Document:

EMPLOYMENT
      AGREEMENT

     

    This
      Employment
      Agreement (the “Agreement”) is entered into as of the 30th
      day of
      June, 2008, by and between, interCLICK, Inc., a company organized under the
      laws
      of the State of Delaware (the “Company”), and David
      Garrity (the
      “Executive”). 

     

    In
      consideration of the mutual covenants contained herein and other good and
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the Company and Executive, intending to be legally bound, hereby
      agree as follows: 

     

    1. Employment
      and Duties.
      The
      Company hereby agrees to employ Executive as its Chief Financial Officer (the
      “CFO”), and Executive hereby accepts such employment, on the terms and
      conditions set forth herein. During the Employment Period (as defined below),
      Executive shall serve as CFO and shall report to the Board of Directors of
      the
      Company (the “Board”). Executive shall have those powers and duties customarily
      associated with the position of CFO of entities comparable to the Company and
      such other powers and duties as may be prescribed by the Board. Executive’s
      primary commitment shall be to the performance of his duties for the Company,
      however, Executive is not precluded from participating in activities and
      functions separate and apart from, and which are not inconsistent with, his
      function as CFO of the Company.

     

    2. Term.
      Executive’s employment by the Company shall commence as of the date of this
      Agreement and shall continue until June 30, 2010 unless such employment is
      terminated in accordance with Section 4 below (the “Employment
      Period”).

     

    3. Compensation,
      Benefits and Equity Awards.

     

    (a) Base
      Salary.
      During
      the Employment Period, Executive shall receive an annual base salary of
      $200,000. On an annual basis, the Board will review Executive’s performance and
      determine, in its sole discretion, whether an increase to Executive’s base
      salary is appropriate. Executive’s base salary shall be paid in accordance with
      the Company’s regular payroll practices, including any and all usual and
      customary withholdings. 

     

    (b) Bonus.
      In
      addition to a base salary, Executive shall be eligible to receive an annual
      bonus (pro-rated for partial calendar years during the Employment Period) upon
      the achievement of pre-established performance goals tied to Company revenues
      and earnings, as to be determined by the Board (the “Bonus”). Depending upon
      achievement of the performance goals established by the Board, Executive’s Bonus
      for each calendar year during the Employment Period shall be 50% of Executive’s
      base salary earned during such year. The Bonus is to be paid 50% in cash and
      50%
      in Company stock. Any Bonus earned during a calendar year shall be paid at
      such
      time as the Company customarily pays annual bonuses. 

     

    (c) Expenses.
      The
      Company shall reimburse Executive for all reasonable business expenses upon
      the
      presentation of itemized statements of such expenses in accordance with Company
      policies and procedures as may be in effect from time to time, provided however,
      that Executive shall be reimbursed no later than thirty (30) days after
      presentation of any reasonable expense to the Company. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) Vacation.
      During
      the Employment Period, Executive shall be entitled to at least three (3) weeks
      of paid vacation per calendar year to be used and accrued in accordance with
      the
      Company’s policies as may be in effect from time to time. In addition to
      vacation, Executive shall be entitled to the number of sick days, personal
      days
      and national holidays per year as to which other Executives of the Company
      may
      be entitled.

     

    (e) Other
      Benefit Plans.
      During
      the Employment Period, Executive shall be entitled to participate in such
      employee benefit plans and insurance programs offered by the Company, or which
      may be in effect from time to time, in accordance with any eligibility
      requirements for participation therein. Such benefits will include medical,
      dental and vision coverage similar to premium plans offered by United HealthCare
      or Blue Cross Blue Shield. The Company agrees to pay 75% of Executive’s premium
      payments for such coverage.

     

    (f) Equity
      Award.
      No
      later than August 1, 2008, the Executive shall receive options to purchase
      405,000 shares of the Company’s common stock which shall be subject to the terms
      and conditions of the Company’s 2007 Incentive Stock and Award Plan.

     

    4. Termination.
      Executive’s employment by the Company shall terminate under the following
      circumstances:

     

    (a) Death.
      If
      Executive dies, Executive’s employment shall be terminated effective as of the
      end of the calendar month during which Executive died.

     

    (b) Disability.
      In the
      event Executive, by reason of physical or mental incapacity, shall be
      substantially unable to perform his duties hereunder for a period of three
      (3)
      consecutive months, or for a cumulative period of six (6) months within any
      twelve (12) month period (such incapacity deemed to be “Disability”), the
      Company shall have an option, at any time thereafter, to terminate Executive’s
      employment hereunder as a result of such Disability. Such termination will
      be
      effective ten (10) days after the Board gives written notice of such termination
      to Executive, unless Executive shall have returned to the full performance
      of
      his duties prior to the effective date of the notice. Upon such termination,
      Executive shall be entitled to any benefits as to which he and his dependents
      are entitled by law, and except as otherwise expressly provided herein, all
      obligations of the Company hereunder shall cease upon the effectiveness of
      such
      termination other than payment of salary earned through the date of Disability,
      provided that such termination shall not affect or impair any rights Executive
      may have under any policy of long term disability insurance or benefits then
      maintained on his behalf by the Company. Executive’s base salary shall continue
      to be paid during any period of incapacity prior to and including the date
      on
      which Executive’s employment is terminated for Disability.

     

    (c) Cause.
      The
      Company shall have the right to terminate Executive's employment for “Cause.”
For purposes of this Agreement, “Cause” shall mean: 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (i) the
      willful or continued failure by Executive to substantially perform his duties,
      including, but not limited to, acts of fraud, willful misconduct, gross
      negligence or other act of dishonesty;

     

    (ii) a
      material violation or material breach of this Agreement which is not cured
      within 10 days written notice to Executive;

     

    (iii) misappropriation
      of funds, properties or assets of the Company by Executive or any action which
      has a materially adverse effect on the Company or its business; 

     

    (iv) the
      conviction of, or plea of guilty or no contest to, a felony or any other crime
      involving moral turpitude, fraud, theft, embezzlement or dishonesty; or

     

    (v) abuse
      of
      drugs or alcohol which impairs Executive’s ability to perform his duties as CFO.

