EXHIBIT 10.6

 

BEACON POWER CORPORATION

OPTION AGREEMENT

This Option Agreement (this “Agreement”), dated as of March 2, 2007 (the
“Effective Date”), is by and between Beacon Power Corporation (the “Company”)
and Matthew L. Lazarewicz (“Executive”), an executive officer of the Company.

WHEREAS, this Agreement is intended to provide Executive with a non-qualified
stock option to purchase shares of the Common Stock pursuant to the terms and
conditions set forth herein;

NOW THEREFORE, it is agreed as follows:

ARTICLE I.

NON-QUALIFIED STOCK OPTION GRANT

1.1           Grant of Option. The Company hereby grants Executive an option
(the “Option”) to purchase, as a whole or in part, on the terms provided herein
and in the Plan the shares (the “Shares”) of Common Stock at an exercise price
per share, as set forth below:

 

Shares:

Exercise Price:

35,156

$1.58

 

Unless earlier terminated, the Option shall expire one day before its 10th
anniversary (the “Final Exercise Date”). It is intended that the Option shall be
a non-qualified stock option.

 

1.2           Vesting Schedule. Subject to the other terms of this Agreement
regarding the exercisability of the Option, the Shares shall vest and become
exercisable, as follows; provided, however, that as of each relevant Vesting
Date, Executive’s employment with the Company has not terminated:

 

% of total Shares Vested

 

Vesting Date

Shares Vesting

on Vesting Date

Total Shares Vested

to Date

33.33%

March 2, 2007

11,717

11,717

8.33%

March 31, 2007

2,929

14,646

8.33%

June 30, 2007

2,929

17,575

8.33%

September 30, 2007

2,929

20,504

8.33%

December 31, 2007

2,929

23,433

8.33%

March 31, 2008

2,929

26,362

8.33%

June 30, 2008

2,929

29,291

8.33%

September 30, 2008

2,929

32,220

8.36%

December 31, 2008

2,937

35,156

 

The right of exercise shall be cumulative so that to the extent the Option is
not exercised in any period to the maximum extent permissible it shall continue
to be exercisable, as a whole or in part, with respect to all Shares for which
it is vested until the earlier of the Final Exercise Date or the termination of
the Option under this Agreement or the Plan.

 

1.3

Exercise of Option.

 

(a)            Form of Exercise. Each election to exercise the Option shall be
in writing, signed by Executive, and received by the Company at its principal
office, accompanied by a copy of this Agreement and by payment in full as
provided below. Executive may purchase less than the number of Shares covered by
the Option, provided that no partial exercise of the Option may be for any
fractional share or for fewer than 100 whole shares of Common Stock. Payment
shall be as follows:

 

 

 

 

(i)

in cash or by check, payable to the order of the Company;

 

(ii)           in the sole discretion of the authorized administrator of the
Plan, (A) delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay
the exercise price or (B) delivery by Executive to the Company of a copy of
irrevocable and unconditional instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the exercise price;

 

(iii)           delivery of shares of Common Stock owned by Executive valued at
fair market value, as determined in the sole discretion of the board of
directors of the Company, which Common Stock was owned by Executive at least six
months prior to such delivery;

 

(iv)           to the extent permitted by the authorized administrator of the
Plan, in its sole discretion, by payment of such other lawful consideration as
the authorized administrator of the Plan may determine; or

 

(v)

any combination of the above permitted forms of payment.

 

A certificate or certificates for the Shares purchased shall be issued by the
Company after the exercise of the Option and payment therefor, including the
provision for any federal and state withholding taxes, and other applicable
employment taxes.

 

(b)           Continuous Relationship with the Company Required. Except as
otherwise provided in Article II, the Option may not be exercised unless
Executive, at the time he exercises the Option, is, and has been at all times
since the Effective Date, an employee of the Company or any parent or subsidiary
of the Company as defined in Section 424(e) or (f) of the Internal Revenue Code
of 1986, as amended (the “Code”).

 

ARTICLE II.

TERMINATION OF EMPLOYMENT

 

2.1

Termination of Employment.

