Document:

Exhibit 10.4

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”),
entered into as of April 26, 2010 is by and between Beacon Power
Corporation, a Delaware corporation (the “Company”), and Judith Judson
(the “Executive”)

 

WHEREAS, the Executive is an employee of the
Company, and the Company desires to retain her services and she wishes to
continue her employment by the Company;

 

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:

 

SECTION 1.  TERM.  The Company shall employ the Executive for a
term commencing on April 1, 2010 and continuing until March 31, 2011,
unless renewed or terminated pursuant to Section 9.  The period of the Executive’s employment
hereunder is referred to as the “Employment Period.”

 

SECTION 2.  DUTIES.  The Executive shall serve the Company as Vice
President, Asset Management and Market Development and shall have duties and
responsibilities consistent with such position. 
Such duties and responsibilities shall include, but not be limited to,
management of the Company’s plant facility assets and regulatory and market
affairs.  The Executive will report to
the Chief Executive Officer of the Company. 
The Executive will generally perform her services at the Company’s
principal offices, which are currently located in Tyngsboro, Massachusetts; provided,
however, that the Executive may be required to travel from time to time
in connection with Company business.

 

SECTION 3.  FULL TIME; BEST EFFORTS.  During the Employment Period the Executive
shall use her best efforts to promote the interests of the Company and shall
devote her full business time and efforts to its business and affairs.  The Executive shall not engage in any
business activity which could reasonably be expected to interfere with the
performance of the Executive’s duties, services and responsibilities hereunder.

 

SECTION 4.  COMPENSATION.  The Executive shall be entitled to
compensation as follows:

 

(a)           Base
Salary.  During the Employment
Period, the Executive will receive a salary at an annual gross rate of $160,000
(as the same may be adjusted from time to time, the “Base Salary”),
which shall be payable in accordance with the Company’s regular payroll
practices applicable to senior executive officers.  The Executive’s Base Salary shall be reviewed
by the Board of Directors of the Company (the “Board”) at least annually
and may be increased (but not decreased) in the Board’s discretion, depending
upon the performance of the Executive and of the Company.

 

(b)           Annual
Bonus.  The Executive shall be
eligible to receive an annual bonus based on the achievement of individual and
Company performance objectives determined annually by the Compensation
Committee of the Board in consultation with the Executive.  The amount of the annual bonus will be
targeted at an amount equal to forty (40%) of Base Salary per year.  The Executive and the Compensation Committee
of the Board will set performance goals and targets for the annual bonus prior
to March 31 of the applicable performance year.  The Compensation Committee shall evaluate
such performance goals and targets and such annual bonus, if any, shall be paid
on March 1 of following year.

 

(c)           Long
term incentive compensation.  Effective
on the effective date of this Agreement, the Company has entered into long term
incentive compensation arrangements with Executive, contemplating the grant of
non-qualified stock options and restricted stock units.

 

(d)           Withholding.
The Company may withhold from compensation payable to the Executive all
applicable federal, state, and local withholding taxes as required by law.

 

 

SECTION 5.  BENEFITS.

 

(a)           Generally.  The Executive will be entitled to such fringe
benefits as are generally available to the Company’s executive officers,
including group health and dental insurance coverage, group long and short-term
disability insurance coverage, and 401(k) plan and stock plan
participation.  She will also be entitled
to a fringe benefit consisting of reimbursement of the cost to the Executive
(above any applicable insurance coverage) of an executive physical every other
year (not to exceed $1,000 for each such physical).  In the event that any insurance policy is
paying disability benefits to Executive, and if the amount of the Executive’s
monthly base salary that would be paid in the absence of such disability is
higher than the monthly insurance payments, then the Company shall pay
Executive an amount per month equal to such excess, for so long as the
Executive is employed with the Company. 
No such difference shall be payable after the Executive’s employment
expires or is terminated.

 

(b)           Paid
Vacation.

 

(i) 
In addition to U.S. statutory holidays, the Executive will be entitled
to 20 business days of paid vacation per calendar year, accruing at the rate of
1.66 days per month.  The number of
unused vacation days that may be carried forward from one calendar year to the
next shall be limited to up to ten days of the current calendar year’s unused
accrual (less an equal amount of any unused PVA, defined below).   For any unused vacation accrual from the current calendar
year that cannot be carried over into the next year, the Company shall pay the Executive a
cash amount (based on the Executive’s then current year’s base salary) equal to
such excess up to a maximum not to exceed ten vacation days.  Any such unused excess over ten vacation days
from the current calendar year that was accrued shall be forfeited.