     

    (d) Good
      Reason.
      Executive may terminate his employment for “Good Reason.” For purposes of this
      Agreement, “Good Reason” shall mean: (i) a material diminution of Executive’s
      authority or duties with the Company (other than as a result of Executive’s
      incapacity or disability); (ii) a reduction in Executive’s base salary; or (iii)
      if Executive must relocate his principal office more than one hundred (100)
      miles from any office that the Company is then maintaining for Executive as
      Executive’s principal office. Prior to Executive terminating his employment with
      the Company for “Good Reason,” Executive must provide written notice to the
      Company that such “Good Reason” exists and setting forth, in detail, the grounds
      Executive believes constitutes such “Good Reason” (a “Good Reason Notice”). If
      the Company does not cure the grounds upon which Executive believes “Good
      Reason” exists within thirty (30) days after being provided with notice by
      Executive, then Executive’s employment shall be deemed terminated. 

     

    (e) Without
      Cause.
      The
      Company shall have the right to terminate Executive’s employment hereunder at
      any time without cause by providing Executive with written notice of such
      termination, which termination shall take effect ten (10) days after the date
      such notice is provided or, at the sole discretion of the Company, at any time
      prior to the expiration of such ten (10) day period. 

     

    (f) Voluntary
      Resignation.
      Executive shall have the right to terminate his employment hereunder by
      providing the Company with a written notice of resignation. Such notice must
      be
      provided sixty (60) days prior to the date upon which Executive wishes such
      resignation to be effective. Upon receipt of such resignation, the Company
      shall
      have the option to accelerate the resignation to a date prior to the expiration
      of the sixty (60) day period.

     

    5. Payments
      Due Upon Termination.
      In the
      event Executive’s employment is terminated pursuant to Section 4(d) or 4(e)
      above, then the Company shall continue pay to Executive his base salary as
      in
      effect on the date of termination for a period of six (6) months and the Company
      shall reimburse Executive for the costs of obtaining comparable medical benefits
      for six (6) months, unless Executive obtains other employment which provides
      for
      comparable medical benefits as Executive received while employed by the Company.
      In the event Executive’s employment is terminated for any other reason, then
      Executive shall be entitled to receive his base salary though the effective
      date
      of termination and the Company shall reimburse Executive for any reasonable
      expenses previously incurred for which Executive had not been reimbursed prior
      to the termination of employment. Executive acknowledges and agrees that prior
      to receiving any payments which may be due under this Section, and as a material
      condition thereof, Executive shall, if requested by the Company, sign and agree
      to be bound by a general release of claims against the Company related to
      Executive’s employment (and termination of employment) with the Company in such
      form as the Company may deem appropriate. Upon Executive’s termination of
      employment for any reason, upon the request of the Board, he shall resign any
      memberships or positions that he then holds with the Company. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    6. Restrictive
      Covenants.

     

    (a) Acknowledgments.
      Executive acknowledges that: (i) as a result of Executive’s employment by the
      Company, Executive has obtained and will obtain Confidential Information (as
      defined below); (ii) the Confidential Information has been developed and created
      by the Company at substantial expense and the Confidential Information
      constitutes valuable proprietary assets; (iii) the Company will suffer
      substantial damage and irreparable harm which will be difficult to compute
      if,
      during the Employment Period and thereafter, Executive should enter a
      Competitive Business (as defined below) in violation of the provisions of this
      Agreement; (iv) the nature of the Company’s business is such that it could be
      conducted anywhere in the world and that it is not limited to a geographic
      scope
      or region; (v) the Company will suffer substantial damage which will be
      difficult to compute if, during the term of employment or thereafter, Executive
      should solicit or interfere with the Company’s employees, clients or customers
      or should divulge Confidential Information relating to the business of the
      Company and its affiliates; (vi) the provisions of this Agreement are reasonable
      and necessary for the protection of the business of the Company; (vi) the
      Company would not have hired or continued to employ Executive unless he agreed
      to be bound by the terms hereof; and (vii) the provisions of this Agreement
      will
      not preclude Executive from other gainful employment. “Competitive Business,” as
      used in this Agreement, shall mean any business which directly competes with
      any
      aspect of the Company’s business. “Confidential Information,” as used in this
      Agreement, shall mean any and all confidential and/or proprietary knowledge,
      data, or information of the Company, including, without limitation, any: (A)
      trade secrets, drawings, inventions, methodologies, ideas, processes, formulas,
      source and object codes, data, programs, software source documents, works of
      authorship, know-how, improvements, discoveries, developments, designs and
      techniques, and all other work product of the Company, whether or not patentable
      or registrable under trademark, copyright, patent or similar laws; (B)
      information regarding plans for research, development, new service offerings
      and/or products, marketing, advertising and selling, distribution, business
      plans, business forecasts, budgets and unpublished financial statements,
      licenses, prices and costs, suppliers, customer lists, customers or distribution
      arrangements; (C) any information regarding the skills and compensation of
      employees, suppliers, agents, and/or independent contractors of the Company;
      (D)
      concepts and ideas relating to the development and distribution of content
      in
      any medium or to the current, future and proposed products or services of the
      Company; or (E) any other information, data or the like that is labeled
      confidential or orally disclosed to Executive as confidential.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (b) Confidentiality.
      In
      consideration of the benefits provided for in this Agreement, Executive agrees
      not to, at any time, either during the Employment Period or thereafter, divulge,
      use, publish or in any other manner reveal, directly or indirectly, to any
      person, firm, corporation or any other form of business organization or
      arrangement and keep in the strictest confidence any Confidential Information,
      except (i) as may be necessary to the performance of Executive’s duties
      hereunder, (ii) with the Company’s express written consent, (iii) to the extent
      that any such information is in or becomes in the public domain other than
      as a
      result of Executive’s breach of any of obligations hereunder, or (iv) where
      required to be disclosed by court order, subpoena or other government process
      and, in such event, Executive shall cooperate with the Company in attempting
      to
      keep such information confidential. Upon the request of the Company, Executive
      agrees to promptly deliver to the Company the originals and all copies, in
      whatever medium, all such Confidential Information.

