EXHIBIT 10.1

 

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May 1, 2008

 

Mr. Charles S. Rhoades

645 Highland Avenue

Boulder, Colorado 80302

 

Dear Steve:

 

SatCon Technology Corporation, an employer at will, is pleased to confirm our
offer of employment to you as President and Chief Executive Officer reporting to
the Board of Directors.  In addition, you will be appointed to serve on the
Company’s Board of Directors upon commencement of your employment.  Your
employment will commence May 1, 2008.

 

COMPENSATION

 

Your starting base salary will be $400,000 per annum payable in equal bi-weekly
installments of approximately $15,385.

 

In addition, you are eligible for a fiscal year based incentive cash bonus
opportunity of up to 60% of your base salary.  The Board of Directors and you
will define and agree upon specific incentive bonus plan criteria upon your
commencement of employment.

 

We are also offering you an option to purchase 4,796,020 shares of SatCon Common
Stock, 1,199,005 shares of which will vest on the first anniversary of your
employment commencement date, with the remaining 3,597,015 subsequently vesting
pro rata at the end of each quarterly anniversary of your employment
commencement date (1,199,005 per year).  Except as set forth below, unvested
shares under the option will expire on the last day of your employment, and the
option will expire at the earlier of ten years after the date of grant, if you
remain an active employee, or 90 days after you are no longer employed by SatCon
hereunder (unless you are terminated for “Cause” (as hereinafter defined), in
which case it will expire immediately).  If your employment is terminated
without Cause or is Constructively Terminated (as such term is hereinafter
defined) or you become Disabled or die while you are employed by the Company,
you or your estate shall have 12 months after such termination without Cause,
Constructive Termination, determination of Disability or date of death to
exercise the option.  If a Change in Control (as such term is defined under
SatCon’s amended 2005 Stock Incentive Plan (the “Plan”)) occurs, all unvested
shares under the option will vest, and you will have the right to exercise the
option at or prior to the closing of the Change in Control transaction.  If you
choose not to exercise, your option will be accorded the same treatment as
options

 

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outstanding under the Plan are accorded under the Change in Control
transaction.  Your option will be subject to our obtaining the approval of our
Board of Directors (which will be obtained prior to your commencing employment)
and any necessary pre-issuance notice filing with NASDAQ.  Since the option will
be issued outside of the Plan (which has a 500,000 share per year share limit
per individual) we will need to grant you either registration rights with
respect to your option and the underlying shares or file a Registration
Statement on Form S-8 covering them.

 

The exercise price of the option will be the greater of (i) $1.66 per share or
(ii) the closing bid price of a share of SatCon Common Stock on the NASDAQ
exchange on the date the option is granted, which will be the date on which you
become a full-time employee of SatCon.  SatCon will insure that the option
complies with Internal Revenue Code Section 409A and the regulations adopted
thereunder.  SatCon will prepare and provide you with a copy of the option prior
to your commencement of employment.

 

CONSTRUCTIVE TERMINATION

 

For the purposes of this letter, “Constructive Termination” shall be deemed to
occur if: (a) there is any reduction of your base compensation; or (b) the
Company reduces or changes your responsibilities such that you are no longer
performing the duties customarily performed by the Chief Executive Officer of
SatCon (other than as a result of your dying, being terminated for Cause or
becoming Disabled); or (c) the Company requires you to cease residing primarily
in the State of Colorado or deviate from the travel and commuting arrangement
set forth in the paragraph herein entitled Reimbursable Travel Expenses & Work
Location and you refuse to do so, and you provide the Company with 15 days
notice of such reduction or refusal and the Company does not remedy such
situation within the thirty (30) day period immediately following such notice
and you then elect to terminate your employment relationship voluntarily.

 

PAYMENTS AND BENEFITS UPON TERMINATION OF EMPLOYMENT

 

Upon termination of your employment, the Company shall pay you any compensation
and benefits earned by you through the date of termination of your employment
(the “Termination Date”), including any earned bonus that has not been paid as
of the Termination Date.  Additionally, in the event that your employment has
been terminated by the Company without Cause (other than as a result of your
dying or becoming Disabled) or your employment has been Constructively
Terminated within 12 months after the occurrence of a Change in Control, and
conditioned upon your execution of a written release reasonably acceptable to
the Company and you (a “Release”) that becomes binding upon you and the Company
(to be drafted and provided by the Company) of any and all claims, including
without limitation any claims for lost wages or benefits, stock options,
compensatory damages, punitive damages, attorneys’ fees, equitable relief, or
any other form of damages or relief you may assert against the Company, you
shall receive the following benefits for the twelve (12) month period
immediately following the Termination Date: (i) continuation of your base salary
(as of the Termination Date), less all applicable taxes and withholdings, paid
in accordance with the Company’s normal payroll schedule and practices, and
(ii) payment by the Company of the share of the

 

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premiums for continuation of medical and dental benefits under COBRA that are
paid by the Company for active and similarly-situated employees who receive the
same type of coverage, assuming you elect and are eligible for such coverage.

