Document:

exhibit4_10.htm

 

Exhibit 4.10

MB Financial, Inc.

and

__________________________________,

Warrant Agent

__________________________________

WARRANT AGREEMENT

 ___________________________

Providing for the Issuance of ____________________ Warrants

Dated as of _______________________, 201__

 

 

 

 

 

 

 

 

 

  

  

  

 

 

WARRANT AGREEMENT

THIS WARRANT AGREEMENT is entered into as of, 201_ between MB Financial, Inc., a corporation incorporated under the laws of the State of Maryland (the “Company”) and _____________________, a ________ incorporated under the laws of ____________ (the “Agent”).

W I T N E S S E T H:

 

 

WHEREAS, the Company proposes to issue ____ Warrants, each Warrant entitling the registered owner thereof to purchase ________________________ of the Company at the price and upon the terms and conditions herein set forth; and

WHEREAS, the Company is duly authorized to issue the Warrants as provided in this Agreement; and

WHEREAS, all things necessary have been done and performed to make the Warrants when duly authenticated by the Agent and issued as provided for in this Agreement legally valid and binding obligations of the Company with the benefits and subject to the terms of this Agreement.

NOW, THEREFORE, for good and valuable consideration mutually given and received, the receipt and sufficiency thereof is hereby acknowledged, it is hereby agreed and declared as follows:

 

 

ARTICLE I

DEFINITIONS

SECTION 1.1.  Definitions.  Except as otherwise expressly provided or unless the context otherwise requires, the terms defined in this Section 1.1 shall for all purposes of this Agreement, have the meanings herein specified, the following definitions to be equally applicable to both the singular and plural forms of any of the terms herein defined:

The term “Agent” shall mean _____________, a _________ incorporated under the laws of ____________ or its lawful successors from time to time appointed in accordance with this Agreement.

The term “Agreement” shall mean this Warrant Agreement between the Company and the Agent, as such agreement is originally executed or as it may from time to time be supplemented, modified or amended as provided herein.

The term “Business Day” shall mean any day which is not a Saturday or Sunday and which in New York, New York and Chicago, Illinois is neither a legal holiday nor a day on which banking institutions are authorized by law or regulation to close.

The term “Company” shall mean MB Financial, Inc., a Maryland corporation, until a successor entity shall have become such pursuant to the applicable provisions of this Agreement and thereafter the term “Company” shall mean such successor entity.

The term “Event of Default” shall mean any event specified as such in Section 6.1 hereof.  An Event of Default shall “exist” if an Event of Default shall have occurred and be continuing.

The term “Exercise Date” shall mean each date during the Exercise Period on which the ___________________________ are purchased by a Registered Owner through the exercise of all or a portion of its Warrants.

The term “Exercise Form” shall mean the form designated Exercise Form attached as Annex II to each Warrant.

The term “Exercise Period” shall mean the period commencing at 9:00 A.M. (Chicago, Illinois time) on _____________, 20__ and ending at 4:00 P.M. (Chicago, Illinois time) on _____________, 20__.

 

  

  

  

The term “Exercise Price” shall have the meaning accorded such term in Section 2.1 of this Agreement.

The term “Expiration Time” means 4:00 p.m., Chicago, Illinois time, on ____________, 20__.

[The term “Indenture” shall mean that certain Indenture dated as of ___________, 20__ between the Company and ___________, as trustee, as such Indenture was originally executed or as it may from time to time be supplemented, modified or amended in accordance with the terms thereof.]

The term “Notice of Intent to Exercise” shall have the meaning accorded thereto in Section 4.1 of this Agreement. The form of Notice of Intent to Exercise is attached as Annex I to each Warrant.

The term “Outstanding” when used with reference to the Warrants shall mean, as of the date of determination, all Warrants theretofore authenticated and delivered under this Agreement, except:

(a)           Warrants theretofore canceled by the Agent or delivered to the Agent for cancellation; and

(b)           Warrants in exchange for or in lieu of which other Warrants shall have been authenticated and delivered under this Agreement.

The term “Person” shall mean an individual, a corporation, a partnership, a joint venture, an association, a joint stock company, a trust, an unincorporated organization, or a government or any agency, authority or political subdivision thereof.

The term “Register” shall mean the books for the registration and transfer of Warrants which books are kept by the Agent pursuant to Section 3.1 hereof.

The term “Warrantholders” or “Registered Owners” means the persons from time to time who are registered owners of the Warrants.

The term “Warrantholders’ Request” means an instrument signed in one or more counterparts by the Warrantholders entitled to purchase in the aggregate not less than a majority of the aggregate amount of _______________ which could be purchased pursuant to all Warrants then Outstanding requesting the Agent to take some action or proceeding specified therein.

The term “Warrants” means the ___________ Warrants issued hereunder pursuant to which Warrantholders have the right to purchase __________________ on the terms and conditions herein set forth.

The term “Written Order of the Company” and “Written Consent of the Company” mean, respectively, a written order or consent signed in the name of the Company by any one of its officers and may consist of one or more instruments so executed.

ARTICLE II

ISSUANCE OF WARRANTS

SECTION 2.1.  Issuance and Terms of Warrants.  The issuance of Warrants entitling the Registered Owners thereof to purchase up to an aggregate of not more than ______________ of the __________________ is hereby authorized.  The Warrants shall be delivered by the Company to the Agent to be authenticated by the Agent and delivered in accordance with the Written Order of the Company.  The Warrants shall be dated ________, 20__ and shall be issuable in fully registered form and in denominations that permit the purchase upon exercise of ____________.

The Warrants shall be exercisable on any Business Day during the Exercise Period. Each Warrant shall entitle the Registered Owner thereof to exercise such Warrant in accordance with and pursuant to the terms thereof for the purchase of  _______________________ at an exercise price of [$____] per _______ (the “Exercise Price”).

 

  

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SECTION 2.2.  Form of Warrants. The Warrants shall be in substantially the form set out in Exhibit A hereto, with such additional provisions, omissions, variations or substitutions as are not inconsistent with the provisions of this Agreement. The Warrants may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistent herewith, be determined by the officer executing such Warrants as evidenced by such officer's execution thereof.

SECTION 2.3.  Mutilated, Lost, Destroyed or Stolen Warrants.  If (i) any mutilated Warrant is surrendered to the Agent, or the Company and the Agent receive evidence to their satisfaction of the destruction, loss or theft of any Warrant and (ii) there is delivered to the Company and the Agent such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Agent that such Warrant has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Agent shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Warrant, a new Warrant of the same principal amount, bearing a number not contemporaneously Outstanding.

Upon the issuance of any new Warrant under this Section 2.3, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith.

Every new Warrant issued pursuant to this Section 2.3 in lieu of any destroyed, lost or stolen Warrant shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Warrant shall be at any time enforceable by anyone, and shall be entitled to all the security and benefits of this Agreement equally and ratably with all other Outstanding Warrants.

The provisions of this Section 2.3 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Warrants.

