Exhibit 10.35

 

A123 SYSTEMS, INC.

 

Amended and Restated Executive Retention Agreement

 

THIS AMENDED AND RESTATED EXECUTIVE RETENTION AGREEMENT by and between A123
Systems, Inc. a Delaware corporation (the “Company”), and
                                   (the “Executive”) is made as of
                    , 2012 (the “Effective Date”).  This Agreement amends and
restates the Executive Retention Agreement between the Company and the Executive
dated                                    , 20    , as amended (the “Prior
Agreement”).

 

WHEREAS, the Company recognizes that the possibility of a change in control of
the Company exists and that such possibility, and the uncertainty and questions
which it may raise among key personnel, may result in the departure or
distraction of key personnel to the detriment of the Company and its
stockholders; and

 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that
appropriate steps should be taken to reinforce and encourage the continued
employment and dedication of the Company’s key personnel without distraction
from the possibility of a change in control of the Company and related events
and circumstances.

 

NOW, THEREFORE, as an inducement for and in consideration of the Executive
remaining in its employ, the Company agrees that the Executive shall receive the
severance benefits set forth in this Agreement in the event the Executive’s
employment with the Company is terminated under the circumstances described
below.

 

1.              Key Definitions.

 

As used herein, the following terms shall have the following respective
meanings:

 

1.1                               “Change in Control” means the sale of all or
substantially all of the capital stock (other than the sale of capital stock to
one or more venture capitalists or other institutional investors pursuant to an
equity financing (including a debt financing that is convertible into equity) of
the Company approved by a majority of the Board), assets or business of the
Company, by merger, consolidation, sale of assets or otherwise (other than a
transaction in which all or substantially all of the individuals and entities
who were beneficial owners of the Common Stock immediately prior to such
transaction beneficially own, directly or indirectly, more than 50% of the
outstanding securities entitled to vote generally in the election of directors
of the resulting, surviving or acquiring corporation in such transaction).

 

1.2                               “Change in Control Date” means the first date
during the Term (as defined in Section 2) on which a Change in Control occurs. 
Anything in this Agreement to the contrary notwithstanding, if (a) a Change in
Control occurs, (b) the Executive’s employment with the Company is terminated
prior to the date on which the Change in Control occurs, and (c) it is
reasonably demonstrated by the Executive that such termination of employment
(i) was at the request of a third party who has taken steps reasonably
calculated to effect a Change in Control or (ii) otherwise arose in connection
with or in anticipation of a Change in Control, then for all

 

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purposes of this Agreement the “Change in Control Date” shall mean the date
immediately prior to the date of such termination of employment.

 

1.3                               “Cause” means:

 

(a)                                 A good faith finding by a majority of the
Board (excluding the vote of the Executive, if then a member of the Board) that
(1) the Executive has failed to perform his or her reasonably assigned material
duties for the Company; (2) the Executive has engaged in gross negligence or
willful misconduct, which has or is expected to have a material detrimental
effect on the Company, (3) the Executive has engaged in fraud, embezzlement or
other material dishonesty, (4) the Executive has engaged in any conduct which
would constitute grounds for termination for violation of the Company’s policies
in effect at that time; or (5) the Executive has breached any material provision
of any nondisclosure, invention assignment, non-competition or other similar
agreement between the Executive and the Company and, if amenable to cure, has
not cured such breach after reasonable notice from the Company; or

 

(b)                                 The conviction by the Executive of, or the
entry of a pleading of guilty or nolo contendere by the Executive to, any crime
involving moral turpitude or any felony.

 

1.4                               “Good Reason” means the occurrence, without
the Executive’s written consent, of any of the events or circumstances set forth
in clauses (a) through (d) below.