     

    (c) Non-Compete.
      In
      consideration of the benefits provided for in this Agreement, Executive
      covenants and agrees that during the Employment Period and for a period of
      six
      (6) months following the termination of his employment for whatever reason,
      or
      from the date of entry by a court of competent jurisdiction of a final judgment
      enforcing this covenant, whichever is last to occur (the “Restricted Period”),
      he will not, for himself, or in conjunction with any other person, firm,
      partnership, corporation or other form of business organization or arrangement
      (whether as a shareholder, partner, member, principal, agent, lender, director,
      officer, manager, trustee, representative, employee or consultant), directly
      or
      indirectly, be employed by, provide services to, in any way be affiliated,
      associated or have any interest in, or give advice or consultation to any
      Competitive Business.

     

    (d) Non-Solicitation
      of Employees.
      In
      consideration of the benefits provided for in this Agreement, Executive
      covenants and agrees that during the Restricted Period, Executive shall not,
      without the prior written permission of the Company, directly or indirectly
      solicit, employ or retain, or cause any other person or entity to solicit,
      employ or retain, any person who is employed by or who is providing services
      to
      the Company at the time of Executive’s termination of employment or who was
      providing such services to the Company within the twelve (12) month period
      prior
      to Executive’s termination of employment.

     

    (e) Non-Solicitation
      of Clients and Customers.
      In
      consideration of the benefits provided for in this Agreement, Executive
      covenants and agrees that during the Restricted Period, he will not, for
      himself, or in conjunction with any other person, firm, partnership, corporation
      or other form of business organization or arrangement (whether as a shareholder,
      partner, member, lender, principal, agent, director, officer, manager, trustee,
      representative, employee or consultant), directly or indirectly: (i) solicit
      or
      accept any business that is directly related to the business of the Company,
      from any person or entity who, at the time of, or at any time during the twelve
      (12) months preceding Executive’s termination, was an existing or prospective
      customer or client of the Company; (ii) request or cause any of the Company’s
      customers to cancel or terminate any business relationship with the Company;
      or
      (iii) request or cause any employee of the Company to breach or threaten to
      breach any terms of said employee’s agreements with the Company or to terminate
      his or his employment with the Company.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (f) Post-Employment
      Property.
      The
      parties agree that any work of authorship, invention, design, discovery,
      development, technique, improvement, source code, hardware, device, data,
      apparatus, practice, process, method or other work product whatever (whether
      patentable or subject to copyright, or not, and hereinafter collectively called
      “discovery”) related to training or marketing methods and techniques that
      Executive, either solely or in collaboration with others, has made or may make,
      discover, invent, develop, perfect, or reduce to practice during the term of
      his
      employment, whether or not during regular business hours and created, conceived
      or prepared on the Company’s premises or otherwise shall be the sole and
      complete property of the Company. More particularly, and without limiting the
      foregoing, Executive agrees that all of the foregoing and any (i) inventions
      (whether patentable or not, and without regard to whether any patent therefor
      is
      ever sought), (ii) marks, names, or logos (whether or not registrable as trade
      or service marks, and without regard to whether registration therefor is ever
      sought), (iii) works of authorship (without regard to whether any claim of
      copyright therein is ever registered), and (iv) trade secrets, ideas, and
      concepts ((i) - (iv) collectively, “Intellectual Property Products”) created,
      conceived, or prepared on the Company’s premises or otherwise, whether or not
      during normal business hours, shall perpetually and throughout the world be
      the
      exclusive property of the Company, as shall all tangible media (including,
      but
      not limited to, papers, computer media of all types, and models) in which such
      Intellectual Property Products shall be recorded or otherwise fixed. Executive
      further agrees promptly to disclose in writing and deliver to the Company all
      Intellectual Property Products created during his engagement by the Company,
      whether or not during normal business hours. Executive agrees that all works
      of
      authorship created by Executive during his engagement by the Company shall
      be
      works made for hire of which the Company is the author and owner of copyright.
      To the extent that any competent decision-making authority should ever determine
      that any work of authorship created by Executive during his engagement by the
      Company is not a work made for hire, Executive hereby assigns all right, title
      and interest in the copyright therein, in perpetuity and throughout the world,
      to the Company. To the extent that this Agreement does not otherwise serve
      to
      grant or otherwise vest in the Company all rights in any Intellectual Property
      Product created by Executive during his engagement by the Company, Executive
      hereby assigns all right, title and interest therein, in perpetuity and
      throughout the world, to the Company. Executive agrees to execute, immediately
      upon the Company’s reasonable request and without charge, any further
      assignments, applications, conveyances or other instruments, at any time after
      execution of this Agreement, whether or not Executive is engaged by the Company
      at the time such request is made, in order to permit the Company, or its
      assigns, to protect, perfect, register, record, maintain, or enhance their
      rights in any Intellectual Property Product; provided, that, the Company shall
      bear the cost of any such assignments, applications or consequences. Upon
      termination of Executive’s employment by the Company for any reason whatsoever,
      and at any earlier time the Company so requests, Executive will immediately
      deliver to the custody of the person designated by the Company all originals
      and
      copies of any documents and other property of the Company in Executive’s
      possession, under Executive’s control or to which he may have
      access.

     

    (g) Non-Disparagement.
      Both
      parties acknowledge and agree not to defame or publicly criticize the services,
      business, integrity, veracity or personal or professional reputation of the
      other, in either a professional or personal manner, at any time during or
      following the Employment Period. With respect to the Company, this shall include
      any officers, directors, partners, executives, employees, representatives or
      agents of the Company, or of the Merged Entity.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (h) Enforcement.
      Executive acknowledges that any breach of the foregoing covenants and
      restrictions in this Section, would cause irreparable injury to the Company
      for
      which there is no adequate remedy at law. In addition to all of the rights
      and
      remedies as to which the Company may be entitled, the Company shall also be
      entitled to obtain a temporary restraining order and/or a preliminary or
      permanent injunction which would prevent Executive from violating or attempting
      to violate any such provisions. In seeking such an order, any requirement to
      post a bond or other undertaking shall be waived. In any action brought to
      enforce these restrictive covenants, the Company shall be entitled to an award
      of all reasonable costs and fees incurred in bringing such an action, including
      reasonable attorney’s fees. In addition, the Company shall have the right to
      cease making any payments or provide any benefits to Executive under this
      Agreement in the event he breaches or threatens to breach any of the provisions
      hereof.