(a)           General. Except as indicated below in (b), if Executive terminates
his employment for any reason, including by resignation, or if the Company
terminates his employment with or without a Breach of Conduct (as defined
below), Executive may retain all Shares underlying the Option that have vested
before the Termination Notice Date (as defined below). However, he will not be
entitled to receive and shall forfeit any interest Shares underlying the Option
that are scheduled to be vested after the Termination Notice Date.

 

The “Termination Notice Date” means the date on which Executive resigns (or if
earlier, the date on which Executive notifies Company that Executive will
resign), or the date on which Company terminates the employment for or without a
Breach of Conduct (or if earlier, the date on which the Company notifies
Executive that employment will be so terminated).

(b)            Special Rules for Options. In the case of termination of
employment by reason of death, disability (as defined under the Executive's
employment agreement), resignation or without Breach of Conduct, the vested
Shares underlying the Option will expire if not exercised within 365 days after
the Termination Notice Date. In the case of termination of employment for Breach
of Conduct, all vested Shares underlying the Option will expire immediately on
the written declaration of the authorized administrator of the Plan.

 

Such declaration shall be communicated in writing to Executive. In addition, the
Company may, in its sole discretion, by written notice, demand that any or all
stock certificates for Shares acquired pursuant to the exercise of the Option,
or any profit realized from the sale or transfer of such Shares, be returned to
the Company within five days of receipt of such notice, and any exercise price
paid by Executive shall be returned to Executive by the Company immediately
thereafter, without interest. The Company shall be entitled to reimbursement of
reasonable attorney fees and expenses incurred in seeking to enforce its rights
under this paragraph.

 

“Breach of Conduct” shall mean activities which constitute a serious breach of
conduct that, only if possible to cure as determined by the authorized
administrator of the Plan in its sole discretion, is not cured within 30 days
after receipt of written notice to Executive, including, but not limited to: (i)
the disclosure or misuse of confidential information, trade secrets or other
intellectual property of the Company or third parties who have

 

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disclosed such information, secrets or intellectual property to the Company or a
company that controls, is controlled by or is under common control with the
Company (collectively, an “Affiliate”), (ii) activities in violation of the
policies of the Company or any Affiliate, including without limitation, the
Company’s insider trading policy; (iii) the violation or breach of any material
provision in any applicable contract or agreement between Executive and the
Company (or an Affiliate), including, for example, a violation or breach which
is grounds for discharge for cause; (iv) engaging in conduct relating to
Executive’s employment for which either criminal or civil penalties have been
sought; (v) engaging in activities which adversely affect or which are contrary
or harmful to the interests of the Company or Affiliate, or (vi) in the event
that Executive and Company have not signed a noncompetition agreement (which
therefore otherwise would govern issues of noncompetition), engaging in
competition with the Company or any Affiliate or soliciting their respective
employees or customers on behalf of some other entity during employment or
within one year following termination of employment with the Company or
Affiliate. The determination of Breach of Conduct shall be determined by the
authorized administrator of the Plan in good faith and in its sole discretion.

 

ARTICLE III.

GENERAL PROVISIONS

 

3.1           Acquisition Events. Upon the occurrence of an Acquisition Event
(as defined below), or the execution by the Company of any agreement with
respect to an Acquisition Event, the authorized administrator of the Plan shall
take any one or more of the following actions with respect to the Option: (i)
provide that the Option shall be assumed, or equivalent equity compensation
shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof); (ii) upon written notice to Executive, provide that any
portion of the Shares underlying the Option that are vested but not exercised
will become converted or exercisable, as the case may be, in full as of a
specified time (the “Acceleration Time”) prior to the Acquisition Event and will
terminate immediately prior to the consummation of such Acquisition Event,
except to the extent exercised by Executive between the Acceleration Time and
the consummation of such Acquisition Event; (iii) in the event of an Acquisition
Event under the terms of which holders of Common Stock will receive upon
consummation thereof a cash payment for each share of Common Stock surrendered
pursuant to such Acquisition Event (the “Acquisition Price”), provide that the
Option shall terminate upon consummation of such Acquisition Event and Executive
shall receive, in exchange therefor, a cash payment equal to the amount (if any)
by which (x) the Acquisition Price multiplied by the number of shares of Common
Stock subject to the Option (whether or not then convertible or exercisable),
exceeds (y) the aggregate exercise price of the Option; and (iv) provide that
the Option (A) shall become exercisable, realizable or vested in full, or shall
be free of all conditions or restrictions, prior to the consummation of the
Acquisition Event, or (B), if applicable, shall be assumed, or equivalent
options shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof).