 

(a)                                 the assignment to the Executive of duties
that involve materially less authority and responsibility for the Executive and
are materially inconsistent with the Executive’s position, authority or
responsibilities in effect immediately prior to the earliest to occur of (i) the
Change in Control Date, (ii) the date of the execution by the Company of the
initial written agreement or instrument providing for the Change in Control or
(iii) the date of the adoption by the Board of a resolution providing for the
Change in Control (with the earliest to occur of such dates referred to herein
as the “Measurement Date”);

 

(b)                                 relocation of the Executive’s primary place
of business to a location that results in an increase in the Executive’s daily
one way commute of at least thirty (30) miles; or

 

(c)                                  reduction of the Executive’s annual base
salary without the Executive’s prior consent (other than in connection with, and
substantially proportionate to, reductions by the Company of the annual base
salary of more than 75% of its employees); or

 

(d)                                 the failure of the Company to obtain the
agreement from any successor to the Company to assume and agree to perform this
Agreement, as required by Section 5.1.

 

Notwithstanding the occurrence of any of the foregoing events or circumstances,
such occurrence shall not be deemed to constitute Good Reason unless (x) the
Executive gives the Company a Notice of Termination (as defined in
Section 3.2(a)) no more than 90 days after the initial existence of such event
or circumstance and (y) such event or circumstance has not been fully corrected
and the Executive has not been reasonably compensated for any losses or

 

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damages resulting therefrom within 30 days of the Company’s receipt of the
Notice of Termination.

 

1.5                               “Disability” means the Executive’s absence
from the full-time performance of the Executive’s duties with the Company for
180 consecutive calendar days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive’s legal representative.

 

2.              Term of Agreement.  This Agreement, and all rights and
obligations of the parties hereunder, shall take effect upon the Effective Date
and shall expire upon the first to occur of (a) the expiration of the Term (as
defined below) if a Change in Control has not occurred during the Term, (b) the
termination of the Executive’s employment with the Company by the Executive
prior to the Change in Control Date, (c) the date 24 months after the Change in
Control Date, if the Executive is still employed by the Company as of such later
date, or (d) the fulfillment by the Company of all of its obligations under
Section 4 if the Executive’s employment with the Company is terminated by the
Company without Cause or terminates within 24 months following the Change in
Control Date.  “Term” shall mean the period commencing as of the Effective Date
and continuing in effect through December 31, 2015; provided, however, that
commencing on January 1, 2016 and each January 1 thereafter, the Term shall be
automatically extended for one additional year unless, not later than 90 days
prior to the scheduled expiration of the Term (or any extension thereof), the
Company shall have given the Executive written notice that the Term will not be
extended.

 

3.              Employment Status; Termination.

 

3.1                               Not an Employment Contract.  The Executive
acknowledges that this Agreement does not constitute a contract of employment or
impose on the Company any obligation to retain the Executive as an employee and
that this Agreement does not prevent the Executive from terminating employment
at any time.  If the Executive’s employment with the Company terminates for any
reason and subsequently a Change in Control shall occur, the Executive shall not
be entitled to any benefits hereunder except as otherwise provided pursuant to
Section 4.2(b) or 4.2(c), as applicable.

 

3.2                               Termination of Employment Following Change in
Control.

 

(a)                                 If the Change in Control Date occurs during
the Term, any termination of the Executive’s employment by the Company or by the
Executive within 24 months following the Change in Control Date (other than due
to the death of the Executive) shall be communicated by a written notice to the
other party hereto (the “Notice of Termination”), given in accordance with
Section 6.  Any Notice of Termination shall: (i) indicate the specific
termination provision (if any) of this Agreement relied upon by the party giving
such notice, (ii) to the extent applicable, set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated and (iii) specify the
Date of Termination (as defined below).  The effective date of an employment
termination (the “Date of Termination”) shall be the close of business on the
date specified in the Notice of Termination (which date may not be fewer than 10
days or more than

 

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60 days after the date of delivery of such Notice of Termination), in the case
of a termination other than one due to the Executive’s death, or the date of the
Executive’s death, as the case may be.  In the event the Company fails to
satisfy the requirements of Section 3.2(a) regarding a Notice of Termination,
the purported termination of the Executive’s employment pursuant to such Notice
of Termination shall not be effective for purposes of this Agreement.

 

(b)                                 The failure by the Executive or the Company
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting any such fact or circumstance in
enforcing the Executive’s or the Company’s rights hereunder.

 

(c)                                  Any Notice of Termination for Cause given
by the Company must be given within 90 days of the occurrence of the event(s) or
circumstance(s) which constitute(s) Cause.