 

(ii) 
Notwithstanding the foregoing, any paid vacation time that the Executive had
accrued prior to January 1, 2010 (“Prior Vacation Accrual” or “PVA”) shall
remain available for the Executive’s use, provided that the Compensation
Committee, in its sole discretion, may elect from time to time to direct the Company
to pay the Executive a cash amount (based on the Executive’s then current year’s
base salary) equal to part or all of any such Prior Vacation Accrual.

 

(iii) Vacation
time that is used by the Executive shall first be drawn from any unused accrual
with respect to the current calendar year, and then (assuming the current year’s
accrual has been used) then from any Prior Vacation Accrual.  The Executive shall coordinate with the Chair
of the Company Compensation Committee if he wishes to use more than 20 vacation
days in any calendar year.

 

(iv) Upon
any termination of employment, the Company shall pay Executive a lump sum equal
to any unused PVA, plus a lump sum equal to up to ten days of current year
vacation accrual.   Any remaining accrued
but unused or unpaid days shall be forfeited.

 

(v) The
following table illustrates these principles as applied to Executive’s actual,
unused PVA as of the date hereof and to her possible vacation day use during
calendar 2010, assuming employment through December 31, 2010:

 

	
  Executive’s 

  	
   

  	
  Current

  Accrual for 

  	
   

  	
  Examples
  of Conceivable

  Use During 2010

  	
   

  	
  Ex. of 

  	
   

  	
  Ex. of
  2010

  Accrual That

  	
   

  	
  Ex. of
  Possible

  Carried

  	
   

  
	
  Actual PVA

  At 1/1/10

  	
   

  	
  2010 Cal.

  Yr

  	
   

  	
  From

  PVA

  	
   

  	
  From 2010

  accrual

  	
   

  	
  Req’d
  Paid

  to Exec.

  	
   

  	
  Executive

  Forfeits

  	
   

  	
  Forward

  to 2011

  	
   

  
	
  [20.4]
  days

  	
   

  	
  20
  days

  	
   

  	
  —

  	
   

  	
  5 days

  	
   

  	
  10 days

  	
   

  	
  5 days

  	
   

  	
  [20.4] days

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  10

  	
   

  	
  10

  	
   

  	
  —

  	
   

  	
  [20.4]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  20

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  [20.4]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  [10] days

  	
   

  	
  20

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  [20.4]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  [ ]

  	
   

  	
  20

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  [10]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  [ ]

  	
   

  	
  20

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  

 

(c)           Life
Insurance.  The Company will provide
the Executive with group term life insurance in an amount equal to no less than
two times her Base Salary plus $1,000,000.

 

2

 

SECTION 6.  EXPENSE REIMBURSEMENT.  The Executive will be entitled to reimbursement
of all reasonable and necessary business expenses incurred by the Executive in
the ordinary course of business on behalf of the Company, subject to
presentation of appropriate documentation and compliance with policies
established by the Board.

 

SECTION 7. NON-DISCLOSURE AND ASSIGNMENT OF INVENTION AGREEMENT;
INDEMNIFICATION AGREEMENT.  The parties acknowledge and agree that the
Executive has executed and delivered to the Company the Company’s standard form
of Invention and Non-Disclosure Agreement and that the Company and the
Executive have executed and delivered an Indemnification Agreement in form and
substance satisfactory to both parties (the “Indemnification Agreement”).

 

SECTION 8.  NON-COMPETITION AND
NON-SOLICITATION COVENANTS.

 

(a)           Non-competition.  The Executive agrees that during the
Employment Period and for the longer
of (i) 12 months thereafter, and (ii) the period during which the
Company is providing payment to the Executive under Section 9(c) of
this Agreement, she will not own, manage, operate, control, be employed by,
provide services as an independent contractor or consultant to, own any stock
or other investment in or debt of, or otherwise be connected in any manner with
the ownership, management, operation or control of, any business or enterprise
that at the time of termination, competes with the Company or conducts business
in a field in respect of which the Board is making plans to enter.

 

(b)           Non-solicitation.  The Executive agrees that during the
Employment Period and for two year thereafter, she will not attempt to persuade
or induce any employee of the Company to terminate his or her employment with
the Company for any reason.