SECTION 2.4.  Warrantholder Not a Registered Owner of the _________________.  The ownership of a Warrant shall not constitute the Registered Owner thereof an owner of any of the __________________ nor entitle the Registered Owner to any right or interest in respect thereof except upon the exercise and surrender of its Warrants and the payment of the purchase price of the __________________ in accordance with and pursuant to the terms herein provided.

SECTION 2.5.  Warrants to Rank Pari Passu. All Warrants shall rank pari passu with each other.

SECTION 2.6.  Execution of Warrants.  The Warrants shall be signed in the name and on behalf of the Company by one of its officers. The signature of the officer executing the Warrants may be manual or facsimile. In case any officer of the Company who shall have signed any of the Warrants (manually or in facsimile) shall cease to be such officer before the Warrants so signed shall have been authenticated and delivered by the Agent, such Warrants nevertheless may be authenticated and delivered as though the Person who signed such Warrants had not ceased to be such officer of the Company. In addition, any Warrant may be signed on behalf of the Company by such Persons as on the actual date of execution of such Warrant shall be the proper officers of the Company, although at the date of the execution of this Agreement any such Person was not such officer.

Only such of the Warrants as shall bear thereon a certificate of authentication in substantially the form set forth in Section 2.2 hereof, executed by the Agent, shall be entitled to the benefits of this Agreement or be valid or obligatory for any purpose.

SECTION 2.7.  Purchase of Warrants by the Company.  The Company may purchase in the market, by private contracts or otherwise all or any portion of the Warrants on such terms as the Company may determine.

 

  

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ARTICLE III

EXCHANGE OF WARRANTS; REGISTRATION OF

TRANSFER OF WARRANTS; NOTICE TO WARRANTHOLDERS

SECTION 3.1.  Register.  The Agent, as agent of the Company, shall maintain, at its principal office in ____________, ____, the Register in which, subject to such reasonable regulations as it and the Company may prescribe, it shall provide for the registration of the Warrants and the transfer of Warrants as in this Agreement provided. The Register shall be in written form or in any other form capable of being converted into written form within a reasonable time. The Registered Owners of the Warrants shall present directly to the Agent all requests for (a) registration of transfer of Warrants, (b) exchange of Warrants for new Warrants in authorized denominations and (c) replacement of Warrants in the case of mutilation, destruction, loss or theft.

Upon the Company's request, the Agent shall furnish the Company with a list of names and addresses of the Registered Owners showing the number of such Warrants held by each Registered Owner.

SECTION 3.2.  Exchange of Warrants.  Warrants entitling the Registered Owner to purchase any specified amount of __________________ may, upon compliance with the reasonable requirements of the Agent, be exchanged for Warrants entitling the Registered Owner thereof to purchase an equal amount of __________________.

Warrants may be exchanged only at the principal office of the Agent in _______________, ___ or at any other place that is designated by the Company.  Any Warrants tendered for exchange shall be surrendered to the Agent and canceled. The Company shall execute all Warrants necessary to carry out exchanges as aforesaid and such Warrants shall be authenticated by the Agent.

SECTION 3.3.  Charges for Exchange.  For each Warrant exchanged or transferred, the Agent, except as otherwise herein provided, shall, if required by the Company, charge a reasonable sum for each new Warrant issued; and payment of such charges and reimbursement of the Agent or the Company for any taxes or governmental or other charges required to be paid shall be made by the party requesting such exchange, as a condition precedent thereto.

SECTION 3.4.  Registration of Transfer; Restrictions on Transfers.  No transfer of a Warrant shall be valid unless made at the principal offices of the Agent in the ____________, __________ or at any other place that is designated by the Company as an office for registration of transfer by the Registered Owner or such Registered Owner's executors, administrators or other legal representatives or attorney duly appointed by an instrument in writing in form and execution satisfactory to the Agent and upon compliance with such reasonable requirements as the Agent and the Company may prescribe. Any Warrants tendered for registration of transfer shall be surrendered to the Agent.

SECTION 3.5.  Notice to Warrantholders.  Unless herein otherwise expressly provided, any notice to be given hereunder to Warrantholders shall be deemed to be validly given if such notice is mailed to the last addresses of the Warrantholders appearing on the Register. Any notice so given shall be deemed to have been given on the day on which it has been mailed.  In determining under any provision hereof the date when notice of any meeting or other event must be given, the date of giving notice shall be included and the date of the meeting or other event shall be excluded.

ARTICLE IV

EXERCISE OF WARRANTS

SECTION 4.1.  Method of Exercise of Warrants.  The Registered Owner of any Warrant may exercise the right thereby to purchase __________________ by surrendering to the Agent on any Business Day during the Exercise Period at the principal office of the Agent ___________, ___________, or at any other place or places that may be designated by the Company:

(a)           at least 3 Business Days prior to the exercise of its Warrants, a completed and executed Notice of Intent to Exercise in the form thereof set forth in Annex I to each Warrant (a “Notice of Intent to Exercise”);

 

  

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(b)           on the Exercise Date, a duly completed and executed Exercise Form in the form thereof set forth in Annex II to each Warrant;

(c)           on the Exercise Date, its Warrant or Warrants which it is exercising; and

(d)           on the Exercise Date, the Exercise Price in funds immediately available to the Company.

The items described in the foregoing clauses (a) and (b) shall be deemed received when an actual copy or a facsimile thereof is received by the Agent.  Each Warrant shall be deemed to be surrendered only upon personal delivery thereof to or, if sent by mail or other means of transmission, upon receipt thereof by, the Agent at the office specified in this Section 4.1. Each Warrant shall be deemed exercised as of the first Business Day on which all of the foregoing conditions are satisfied with respect to such Warrant. The first day on which the Warrants may be exercised is ________________, ____________, ___.  The Company acknowledges that the Registered Owners of the Warrants are not required under any circumstances to take any other actions in order to exercise their Warrants.

SECTION 4.2.  Effect of Exercise of Warrants.  Upon surrender and payment of the Exercise Price by the Registered Owner of any Warrant in accordance with Section 4.1, the __________________ so purchased shall be deemed to have been issued and the person or persons to whom such __________________ are to be issued shall be deemed to have become the Registered Owner or owners of such __________________ on the Exercise Date.

After the due exercise of a Warrant as aforesaid, the Company shall forthwith cause to be delivered to the person to whom the __________________ so purchased are to be issued at the address specified in such form or, if so specified in such purchase form, cause to be delivered to such person at the office where such Warrant was surrendered,  ______________.

SECTION 4.3.  Partial Exercise of Warrants.  Subject to the issuance of __________________ in authorized denominations only, the Registered Owner of any Warrant may purchase _________________ in an amount less than that which such Registered Owner is entitled to purchase pursuant to the surrendered Warrant.  In the event of any purchase of an amount of __________________ less than the amount which can be purchased pursuant to a Warrant, the Registered Owner thereof upon exercise thereof prior to the Expiration Time shall, in addition, be entitled to receive forthwith a new Warrant in respect of the balance of the __________________ which such Registered Owner was entitled to purchase pursuant to the surrendered Warrant and which were not then exercised. The Company shall not be responsible for any taxes which may be payable in connection with the issuance of such new Warrant.