     

    (i) Blue
      Pencil.
      If, at
      any time, the provisions of this Section 6 shall be determined to be invalid
      or
      unenforceable under any applicable law, by reason of being vague or unreasonable
      as to area, duration or scope of activity, this Agreement shall be considered
      divisible and shall become and be immediately amended to only such area,
      duration and scope of activity as shall be determined to be reasonable and
      enforceable by the court or other tribunal having jurisdiction over the matter
      and Executive and the Company agree that this Agreement, as so amended, shall
      be
      valid and binding as though any invalid or unenforceable provision had not
      been
      included herein.

     

    7. Executive’s
      Representations.
      Executive hereby represents and warrants to the Company that: (i) his execution
      and performance of duties under this Agreement does not and shall not conflict
      with, breach, violate or cause a default under any contract, agreement,
      arrangement, understanding, order, judgment or decree as to which Executive
      is a
      party or by which he is bound; (ii) Executive is not a party to or bound by
      any
      employment agreement, non-compete agreement, confidentiality agreement or any
      similar agreement or arrangement with any other person or entity which effects
      or impacts his ability to be employed by the Company pursuant to the terms
      of
      this Agreement; and (iii) upon the execution and delivery of this Agreement
      by
      the Company, this Agreement shall constitute a valid and binding obligation
      of
      Executive, enforceable in accordance with its terms. In addition, Executive
      acknowledges that the Company has relied on such representations and warranties
      in employing Executive, that he has not entered into, and will not enter into,
      any agreement, either oral or written, in conflict with this Agreement. If
      it is
      determined that Executive is in breach or has breached any of the
      representations set forth herein, the Company shall have the right to
      immediately terminate the Executive’s employment with the company and that such
      termination shall be deemed a termination with Cause. Executive hereby
      acknowledges and represents that he has consulted with independent legal counsel
      regarding his rights and obligations under this Agreement and that he fully
      understands the terms and conditions contained herein.

     

    8. Successors.
      The
      rights and benefits of Executive hereunder shall not be assignable, whether
      by
      voluntary or involuntary assignment or transfer by Executive. This Agreement
      shall be binding upon, and inure to the benefit of, the successors and assigns
      of the Company, and the heirs, executors and administrators of the Executive,
      and shall be assignable by the Company to any entity acquiring substantially
      all
      of the assets of the Company, whether by merger, consolidation, sale of assets
      or similar transactions.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    9. Notice.
      For the
      purposes of this Agreement, notices, demands and all other communications
      provided for in this Agreement shall be in writing and shall be delivered (i)
      personally, (ii) by first class mail, certified, return receipt requested,
      postage prepaid, (iii) by overnight courier, with acknowledged receipt, or
      (iv)
      by facsimile transmission followed by delivery by first class mail or by
      overnight courier, in the manner provided for in this Section, and properly
      addressed as follows:

     

    
      	
              If
                to the Company, to:

            	
              Michael
                Mathews 

              interCLICK,
                Inc. 

              200
                Park Avenue South

              Suite
                908-909

              New
                York, New York 10003

            
	 	 
	
              With
                a copy to:

            	
              Harvey
                J. Kesner or Kenneth J. Rubinstein

              Haynes
                and Boone, LLP

              153
                East 53rd Street, Suite 4900

              New
                York, New York 10022

              Fax:
                212-918-8989

            
	 	 
	
              If
                to Executive to:

            	
              David
                Garrity

              24
                Peck Slip, #5E

              New
                York, New York 10038

            

    

    

    or
      to
      such other address as the Company or Executive may later indicate in
      writing.

     

    10. Governing
      Law and Dispute Resolution.
      This
      Agreement is governed by, and is to be construed and enforced in accordance
      with, the laws of the State of New York, without regard to principles of
      conflicts of laws. If, under such law, any portion of this Agreement is at
      any
      time deemed to be in conflict with any applicable statute, rule, regulation
      or
      ordinance, such portion shall be deemed to be modified or altered to conform
      thereto or, if that is not possible, to be omitted from this Agreement, and
      the
      invalidity of any such portion shall not affect the force, effect and validity
      of the remaining portion hereof. Each party expressly agrees, consents and
      submits to the personal jurisdiction and venue of the American Arbitration
      Association (“AAA”) in New York County, New York for adjudication of any and all
      disputes arising from or related to this Agreement. Such arbitration shall
      be
      conducted in a confidential manner and shall be identified to the AAA as a
      confidential proceeding. Each party waives any and all rights, under law or
      in
      equity, to object or contest the jurisdiction and venue of said tribunal.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    11. Amendment.
      No
      provisions of this Agreement may be amended, modified, or waived unless such
      amendment or modification is agreed to in writing signed by Executive and by
      a
      duly authorized officer of the Company. No waiver by either party hereto at
      any
      time of any breach by the other party hereto of any condition or provision
      of
      this Agreement to be performed by such other party shall be deemed a waiver
      of
      similar or dissimilar provisions or conditions at the same or at any prior
      or
      subsequent time.

     

    12. Entire
      Agreement.
      This
      Agreement sets forth the entire agreement of the parties hereto in respect
      of
      the subject matter contained herein and supersedes any and all prior agreements,
      promises, covenants, arrangements, understandings, communications,
      representations or warranties, whether oral or written, by any officer, employee
      or representative of any party hereto. Any prior agreement by the parties hereto
      with respect to the subject matter of this Agreement is hereby terminated and
      canceled as of the date hereof.

