Exhibit 10.32


 


A123 SYSTEMS, INC.


 


Executive
Retention Agreement


 


THIS EXECUTIVE RETENTION AGREEMENT by and between A123 Systems, Inc.,
a Delaware corporation (the “Company”), and
                                  
(the “Executive”) is made as of
                    ,
2009 (the “Effective Date”).


 


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


 

















 


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, 2012; provided,
however, that commencing on January 1, 2013 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 accelerated in part so that the
option shall become exercisable for an additional number of shares equal to 50%
of the shares of Common Stock subject to the option which are unvested
immediately prior to such Change in Control; the remaining 50% of such number
of shares shall continue to become vested in accordance with the original
vesting schedule set forth in the applicable option agreement, except that the
actual number of shares vesting on each subsequent vesting date shall be
reduced by 50%; and (b) the number of unvested shares with respect to each
restricted stock award held by the Executive immediately following the Change
in Control shall be reduced by 50% of the number of unvested shares; the
remaining unvested shares shall continue to vest in accordance with the
original schedule set forth in the applicable restricted stock agreement,
except that the number of shares of Common Stock vesting on each subsequent
vesting date shall be reduced by the same percentage that the number of
unvested shares was reduced immediately following the Change in Control.


 


(b)                                 Termination Without Cause or For Good
Reason.  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, provided that the Executive Release (as
defined in Section 4.5) becomes effective, (a) each
outstanding option to purchase shares of Common Stock of the Company held by
the Executive shall become immediately exercisable in full; and (b) each restricted
stock award held by the Executive immediately following the Change in Control
shall 


 


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be deemed to be fully
vested and will no longer be subject to a right of repurchase by the Company.


 


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 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 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 pro rata portion of the bonus payment, if any,
paid (or earned, if not yet paid) to the Executive for the most recent fiscal
year ended prior to the Date of Termination, with such pro rata amount equal to
the product of the amount of such prior bonus payment multiplied by a fraction,
(1) the numerator of which is the number of days in the current fiscal
year prior to the Date of Termination and the (2) denominator of which is
365.


 


(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, 


 


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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 six (6) 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 six (6) 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 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 


 


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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.


 


(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 


 


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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 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.


 


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(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 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.


 


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(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
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.


 


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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 Watertown, 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.


 


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.


 


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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 outstanding option agreements or letter
agreements governing outstanding options.


 


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 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 Wilmer Cutler Pickering Hale and Dorr 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.


 


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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