SECTION 4.4.  Expiration of Warrants.  After the Expiration Time, all rights under any Warrant in respect of which the right of purchase herein and therein provided for shall not theretofore have been exercised pursuant to Section 4.1 shall cease and terminate and such Warrant shall become void and of no effect and all rights of the Registered Owner thereof under this Warrant Agreement shall cease and terminate as of such termination; provided that such Registered Owner's rights under this Warrant Agreement with respect to actions occurring prior to such termination shall remain in full force. After the Expiration Time, each Registered Owner of any Warrants shall return any unexercised Warrants to the Agent for cancellation in accordance with Section 4.5 of this Agreement.

SECTION 4.5.  Cancellation of Surrendered Warrants.  All Warrants surrendered to the Agent pursuant to Sections 2.3, 3.2, 3.4 or 4.1 shall forthwith be canceled by the Agent. All Warrants canceled or required to be canceled under this or any other provision of this Agreement may be destroyed by or under the direction of the Agent and the Agent shall furnish the Company with a destruction certificate identifying the Warrants so destroyed and the __________________ which could have been purchased pursuant to each.

SECTION 4.6.  Accounting and Recording.  The Agent shall forthwith account and remit to the Company with respect to Warrants exercised and immediately forward to the Company (or into an account or accounts of the Company with the bank or trust company designated by the Company for that purpose) all monies received by the Agent on the purchase of ____________ through the exercise of Warrants. All such monies, and any ____________or other instruments, from time to time received by the Agent shall be received in trust for, and shall be segregated and kept apart by the Agent in trust for, the Company.

 

  

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The Agent shall record the particulars of the Warrants exercised which shall include the names and addresses of the persons who become Registered Owners of __________________ on exercise, the Exercise Date, the Exercise Price and the quantity of __________________ reserved for that purpose by the Company.

The Agent shall provide such particulars in writing to the Company.

ARTICLE V

COVENANTS

SECTION 5.1.  Issuance of __________________.  The Company covenants that so long as any Warrants remain Outstanding it will cause the __________________ from time to time paid for pursuant to the Warrants in the manner herein provided to be duly issued and delivered in accordance with the Warrants and the terms hereof.

SECTION 5.2.  Corporate Existence of the Company; Consolidation, Merger, Sale or Transfer.  The Company covenants that so long as any of the Warrants are Outstanding, it will maintain its existence, will not dissolve, sell or otherwise dispose of all or substantially all of its assets and will not consolidate with or merge into another entity or permit one or more other entities to consolidate with or merge into it; provided that the Company may, without violating the covenants in this Section 5.2 contained, consolidate with or merge into another entity or permit one or more other entities to consolidate with or merge into it, or sell or otherwise transfer to another entity all or substantially all of its assets as an entirety and thereafter dissolve, if the surviving, resulting or transferee entity, as the case may be, (i) shall be formed and existing under the laws of one of the States of the United States of America, (ii) assumes, if such entity is not the Company, all of the obligations of the Company hereunder and (iii) is not, after such transaction, otherwise in default under any provisions hereof.

SECTION 5.3.  Maintenance of Offices or Agencies for Transfer, Registration, Exchange of Warrants.  So long as any of the Warrants shall remain Outstanding, the Company covenants that it will maintain an office or agency in _________, where the Warrants may be presented for registration, exchange and transfer as in this Agreement provided, and where notices and demands to or upon the Company in respect of the Warrants or of this Agreement may be served, and where the Warrants may be presented for exchange for __________________ as provided herein.

SECTION 5.4.  Appointment to Fill a Vacancy in the Office of Agent.  The Company, whenever necessary to void or fill a vacancy in the office of Agent, covenants that it will appoint, in the manner provided in Section 7.4 hereof, an Agent, so that there shall at all times be a Agent with respect to the Outstanding Warrants.

ARTICLE VI

EVENTS OF DEFAULT; REMEDIES

SECTION 6.1.  Events of Default.  The term “Event of Default” whenever used herein with respect to any Warrant shall mean any one of the following events:

(a)           Failure by the Company to deliver the __________________ in exchange for the Warrants in accordance with the provisions of this Agreement, or

(b)           failure on the part of the Company to observe or perform in any material  respect any of the covenants or agreements on its part in the Warrants or in this Agreement specifically contained for the benefit of the Warrantholder, for a period of 30 days after there has been given, by registered or certified mail, to the Company by the Agent, or to the Company and the Agent by the Registered Owner a written notice specifying such failure and stating that such is a “Notice of Default” hereunder.

SECTION 6.2.  Suits by Warrantholders.  All or any of the rights conferred upon the Registered Owner of any Warrant by the terms of such Warrant and/or this Agreement may be enforced by the Registered Owner of such Warrants by appropriate legal proceedings but without prejudice to the right which is hereby conferred upon the Agent to proceed in its own name to enforce each and all of the provisions herein contained for the benefit of the Registered Owners of the Warrants from time to time Outstanding.

 

  

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SECTION 6.3.  Remedies Not Waived; Enforcement Expense.  No delay or failure on the part of the Registered Owners of Warrants or the Agent to exercise any right shall operate as a waiver of such right or otherwise prejudice such Registered Owner’s or Agent’s, as the case may be, rights, powers and remedies.

The Company agrees to pay all costs, expenses and fees, including all reasonable attorneys' fees, which may be incurred by a Registered Owner in enforcing or attempting to enforce its rights thereunder and hereunder following the occurrence and during the continuance of any Event of Default hereunder, whether the same shall be enforced by suit or otherwise.

SECTION 6.4.  Incorporators, Stockholders, Officers and Directors of Company are Exempt from Individual Liability.  No recourse under or upon any obligation, covenant or agreement of this Agreement, or of any Warrant, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company, either directly or though the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Agreement and the Warrants issued hereunder are solely corporate obligations, and that no personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors, as such, of the Company because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Agreement or in any of the Warrants or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director, as such, because of the creation of the obligations hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Agreement or in any of the Warrants or implied therefrom are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Agreement and the issuance of such Warrants.

ARTICLE VII

CONCERNING THE AGENT

SECTION 7.1.  Appointment of Agent.  The Company hereby appoints, at present having its principal office in [__________ at _____________, ________, __________] as the Agent in respect of the Warrants, upon the terms and subject to the conditions set forth in this Agreement.

SECTION 7.2.  Acceptance of Appointment By Agent; Limitations of Duties of Agent.  The Agent accepts its obligations set forth herein and in the Warrants upon the terms and conditions hereof and thereof, including the following, to all of which the Company agrees and to all of which the rights hereunder of the Registered Owners from time to time of the Warrants shall be subject:

(a)           The Agent shall be entitled to the compensation agreed upon with the Company for all services rendered by it, and the Company agrees promptly to pay such compensation and to reimburse the Agent for its reasonable out-of-pocket expenses (including, without limitation, the reasonable compensation of its counsel) incurred by it in connection with the services rendered by it hereunder. The Company also agrees to indemnify the Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acting as such Agent hereunder, including the costs and expenses of defending against any claim of liability.