     

    13. Severability.
      The
      covenants of this Agreement shall be construed as covenants independent of
      one
      another and as obligations distinct from any other agreement between the
      parties. Should any provision herein be held to be void or unenforceable, the
      remaining provisions shall remain in full force and effect, to be read and
      construed as if the void or unenforceable provisions were originally
      deleted.

     

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

     

    IN
      WITNESS HEREOF,
      the
      parties hereby enter into this Agreement and affix their signatures as of the
      date first above written.

     

    InterCLICK,
      INC. 

     

    By:
      /s/
      Michael
      Mathews                

    Michael
      Mathews

    Chief
      Executive Officer

    

     

    /s/
      David
      Garrity                              

    David
      Garrity

     

     

    9Exhibit
        10.1

      PROMISSORY
        NOTE

      

        
          	
                  $5,000,000.00

                	
                  June
                    30, 2008

                

        

      FOR
        VALUE
        RECEIVED, on
        the
        Maturity Date, as such term is defined in Section 1.1 below,
        BEACON POWER CORPORATION,
        a
        Delaware corporation with its chief executive office and principal place
        of
        business presently at 65
        Middlesex Road, Tyngsboro, MA 01879
        ("Borrower")
        promises to pay to the order of MASSACHUSETTS
        DEVELOPMENT FINANCE AGENCY, a
        body
        politic and corporate created by Chapter 289 of The Acts of 1998 and established
        under Massachusetts General Laws Chapter 23G as amended, ("Lender")
        at its
        principal offices at 160 Federal Street, Boston, MA 02110, or at such other
        place as the holder of this note may from time to time designate in writing,
        the
        principal sum of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00), or such
        lesser
        amount advanced by Lender pursuant to Section 1.1 below (the “Loan”),
        or so
        much thereof then remaining unpaid, in lawful money of the United States
        with
        interest at the rate or rates set forth below, until fully paid. Borrower
        further agrees to pay upon an Event of Default, as such term is defined below,
        all costs, including reasonable attorneys’ fees reasonably incurred in the
        collection of Borrower’s obligations and the defense, preservation, enforcement
        or protection of Lender’s rights and remedies under this Note, or in the
        foreclosure of any mortgage or security interest now or hereafter securing
        the
        same or in any proceedings to otherwise enforce or protect upon an Event
        of
        Default Lender’s rights and remedies under this Note or any security therefor.
        Interest on this Note shall be computed on the basis of a year of three hundred
        sixty (360) days and actual days elapsed. 

      

      1.0. Funding;
        Term; Interest Rate; Payments.

      

      1.1. Funding;
        Term.
        

      

      (a) Borrower
        may request one (1) or more advances of up to the entire principal amount
        of
        this Note for the purchase of equipment and installation of certain tenant
        improvements more specifically defined in a certain Collateral Assignment
        of
        Lease Agreement of even date herewith, at the Borrower’s manufacturing
        facility at 65 Middlesex Road, Tyngsboro, Massachusetts
        (the
“Premises”).
        

      

      (b) Provided
        no Event of Default has occurred and is continuing on the date of each request
        for an advance, and no event or circumstance exists on such date, which with
        the
        passage time, or notice, or both would result in an Event of Default, Lender
        shall advance the full requested amount within ten (10) business days of
        the
        date of such request. Borrower may request one (1) or more advances, subject
        to
        availability of funds hereunder as a result of advances made pursuant to
        Section
        1.1(a) above, and the limitation on the total aggregate advances made pursuant
        to this Section 1.1(b) set forth below, for the purposes of performing tenant
        improvements to the Premises (the “Tenant
        Improvements”),
        as
        more fully described on Schedule A attached to that certain Security Agreement
        of even or near date herewith (the
        “Security
        Agreement”),
        and
        purchasing new equipment (the “Equipment”),
        also
        as more fully described on Schedule A to the Security Agreement, to be operated
        and maintained at the Premises, provided
        that,
        prior
        to
        the first advance of the Loan under this Section 1.1(b), in
        the
        case of Equipment, (i)
        Borrower’s
        request
        for the advance is accompanied by Borrower’s invoices evidencing the purchase of
        the Equipment for which the advance is sought and evidence of delivery of
        the
        same to the Premises, and (ii) such advance does not exceed eighty-five percent
        (85%) of the invoice cost of the Equipment purchased with the funds advanced
        hereunder; and in the case of Tenant Improvements, Borrower’s
        request
        for the advance is accompanied by
        (x)
        architect’s and contractor’s contracts in a form reasonably satisfactory to
        Lender, (y) plans and specifications for the Borrower’s tenant improvements to
        the Premises, and (z) a budget for such improvements. Prior to the final
        advance
        for the Tenant Improvements, Borrower shall provide an unconditional certificate
        of occupancy for the Premises permitting the use thereof for Borrower’s intended
        purpose, and such other items as would customarily be required by a conventional
        institutional construction lender.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (c)
         The
        term
        of this Note shall commence on June 30, 2008 (the “Effective
        Date”)
        and
        shall mature on the same date of the 84th
        calendar
        month following the Initial
        Funding Date (as defined below) (the “Maturity Date”). Borrower’s obligation to
        make payments of principal and interest under Section 1.2 commence when Lender
        first advances funds to Borrower in accordance with Section 1.1 (the “Initial
        Funding
        Date”).

      

      1.2. Payments
        of Principal and Interest.
        Payments
        of interest only during the first twelve (12) months after the Effective
        Date,
        at the rate provided in Section 1.3 below, shall be due and payable and shall
        commence on the first (1st)
        day of
        the calendar month next following the Initial
        Funding
        Date
        (the “Payment
        Start Date”).
        Each
        such payment of accrued interest shall be paid in arrears. Thereafter,
        the then balance of the principal outstanding under this Note shall be amortized
        such that monthly payments of principal and interest (at the rate provided
        in
        Section 1.3 below) shall commence on the first anniversary of the Payment
        Start
        Date and shall continue on the first day of each successive month thereafter
        in
        as equal monthly installments as possible over the remaining term of this
        Note.
        No further advances of principal shall be made hereunder after the first
        anniversary of the Payment Start Date.

