Document:

Exhibit 10.20

 

ADVANCED POWER TECHNOLOGY, INC.

 

EMPLOYMENT AGREEMENT

(MANAGEMENT & TECHNICAL PERSONNEL)

EXEMPT
SALARIED EMPLOYEES

 

THIS EMPLOYMENT AGREEMENT is
made and entered into this 23 day of February, 2004, by and
between ADVANCED POWER TECHNOLOGY, INC., a Delaware corporation (“Company”) and
 George J. Krausse III, an
individual (“Employee”).

 

WHEREAS,
Company desires to employ Employee upon the terms and conditions hereinafter
set forth, and Employee desires to be so employed;

 

NOW, THEREFORE, in consideration
of the mutual promises contained herein, Company and Employee agree as follows:

 

1.                                     EMPLOYMENT

Company
hereby employs Employee as Vice President Commercial RF Products of the
Company with the powers and duties consistent with such position, and Employee
hereby accepts such employment, on the terms and conditions hereinafter set
forth. Employee, subject to the control of the Management of Company, agrees to
diligently utilize his or her best efforts to further the interests of the
Company and to discharge those responsibilities and duties required for the
planning, development, operation, promotion and advancement of the Company, and
such other duties as Company may require.

 

2.                                       TERM AND TERMINATION

 

2.1                               This Agreement shall terminate upon the happening
of any of the following events:

 

(a)                                  By mutual agreement between Company and
Employee;

 

(b)
                              Unilaterally by Employee without cause;

 

(c)
                               Upon the death of Employee

 

(d)                               Upon the good faith determination of the
Chief Executive Officer of the Company that Employee has become so physically
or mentally disabled as to be incapable of satisfactorily performing his or her
duties. (Refer to Sick Pay Policy.)

 

(e)                                By the Company for cause, that is to say only
upon Employee’s conviction of a felony, commission of any material act of
dishonesty against the Company, material breach of this Agreement by Employee,
or misconduct by Employee having a substantial adverse effect on the business
of the Company.

 

 

(f)                                  By the Company without cause, in which event
(Section 2.2. to the contrary notwithstanding) the Company will continue to pay
Employee the full amount due as salary for a period of thirty days following
notice of termination.

 

2.2                               In the event that this Agreement is
terminated pursuant to Paragraph 2.1, neither Company nor Employee shall have
any remaining duties or obligations hereunder, except that Company shall pay to
Employee, or his or her representatives, such compensation as is due pursuant to Sub-Section 2.1 (f) and
Section 3. The provisions of Section 4-9 shall survive termination.

 

2.3                               This Agreement shall not be terminated by
any:

 

(a)
                               Merger, whether the Company is or is not the
surviving corporation; or

 

(b)
                              Transfer of all or substantially all of the
assets of the Company; or

 

(c)
                               Voluntary or involuntary dissolution or
liquidation of the Company; or

 

(d)
                              Consolidation to which the Company is a
party.

 

In the event of any such
merger, transfer of assets, dissolution, liquidation, or consolidation, the
surviving corporation or transferee, as the case may be, shall be bound by and
shall have the benefits of this Agreement, and Company shall take all action to
ensure that such corporation or transferee is bound by the provisions of this
Agreement.

 

3.                                       COMPENSATION

 

3.1                               As the total consideration for the services
which Employee agrees to render hereunder, Employee shall be entitled to the
following:

 

(a)                                Beginning on February 23, 2004 an annual base
salary at the rate of   One Hundred Twenty Thousand One Hundred
Twenty   Dollars ($  120,120  ), subject to
increases at the discretion of Company, in accordance with the regular and
ordinary payment practices of Company. All payroll payments shall be subject to
deduction of payroll taxes and related deductions as required by law.

 

(b)                               Participation in all plans or programs
sponsored by Company for employees in general, including without limitation
participation in any group health plan, medical reimbursement plan and life
insurance plan, pension and profit sharing plan.

 

(c)                                Reimbursement of any and all reasonable and
documented expenses incurred by Employee from time to time in the performance
of his or her duties hereunder, including without limitation entertainment
expenses and air fare, taxi, automobile, and other traveling expenses.

 

2

 

(d)
                              Refer to Vacation Policy.

 

(e)
                               Such other benefits as Company, in its sole
discretion, may from time to time provide.