(b)           In acting under this Agreement and in connection with the Warrants, the Agent is acting solely as the agent of the Company and does not assume any obligations or relationship of agency or trust for or with any of the Registered Owners of the Warrants.

(c)           The Agent may consult with one or more counsel (who may also be counsel to the Company), and, in the absence of bad faith, the written opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, omitted or suffered by it  hereunder in the good faith reliance thereon.

 

  

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(d)           The Agent shall be protected and shall incur no liability for or in respect of any action taken, omitted or suffered by it in the good faith reliance upon any Warrant, notice, direction, consent, certificate, affidavit, statement or other paper or document signed by the Company reasonably believed by the Agent to be genuine and to have been signed by the proper persons.

(e)           The Agent and its officers, directors and employees may become the owner of, or acquire any interest in, any Warrants, with the same rights that it or they would have if it were not the Agent hereunder, may engage or be interested in any financial or other transaction with the Company and may act on, or as depository, trustee or agent for, any committee or body of Registered Owners of the Warrants or holders of other obligations of the Company as freely as if it were not the Agent hereunder.

(f)           The recitals contained herein and in the Warrants (except in the Agent’s certificates of authentication) shall be taken as the statements of the Company, and the Agent assumes no responsibility for their correctness. The Agent makes no representation as to the validity or sufficiency of this Agreement or the Warrants, provided that the Agent shall not be relieved of its duty to authenticate Warrants as authorized by this Agreement. The Agent shall not be accountable for the use or application by the Company of the proceeds of the Warrants.

(g)           The Agent shall be obligated to perform such duties and only such duties as are herein and in the Warrants specifically set forth and no implied duties or obligations shall be read into this Agreement or the Warrants against the Agent.

(h)           No provision of this Agreement shall be construed to relieve the Agent from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct or that of its officers or employees.

(i)           The Agent shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company.

SECTION 7.3.  Agent Required.  The Company agrees that, until all Warrants (i) shall have been delivered to the Agent for cancellation or (ii) have become null and void because of the passage of the Expiration Time, there shall at all times be a Agent hereunder which shall be a corporation doing business in the United States and which alone or with its affiliates has a combined capital and surplus of at least $50,000,000.

SECTION 7.4.  Resignation and Removal of Agent; Appointment of Successor.  The Agent may at any time resign by giving written notice to the Company of such intention on its part, specifying the date on which its desired resignation shall become effective; provided, however, that such date shall never be less than 90 days after the receipt of such notice by the Company unless the Company agrees to accept less notice.  Upon receipt of such notice of resignation, the Company shall promptly act to appoint a successor Agent. The Agent may be removed at any time by the Company by delivering written notice thereof specifying such removal and the date when it is intended to become effective.  Any resignation or removal of the Agent shall take effect upon the date of the appointment by the Company as hereinafter provided of a successor and the acceptance of such appointment by such successor.

In case at any time the Agent shall resign, or shall be removed, or shall become incapable of acting or shall be adjudged as bankrupt or insolvent, or if a receiver of its or of its property shall be appointed, or if any public officer shall take charge or control of its or of its property or affairs, for the purpose of rehabilitation, conservation or liquidation, a successor agent, eligible as aforesaid, shall be appointed by the Company.

Upon the appointment as aforesaid of a successor agent and acceptance by it of such appointment, the Agent so superseded shall cease to be the Agent hereunder. If no successor Agent shall have been so appointed by the Company and shall have accepted appointment as hereinafter provided, then the Registered Owners of a majority in aggregate amount of the Outstanding Warrants, on such Holders’ behalf and on behalf of all others similarly situated may petition any court of competent jurisdiction for the appointment of a successor Agent.

 

  

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Any successor Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor and to the Company an instrument accepting such appointment hereunder, and thereupon such successor Agent, without any further act deed or conveyance, shall become vested with all the authority, rights, powers, immunities, duties and obligations of such predecessor with like effect as if originally named as such Agent hereunder, and such predecessor, upon payment of its charges and disbursements then unpaid, shall simultaneously therewith become obligated to transfer, deliver and pay over, and such successor Agent shall be entitled to receive, all moneys, __________________ or other property on deposit with or held by such predecessor, as such Agent hereunder.

The Company or, at the discretion of the Company, the successor Agent, will give prompt written notice by U.S. Mail to each Registered Owner of the Warrants at such owner's address as it appears on the Register of the appointment of a successor Agent. Failure to give such notice or any defect therein shall not affect the appointment of a successor Agent.

SECTION 7.5.  Merger, Conversion, Consolidation or Succession to Business of Agent.  Any corporation into which the Agent may be merged or converted, or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Agent shall be a party, or any corporation succeeding to all or substantially all the assets and business of the Agent, shall be the successor to the Agent hereunder, provided such corporation shall be otherwise eligible under this Article VII, without the execution or filing of any document or any further act on the part of any of the parties hereto.

In case any Warrants shall have been authenticated, but not delivered, by the Agent then in office, any successor by merger, conversion or consolidation to such authenticating Agent may adopt such authentication and deliver the Warrants so authenticated with the same effect as if such successor Agent had itself authenticated such Warrants.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.1.  Notices.  All notices or demands hereunder upon the Company or the Agent may be electronically communicated or hand delivered or sent by overnight courier, addressed to any party hereto as provided in this Section 8.1.

All communications intended for the Company shall be sent to:

MB Financial, Inc.

6111 N. River Road

Rosemont, Illinois 60018

Attention: Secretary

All communications intended for the Agent shall be sent to:

Agent-Name

Attention:

or at any other address of which either of the foregoing shall have notified the other in any manner prescribed in this Section 8.1.

For all purposes of this Agreement, a notice or communication will be deemed effective:

 

  

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(a)            if delivered by hand or sent by overnight courier, on the day it is delivered  unless (i) that day is not a day on which commercial banks are open for business (a “Local Business Day”) in the city specified in the address for notice provided by the recipient or (ii) if delivered after the close of business on a Local Business Day, then on the next succeeding Local Business Day or

(b)  if sent by facsimile transmission, on the date transmitted, provided that oral or written confirmation of receipt is obtained by the sender unless the date of transmission and confirmation is not a Local Business Day, in which case, on the next succeeding Local Business Day.

Any notice, direction, request, demand, consent or waiver by the Company or any Registered Owner to or upon the Agent shall be deemed to have been sufficiently given, made or filed, for all purposes, if given, made or filed in writing with the Agent in accordance with the provisions of this Section 8.1.

SECTION 8.2.  Day Not a Business Day.  If any date on which a payment is to be made, notice given or other action taken hereunder is not a Business Day, then such payments, notice or other action shall be made, given or taken on the next succeeding business day in such place, and in the case of any payment, no interest shall accrue for the delay.