 

(d)                                 Any Notice of Termination for Good Reason
given by the Executive must be given in accordance with the provisions set forth
in Section 1.4.

 

4.              Benefits to Executive.

 

4.1                               Stock Acceleration in Connection with Change
in Control.

 

(a)                                 Automatic Acceleration.  If the Change in
Control Date occurs during the Term, then, effective upon the Change in Control
Date, (a) the vesting schedule of each outstanding option held by the Executive
to purchase shares of Common Stock of the Company held by the Executive shall be
fully accelerated so that the option shall become exercisable for an additional
number of shares equal to 100% of the shares of Common Stock subject to the
option which are unvested immediately prior to such Change in Control; and
(b) the vesting schedule of each outstanding restricted stock award held by the
Executive shall be accelerated so that 100% of the number of unvested shares
subject to such restricted stock award shall vest in full..

 

4.2                               Compensation.  If the Executive’s employment
with the Company is terminated under the circumstances described below, the
Executive shall be entitled to the following benefits, provided that the
Executive Release becomes effective:

 

(a)                                 Termination Without Cause or for Good Reason
After a Change in Control.  If the Executive’s employment with the Company is
terminated by the Company (other than for Cause, Disability or death) or by the
Executive for Good Reason within 24 months following the Change in Control Date,
then the Executive shall be entitled to the following benefits, commencing in
accordance with the terms set forth in Section 4.6:

 

(i)                                     a payment of twenty-four (24) months
base salary, to be paid in accordance with the Company’s customary payroll
practices as are established or modified from time-to-time.

 

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(ii)                                  for twenty-four (24 ) months after the
Date of Termination, or such longer period as may be provided by the terms of
the appropriate plan, program, practice or policy, the Company shall continue to
provide benefits to the Executive and the Executive’s family at least equal to
those which would have been provided to them if the Executive’s employment had
not been terminated, in accordance with the applicable benefit plans in effect
on the Measurement Date; provided, however, that (1) if the Executive becomes
reemployed with another employer and is eligible to receive a particular type of
benefits (e.g., health insurance benefits) from such employer on terms at least
as favorable to the Executive and his/her family as those being provided by the
Company, then the Company shall no longer be required to provide those
particular benefits to the Executive and his/her family and (2) to the extent
such payments are taxable and/or extend beyond the period of time during which
the Executive would be entitled (or would, but for this clause (2)) to COBRA
continuation coverage under a group health plan of the Company, such payments
shall be made on a monthly basis; and

 

(iii)                               payment, to be paid after the Date of
Termination in a lump sum on the first payroll period following the date the
Executive Release becomes effective, equal to the total bonus payment that would
be due to the Executive under the Company’s Executive Bonus Plan (the “Plan”)
for the then-current fiscal year calculated at 100% of the applicable Plan
targets.

 

(b)                                 Termination for Cause.  If the Company
terminates the Executive’s employment with the Company for Cause within 24
months following the Change in Control Date, then the Company shall pay the
Executive, in a lump sum in cash within 30 days after the Date of Termination,
the Executive’s earned and unpaid salary through the Date of Termination; and

 

(c)                                  Termination without Cause prior to a Change
in Control.  If the Executive’s employment with the Company is terminated by the
Company (other than for Cause, Disability or death) prior to a Change in
Control, then the Executive shall be entitled to the following benefits,
commencing in accordance with the terms set forth in Section 4.6:

 

(i)                                     a payment of twelve (12) months base
salary, to be paid in accordance with the Company’s customary payroll practices
as are established or modified from time to time.

 

(ii)                                  for twelve (12) months after the Date of
Termination, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall continue to
provide benefits to the Executive and the Executive’s family at least equal to
those which would have been provided to them if the Executive’s employment had
not been terminated, in accordance with the applicable benefit plans in effect
on the date of employment termination; provided, however, that (1) if the
Executive becomes reemployed with another employer and is eligible to receive a
particular type of benefits (e.g., health insurance benefits) from such employer
on terms at least as favorable to the Executive and his/her family as those
being provided by the Company, then the Company shall no longer be required to
provide those particular benefits to the Executive and his/her family and (2) to
the extent such payments are taxable and/or extend beyond the period of time
during which the

 

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Executive would be entitled (or would, but for this clause (2)) to COBRA
continuation coverage under a group health plan of the Company, such payments
shall be made on a monthly basis.