 

(c)           Acknowledgments
by Executive.  The Executive
acknowledges that the covenants set forth in this Section 8 are reasonable
in scope and are no greater than is necessary to protect the Company’s
legitimate business interests.  The
Executive further acknowledges that any breach by her of the covenants set
forth in this Section 8 would irreparably injure the Company, and that
money damages would not adequately compensate the Company for the injuries that
it would suffer.  The parties accordingly
agree that in the event of any breach or threatened breach by the Executive of
any of the covenants set forth in this Section 8, the Company may obtain,
from any court of competent jurisdiction, both preliminary and permanent
injunctive relief in order to prevent the occurrence or continuation of such
injuries, without being required to prove actual damages or post any bond or
other security.  Nothing in this
Agreement shall prohibit the Company from pursuing any other legal or equitable
remedy that may be available to it in the event of the Executive’s breach of
any of the covenants set forth in this Agreement.

 

SECTION 9.  TERMINATION.

 

(a)           Employment
Termination.  The
employment of the Executive pursuant to this Agreement shall terminate upon the
occurrence of any of the following:

 

(i)  At the election of the Company, for Cause,
immediately upon written notice by the Company to the Executive.  For purposes of this Agreement, “Cause”
shall be deemed to exist upon a reasonable good faith finding by the Board that
the Executive has:

 

(1) committed an act
constituting fraud, embezzlement or other felony, determined in the reasonable
opinion of the Board acting in its sole discretion, or

 

(2) materially breached her obligations under this Agreement or
the Inventions and Nondisclosure Agreement, and failed to cure same within 30
days after written notice thereof is given to her by the Company, or

 

(3) materially breached
the Company’s material policies, including but not limited to the Company’s
policies regarding insider trading and sexual harassment, or

 

3

 

(4) engaged in willful
misconduct and failed to cure same within 30 days after written notice thereof
is given to her by the Company.

 

(ii)  At the election of the Company, without
Cause, upon at least 90 days written notice by the Company to the Executive.

 

(iii)  The death of the Executive, or (in the
discretion of the Company) the Disability of the Executive.  For purposes of this Agreement, “Disability”
shall be considered to exist:

 

(1) if the Executive
fails to perform her normal duties for at least 60 days (not counting days
taken for vacation), whether or not consecutive, during any 180-day period, or

 

(2) if the Executive’s
insurance company has confirmed that any disability insurance benefits are
going to be paid by reason of Executive’s incapacitation, or

 

(3) if the Board,
acting in its sole discretion but after reasonable consultation with Executive,
concludes that the Executive suffers from a degree of physical or mental
incapacitation as a result of illness or accident which makes it reasonably
unlikely that the Executive will be able to perform her normal duties for a
period of 60 days.  In reaching this
conclusion, the Board may consult third parties, including, but not limited to,
other employees, physicians, psychiatrists, and counselors.

 

(iv)  At the election of the Executive, for any
reason, upon at least 90 days prior written notice to the Company.

 

(v)  At the election of the Executive for Good
Reason, provided that the Executive shall have given written notice to
the Company within 30 days after she becomes aware of the occurrence of any
event of Good Reason specifying such event, and such event shall be continued
for a period of 30 days following such notice. 
For purposes of this Agreement, “Good Reason” means any of the
following events:

 

(1) a material
diminution in the duties, responsibilities, position or job title of the
Executive without the Executive’s written consent.  For example, it will be considered such a
diminution if in the event of a business combination involving the Company by
means of a reorganization, merger, consolidation, recapitalization, or asset
sale (other than one described below in subparagraph 4), the Executive remains
as Vice President and CFO of the Company itself but is not appointed as the
Vice President and CFO of the other party to such combination by the 180th day after closing (or, the Executive and the
Company have not reached some other, mutually acceptable arrangement by then).