SECTION 8.3.  Currency.  All amounts herein are expressed in United States Dollars.

SECTION 8.4.  Governing Law.  This Agreement and the Warrants shall be construed in accordance with the laws of the State of Maryland, without regard to principles of conflicts of law.

SECTION 8.5   Amendment.  This Agreement may be amended by the parties hereto, without the consent of the Warrantholders, for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained herein, or making such provisions in regard to matters or questions arising under this Agreement as the Company may deem necessary or desirable or amending this Agreement in any manner that does not adversely affect the interests of the Warrantholders in any material respect.  Any amendment or supplement to this Agreement or the Warrants that has a material adverse effect on the interests of the Warrantholders shall require the written consent of a majority of the Outstanding Warrantholders.  Except as otherwise provided herein, the consent of each Warrantholder affected shall be required for any amendment pursuant to which (i) the Exercise Price would be increased, (ii) the [number/amount of] _________ purchasable upon exercise of Warrants would be decreased, (iii) the Expiration Time would be accelerated or (iv) the number of Outstanding Warrants would be reduced the consent of whose Holders would be required for any amendment or modification of this Agreement. The Agent may, but shall not be obligated to, enter into any amendment to this Agreement which affects the Agent's own rights, duties or immunities under this Agreement or otherwise.

SECTION 8.6.  Limitation of Rights to Parties and Registered Owners of Warrants.  Nothing in this Agreement or in the Warrants expressed or implied is intended or shall be construed to give to any Person other than the Company, the Agent and the Registered Owners of the Warrants any legal or equitable right, remedy or claim under or in respect of this Agreement  or any covenant, condition or provision herein or in the Warrants. All such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Company, the Agent and the Registered Owners of the Warrants.

SECTION 8.7.  Separability of Invalid Provisions.  In case any one or more of the provisions contained in this Agreement or in the Warrants shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein.

SECTION 8.8.  No Waiver of Rights.  A failure or delay in exercising any right, power or privilege in respect of this Warrant Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise of that right, power or privilege or the exercise of any other right, power or privilege.

 

  

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SECTION 8.9.  Execution in Several Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original; but such counterparts shall together constitute but one and the same instrument.

SECTION 8.10.  Article and Section Headings.  The headings or titles of the several Articles and Sections hereof and any table of contents appended to copies hereof shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Agreement.

SECTION 8.11.  Successor and Assigns.  All the covenants and agreements in this Agreement contained by or on behalf of the Company or the Agent shall bind their respective successors and assigns, whether so expressed or not.

 

  

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The parties hereto have executed this Agreement as of the date first above written.

                MB FINANCIAL, INC.

                By__________________________

                AGENT NAME, as Agent

                By__________________________

 

  

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 EXHIBIT A

 

FORM OF WARRANT

Number ___ _____ Warrant(s) Representing Right to Purchase Up to ________________ of _________.

This Warrant expires at 4:00 p.m. (Chicago, Illinois time) on [________, _________] and thereafter will be void and of no value. Notice of the holder's intent to exercise this Warrant must be given to ________________, as Agent not later than 4:00 P.M. (Chicago, Illinois time) [____________, _____].

MB FINANCIAL, INC.

THIS CERTIFIES THAT, for value received, ____________, the Registered Owner hereof (herein sometimes called the “Warrantholder”) is entitled, upon and subject to the terms and conditions set forth herein and in the Warrant Agreement (the “Warrant Agreement”) dated as of ___________, ____, ____ between MB Financial, Inc., a Maryland corporation (the “Company”), and ______________, as Agent, (the “Agent”), to purchase __________________ at any time from 9:00 A.M. (Chicago, Illinois time) [____________, 20__] to 4:00 P.M. (Chicago, Illinois time) [________________, 20__], inclusive (each such date being referred to as an “Exercise Date”) up to _________________, by providing written notice to the Agent of the Warrantholder’s intention to exercise its right to purchase provided for herein specifying the number of Warrants which the Warrantholder wishes to exercise, such notice to be provided in the notice form annexed hereto as Annex II not earlier than 9:00 A.M. (Chicago, Illinois time)on [_________________, 20__] and not later than 4:00 P.M. (Chicago, Illinois  time) [____________, 20__], and by surrendering to the Agent at its principal office in _____________, ___________ on any Exercise Date, this Warrant, with the Exercise Form on which this Warrant is exercised, the __________________ will be delivered as described below against payment therefor in funds current and immediately available to the Agent at the amount designated in the Warrant Agreement, in each case in an amount equal to the purchase price of the __________________ so purchased pursuant to the exercise of this Warrant.

This Warrant is one of a duly authorized issue of warrants issued under the provisions of the Warrant Agreement. Reference is hereby made to the Warrant Agreement for particulars of the rights of the Warrantholders and of the Company in respect thereof and the terms and conditions upon which the Warrants are issue and held, all to the sole effect as if the provisions of the Warrant Agreement were herein set forth, to all of which the Warrantholder by acceptance hereof assents. The Company will furnish to the Warrantholder, upon written request and without charge, a copy of the Warrant Agreement. All capitalized terms not otherwise defined herein, shall have the meanings ascribed thereto in the Warrant Agreement.

The __________________ purchased pursuant to the exercise of this Warrant will be mailed by certified mail return receipt requested to the person specified in the Exercise Form annexed hereto at its address specified therein or, if so specified in the Exercise Form, delivered   to such person or its agent at the principal office of the Agent in ______________ on the Exercise Date.

If __________________ are purchased in an aggregate amount which is less than the total amount of _____________________ that can be purchased pursuant to this Warrant, the Warrantholder hereof will be entitled to receive without charge a new Warrant in respect of the balance of the amounts of __________________ which the Registered Owner hereof was entitled to purchase under the surrendered Warrant and which were not then purchased.

On presentation at the principal office of the Agent in ______________ subject to the provisions of the Warrant Agreement, one or more Warrants may be exchanged for one or more Warrants entitling the Warrantholder to purchase an equal aggregate amount of __________________ as may be purchased under the Warrant or Warrants so exchanged. Nothing contained in this Warrant, the Warrant Agreement or elsewhere shall be construed as conferring upon the Warrantholder hereof any right or interest whatsoever as an owner of __________________ or any other right or interest in respect thereof except as herein and in the Warrant Agreement expressly provided.

This Warrant is registered on the books of the Company and is transferable only in accordance with the provisions of the Warrant Agreement by surrender thereof at the principal office of the Agent duly endorsed or accompanied by a written instrument of transfer duly executed by the Registered Owner of this Warrant or its attorney duly authorized in writing all in accordance with the terms and provisions of the Warrant Agreement.

 

  

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This Warrant and the Warrant Agreement are governed by and construed in accordance with the laws of the State of Maryland, without regard to principles of conflicts of law.

The Company has caused this Warrant to be duly executed as of _________________, 20__.

                MB FINANCIAL, INC.