 

4.3                               Taxes.

 

(a)                             Notwithstanding any other provision of this
Agreement, except as set forth in Section 4.3(b), in the event that the Company
undergoes a “Change in Ownership or Control” (as defined below), the Company
shall not be obligated to provide to the Executive a portion of any “Contingent
Compensation Payments” (as defined below) that the Executive would otherwise be
entitled to receive to the extent necessary to eliminate any “excess parachute
payments” (as defined in Section 280G(b)(1) of the Internal Revenue Code of
1986, as amended (the “Code”)) for the Executive.  For purposes of this
Section 4.3, the Contingent Compensation Payments so eliminated shall be
referred to as the “Eliminated Payments” and the aggregate amount (determined in
accordance with Treasury Regulation Section 1.280G-1, Q/A-30 or any successor
provision) of the Contingent Compensation Payments so eliminated shall be
referred to as the “Eliminated Amount.”

 

(b)                                 Notwithstanding the provisions of Section
4.3(a), no such reduction in Contingent Compensation Payments shall be made if
(i) the Eliminated Amount (computed without regard to this sentence) exceeds
(ii) 110% of the aggregate present value (determined in accordance with Treasury
Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of
the amount of any additional taxes that would be incurred by the Executive if
the Eliminated Payments (determined without regard to this sentence) were paid
to him (including, state and federal income taxes on the Eliminated Payments,
the excise tax imposed by Section 4999 of the Code payable with respect to all
of the Contingent Compensation Payments in excess of the Executive’s “base
amount” (as defined in Section 280G(b)(3) of the Code), and any withholding
taxes).  The override of such reduction in Contingent Compensation Payments
pursuant to this Section 4.3(b) shall be referred to as a “Section 4.3(b)
Override.”  For purpose of this paragraph, if any federal or state income taxes
would be attributable to the receipt of any Eliminated Payment, the amount of
such taxes shall be computed by multiplying the amount of the Eliminated Payment
by the maximum combined federal and state income tax rate provided by law.

 

(c)                                  For purposes of this Section 4.3 the
following terms shall have the following respective meanings:

 

(i)                                     “Change in Ownership or Control” shall
mean a change in the ownership or effective control of the Company or in the
ownership of a substantial portion of the assets of the Company determined in
accordance with Section 280G(b)(2) of the Code.

 

(ii)                                  “Contingent Compensation Payment” shall
mean any payment (or benefit) in the nature of compensation that is made or made
available (under this Agreement or otherwise) to a “disqualified individual” (as
defined in Section 280G(c) of the Code) and that is contingent (within the
meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or
Control of the Company.

 