 

(2) a material breach
by the Company of its obligations under this Agreement or the Indemnification
Agreement, or

 

(3) a change in the
primary location where the Executive is expected to perform her services
hereunder to a location that is more than 50 miles away from Tyngsboro,
Massachusetts, or

 

(4) a Sale of the
Business (as defined below)  For purposes
of this Agreement, a “Sale of the Business” means (A) the
acquisition by a person, group, or party of 50% or more of the outstanding
capital stock of the Company in a single transaction or series of contractually
related transactions, (B) a change of a majority of the members of the
Board (other than by resignation or by any replacement of such resigned Board
member(s)) when the change of the various directors occurs at substantially the
same time, without the approval or consent of the members of the Board before
such change, (C) the acquisition of the Company by means of a
reorganization, merger, consolidation, recapitalization, or asset sale, unless
the owners of the capital stock of the Company before such transaction own
immediately after such transaction more than 50% of the capital stock of the
acquiring or succeeding entity in substantially the same proportions (without
giving effect to any funds that may be newly invested in the Company or such
acquiring or succeeding entity at about the same time), or (D) the
approval of a liquidation or dissolution of the Company.

 

4

 

(b)  Effect of Termination.

 

(i)  Termination
Pursuant to Section 9(a)(i) relating to termination for cause or Section 9(a)(iv) relating
to termination at the election of Executive for any reason.  In the event the Executive’s employment is
terminated pursuant to Section 9(a)(i) or Section 9(a)(iv), the
Company shall pay to the Executive her accrued Base Salary through the last
date of her employment hereunder (the “Termination Date”) and shall
continue to provide to the Executive the benefits described in Section 5
(the “Benefits”) through the Termination Date, but shall have no further
responsibility for any compensation or benefits to the Executive for any time
period subsequent to the Termination Date.

 

(ii)  Termination
pursuant to Section 9(a)(ii) relating to termination without cause.  In the event the Executive’s employment is
terminated pursuant to Section 9(a)(ii), the Company shall:

 

(1) Pay to the
Executive a cash amount equal to her then monthly Base Salary multiplied by
twelve.

 

(2) Continue to provide
the benefits described in Sections 5(a) and 5(c) to the Executive
until the first anniversary of the Termination Date.

 

(3) Within five
business days after the Termination Date, pay the Executive an amount equal to her
bonus which was paid (or which has been determined but not yet paid) with
respect to the prior fiscal year multiplied by a fraction, the numerator of
which is the number of full fiscal months that have elapsed in the then current
fiscal year prior to the Termination Date, and the denominator of which is
12.  In no event shall payment under this
Section 9(b)(ii)(3) exceed 80% of the Executive’s base salary for the
prior year.  If the bonus with respect to
the prior fiscal year has not yet been determined by the date that the parties
must calculate the amount to be paid under this paragraph, then the parties
shall calculate this portion of the severance by reference to the bonus paid
with respect to the year next preceding the prior fiscal year.

 

(iii)  Termination
pursuant to Section 9(a)(v) relating to termination at the election
of Executive for Good Reason. 
In the event the Executive’s employment is terminated pursuant to Section 9(a)(v),
the Company shall:

 

(1) Pay to the
Executive a cash amount equal to her then monthly Base Salary multiplied by
twelve.

 

(2) Continue to provide
the benefits described in Sections 5(a) and 5(c) to the Executive
until the first anniversary of the Termination Date.

 

(3) Within five
business days after the Termination Date, pay the Executive an amount equal to her
bonus which was paid (or which has been determined but not yet paid) with
respect to the prior fiscal year multiplied by a fraction, the numerator of
which is the number of full fiscal months that have elapsed in the then current
fiscal year prior to the Termination Date, and the denominator of which is
12.  In no event, shall payment under
this Section 9(b)(iii)(3) exceed 80% of the Executive’s base salary
for the prior year.  If the bonus with
respect to the prior fiscal year has not yet been determined by the date that
the parties must calculate the amount to be paid under this paragraph, then the
parties shall calculate this portion of the severance by reference to the bonus
paid with respect to the year next preceding the prior fiscal year.

 

(iv)  Termination
pursuant to Section 9(a)(iii) relating to the death or disability of
the Executive.  In the
event the Executive’s employment is terminated pursuant to Section 9(a)(iii),
the Company shall:

 

(1) Continue to pay to
Executive or her estate, as the case may be, an amount equal to her then
current Base Salary for the three-month period following the Termination Date.

 

5

 

(2) Continue for the
12-month period following the Termination Date all health and dental insurance
benefits the Executive was entitled to at the Termination Date.