      

      1.3. Interest
        Rate.
        So long
        as no Event of Default has occurred and is continuing (but subject to applicable
        cure or grace periods), and subject to the terms hereof, the principal
        outstanding hereunder from time to time shall bear interest at a fixed annual
        rate of six and one-half (6.50%) percent.

      

      2.0. Default
        Rate.
        To the
        extent allowed by applicable law, after the occurrence of any Event of Default
        and during the continuation thereof (and after giving effect to any applicable
        grace or cure periods), after the Maturity Date, or after judgment has been
        rendered on this Note, all outstanding principal and unpaid interest shall
        bear,
        until paid, interest at a
        rate
        per annum equal to five (5%) percentage
        points greater than that which would otherwise be applicable assessed
        retroactive to the date that the Event of Default first occurs (the
“Default
        Rate”).

      

      3.0. Late
        Charge.
        If a
        regularly scheduled payment is five (5) business days or more late, Borrower
        will be charged five percent (5%) of the unpaid portion of the regularly
        scheduled payment or ten dollars ($10.00), whichever is greater. If Lender
        demands payment in writing of this Loan after the occurrence and during the
        continuation of an Event of Default (after giving effect to any applicable
        grace
        or cure periods), and Borrower does not pay the Loan within fifteen (15)
        days
        after Lender’s demand, Borrower will be charged five percent (5%) of the unpaid
        principal amount plus accrued and unpaid interest.

      

      4.0. Expenses.
        Borrower further promises to pay to Lender, as incurred, and as an additional
        part of the unpaid principal, all costs, expenses and reasonable attorneys'
        fees
        incurred
        (except
        such as shall result from Lender’s gross negligence or willful
        misconduct):
        (a) in
        the protection, modification, collection, defense or enforcement of all or
        part
        of this Note or any guaranty hereof; or (b) in the foreclosure or enforcement
        of
        any mortgage or security interest which may now or hereafter secure the debt
        hereunder, or (c) with respect to any action reasonably taken to protect,
        defend, modify or sustain the lien of any such mortgage or security agreement;
        or (d) with respect to any litigation or controversy arising from or connected
        with this Note or any mortgage or security agreement or collateral which
        may now
        or hereafter secure this Note; or (e) with respect to any act during the
        continuance of an Event of Default to protect defend, modify, enforce or
        release
        any of its rights or remedies with regard to, or otherwise effect collection
        of,
        any collateral which may now or in the future secure this Note or with regard
        to
        or against Borrower or any endorser, guarantor or surety of this Note. Borrower
        also promises to pay Lender, on the date hereof, all reasonable third party
        costs incurred in making this loan to Borrower including without limitation
        Lender’s legal fees and costs,
        and
        filing
        fees.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      5.0. Optional
        Prepayment.
        Borrower may at any time elect to prepay the unpaid amount of this Note,
        or any
        part thereof, without penalty or premium; provided, however, that, any such
        prepayment shall first be applied to (i) any unpaid expenses required by
        Section
        4.0 above, then to (ii) late fees, if any are due, then to (iii) Default
        Rate
        interest, if any is due, then to (iv) regularly accrued but unpaid interest
        pursuant to Section 1.3 above, and then finally to (v) the
        principal.

      

      6.0 Warrants.
        As
        part
        of the consideration in making the Loan on favorable terms and conditions,
        Borrower shall issue to the Lender on the date of this Note  two
        (2)
        separate
        warrants with identical terms entitling Lender to purchase an aggregate of
        171,958 shares (85,979 shares per warrant) of voting common stock
        in the Borrower
        with an
        exercise price of $1.89 per share, subject to any adjustments as set forth
        in
        Section 8 of each warrant (the “Warrants”).
        The
        above
        description of the Warrants does not purport to be complete and is qualified
        in
        its entirety by reference to the full text of the Warrants, a copy of which
        has
        been provided to the Lender and is incorporated herein by
        reference.

      

      7.0. Default.
        The
        happening of any of the following events or conditions shall constitute an
        “Event
        of Default”
under
        this Note:

      

      7.1. Failure
        to make any payment of principal or interest on any sum due under this Note
        within ten
        (10)
        days
        after the same shall be due and payable. 

      

      7.2. Failure
        by Borrower to observe or perform any covenant contained herein or a default
        or
        the occurrence of an event of default in any agreement between Borrower and
        Lender in connection herewith, including the Security Agreement and that
        certain
        Collateral Assignment of Lease Agreement (the “Collateral
        Assignment”)
        by and
        between Borrower and Lender of even date herewith beyond the applicable grace
        or
        cure period (or, if no such grace or cure period is specified, then beyond
        thirty (30) days following written notice by Lender to Borrower of the
        occurrence of any such default or event of default).

      

      7.3. A
        material default by Borrower under that certain Lease Agreement by and between
        Borrower and GFI
        Tyngsboro, LLC ("Landlord")
        dated
        July 23, 2007,
        including all addenda and riders thereto (the “Lease”),
        such
        default continuing beyond the applicable cure or grace period. A “material”
default as provided in this Section 7.3 shall mean any default of any covenant,
        term or condition of the Lease, the failure by Borrower to cure which default
        gives Landlord the right to terminate the Lease in accordance with the terms
        and
        conditions thereof.

      

      7.4. The
        term
        of the Lease ends, for any reason other than what is permitted Borrower under
        the Lease, prior to the Maturity Date.