 

3.2                               Subject to the limitations contained in
Section 2.1, if Employee shall be absent on account of personal injuries or
physical or mental disability, Employee shall continue to receive all payments
provided in this Agreement; provided, however, that any such payments may, at
the sole option of Company, be reduced by any amount that Employee receives for
the period covered by such payments as disability compensation under insurance
policies mantained by Company or under governmental programs.

 

3.3                               Company shall have the right to deduct from
the compensation due to Employee hereunder any and all sums required for social
security and withholding taxes and for any other federal, state, or local tax
or charge which may be in effect or hereafter enacted or required as a charge
on the compensation of Employee.

 

3.4                               Employee shall repay relocation expenses paid
by Company if he or she voluntarily termnates employment within one year from
date of employment.

 

3.5                               Any payments, whether incurred by the Company
or by an employee or officer of the Company on behalf of and reimbursed by the
Company, including, without limitation, salary, commission, bonus, interest,
rent or travel and entertainment expenses, which are disallowed in whole or in
part as a deductible expense for federal income tax purposes on the grounds
that said payments constitute unreasonable compensation to an employee or
officer, shall be repaid by the employee or officer to the Company to the full
extent of the disallowance, if the Board, in its discretion, agrees to enforce
the repayment of each such amount disallowed.

 

4.                                       NON-DISCLOSURE

 

Employee shall not disclose
or use in any way, either during his or her employment with Company or
thereafter, except as required in the course of his or her employment with
Company, any confidential business or technical information or trade secret
acqured during his or her employment by Company, whether or not conceived of,
discovered, developed or prepared by Employee, including without limitation any
formulae, patterns, inventions, procedures, processes, plans, devices,
products, operations, techniques, know-how, specifications, data, compilations
of information, customer lists, records, financing or production methods,
costs, employees, and information concerning specific customer requirements,
preferences, practices and methods of doing business, all of which are
exclusive and valuable property of Company.

 

3

 

5.                                       ASSIGNMENT OF PROPRIETARY
INTEREST

 

Employee hereby assigns and
transfers to Company his or her entire right, title and interest in and to any
and all inventions, improvements, processes, sketches, methods of production,
designs, discoveries, ideas (whether or not shown or described in writing) or
services (collectively “inventions”) whether or not patentable, which are made,
conceived or first reduced to practice by Employee with Company’s equipment,
supplies, facilities, or trade secrets and on Company’s time, or which relates
to the business of Company or Company’s actual or anticipated research or
business development, or which results from any work performed by the Employee
for Company. Employee agrees that Company shall have the right to keep such
inventions as trade secrets. To permit Company to claim rights to which it may
be entitled, the Employee agrees to promptly disclose to Company in confidence
all inventions which the employee makes, conceives, or first reduces to
practice during the course of his or her employment or within one year after
terminatin thereof if such inventions relate to a product, process or service
upon which Employee worked during the period of his or her employment by
Company, and all patent or copyright applications filed by the Employee within
a year after termination of this Agreement. Both during and after the period of
employment with Company, Employee shall further assist Company in obtaining
patents or copyrights on all inventions deemed patentable or copyrightable by
Company in the United States and in all foreign countries, and shall execute
all documents and do all things necessary to obtain letters patent and/or
copyrights, to vest Company with full and extensive title thereto, and to
protect Company’s rights against infringement by others. Employee further
agrees that any patent application fled within a year after termination of his
or her employment on an invention for which the Employee was partially or
totaly responsible shall be presumed to relate to an invention made during the
term of the Employee’s employement unless the Employee can provide evidence to
the contrary.

 

6.                                       TANGIBLE ITEMS AS PROPERTY
OF COMPANY

 

Excluding any personal
property owned by Employee prior to the date hereof, all files, records,
documents, drawings, plans, specifications, manuals, books, forms, receipts,
notes, reports, memoranda, studies, data, calculations, recordings, catalogues,
compilations of information, correspondence and all copies, abstracts and
summaries of the foregoing, instruments, tools and equipment and all other
physical items related to the business of Company, other than a merely personal
item of a general professional nature, whether of a public nature or not, and
whether prepared by Employee or not, are and shall remain the exclusive
property of Company and shall not be removed from the premises of Company under
any circumstances whatsoever without the prior written consent of Company, and
the same shall be promptly returned to Company by Employee on the expiration or
termination of his or her employment with Company or at any time prior thereto
upon the request of Company.