 

(v)  Golden
Parachute Payment Excise Tax Protection.  In the event that the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the “Code”), (or any
successor penalty or excise tax subsequently imposed by law) applies to any
payments or benefits specifically paid or conferred only under this Agreement
(which shall not include any payments or benefits paid or conferred under the
long-term incentive compensation arrangement or the performance based long-term
incentive compensation arrangement referenced in Section 4(c)) (the “Excise
Tax”), an additional amount shall be paid by the Company to the Executive equal to the
amount of such Excise Tax (the “Gross Up
Payment”); provided, however in no event shall the aggregate amount
payable by the Company to Executive for any excise tax imposed by Section 4999
of the Code pursuant to this Agreement and all other agreements between the
Company and Executive exceed $250,000.  Any
such Gross Up Payment shall be made to the Executive as soon as practicable,
but in no event later than the close of the calendar year following the
calendar in which the Excise Tax is remitted to the applicable taxing
authority.  The Company and its advisers
shall make the determination of the amount of the Gross Up Payment.  To the extent that the amount of such Gross
Up Payment exceeds the amount of Excise Tax actually paid by Executive,
Executive shall promptly pay to the Company such excess amount.

 

(c)           Continuation/Nonrenewal.  Unless this Agreement has
been otherwise terminated before the end of the scheduled Employment Period as
described in Section 1, the Company and the Executive agree to discuss in
good faith the possible continuation of the Executive’s employment, commencing
six months prior to such date.  If the
Company fails to offer the Executive a new employment agreement, with at least
equivalent material terms to this Agreement, by such date and in fact the
Executive ceases to be an employee of the Company (other than for Cause)
following such date the Company shall pay the Executive a monthly amount for
twelve months equal to her last prevailing monthly Base Salary, plus
one-twelfth of the Executive’s bonus for the most recent fiscal year of the
Company, in accordance with the Company’s regular payroll practices, less
applicable withholdings required by law. 
If the bonus with respect to the most recent fiscal year has not yet
been determined by the date that the parties must calculate the amount to be
paid under this paragraph with respect to bonus, then the parties shall calculate
this portion of the severance by reference to the bonus paid with respect to
the year next preceding such most recent fiscal year.

 

SECTION 10.  NO CONFLICTING AGREEMENTS.  The Executive represents and warrants to the
Company that she is not a party to or bound by any confidentiality,
non-competition, non-solicitation or other agreement or restriction that could
conflict with or be violated by the performance of her duties for the Company.

 

SECTION 11.  NO DISPARAGEMENT.  Each party agrees that at all times following
the termination of the Executive’s employment hereunder, such party shall not
make or cause to be made, directly or indirectly, any statements to any third
party that disparage or denigrate the other party or, in the case of the
Company, any of its current or former directors, officers or employees, unless
required by law.

 

SECTION 12.  ENFORCEABILITY, ETC.  This Agreement shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
hereof shall be prohibited or invalid under any such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating or nullifying the remainder of such provision or any other
provisions of this Agreement.  If any one
or more of the provisions contained in this Agreement shall for any reason be
held to be excessively broad as to duration, geographical scope, activity, or
subject, such provisions shall be construed by limiting and reducing it so as
to be enforceable to the maximum extent permitted by applicable law.

 

SECTION 13.  NOTICES.  Any notice or other communication given
pursuant to this Agreement shall be in writing and shall be personally
delivered, sent by nationally recognized overnight courier or express mail, or
mailed by first class certified or registered mail, postage prepaid, return
receipt requested as follows:

 

6

 

	
  (a) If to
  the Executive:

  Judith Judson

   

  	
  (b) If to the Company:

  Beacon Power Corporation

  65 Middlesex Road

  Tyngsboro, MA 
  01879

  Attn:  Compensation Committee
  and Chief Executive Officer

  

 

or
to such other address as a party shall have designated by notice to the other
party.

 

SECTION 14.  GOVERNING LAW.  This Agreement shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Massachusetts without giving effect to any choice or conflict of laws provision
or rule that would cause the application of the domestic substantive laws
of any other jurisdiction.