                By:______________________

                Name:____________________

                Title:___________________

Certificate of Authentication

This is one of the Warrants described in the within-mentioned Warrant Agreement

                ______________________, as Agent

By______________________________________

  Authorized Officer

 

 

  

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ANNEX I - NOTICE OF INTENT TO EXERCISE

TO:

The undersigned Warrantholder of _____ Warrants evidenced by Warrant Number______ (the “Warrant”) hereby notifies you pursuant to Section 4.1 of the Warrant Agreement dated as of _______, 20__ (the “Warrant Agreement”) between MB Financial, Inc., a Maryland corporation (the “Company”), and [__________, the undersigned], of the undersigned’s intention to exercise _______ of such Warrants on ____________, 20__) (the “Exercise Date”) to purchase ________________ in aggregate amount of the Company's __________________ from and after [___________, _____].

The Warrant with the Exercise Form duly completed shall be delivered to the Agent at its principal office in ________________, ________. Payment of the purchase price of the __________________ shall be made in immediately available at the principal office of the Agent on the Exercise Date. The undersigned shall direct such __________________ be registered and delivered in the name(s) and the amount(s) set forth opposite the undersigned's name on Annex II to the Warrant.

 

DATED this _____ day of ____________, ____.

                [NAME OF WARRANTHOLDER]

                By__________________________

 

  

  

  

 

 

ANNEX II - EXERCISE FORM

TO:

The undersigned Warrantholder of ______ Warrants evidenced by the Warrant attached hereto hereby exercises on _____________, 20__ (the “Exercise Date”) Warrants to purchase ____________ of MB Financial, Inc., a Maryland corporation, and agrees to transfer on the Exercise Date in  funds immediately available to the Agent (at [account]) such purchase price and in accordance with the terms and conditions of the Warrant Agreement dated as of ____________, 20__ (the “Warrant Agreement”) between MB Financial, Inc. and [____________________], as Agent. The undersigned hereby irrevocably directs that such __________________ be registered and delivered in accordance with the directions set forth herein.

The undersigned acknowledges that all taxes or other governmental charges payable upon the registration and delivery of such __________________ (other than in connection with each original issue and sale of the __________________), including any transfer taxes payable if the __________________ are to be registered in the name of a person or persons other than the undersigned Warrantholder, must be paid by the undersigned.

DATED this _________ day of _____________, __.

 

                                        [NAME OF WARRANTHOLDER]

                By__________________________________

 

 

Please check box if __________________ are to be delivered at the offices of _________ on the Exercise Date, failing which the __________________ will be mailed by certified mail return receipt requested.

Unless the foregoing box is checked, the __________________ shall be delivered to the Warrantholder at its address set forth in the Register.ex10_1.htm

Exhibit 10.1

SEPARATION AGREEMENT AND RELEASE

This Separation Agreement and Release (“Agreement”) is made by and between James A.  Clishem (“Employee”) and Active Power, Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).

RECITALS

WHEREAS, Employee was employed by the Company;

WHEREAS, Employee signed an Proprietary Information and Nondisclosure Agreement with the Company on May 5, 2005 (the “Confidentiality Agreement”);

WHEREAS, Employee signed a Severance Benefits Agreement with the Company on April 14, 2010, which amended and restated that a Severance Benefits Agreement dated October 29, 2008 (collectively, the “Severance Agreement”);

WHEREAS, the Company and Employee have entered into (i) Stock Option Agreements, dated June 7, 2005, November 10, 2005, May 16, 2006, February 7, 2007, February 28, 2008, February 4, 2009, February 25, 2010 and February 25, 2010 granting Employee the option to purchase shares of the Company’s common stock subject to the terms and conditions of the Company’s 2000 Stock Incentive Plan and the Stock Option Agreements and (ii) a Stock Option Agreement, dated February 28, 2011 granting Employee the option to purchase shares of the Company’s common stock subject to the terms and conditions of the Company’s 2010 Equity Incentive Plan and the Stock Option Agreement (all such agreements referred to in (i) and (ii), collectively the “Stock Agreements”);

WHEREAS, Employee and the Company have agreed that Employee’s employment with the Company will terminate effective October 14, 2011 (the “Termination Date”), and that such separation will be considered an involuntary termination without cause as described in the Severance Agreement; and

WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that the Employee may have against the Company and any of the Releasees as defined below, including, but not limited to, any and all claims arising out of or in any way related to Employee’s employment with or separation from the Company;

NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Employee hereby agree as follows:

AGREEMENT

1.             Consideration.  In consideration of Employee’s execution of this Agreement and Employee’s fulfillment of all of its terms and conditions, the Company agrees as follows:

  

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a.             Separation Payment.  The Company agrees to pay Employee a total of Three Hundred and Forty-Four Thousand and no/100 Dollars ($344,000.00), at the rate of Twenty Eight Thousand, Six Hundred Sixty-Six and 67/100 Dollars ($28,666.67) per month, less applicable withholding, for twelve (12) months from the first regular payroll date following the Effective Date, in accordance with the Company’s regular payroll practices.

b.             COBRA.  The Company shall reimburse Employee for the payments Employee makes for COBRA coverage for a period of twelve (12) months, or until Employee has secured other employment, whichever occurs first, provided Employee timely elects and pays for continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), within the time period prescribed pursuant to COBRA.  COBRA reimbursements shall be made by the Company to Employee consistent with the Company’s normal expense reimbursement policy, provided that Employee submits documentation to the Company substantiating his payments for COBRA coverage.  The Company’s obligation to pay COBRA reimbursements shall cease immediately upon the date that Employee secures other employment.

c.             Bonus.  The Company agrees to pay Employee a lump sum of One Hundred Thousand Dollars ($100,000), less applicable withholding, to compensate Employee for his 2011 bonus in accordance with Section 2(d) of the Severance Agreement.  This payment will be made to Employee within ten (10) days following the Effective Date of this Agreement.

d.             General.  Employee acknowledges that without this Agreement, he is otherwise not entitled to the consideration listed in this paragraph 1.

2.             Stock.  In consideration for this Agreement, the Parties have agreed that, for the purposes of determining the number of shares of the Company’s common stock that Employee is entitled to purchase from the Company pursuant to the exercise of outstanding options, the Company will accelerate the vesting of  435,475 shares (equivalent to an additional one (1) year of vesting) under the Stock Agreements that would have otherwise remained unvested at the Termination Date, such that Employee will be vested in a total of 1,890,675 shares under the Stock Agreements, effective as of the Effective Date.  The exercise of Employee’s vested options shall continue to be governed by the terms and conditions of the Company’s Stock Agreements.  Employee hereby acknowledges and agrees that he is not entitled to any additional vesting under the Stock Agreements.

3.             Benefits.  Employee’s health insurance benefits shall cease on October 14, 2011, subject to Employee’s right to continue his health insurance under COBRA.  Employee’s participation in all benefits and incidents of employment, including, but not limited to, vesting in stock options, and the accrual of bonuses, vacation, and paid time off, ceased as of the Termination Date.