 

4

 

7.                                       SOLICITATION OF CUSTOMERS
AND EMPLOYEES:

 

Both during and after the
period of employment, Employee shall not in any way attempt to interfere with
the business of Company and, shall not call on, solicit, interfere with or attempt
to entice away, either directly or indirectly, any employee or customer of
Company with whom he or she became acquainted during his or her employment with
Company, either for his or her own benefit or purposes or for the benefit or
purposes of any other person, partnership, corporation, firm, association or
other business organization, entity or enterprise.

 

8.                                       NONCOMPETITION

 

Except as set forth in this
Section 8, for a period of 18 months after termination of this Agreement,
Employee shall not, directly or indirectly, engage or participate in, assist or
have any interest in any person, partnership, corporation, firm, association or
other business organization, entity or enterprise (whether as an employee,
officer, director, agent, security holder, creditor, consultant or otherwise)
which, directly or indirectly, manufactures, designs, develops, engineers,
markets or otherwise produces or offers for sale or sells inventions, products,
processes, systems or services the same as, similar to or competitive with any
devices, inventions, products, processes, systems or services manufactured,
designed, developed, engineered, marketed or otherwise produced or offered for
sale or sold by Company (or any successor thereof) in the United States or
abroad.

 

The parties intend that the
covenant contained in this Section 8 shall be construed as a series of separate
covenants. If, in any judicial or arbitration proceeding, a court shall refuse
to enforce any of the separate covenants deemed included in this Section 8, then
this unenforceable covenant shall be deemed eliminated from these provisions
for the purpose of those proceedings to the extent necessary to permit the
remaining separate covenants to be enforced. Moreover, if, in any judicial or
arbitration proceeding, the term of non-competition shall be determined to be
unreasonable, the parties agree that the term shall be shortened to the maximum
period deemed reasonable under the laws of the state of Oregon, and that
modified period shall be enforceable as though originally set forth herein.

 

9.                                       INJUNCTIVE RELIEF

 

Employee hereby acknowledges
and agrees that it would be difficult to fully compensate Company for damages
resulting from the breach or threatened breach of Sections 4, 5, 6, 7, or 8 of
this Agreement, and accordingly, that Company shall be entitled to temporary
and injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, to enforce such Sections without the
necessity of proving actual damages therewith. This provision with respect to
injunctive relief shall not, however, diminish Company’s right to claim and
recover damages.

 

5

 

10.                               INDEMNIFICATION

 

Company shall, to the
maximum extent permitted by law, indemnify and hold Employee harmless against
expenses, including reasonable attorney’s fees, judgments, fines, settlemens,
and other amounts actually and reasonably incurred in connection with any
proceeding arising by reason of Employee’s employment with Company if Employee,
in incurring the above expenses, acted in good faith and in a manner Employee
believed to be in the best interests of Company and, in the case of a criminal
proceeding, had no reasonable cause to believe Employee’s conduct was unlawful.

 

11.                               COPIES OF AGREEMENT

 

Employee authorizes Company
to send a copy of this Agreement to any and all future employers which he or
she may have, and to any and all persons, firms, and corporations, with whom he
or she may become affiliated in a business or commercial enterprise, and to
inform any and all such employers, persons, firms or corporations that Company
intends to exercise its legal rights should Employee breach the terms of this
Agreement or should another party induce a breach of Employee’s part.

 

12.                               SEVERABLE PROVISIONS

 

The provisions of this
Agreement are severable and if anyone or more provisions may be determined to
be illegal or otherwise unenforceable, in whole or in part, the remaining
provisions, and any partially unenforceable provisions to the extent
enforceable, shall nevertheless be binding and enforceable.

 

13.                               BINDING AGREEMENT

 

This Agreement shall inure
to the benefit of and shall be binding upon Company, its successors and
assigns.

 

14.                               CAPTIONS

 

The Section captions are inserted
only as a matter of convenience and reference and in no way define, limit or
describe the scope of this Agreement or the intent of any provisions hereof.

 

15.                               ENTIRE AGREEMENT

 

This Agreement, contains the
entire agreement of the parties relating to the subject matter hereof, and the
parties hereto have made no agreements, representations or warranties relating
to the subject matter of this Agreement that are not set forth herein. No
modification of this Agreement shall be valid unless made in writing and signed
by the parties hereto.

 

6

 

16.                               GOVERNING LAW

 

This Agreement shall be
governed and construed in accordance with the laws of the state of Oregon.