 

SECTION 15.  AMENDMENTS AND WAIVERS.  No amendment or waiver of this Agreement or
any provision hereof shall be binding upon the party against whom enforcement
of such amendment or waiver is sought unless it is made in writing and signed
by or on behalf of such party.  The
waiver by either party of a breach of any provision of this Agreement by the
other party shall not operate and be construed as a waiver or a continuing
waiver by that party of the same or any subsequent breach of any provision of
this Agreement by the other party.  To
the extent that the final regulations under Section 409A of the Code
require modifications to this Agreement in order to avoid that section’s
penalty tax, the parties agree to discuss amending this Agreement
accordingly.  Notwithstanding the
foregoing, to the extent the Company reasonably determines that any portion of
the payments or benefits payable under this Agreement is subject to Section 409A
of the Code, such portion of payments or benefits payable shall (i) to the
extent required by Section 409A of the Code, be delayed for six months
from the Termination Date or (ii) to the extent permitted under subsequent
guidance from the Internal Revenue Service, be otherwise made to comply with
such Section 409A requirements, provided, however, that any such action
under this subsection (ii) that is more detrimental to Executive than that
in subsection (i) shall only be made with Executive’s consent. To the
extent required in order to avoid accelerated taxation and/or tax penalties
under Section 409A, the Executive shall not be considered to have
terminated employment with the Company for purposes of the Agreement and no
payments shall be due under the Agreement which are payable upon termination of
employment until the Executive would be considered to have incurred a “separation
from service” from the Company within the meaning of Section 409A.

 

SECTION 16.  BINDING EFFECT.  This Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective heirs, executors and
administrators, successors and assigns, except that it may not be assigned by
the Company without the Executive’s consent, provided that the Company may
assign this Agreement to an entity that acquires substantially all of the
Company’s assets by means of an asset sale, merger or otherwise, provided
further that such entity shall agree in writing to assume and be bound by this
Agreement.  This Agreement is personal to
the Executive and is not assignable by her.

 

SECTION 17.  ENTIRE AGREEMENT.  This Agreement constitutes the final and
entire agreement of the parties with respect to the matters covered hereby and
replaces and supersedes all other agreements and understandings relating
hereto, other than the RSU (restricted stock unit) and option agreements
already in place.

 

SECTION 18.  PRONOUNS.  Whenever the context may require, any
pronouns used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural, and vice versa.

 

SECTION 19.  SURVIVABILITY.  Sections 6-20 herein shall survive the
termination of this Agreement.

 

SECTION 20.  COUNTERPARTS.  This Agreement may be executed in any number
of counterparts, and with counterpart signature pages, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

 

7

 

IN WITNESS WHEREOF, this Agreement has been executed
as a sealed instrument as of the date first above written.

 

	
  EXECUTIVE

  	
   

  	
  BEACON POWER CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Judith Judson

  	
   

  	
  By:  

  	
  /s/ F. William Capp

  
	
  Judith Judson

  	
   

  	
  Name: F. William Capp

  
	
   

  	
   

  	
  Title: President and Chief Executive OfficerExhibit 10.5

 

BEACON POWER CORPORATION

 

OPTION
AGREEMENT

 

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

 

WHEREAS,
this Agreement is intended to provide Executive with a non-qualified stock
option to purchase shares of the Common Stock pursuant to the terms and
conditions of this Agreement and the Company’s Third Amended and Restated 1998
Stock Incentive Plan (the “Plan”);

 

NOW
THEREFORE, it is agreed as follows:

 

ARTICLE I.                                NON-QUALIFIED
STOCK OPTION GRANT

 

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

 

	
  Shares:

  	
   

  	
  Exercise Price:

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
					

 

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

 

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

 

	
  % of total Shares Vested

  	
   

  	
  Vesting Date

  	
   

  	
  Shares Vesting
 on Vesting Date

  	
   

  	
  Total Shares Vested
 to Date

  	
   

  
	
  8.33%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.33%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.33%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.33%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.33%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.33%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.33%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.33%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.33%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.33%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.33%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.37%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

 

13                                  Exercise of Option.

 

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

 

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

 

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

 

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

 

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

 

(v)                                 any combination of the above permitted
forms of payment.

