Executive’s employment by the Employer or in connection
with the Executive’s duties with the Employer.  Notwithstanding anything to the
contrary contained herein, the general skills, knowledge and experience gained
during the Executive’s employment with the Employer, information publicly
available or generally known within the industry or trade in which the Employer
competes and information or knowledge possessed by the Executive prior to the
Executive’s employment by the Employer, shall not be considered Company
Confidential Information.

“Date of Termination” means (i) if the Executive’s employment is terminated by
the Executive’s death, the date of the Executive’s death; (ii) if the
Executive’s employment is terminated by the Employer or the Executive, the date
specified in the Notice of Termination; or (iii) if the Executive’s employment
ends because of Non-Renewal, the date on which the Initial Term or the Extended
Term, as the case may be, expires.  Notwithstanding the foregoing the
Executive’s Date of Termination shall mean the date of the Executive’s
separation from service as defined in Section 409A.

 
 
 
 
 

 
 
 

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IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement, or have caused this Agreement to be duly executed and delivered on
their behalf.

“EXECUTIVE”

_________________________________
Charles Schillings

“EMPLOYER”

ZAP

By:______________________________

Name:
Title:    Chairman of the Board of ZAP