 

17.                               NOTICES

 

Any notice or demand
required or permitted to be given hereunder shall be in writing and shall be
deemed effective upon the personal delivery thereof or, if mailed, forty-eight
hours after having been deposited in the United States mails, postage prepaid,
and addressed to the party to whom it is directed at the address set forth
below:

 

If to Company:

 

	
  ADVANCED POWER TECHNOLOGY,
  INC.

  
	
  405 S. W. Columbia Street

  
	
  Bend, Oregon 97702

  
	
   

  
	
   

  
	
  If to EMPLOYEE:

  	
   

  
	
   

  	
   

  
	
  George J Krausse III

  	
   

  
	
   

  
	
  4236 Durango PL.

  	
   

  
	
   

  
	
  Fort Collins CO 80526

  	
   

  
			

 

 

Either party may change the
address to which such notices are to be addressed by giving the other party
notice in the manner herein set forth.

 

IN WITNESS WHEREOF, the
parties have executed this Agreement on the day and year first written above.

 

	
   

  	
  ADVANCE POWER TECHNOLOGY,
  INC.

  
	
   

  	
  A Delaware corporation
  (“Company”)

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Patrick Sireta

  
	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (“Employee”)Exhibit 10.21

 

Exhibit A

 

AMENDMENT NO. 5

 

TO ADVANCED POWER TECHNOLOGY, INC.

 

STOCK OPTION PLAN

 

 

The
ADVANCED POWER TECHNOLOGY, INC. Stock Option Plan (“Plan”) is amended to
increase the aggregate amount of Common Stock to be delivered upon the exercise
of all options granted under the Plan from 2,250,000 to 2,400,000.

 

 

APPROVED BY SHAREHOLDERS effective         MAY
4, 2004               .

 

 

	
   

  	
  /s/
  GREG HAUGEN

  	
   

  
	
   

  	
  GREG
  HAUGEN, Secretary

  

 

 

AMENDMENT NO. 5 TO STOCK OPTION PLAN

 

 

AMENDMENT NO. 4

 

TO
ADVANCED POWER TECHNOLOGY, INC.

 

STOCK
OPTION PLAN

 

 

The ADVANCED POWER
TECHNOLOGY, INC. Stock Option Plan (“Plan”) is hereby amended as follows:

 

1.                                       5.7 Termination of
Relationship.

 

The
second full paragraph of Section 5.7 is hereby amended and completely restated
as follows:

 

“If an Optionee is
terminated for cause, any option granted hereunder shall terminate as of the
first discovery of the Company of any reason for termination for cause, and
such Optionee shall thereupon have no right to purchase any shares pursuant to
such option. “Termination for cause” shall mean dismissal for dishonesty,
conviction or confession of a crime punishable by law (except minor
violations), fraud, disclosure of confidential information, or misconduct,
including but not limited to, violation of the Company’s drug and alcohol
policy and any other Company policies in effect from time to time. If an
Optionee’s relationship with the Company or any related corporation is
suspended pending an investigation of whether or not the Optionee shall be
terminated for cause, all Optionee’s rights under any option granted hereunder
likewise shall be suspended during the period of investigation.”

 

2.                                        Except as amended herein and by Amendment
Nos. 1, 2 and 3, the Plan shall remain in full force and effect.

 

ADOPTED BY THE BOARD OF
DIRECTORS ON JANUARY 30th, 2003.

 

 

	
   

  	
  /s/
  GREG HAUGEN

  	
   

  
	
   

  	
  GREG
  HAUGEN, Secretary

  

 

 

AMENDMENT NO. 4 TO STOCK OPTION PLAN

 

 

AMENDMENT NO. 3

TO
ADVANCED POWER TECHNOLOGY, Inc.

 

STOCK
OPTION PLAN

 

 

The ADVANCED POWER TECHNOLOGY,
INC. Stock Option Plan (“Plan) is amended to increase the aggregate amount of
Common Stock to be delivered upon the exercise of all options granted under the
Plan from 1,500,000 to 2,250,000.

 

ADOPTED BY THE BOARD OF
DIRECTORS effective   DECEMBER 31, 2001.

 

APPROVED BY SHAREHOLDERS
effective   APRIL 26, 2002.

 

 

	
   

  	
  /s/
  GREG HAUGEN

  	
   

  
	
   

  	
  GREG
  HAUGEN, Secretary

  

 

 

AMENDMENT
NO.3 TO STOCK OPTION PLAN

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