 

An “Acquisition Event” shall mean: (a) any merger or consolidation which results
in the voting securities of the Company outstanding immediately prior thereto
representing immediately thereafter (either by remaining outstanding or by being
converted into voting securities of the surviving or acquiring entity) less than
50% of the combined voting power of the voting securities of the Company or such
surviving or acquiring entity outstanding immediately after such merger or
consolidation; (b) any sale of all or substantially all of the assets of the
Company; or (c) the complete liquidation of the Company.

 

3.2           Acceleration. The authorized administrator of the Plan may at any
time provide that the Option shall become immediately exercisable in full or in
part, that the Option may become exercisable in full or in part or free of some
or all restrictions or conditions, or otherwise realizable in full or in part,
as the case may be.

 

3.3           Golden Parachute Payment Excise Tax Protection. In the event that
the excise tax imposed by Section 4999 of the Code, (or any successor penalty or
excise tax subsequently imposed by law) applies to any payments or benefits
specifically paid or conferred only under this Agreement (the “Excise Tax”), an
additional amount shall be paid by the Company to the Executive equal to the
amount of such Excise Tax (the “Gross Up Payment”); provided, however in no
event shall the aggregate amount payable by the Company to Executive for any
excise tax imposed by Section 4999 of the Code pursuant to this Agreement and
all other agreements between the Company and Executive exceed $500,000. The
Company and its advisers shall make the determination of the amount of the Gross
Up Payment. To the extent that the amount of such Gross Up Payment exceeds the
amount of Excise Tax actually paid by Executive, Executive shall promptly pay to
the Company such excess amount.

 

 

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ARTICLE IV.

TRANSFERABILITY

4.1           Nontransferability of Agreement and the Option. This Agreement and
the Option may not be sold, assigned, transferred, pledged or otherwise
encumbered by Executive, either voluntarily or by operation of law, except by
will or the laws of descent and distribution. Notwithstanding the foregoing,
Executive’s transfer to a revocable trust that is solely for the benefit of
Executive and Executive’s spouse and/or issue during Executive’s lifetime and
transfer under such trust at Executive’s death to the trust’s intended
beneficiaries shall not be deemed to be prohibited by the foregoing provisions.
If any person other than Executive, Executive’s then current spouse, and
Executive’s issue shall possess a vested interest in such trust during the
lifetime of Executive, such interest shall not be recognized hereunder as giving
such person any right to the benefit of the shares of Common Stock issuable upon
conversion thereof. In such event the Option shall revest in Executive as if
such transfer in trust had not occurred. During the lifetime of Executive, the
Option shall be exercisable only by Executive.

ARTICLE V.

MISCELLANEOUS

5.1           Provisions of the Plan. This Agreement is subject to the
provisions of the Plan, a copy of which Executive hereby acknowledges receiving
with this Agreement.

 

5.2           No Right to Continued Employment. This Agreement shall not confer
upon Executive any right with respect to continuance of employment by the
Company, nor shall it interfere in any way with the right of the Company to
terminate Executive’s employment at any time.

 

5.3           No Right as Stockholder. Executive shall not be entitled to vote
any shares of Common Stock that may be acquired through conversion of the Shares
underlying the Option to Common Stock, shall not receive any dividends
attributed to such shares of Common Stock, and shall have no other rights of a
stockholder with respect to the Option unless and until the Option is duly
exercised by Executive and the Common Stock is issued.