 

For purposes of this letter, “Cause” for termination shall be deemed to exist
upon (i) a good faith finding by the Board of Directors of the Company (A) that
you have repeatedly and willfully failed to perform your reasonably assigned
duties for the Company, which failure is not cured within fifteen days after
written notice to you of such finding; (B) that you have engaged in fraud, gross
negligence or the deliberate and intentional violation of material rules or
standards applicable to you as a result of your employment at the Company
(“Misconduct”), which fraud, gross negligence or Misconduct has had or could
have a material adverse effect on the Company; (C) that you have been enjoined
or otherwise prevented by court order (whether temporarily or permanently) from
performing your full duties as President and Chief Executive Officer of the
Company; or (D) that you have made a material misrepresentation under subsection
(i) or (ii) of the third paragraph of the Section of this Agreement entitled
“Other Agreements”; (ii) your being convicted of, or pleading guilty or nolo
contendere to, any crime involving moral turpitude or any felony; or (iii) a
breach by you of any material provision of this Agreement or any invention and
non-disclosure agreement with the Company, which breach is not cured within
fifteen days after written notice thereof to you.  Further, for purposes of this
letter, “Disability” or “Disabled” shall mean a permanent and total disability
(within the meaning of Section 22(e) of the Code), as determined by a medical
doctor satisfactory to the Company.

 

Benefits

 

Beginning on your first day of employment, you will be eligible to participate
in our comprehensive medical insurance plan, dental insurance, 401k savings
plan, long term disability and life insurance plans.  You are eligible for four
(4) weeks of paid vacation per year.  Vacation time is accrued over the course
of the year.

 

Reimbursable Travel Expenses & Work Location

 

As your domicile and primary residence will remain in Boulder, Colorado, and
since the Company maintains operations in multiple locations, SatCon will
reimburse you for hotels, business class travel, car rental, shuttles, taxis,
transfers (or reimburse mileage) to these work sites, including corporate
headquarters.  The Board of Directors and you have agreed that you will work
full-time, primarily at corporate headquarters in Boston, for the first 6-12
months of employment.  You have agreed to establish a secondary residence in
Boston and this cost as well as other expenses associated with your time in
Boston will not be considered to be reimbursable as a business expense.  After
an initial 6-12 month period, and only after meeting the Board’s expectations
with respect to the execution of your roles and responsibilities as CEO, will
your work schedule be modified such that you may then work from your primary
residence in Boulder, Colorado for up 5 workdays per month.

 

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OTHER AGREEMENTS

 

You will be required to review and sign the company’s standard non-disclosure
and patent agreement prior to or on your first day of work.  You will also be
required to agree to the terms of the SatCon insider trading policy and
procedures.  As you will be a Section 16 officer, you are subject to the
reporting requirements thereof.

 

You have provided us with copies of the following documents with regard to your
previous employment with Advanced Energy, Inc. (“AE”): (i) Employment Agreement,
dated August 20, 2002; (ii) Confidentiality Agreement, dated September 12, 2002;
(iii) Change of Control Severance Agreement, dated March 29, 2005; and
(iv) Executive Transition Agreement, dated December 31, 2007 (the “Transition
Agreement”) (collectively, the “AE Documents”).

 

You hereby represent, warrant and covenant to the Company, as a material
inducement to the Company’s entering into this Employment Offer Letter: 
(i) that the AE Documents constitute all of the documents, instruments and
agreements that you have entered into with AE that may affect your employment
with the Company; (ii) that it is, and has always been, your understanding that
the Transition Agreement does not, and was never intended to, contain a
non-competition agreement with AE and that you will provide the Company with an
affidavit to that effect for use in connection with any litigation that may be
brought by AE in connection therewith; (iii) that you will cooperate with the
Company with respect to any claim, litigation or judicial, arbitral or
investigative proceeding that may be brought against the Company in connection
with your former employment with AE; and (iv) that you will not intentionally
violate any of your confidentiality or assignment of inventions obligations to
AE in connection with your employment with the Company.

 

You shall be entitled to indemnification from the Company as may be provided in
the Company’s Certificate of Incorporation and Bylaws to officers and directors
of the Company.  You shall be included in any directors and officers liability
insurance coverage provided to the Company’s directors and executive officers
generally from time to time.  In addition, based upon your representations,
warranties and covenants set forth above, the Company agrees to indemnify,
defend and protect you against any claims, demands, actions, judgments, damages,
liabilities, debts or expenses (including attorney fees and legal costs)
relating to or arising out of your obligations to AE pursuant to the terms of
the AE Documents and arising out of your employment with the Company (other than
any claim that AE may bring to seek the return of monies paid to you under the
Transition Agreement or any claim that you may bring against AE to enforce such
payment).

 

Notwithstanding the foregoing, if you bring an action against AE to enforce
payment or performance of AE’s obligations to you under the Transition Agreement
you shall do so with counsel of your own choosing and at your own expense.  If,
however, AE counterclaims against you in any such proceeding, whether or not the
Company is made a defendant therein, and such counterclaim or action is one

 

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for which the Company has agreed to provide indemnification herein the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to you and the payment of all fees and expenses incurred in
connection with defense thereof.  Similarly, if AE initially brings an action
against you for which the Company has agreed to provide indemnification herein,
and you counterclaim to enforce payment or performance of AE’s obligations to
you under the Transition Agreement, the Company shall assume the prosecution of
such counterclaim, including the employment of counsel reasonably satisfactory
to you and the payment of all fees and expenses incurred in connection with the
defense thereof.  You shall have the right to employ separate counsel in any
such proceeding for which the Company is providing indemnification and defense
herein and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at your expense.

 

Steve, I trust that you will find the President and CEO position offered both
challenging and rewarding.  We all very much look forward to your becoming a
part of SatCon.

 

Sincerely,

 

 

 

/s/ John M. Carroll

 

 

 

John M. Carroll, Chairman

 

SatCon Technology Corporation

 

 

 

AGREED TO AND ACCEPTED

 

 

 

 

 

/s/ Charles S. Rhoades

 

Charles S. Rhoades

 

 

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