      

      7.5. Any
        amendment to the Lease without the Lender’s prior written consent (not to be
        unreasonably withheld,
        conditioned or delayed)
        which
        has the effect of
        (i)
terminating
        the Lease before the Maturity Date,
        (ii)
defining
        Premises
        as set forth in the Lease
        in a
        manner materially adverse to the collateral securing this Note, (iii)
        increasing
        the
        rent due, (iv) making
        the
        rent
        payment terms
        less
        favorable to the Borrower,
        (v)
materially
        increasing any
        repair obligation (vi) imposing
        any
        escalators as additional rent or (vii) amending any other financial provision
        of
        the Lease
        in a
        manner materially adverse to the Borrower,
        

      

      7.6. As
        of the
        Effective Date, any
        representation or warranty made by Borrower herein or in any agreement executed
        in connection herewith, including the Security Agreement or any statement,
        certificate or other data furnished by Borrower in connection herewith or
        with
        such agreements, proves
        to have
        been incorrect in any material respect when made.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      7.7. A
        judgment or judgments for the payment of money shall be rendered against
        Borrower in an amount, individually or in the aggregate, of at least two
        hundred
        thousand dollars ($200,000.00), and any such judgment shall remain unbonded
        or
        unsatisfied and in effect for any period of thirty (30) consecutive days
        without
        a stay of execution, and the Lender holds the good faith belief that such
        unsatisfied judgment or unstayed execution is materially adverse to the
        condition (financial or otherwise) of the Borrower or the Lender’s collateral
        for this Note. 

      

      7.8. Borrower
        shall: (a) apply for or consent to the appointment of a receiver, trustee
        or
        liquidator of all or a substantial part of any of its assets; (b) admit in
        writing its inability to pay its debts as they mature; (c) file or permit
        the
        filing of any petition, case arrangement, reorganization, or the like under
        any
        insolvency or bankruptcy law, or be adjudicated as a bankrupt, or make an
        assignment for the benefit of creditors or consent to any form or arrangement
        for the satisfaction, settlement or delay of debt or the appointment of a
        receiver for all or any part of its properties; or (d) any action shall be
        taken
        by Borrower for the purpose of effecting any of the foregoing.

      

      7.9. An
        order,
        judgment or decree shall be entered, or a case shall be commenced, against
        Borrower, without its application, approval or consent by any court of competent
        jurisdiction, approving a petition or permitting the commencement of a case
        seeking reorganization or liquidation of Borrower or appointing a receiver,
        trustee or liquidator of Borrower, or of all or a substantial part of the
        assets
        of Borrower, and Borrower, by any act, indicates its approval thereof, consent
        thereto, or acquiescence therein, or such order, judgment, decree or case
        shall
        continue unstayed and in effect for any period of sixty (60) consecutive
        days,
        or an order for relief in connection therewith shall be entered.

      

      7.10. If
        Borrower shall dissolve or liquidate, or be dissolved or liquidated, or cease
        to
        legally exist, or merge or consolidate, or be merged or consolidated with
        or
        into any other corporation or entity,
        other
        than (i) a merger or reorganization involving only a change in the state
        of
        incorporation of the Borrower or (ii)
        the
        acquisition by the Borrower of another business where the Borrower survives
        as a
        going concern (in the case of an event
        listed
        in (i) and (ii) above,
        Borrower must provide Lender with written notice of such event within less
        than
        ten (10) business days prior to the effective date thereof).

      

      7.11. If
        any
        other indebtedness or obligation shall be accelerated, or if there exists
        any
        event of default under any instrument, document or agreement governing,
        evidencing or securing such other indebtedness or obligation, in any event,
        in
        an amount, individually or in the aggregate, of at least two hundred thousand
        dollars ($200,000.00);
        and any such amount remains unpaid or any such indebtedness or obligations
        remain accelerated or any such event of default remains uncured, in each
        case,
        for any period of thirty (30) consecutive days; and the Lender holds the
        good
        faith belief that such unpaid indebtedness or event of default is materially
        adverse to the condition (financial or otherwise) of the Borrower or the
        Lender’s collateral for this Note.

       

      7.12. If
        Borrower relocates any material portion of its manufacturing operations,
        or any
        other Massachusetts-based operations financed with any portion of the Loan
        proceeds, from the Premises to another site outside the Commonwealth of
        Massachusetts, or for any reason ceases such manufacturing or other financed
        operations at the Premises for any reason other than (i) a default by Landlord
        under the Lease for a thirty (30) day period (consecutive or cumulative in
        any
        ninety (90) day period), or (ii) force majeure which prevents such manufacturing
        or other financed operations at the Premises for a continuous six (6) month
        period.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      7.13. If
        Borrower fails to maintain at all times during the term a minimum cash balance
        of $1,500,000.00 in the Borrower’s principal bank depository.

       

      7.14. If
        by
        December 31, 2008, the Borrower fails to file or cause to be filed with the
        Securities and Exchange Commission a Registration Statement providing for
        the
        resale of all shares received upon exercise of the Warrants then outstanding
        for
        an offering to be made by the Lender, or its permitted assignee, the
        Massachusetts Technology Park Collaborative (“MTPC”),
        and
        fails
        thereafter to use commercially reasonable efforts to both have such registration
        statement declared effective as soon thereafter as reasonably practicable
        and to
        maintain the effectiveness of such registration statement after it is declared
        effective
        until
        the earlier date of when: (i) all shares received upon exercise of the Warrants
        have been sold or (ii) all shares received upon exercise of the Warrants
        are
        covered by such registration statement may be sold immediately without
        registration under the Securities Act and without volume restrictions pursuant
        to Rule 144, as determined by the counsel to the Borrower pursuant to a
        written opinion letter to such effect, addressed and acceptable to the
        Borrower’s transfer agent and the affected warrant holder.

       

      Upon
        and
        after an Event of Default, the entire unpaid balance of said indebtedness,
        both
        principal and interest, and including any other sums which may become due
        under
        this Note, shall, upon written notice from the holder and at the holder’s
        option, immediately become due and payable without presentment, further demand,
        protest, notice of protest, or other notice of dishonor of any kind, all
        of
        which are hereby expressly waived by Borrower; in addition, Lender shall
        have
        those remedies available to it under Section 8 of the Security Agreement.
        Notice
        of an Event of Default shall be provided in accordance with Section 8(a)
        of the
        Security Agreement.