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(d)           Any payments or other benefits otherwise due to the Executive
following a Change in Ownership or Control that could reasonably be
characterized (as determined by the Company) as Contingent Compensation Payments
(the “Potential Payments”) shall not be made until the dates provided for in
this Section 4.3(d).  Within 30 days after each date on which the Executive
first becomes entitled to receive (whether or not then due) a Contingent
Compensation Payment relating to such Change in Ownership or Control, the
Company shall determine and notify the Executive (with reasonable detail
regarding the basis for its determinations) (i) which Potential Payments
constitute Contingent Compensation Payments, (ii) the Eliminated Amount and
(iii) whether the Section 4.3(b) Override is applicable.  Within 30 days after
delivery of such notice to the Executive, the Executive shall deliver a response
to the Company (the “Executive Response”) stating either (A) that he agrees with
the Company’s determination pursuant to the preceding sentence, in which case he
shall indicate, if applicable, which Contingent Compensation Payments, or
portions thereof (the aggregate amount of which, determined in accordance with
Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision, shall
be equal to the Eliminated Amount), shall be treated as Eliminated Payments or
(B) that he disagrees with such determination, in which case he shall set forth
(i) which Potential Payments should be characterized as Contingent Compensation
Payments, (ii) the Eliminated Amount, (iii) whether the Section 4.3(b) Override
is applicable, and (iv) which (if any) Contingent Compensation Payments, or
portions thereof (the aggregate amount of which, determined in accordance with
Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision, shall
be equal to the Eliminated Amount, if any), shall be treated as Eliminated
Payments.  In the event that the Executive fails to deliver an Executive
Response on or before the required date, the Company’s initial determination
shall be final.  If and to the extent that any Contingent Compensation Payments
are required to be treated as Eliminated Payments pursuant to this Section 4.3,
then the payments shall be reduced or eliminated, as determined by the Company,
in the following order: (i) any cash payments, (ii) any taxable benefits,
(iii) any nontaxable benefits, and (iv) any vesting of equity awards in each
case in reverse order beginning with payments or benefits that are to be paid
the farthest in time from the date that triggers the applicability of the excise
tax, to the extent necessary to maximize the Eliminated Payments.  If the
Executive states in the Executive Response that he agrees with the Company’s
determination, the Company shall make the Potential Payments to the Executive
within three business days following delivery to the Company of the Executive
Response (except for any Potential Payments which are not due to be made until
after such date, which Potential Payments shall be made on the date on which
they are due).  If the Executive states in the Executive Response that he
disagrees with the Company’s determination, then, for a period of 60 days
following delivery of the Executive Response, the Executive and the Company
shall use good faith efforts to resolve such dispute.  If such dispute is not
resolved within such 60-day period, such dispute shall be settled exclusively by
arbitration in Boston, Massachusetts, in accordance with the rules of the
American Arbitration Association then in effect.  Judgment may be entered on the
arbitrator’s award in any court having jurisdiction.  The Company shall, within
three business days following delivery to the Company of the Executive Response,
make to the Executive those Potential Payments as to which there is no dispute
between the Company and the Executive regarding whether they should be made
(except for any such Potential Payments which are not due to be made until after
such date, which Potential Payments shall be made on the date on which they are
due).  The balance of the Potential Payments shall be made within three business
days following the resolution of such dispute.  Subject to the limitations
contained

 

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in Sections 4.3(a) and (b) hereof, the amount of any payments to be made to the
Executive following the resolution of such dispute shall be increased by amount
of the accrued interest thereon computed at the prime rate announced from time
to time by The Wall Street Journal, compounded monthly from the date that such
payments originally were due.

 

(e)                                  The provisions of this Section 4.3 are
intended to apply to any and all payments or benefits available to the Executive
under this Agreement or any other agreement or plan of the Company under which
the Executive receives Contingent Compensation Payments.

 

4.4                                 Payments subject to Section 409A.

 

(a)                                  Subject to this Section 4.4, any severance
payments or benefits under this Agreement shall begin only upon the date of the
Executive’s “separation from service” (determined as set forth below) which
occurs on or after the date of the Executive’s termination of employment.  The
following rules shall apply with respect to distribution of the payments and
benefits, if any, to be provided to the Executive under this Agreement:

 

(i)                                     It is intended that each installment of
the severance payments and benefits provided under this Agreement shall be
treated as a separate “payment” for purposes of Section 409A of the Code and the
guidance issued thereunder (“Section 409A”).  Neither the Company nor the
Executive shall have the right to accelerate or defer the delivery of any such
payments or benefits except to the extent specifically permitted or required by
Section 409A.

 

(ii)                                  If, as of the date of the Executive’s
“separation from service” from the Company, the Executive is not a “specified
employee” (within the meaning of Section 409A), then each installment of the
severance payments and benefits shall be made on the dates and terms set forth
in this Agreement.

 

(iii)                               If, as of the date of the Executive’s
“separation from service” from the Company, the Executive is a “specified
employee” (within the meaning of Section 409A), then:

 

(1)                                  Each installment of the severance payments
and benefits due under this Agreement that, in accordance with the dates and
terms set forth herein, will in all circumstances, regardless of when the
separation from service occurs, be paid within the short-term deferral period
(as defined in Section 409A) shall be treated as a short-term deferral within
the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent
permissible under Section 409A; and

 

(2)                                  Each installment of the severance payments
and benefits due under this Agreement that is not described in
Section 4.4(a)(iii)(1) above and that would, absent this subsection, be paid
within the six-month period following the Executive’s “separation from service”
from the Company shall not be paid until the date that is six months and one day
after such separation from service (or, if earlier, the Executive’s death), with
any such installments that are required to be delayed being accumulated during
the six-month period