4.             Payment of Salary and Receipt of All Benefits.  Employee acknowledges and represents that, other than (i) the consideration set forth in this Agreement, (ii) accrued vacation/PTO in the amount reflected in the Company’s records, and (iii) outstanding business expenses in an amount not to exceed Three Thousand Two Hundred Fifteen and 62/100 ($3,215.62), the Company has paid or provided all salary, wages, bonuses, accrued vacation/paid time off, premiums, leaves, housing allowances, relocation costs, interest, severance, outplacement costs, fees, reimbursable expenses, commissions, stock, stock options, vesting, and any and all other benefits and compensation due to Employee.  Items set forth in Section 4(ii) and (iii) will be paid in accordance with Company policy and schedule.

  

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5.             Resignation and Release of Claims.  Employee hereby resigns all executive positions with the Company and with all subsidiaries of the Company and hereby resigns as a member of the Board of Directors of the Company and from the Board of Directors of all subsidiaries of the Company. Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Employee by the Company and its current and former officers, directors, employees, agents, investors, attorneys, shareholders, administrators, affiliates, benefit plans, plan administrators, insurers, trustees, parents, divisions, and subsidiaries, and predecessor and successor corporations and assigns (collectively, the “Releasees”).  Employee, on his own behalf and on behalf of his respective heirs, family members, executors, agents, and assigns, hereby and forever releases the Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Employee may possess against any of the Releasees arising from any omissions, acts, facts, or damages that have occurred up until and including the Effective Date of this Agreement, including, without limitation:

a.             any and all claims relating to or arising from Employee’s employment relationship with the Company and the termination of that relationship;

b.             any and all claims relating to, or arising from, Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;

c.             any and all claims for wrongful discharge of employment; constructive discharge; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;

d.             any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act; the Fair Credit Reporting Act; the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act; the Sarbanes-Oxley Act of 2002; the Texas Payday Act; Texas Workers’ Compensation Act; and Chapter 21 of the Texas Labor Code (also known as the Texas Commission on Human Rights Act);

e.             any and all claims for violation of the federal or any state constitution;

  

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f.              any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;

g.             any claim for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by Employee as a result of this Agreement; and

h.             any and all claims for attorneys’ fees and costs.

Employee agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released.  This release does not extend to any obligations incurred under this Agreement.  This release does not release claims that cannot be released as a matter of law, including, but not limited to, Employee’s right to file a charge with or participate in a charge by the Equal Employment Opportunity Commission, or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company (with the understanding that any such filing or participation does not give Employee the right to recover any monetary damages against the Company; Employee’s release of claims herein bars Employee from recovering such monetary relief from the Company).

6.             Unknown Claims.  Employee acknowledges that he has been advised to consult with legal counsel and that he is familiar with the principle that a general release does not extend to claims that the releaser does not know or suspect to exist in his favor at the time of executing the release, which, if known by him, must have materially affected his settlement with the releasee.  Employee, being aware of said principle, agrees to expressly waive any rights he may have to that effect, as well as under any other statute or common law principles of similar effect.

7.             No Pending or Future Lawsuits.  Employee represents that he has no lawsuits, claims, or actions pending in his name, or on behalf of any other person or entity, against the Company or any of the other Releasees.  Employee also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or entity against the Company or any of the other Releasees.

8.             Application for Employment.  Employee understands and agrees that, as a condition of this Agreement, Employee shall not be entitled to any employment with the Company, and Employee hereby waives any right, or alleged right, of employment or re-employment with the Company.  Employee further agrees not to apply for employment with the Company and not otherwise pursue an independent contractor or vendor relationship with the Company.

9.             Confidentiality.  Employee agrees to maintain in complete confidence the existence of this Agreement, the contents and terms of this Agreement, and the consideration for this Agreement (hereinafter collectively referred to as “Separation Information”).  Except as required by law, Employee may disclose Separation Information only to his immediate family members, the Court in any proceedings to enforce the terms of this Agreement, Employee’s counsel, and Employee’s accountant and any professional tax advisor to the extent that they need to know the Separation Information in order to provide advice on tax treatment or to prepare tax returns, and must prevent disclosure of any Separation Information to all other third parties.  Employee agrees that he will not publicize, directly or indirectly, any Separation Information.

  

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Employee acknowledges and agrees that the confidentiality of the Separation Information is of the essence and a material term of this Agreement.  The Parties agree that if the Company proves that Employee breached this Confidentiality provision, the Company shall be entitled to an award of its costs spent enforcing this provision, including all reasonable attorneys’ fees associated with the enforcement action, without regard to whether the Company can establish actual damages from Employee’s breach. Any such individual breach or disclosure shall not excuse Employee from his obligations hereunder, nor permit him to make additional disclosures.  Employee warrants that he has not disclosed, orally or in writing, directly or indirectly, any of the Separation Information to any unauthorized party.

10.           Trade Secrets and Confidential Information/Company Property.  Employee reaffirms and agrees to observe and abide by the terms of the Confidentiality Agreement, specifically including the provisions regarding nondisclosure of the Company’s trade secrets and confidential and proprietary information, and any restrictive covenants contained therein.  Employee also reaffirms and agrees to observe and abide by the terms of the surviving terms of the Severance Agreement, including the non-competition and non-solicitation provisions contained in Section 4 of such agreement.  Employee’s signature below constitutes his certification under penalty of perjury that he has returned all documents and other items provided to Employee by the Company, developed or obtained by Employee in connection with his employment with the Company, or otherwise belonging to the Company.

11.           No Cooperation.  Employee agrees that he will not knowingly encourage, counsel, or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against any of the Releasees, unless under a subpoena or other court order to do so.  Employee agrees both to immediately notify the Company upon receipt of any such subpoena or court order, and to furnish, within three (3) business days of its receipt, a copy of such subpoena or other court order.  If approached by anyone for counsel or assistance in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints against any of the Releasees, Employee shall state no more than that he cannot provide counsel or assistance.

12.           Non-Disparagement.  Employee agrees to refrain from any disparagement, defamation, libel, or slander of any of the Releasees, and agrees to refrain from any tortious interference with the contracts and relationships of any of the Releasees.  Employee shall direct any inquiries by potential future employers to the Company’s human resources department, which shall use its best efforts to provide only the Employee’s last position and dates of employment.

13.           Breach.  In addition to the rights provided under paragraph 22 below (the “Attorneys’ Fees” section), Employee acknowledges and agrees that any material breach of this Agreement, or of any provision of the Confidentiality Agreement shall entitle the Company immediately to recover and/or cease providing the consideration provided to Employee under this Agreement and to obtain damages, except as provided by law.

14.           No Admission of Liability.  Employee understands and acknowledges that this Agreement constitutes a compromise and settlement of any and all actual or potential disputed claims by Employee.  No action taken by the Company hereto, either previously or in connection with this Agreement, shall be deemed or construed to be (a) an admission of the truth or falsity of any actual or potential claims or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to Employee or to any third party.

  

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15.           Costs.  The Parties shall each bear their own costs, attorneys’ fees, and other fees incurred in connection with the preparation of this Agreement.