       

      8.0. Maximum
        Permissible Interest Rate.
        Borrower shall not be obligated to pay and Lender shall not collect interest
        at
        a rate higher than the maximum permitted by law or the maximum that will
        not
        subject Lender to any civil or criminal penalties. If, because of the
        acceleration of maturity, the payment of interest in advance or any other
        reason, Borrower is required, under the provisions hereof, pursuant to the
        provisions of any other agreements, instruments, documents, security agreements,
        mortgages, financing statements, and supplements thereto and relating to
        the
        Loan, or entered into between Borrower in favor of, or with, Lender, at any
        time, for any purpose (the “Loan
        Documents”)
        or
        otherwise, to pay interest at a rate in excess of such maximum rate, the
        rate of
        interest under such provisions shall immediately and automatically be reduced
        to
        such maximum rate and any payment made in excess of such maximum rate shall
        be
        applied to principal outstanding hereunder or, if received by applicable
        law,
        shall be returned to Borrower.

       

      9.0. Source
        of Loan; Limited Recourse.
        Borrower hereby acknowledges that the Loan is being made by Lender from the
        Commonwealth of Massachusetts’s Emerging Technology Fund created pursuant to
        Section 27 of Chapter 23G of Massachusetts General Laws (the “Fund”) which is
        administered by Lender. In consideration of the Lender’s agreement to make the
        Loan, to the extent that the Borrower ever has any off-sets, defenses or
        claims
        against the Lender, its subsidiaries, affiliates, any members of the Fund’s
        advisory committee, parents, officers, directors, employees, agents,
        predecessors, successors and assigns, both present and former (collectively,
        the
“Lender Affiliates”), the Borrower and its partners, subsidiaries, affiliates,
        parents, officers, directors, employees, agents, heirs, successors, assigns,
        and
        executors, (collectively, the “Obligor Parties”), agree that any recourse an
        Obligor Party may have against the Lender or the Lender Affiliates will be
        limited to the Fund for any action and actions, cause and causes of action,
        suits, debts, controversies, damages, judgments, executions, claims and demands
        whatsoever asserted or unasserted, in contract, tort, law or in equity which
        the
        Obligor Parties may have upon or against the Lender or the Lender Affiliates
        by
        reason of any matter, cause, causes or thing whatsoever including, without
        limitation, to any claim that relates to, in whole or in part, directly or
        indirectly (a) the making or administration of the Loan, including, without
        limitation, such claims and defenses based on mistake, usury, misrepresentation,
        or negligence; (b) any covenants, agreements, duties, or obligations set
        forth
        in the Loan Documents; (c) the actions or omissions of any of the Lender
        and/or
        the Lender Affiliates in connection with the initiation or continuing exercise
        of any right or remedy contained in the Loan Documents or at law or in equity;
        (d) lost profits; (e) loss of business opportunity; (f) increased financing
        costs; (g) increased legal or administrative fees; or (h) damages to business
        reputation, but excluding in each of the foregoing cases the gross negligence
        and willful misconduct of the Lender and/or the Lender Affiliates.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      10.0. Replacement
        Documents.
        Upon
        receipt of an affidavit of an officer of Lender as to the loss, theft,
        destruction or mutilation of the Note or any other security document(s),
        together with an agreement reasonably satisfactory to the Borrower to indemnify
        the Borrower from any loss incurred by it in connection therewith, and, in
        the
        case of any such loss, theft, destruction or mutilation, upon surrender and
        cancellation of such Note or other document(s), Borrower will issue, in lieu
        thereof, a replacement Note or other document(s) in the same principal amount
        thereof and otherwise of like tenor.

       

      11.0. Consent
        To Jurisdiction.
        Borrower hereby agrees that any state or local court of the Commonwealth
        of
        Massachusetts or any United States District Court for the District of
        Massachusetts or, at the option of Lender, any court within the Commonwealth
        of
        Massachusetts in which Lender shall initiate legal or equitable proceedings
        and
        which has subject matter jurisdiction over the matter in controversy, shall
        have
        exclusive jurisdiction to hear and determine any claims or disputes between
        Borrower and Lender pertaining directly or indirectly to this Note or to
        any
        matter arising in connection with this Note. 

      

      12.0 Waivers.
        Borrower agrees that no delay or failure on the part of the holder in exercising
        any power, privilege, remedy, option or right hereunder shall operate as
        a
        waiver thereof or of any other power, privilege, remedy or right; nor shall
        any
        single or partial exercise of any power, privilege, remedy, option or right
        hereunder preclude any other or future exercise thereof or the exercise of
        any
        other power, privilege, remedy, option or right. The rights and remedies
        expressed herein are cumulative, and may be enforced successively, alternately,
        or concurrently and are not exclusive of any rights or remedies which holder
        may
        or would otherwise have under the provisions of all applicable laws, and
        under
        the provisions of all agreements between Borrower and Lender.

      

      Borrower
        hereby waives presentment, demand, notice, protest and all other demands
        and
        notices in connection with the delivery, acceptance, performance, default
        or
        enforcement of this Note. Borrower hereby assents to any extension or
        postponement of the time of payment or any other indulgence, to the addition
        or
        release of any party or person primarily or secondarily liable, and to the
        addition, release and/or substitution of all or any portion of any collateral
        now or hereafter securing this Note.

      

      BORROWER
        AND LENDER MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
        THE
        RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT
        OF,
        UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER DOCUMENTS CONTEMPLATED
        TO BE
        EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
        STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER
        CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN AND ACCEPT
        THIS
        NOTE.

      

      [SIGNATURES
        ON FOLLOWING PAGE]

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      

      This
        Note
        is executed as a sealed instrument and shall be governed by and construed
        in
        accordance with the laws of the Commonwealth of Massachusetts.

       

      
        
          
            	
                    WITNESS:

                  	
                    BORROWER:

                  
	 	 	 	 	 
	 	 	
                    BEACON
                      POWER CORPORATION

                  
	 	 	 	 	 
	 	 	 	 	 
	
                    /s/
                      Lynn Hall 

                  	 	
                    By:
                      

                  	
                    /s/
                      James M. Spiezio

                  	 
	 	 	 	
                    Name:
                      James M. Spiezio

                  
	 	 	 	
                    Title:
                      Chief Financial Officer

                  
	 	 	 	
                    Hereunto
                      Duly Authorized

                  

          

        

      

       

      
        
           

        

        
          7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]