 

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and paid in a lump sum on the date that is six months and one day following the
Executive’s separation from service and any subsequent installments, if any,
being paid in accordance with the dates and terms set forth herein; provided,
however, that the preceding provisions of this sentence shall not apply to any
installment of severance payments and benefits if and to the maximum extent that
such installment is deemed to be paid under a separation pay plan that does not
provide for a deferral of compensation by reason of the application of Treasury
Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary
separation from service).  Any installments that qualify for the exception under
Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the
last day of the second taxable year following the taxable year in which the
separation from service occurs.

 

(b)                                 The determination of whether and when the
Executive’s separation from service from the Company has occurred shall be made
in a manner consistent with, and based on the presumptions set forth in,
Treasury Regulation Section 1.409A-1(h).  Solely for purposes of this
Section 4.4(b), “Company” shall include all persons with whom the Company would
be considered a single employer as determined under Treasury Regulation
Section 1.409A.1(h)(3).

 

(c)                                  All reimbursements and in-kind benefits
provided under this Agreement shall be made or provided in accordance with the
requirements of Section 409A to the extent that such reimbursements or in-kind
benefits are subject to Section 409A, including, where applicable, the
requirements that (i) any reimbursement is for expenses incurred during the
Executive’s lifetime (or during a shorter period of time specified in this
Agreement), (ii) the amount of expenses eligible for reimbursement during a
calendar year may not affect the expenses eligible for reimbursement in any
other calendar year, (iii) the reimbursement of an eligible expense will be made
on or before the last day of the calendar year following the year in which the
expense is incurred and (iv) the right to reimbursement is not subject to set
off or liquidation or exchange for any other benefit.

 

(d)                                 Notwithstanding anything herein to the
contrary, the Company shall have no liability to the Executive or to any other
person if the payments and benefits provided in this Agreement that are intended
to be exempt from or compliant with Section 409A are not so exempt or compliant.

 

4.5                                 Outplacement Assistance. In the event the
Executive is terminated by the Company (other than for Cause, Disability or
death), or in the event the Executive terminates employment for Good Reason
within 24 months following the Change in Control Date, the Company shall provide
outplacement services through one or more outside firms of the Executive’s
choosing up to an aggregate of $12,000, with such services to extend until the
earlier of (i) six months following the termination of Executive’s employment or
(ii) the date the Executive secures full time employment.

 

4.6                                 Release.  The obligation of the Company to
make the payments and provide the benefits to the Executive under Sections
4.2(a) and 4.2(c) is conditioned upon the Executive signing a release of claims,
in a customary and reasonable form requested by the Company (the “Executive
Release”), and upon the Executive Release becoming effective in accordance with
its terms, within sixty (60) days following the Date of Termination.  The

 

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Company shall commence the payments and benefits under Sections 4.2(a) and
4.2(c) on the first payroll period following the date the Executive Release
becomes effective; provided, however, that if the 60th day following the Date of
Termination falls in the calendar year following the year of the Executive’s
termination of employment, the payment will be made no earlier than the first
payroll period of such later calendar year; and provided further that the
payment of any amounts pursuant to Sections 4.2(a) and 4.2(c) shall be subject
to the terms and conditions set forth in Section 4.4.

 

5.               Successors.

 

5.1                                 Successor to Company.  The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company expressly to assume and agree to perform this Agreement to
the same extent that the Company would be required to perform it if no such
succession had taken place.  Failure of the Company to obtain an assumption of
this Agreement at or prior to the effectiveness of any succession shall be a
breach of this Agreement and shall constitute Good Reason if the Executive
elects to terminate employment, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.  As used in this Agreement, “Company” shall mean
the Company as defined above and any successor to its business or assets as
aforesaid which assumes and agrees to perform this Agreement, by operation of
law or otherwise.

 

5.2                                 Successor to Executive.  This Agreement
shall inure to the benefit of and be enforceable by the Executive’s personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.  If the Executive should die while any
amount would still be payable to the Executive or his/her family hereunder if
the Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
executors, personal representatives or administrators of the Executive’s estate.