16.           ARBITRATION.  THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS OF THIS AGREEMENT, THEIR INTERPRETATION, AND ANY OF THE MATTERS HEREIN RELEASED, SHALL BE SUBJECT TO ARBITRATION IN TRAVIS COUNTY, TEXAS BEFORE THE JUDICIAL ARBITRATION & MEDIATION SERVICES, INC. (“JAMS”), PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (“JAMS RULES”).  THE ARBITRATOR MAY GRANT INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES.  THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN ACCORDANCE WITH TEXAS LAW, AND THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND PROCEDURAL TEXAS LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO ANY CONFLICT-OF-LAW PROVISIONS OF ANY JURISDICTION.  TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH TEXAS LAW, TEXAS LAW SHALL TAKE PRECEDENCE.  THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THE ARBITRATION.  THE PARTIES AGREE THAT THE PREVAILING PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION TO ENFORCE THE ARBITRATION AWARD.  THE PARTIES TO THE ARBITRATION SHALL EACH PAY AN EQUAL SHARE OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY SHALL SEPARATELY PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES; PROVIDED, HOWEVER, THAT THE ARBITRATOR SHALL AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY, EXCEPT AS PROHIBITED BY LAW.  THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY.  NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT EITHER PARTY FROM SEEKING INJUNCTIVE RELIEF (OR ANY OTHER PROVISIONAL REMEDY) FROM ANY COURT HAVING JURISDICTION OVER THE PARTIES AND THE SUBJECT MATTER OF THEIR DISPUTE RELATING TO THIS AGREEMENT AND THE AGREEMENTS INCORPORATED HEREIN BY REFERENCE.  SHOULD ANY PART OF THE ARBITRATION AGREEMENT CONTAINED IN THIS PARAGRAPH CONFLICT WITH ANY OTHER ARBITRATION AGREEMENT BETWEEN THE PARTIES, THE PARTIES AGREE THAT THIS ARBITRATION AGREEMENT SHALL GOVERN.

17.           Tax Consequences.  The Company makes no representations or warranties with respect to the tax consequences of the payments and any other consideration provided to Employee or made on his behalf under the terms of this Agreement.  Employee agrees and understands that he is responsible for payment, if any, of local, state, and/or federal taxes on the payments and any other consideration provided hereunder by the Company and any penalties or assessments thereon.  Employee further agrees to indemnify and hold the Company harmless from any claims, demands, deficiencies, penalties, interest, assessments, executions, judgments, or recoveries by any government agency against the Company for any amounts claimed due on account of (a) Employee’s failure to pay or the Company’s failure to withhold, or delayed payment of, federal or state taxes, or (b) damages sustained by the Company by reason of any such claims, including attorneys’ fees and costs.

  

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18.           Authority.  The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement.  Employee represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement.  Each Party warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein.

19.           No Representations.  Employee represents that he has had an opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement.  Employee has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement.

20.           No Waiver.  The failure of the Company to insist upon the performance of any of the terms and conditions in this Agreement, or the failure to prosecute any breach of any of the terms or conditions of this Agreement, shall not be construed thereafter as a waiver of any such terms or conditions.  This entire Agreement shall remain in full force and effect as if no such forbearance or failure of performance had occurred.

21.           Severability.  In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.

22.           Attorneys’ Fees.  In the event that either Party brings an action to enforce or effect its rights under this Agreement, the prevailing Party shall be entitled to recover its costs and expenses, including the costs of mediation, arbitration, litigation, court fees, and reasonable attorneys’ fees incurred in connection with such an action.

23.           Entire Agreement.  This Agreement represents the entire agreement and understanding between the Company and Employee concerning the subject matter of this Agreement and Employee’s employment with and separation from the Company and the events leading thereto and associated therewith, and supersedes and replaces any and all prior agreements and understandings concerning the subject matter of this Agreement and Employee’s relationship with the Company, with the exception of the Confidentiality Agreement, the surviving terms of the Severance Agreement, and the Stock Agreements.

24.           No Oral Modification.  This Agreement may only be amended in a writing signed by Employee and the Company’s Chief Executive Officer.

  

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25.           Governing Law.  This Agreement shall be governed by the laws of the State of Texas, without regard for choice-of-law provisions.  Employee consents to personal and exclusive jurisdiction and venue in the State of Texas.

26.           Section 409A.

a.             Notwithstanding anything to the contrary in this Agreement, if Employee is a “specified employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the final Treasury Regulations and any guidance promulgated thereunder (“Section 409A”) at the time of Employee’s termination of employment (other than due to death), and the severance payable to Employee, if any, pursuant to this Agreement, when considered together with any other severance payments or separation benefits that are considered deferred compensation under Section 409A (together, the “Deferred Compensation Separation Benefits”) that are payable within the first six (6) months following Employee’s termination of employment, will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of Employee’s termination of employment.  All subsequent Deferred Compensation Separation Benefits, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit.  Notwithstanding anything herein to the contrary, if Employee dies following Employee’s termination of employment but prior to the six (6) month anniversary of Employee’s termination of employment, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Employee’s death and all other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit.  Each payment and benefit payable under this Agreement is intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

b.             Any amount paid under the Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Compensation Separation Benefits for purposes of this Agreement.  Any amount paid under the Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit will not constitute Deferred Compensation Separation Benefits for purposes of this Agreement.  For this purpose, “Section 409A Limit” means the lesser of two (2) times: (i) Employee’s annualized compensation based upon the annual rate of pay paid to Employee during the Company’s taxable year preceding the Company’s taxable year of Employee’s termination of employment as determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which Employee’s employment is terminated.

c.             The foregoing provisions are intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply.  Employee and the Company agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Employee under Section 409A.

  

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27.           Effective Date.  This Agreement will become null and void if not signed by Employee on or before 3:00 pm (CST) on October 16, 2011.  This Agreement will become effective on the day both Parties have signed it (the “Effective Date”).

28.           Counterparts.  This Agreement may be executed in counterparts and by facsimile, and each counterpart and facsimile shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

29.           Voluntary Execution of Agreement.  Employee understands and agrees that he executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of the Company or any third party, with the full intent of releasing all of his claims against the Company and any of the other Releasees.  Employee acknowledges that:

a.             he has read this Agreement;

b.             he has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of his own choice or has elected not to retain legal counsel;

c.             he understands the terms and consequences of this Agreement and of the releases it contains; and

d.             he is fully aware of the legal and binding effect of this Agreement.

[Remainder of Page Blank; Signature Page Follows]

  

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

 

 

	  	
JAMES A. CLISHEM, an individual

	  	  	 
	 	 	 
	
Dated:  October 15, 2011

	
/s/ James A. Clishem

	  	
James A. Clishem

	  	  	 
	  	  	 
	  	
ACTIVE POWER, INC.

	  	  	 
	 	 	 
	
Dated:  October 15, 2011

	
By  

	/s/ Benjamin L. Scott
	  	 	
Benjamin L. Scott

	  	 	
Chairman

 

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