 

5.4           Compliance with Law and Regulations. This Agreement and the
obligation of the Company to issue, sell and deliver shares of Common Stock
hereunder shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or regulatory agency as may
be required. The Company shall not be required to issue or deliver any
certificates for Shares or to remove restrictions from shares of Common Stock
previously delivered until (a) the listing of such Shares on any stock exchange
on which the Shares may then be listed, (b) all conditions have been met or
removed to the satisfaction of the Company, (c) in the opinion of the Company’s
counsel, all other legal matters in connection with the issuance and delivery of
such shares have been satisfied, including any applicable securities laws and
any applicable stock exchange or stock market rules and regulations, (d)
Executive has executed and delivered to the Company such representations or
agreements as the Company may consider appropriate to satisfy the requirements
of any applicable laws, rules or regulations and (e) the completion of any
registration or qualification of such Shares under any federal or state law, or
any rule or regulation of any government body which the Company shall, in its
sole discretion, determine to be necessary or advisable. Moreover, the Option
may not be exercised or converted to Common Stock if its exercise or conversion,
or the receipt of Shares pursuant thereto, would be contrary to applicable law.

 

5.5           Adjustment to Common Stock. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, the number of Shares underlying the Option shall be
appropriately adjusted by Company to the extent the authorized administrator of
the Plan shall determine, in good faith, that such an adjustment is necessary
and appropriate.

 

5.6           Withholding. No shares of Common Stock will be issued pursuant to
the exercise of the Option unless and until Executive pays to the Company, or
makes provision satisfactory to the Company for payment of, any federal, state
or local withholding taxes required by law to be withheld in respect of the
Option. Executive may satisfy such tax obligations by delivering to Company cash
in the form of wire transfer or check and Company may, to the extent permitted
by law, deduct any such tax obligations from any payment of any kind otherwise
due to Executive.

 

5.7           Common Stock Reserved. Company shall at all times during the term
of this Agreement reserve and keep available such number of shares of Common
Stock as will be sufficient to satisfy the requirements of this Agreement.

 

 

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5.8           Notices. Any notice hereunder to the Company shall be addressed to
Beacon Power Corporation, Attn: Compensation Committee, 234 Ballardvale Street,
Wilmington, MA 01887, and any notice hereunder to Executive shall be sent to the
address reflected on the payroll records of the Company, subject to the right of
either party to designate at any time hereafter in writing some other address.

 

5.9           Delaware Law to Govern. This Agreement shall be construed and
administered in accordance with and governed by the laws of the State of
Delaware (without giving effect to any conflict or choice of laws provisions
thereof that would cause the application of the domestic substantive laws of any
other jurisdiction).

 

5.10         Certain Special Rules. To the extent that this Agreement and the
grant of the Option hereunder become subject to the provisions of Section 409A
of the Code, the Company and Executive agree that the Option may be amended,
modified, rescinded or substituted by the Company with an award of comparable
economic value as required to maintain compliance with the provisions of Section
409A of the Code.

 

5.11         Amendment of Agreement. Company may amend, modify or terminate this
Agreement, provided that Executive’s consent to such action shall be required
unless Company determines that the action, taking into account any related
action, would not materially and adversely affect Executive.

 

5.12         Successors and Assigns; No Third Party Beneficiaries. Except as
otherwise expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto. There are no third party beneficiaries of
this Agreement.

 

5.13         Entire Agreement. This Agreement and the Plan constitute the full
and entire understanding and agreement of the parties with regard to the Option
and supersede in their entirety all other prior agreements, whether oral or
written, with respect thereto.

 

5.14

Severability; Titles and Subtitles; Gender; Singular and Plural; Counterparts;
Facsimile.

(a)            In case any provision of this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.

(b)            The titles of the sections and subsections of this Agreement are
for convenience of reference only and are not to be considered in construing
this Agreement.

(c)            The use of any gender in this Agreement shall be deemed to
include the other genders, and the use of the singular in this Agreement shall
be deemed to include the plural (and vice versa), wherever appropriate.

(d)            This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together constitute one
instrument.

(e)            Counterparts of this Agreement (or applicable signature pages
hereof) that are manually signed and delivered by facsimile transmission shall
be deemed to constitute signed original counterparts hereof and shall bind the
parties signing and delivering in such manner.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the Effective Date.

EXECUTIVE:

 

By:  /s/ Matthew L. Lazarewicz  

Signature

 

Name: Matthew L. Lazarewicz

 

Address:

 

BEACON POWER CORPORATION

 

By:  /s/ Jack P. Smith  

Signature

 

Name: Jack P. Smith

 

Title: Chairman, Compensation Committee

 

 

 

 

 

 

 

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