 

6.               Notice.  All notices, instructions and other communications
given hereunder or in connection herewith shall be in writing.  Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable
nationwide overnight courier service, in each case addressed to the Company, at
Waltham, Massachusetts, and to the Executive at the Executive’s address
indicated on the signature page of this Agreement (or to such other address as
either the Company or the Executive may have furnished to the other in writing
in accordance herewith).  Any such notice, instruction or communication shall be
deemed to have been delivered five business days after it is sent by registered
or certified mail, return receipt requested, postage prepaid, or one business
day after it is sent via a reputable nationwide overnight courier service.
Either party may give any notice, instruction or other communication hereunder
using any other means, but no such notice, instruction or other communication
shall be deemed to have been duly delivered unless and until it actually is
received by the party for whom it is intended.

 

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7.               Miscellaneous.

 

7.1                                 Employment by Subsidiary.  For purposes of
this Agreement, the Executive’s employment with the Company shall not be deemed
to have terminated solely as a result of the Executive continuing to be employed
by a wholly-owned subsidiary of the Company.

 

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

 

7.3                                 Injunctive Relief.  The Company and the
Executive agree that any breach of this Agreement by the Company is likely to
cause the Executive substantial and irrevocable damage and therefore, in the
event of any such breach, in addition to such other remedies which may be
available, the Executive shall have the right to specific performance and
injunctive relief.

 

7.4                                 Governing Law.  The validity,
interpretation, construction and performance of this Agreement shall be governed
by the internal laws of the Commonwealth of Massachusetts, without regard to
conflicts of law principles.

 

7.5                                 Waiver of Right to Jury Trial.  Both the
Company and the Executive expressly waive any right that any party either has or
may have to a jury trial of any dispute arising out of or in any way related to
the matters covered by this Agreement.

 

7.6                                 Waivers.  No waiver by the Executive at any
time of any breach of, or compliance with, any provision of this Agreement to be
performed by the Company shall be deemed a waiver of that or any other provision
at any subsequent time.

 

7.7                                 Counterparts.  This Agreement may be
executed in counterparts, each of which shall be deemed to be an original but
both of which together shall constitute one and the same instrument.

 

7.8                                 Tax Withholding.  Any payments provided for
hereunder shall be paid net of any applicable tax withholding required under
federal, state or local law.

 

7.9                                 Entire Agreement.  This Agreement sets forth
the entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto in
respect of the subject matter contained herein, including without limitation the
Prior Agreement and any outstanding option agreements or letter agreements
governing outstanding options.  The parties hereby agree that as of the date
hereof, the Prior Agreement is of no further force or effect and the Company
shall have no obligations to the Executive under such Prior Agreement.

 

7.10                           Amendments.  This Agreement may be amended or
modified only by a written instrument executed by both the Company and the
Executive.

 

7.11                           Executive’s Acknowledgements.  The Executive
acknowledges that he/she:  (a) has read this Agreement; (b) has been represented
in the preparation, negotiation, and

 

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execution of this Agreement by legal counsel of the Executive’s own choice or
has voluntarily declined to seek such counsel; (c) understands the terms and
consequences of this Agreement; and (d) understands that the law firm of Latham
and Watkins LLP is acting as counsel to the Company in connection with the
transactions contemplated by this Agreement, and is not acting as counsel for
the Executive.

 

7.12                           Executive’s Acknowledgment and Reaffirmation of
Non-Disclosure, Non-Competition and Non-Solicitation Obligations.  In
consideration of this Agreement and certain other consideration received by the
Executive from the Company, the Executive hereby acknowledges and reaffirms his
continuing obligations under the Invention, Non-Disclosure, Non-Competition and
Non-Solicitation Agreement(s) previously executed for the benefit of the Company
as a condition of the Executive’s commencing employment with the Company, a copy
of which is attached hereto, and which remains in full force and effect.  The
Employee further acknowledges and reaffirms his obligation to keep confidential
all non-public information concerning the Company which he acquired during the
course of his employment with the Company.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first set forth above.

 

 

A123 SYSTEMS, INC.

 

 

 

By:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

[NAME OF EXECUTIVE]

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

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