 

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

 

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

 

ARTICLE II.                            TERMINATION OF EMPLOYMENT

 

2.1                               Termination
of Employment.

 

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

 

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

 

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

 

2

 

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

 

“Breach of
Conduct” shall mean activities which constitute a serious breach of
conduct that, only if possible to cure as determined by the authorized
administrator of the Plan in its sole discretion, is not cured within 30 days
after receipt of written notice to Executive, including, but not limited to: (i) the
disclosure or misuse of confidential information, trade secrets or other
intellectual property of the Company or third parties who have disclosed such
information, secrets or intellectual property to the Company or a company that
controls, is controlled by or is under common control with the Company
(collectively, an “Affiliate”), (ii) activities
in violation of the policies of the Company or any Affiliate, including without
limitation, the Company’s insider trading policy; (iii) the violation or
breach of any material provision in any applicable contract or agreement
between Executive and the Company (or an Affiliate), including, for example, a violation
or breach which is grounds for discharge for cause; (iv) engaging in
conduct relating to Executive’s employment for which either criminal or civil
penalties have been sought; (v) engaging in activities which adversely
affect or which are contrary or harmful to the interests of the Company or
Affiliate, or (vi) in the event that Executive and Company have not signed
a noncompetition agreement (which therefore otherwise would govern issues of
noncompetition), engaging in competition with the Company or any Affiliate or
soliciting their respective employees or customers on behalf of some other
entity during employment or within one year following termination of employment
with the Company or Affiliate.  The determination
of Breach of Conduct shall be determined by the authorized administrator of the
Plan in good faith and in its sole discretion.

 

ARTICLE
III.                        GENERAL PROVISIONS

 

3.1                               Acquisition Events. 
Upon the occurrence of an Acquisition Event (as defined below), or the
execution by the Company of any agreement with respect to an Acquisition
Event,  the authorized administrator of
the Plan shall take any one or more of the following actions with respect to
the Option, upon written notice to Executive: (i) provide that the Option
shall be assumed, or equivalent equity compensation shall be substituted, by
the acquiring or succeeding corporation (or an affiliate thereof); (ii) provide
that any portion of the Shares underlying the Option that are not vested will
become vested in full as of a specified time (the “Acceleration Time”) prior to the Acquisition Event and will
terminate immediately prior to the consummation of such Acquisition Event,
except to the extent exercised by Executive between the Acceleration Time and
the consummation of such Acquisition Event; or (iii) provide that the
Option shall terminate upon consummation of such Acquisition Event and
Executive shall receive, in exchange therefor, a cash payment equal to the
amount (if any) by which (x) the fair market value of the proceeds payable
to a share of Common Stock in connection with the Acquisition Event multiplied
by the number of shares of Common Stock subject to the Option (whether or not
then convertible or exercisable), exceeds (y) the aggregate exercise price
of the Option.

 

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

 

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

 

3.3                               Golden
Parachute Payment Excise Tax Protection.  In the event that the excise tax imposed by Section 4999
of the Code, (or any successor penalty or excise tax subsequently imposed by
law) applies to any payments or benefits specifically paid or conferred only
under this Agreement (the “Excise Tax”),
an additional amount shall be paid by the Company to the Executive equal to the
amount of such Excise Tax (the “Gross Up
Payment”); provided, 

 

3

 

however in no event shall
the aggregate amount payable by the Company to Executive for any excise tax
imposed by Section 4999 of the Code pursuant to this Agreement and all
other agreements between the Company and Executive exceed $                      . 
The Company and its advisers shall make the determination of the amount
of the Gross Up Payment.  To the extent
that the amount of such Gross Up Payment exceeds the amount of Excise Tax
actually paid by Executive, Executive shall promptly pay to the Company such
excess amount.

 

ARTICLE IV.                       TRANSFERABILITY

 

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

 

ARTICLE V.                           MISCELLANEOUS

 

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

 

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

 

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

 

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

 

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

 

5.6                               Withholding.   No shares of Common Stock will be issued pursuant to
the exercise of the Option unless and until Executive pays to the Company, or
makes provision satisfactory to the Company for payment of, any federal, state
or local withholding taxes required by law to be withheld in respect of the
Option.  Executive may 

 

4

 

satisfy
such tax obligations by delivering to Company cash in the form of wire transfer
or check and Company may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to Executive.

 

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

 

5.8                               Notices. 
Any notice hereunder to the Company shall be addressed to Beacon Power
Corporation, Attn: Compensation Committee, 65 Middlesex Road, Tyngsboro,
MA  01879, and any notice hereunder to
Executive shall be sent to the address reflected on the payroll records of the
Company, subject to the right of either party to designate at any time
hereafter in writing some other address.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

	
  EXECUTIVE:

  	
  BEACON
  POWER CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  

  	
   

  	
  By:

  	
  /s/
  

  
	
  Signature

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:  

  	
  Name:  

  
	
   

  	
   

  
	
  Address:

  	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}]]