Document:

EXHIBIT 10.3

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the "Agreement"), entered into as of March 2, 2007, is by and between Beacon Power Corporation, a Delaware corporation (the "Company"), and Matthew L. Lazarewicz (the "Executive")

 

WHEREAS, the Executive is an employee of the Company, and the Company desires to retain his services and he wishes to continue his 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 the above date and continuing until March 31, 2008, 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 and Chief Technical Officer 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 intellectual property and technology.  The Executive will report to the Chief Executive Officer of the Company.  The Executive will generally perform his services at the Company's principal offices, which are currently located in Wilmington, 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 his best efforts to promote the interests of the Company and shall devote his 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 $182,000 (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 thirty-five percent (35%) 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, 2007.  The Compensation Committee shall evaluate such performance goals and targets and such annual bonus, if any, shall be paid on March 1, 2008.

 

(c)            Long term incentive compensation.  Effective on the effective date of this Agreement, the Company has entered into a 2007 long term incentive compensation arrangement with Executive, consisting of a non-qualified stock option and restricted stock units and a performance-based extended long term incentive compensation arrangement.  

 

(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.  He 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.  In addition to U.S. statutory holidays, the Executive will be entitled to 20 business days of paid vacation per year, accruing at the rate of 1.66 days per month.  A maximum of ten unused vacation days in any year may be carried over and used in the next year, subject to such policies as the Company may adopt from time to time with respect thereto.  If by December 31, each year, the Executive has accrued in excess of ten unused vacation days, the Company shall pay (consistent with existing Company policy) 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.

 

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

 

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, he 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, he 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 him 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.

 

 

	
            - 2 -
 

 

 

 

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 his 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 him 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

 

 (4) engaged in willful misconduct and failed to cure same within 30 days after written notice thereof is given to him 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 his 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 his 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 he 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 CTO of the Company itself but is not appointed as the Vice President and CTO 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 -
 

 

 

 

 (3) a change in the primary location where the Executive is expected to perform his services hereunder to a location that is more than 50 miles away from Wilmington, 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.

 

(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 his accrued Base Salary through the last date of his 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 his 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 his 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 his 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 his 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 

 

	
            - 4 -
 

 

 

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 his estate, as the case may be, an amount equal to his then current Base Salary for the three-month period following the Termination Date. 

 

 (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.  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 his 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 he 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 his 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.

 

 

	
            - 5 -
 

 

 

 

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:

	
            (a) If to the Executive:

Matthew L. Lazarewicz

 

 

 
 	
            (b) If to the Company:

Beacon Power Corporation

234 Ballardvale Street

Wilmington, MA  01887

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.

 

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 him.  

 

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.

 

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

 

	
            EXECUTIVE

 

_/s/ Matthew L. Lazarewicz____

Matthew L. Lazarewicz
 	
            BEACON POWER CORPORATION

 

By: _/s/ F. William Capp_____

Name:  F. William Capp

Title:  President and Chief Executive Officer
 

 

 

 

	
            - 6 -
 

 

 

 

 

 

	
            - 7 -EXHIBIT 10.4

 

BEACON POWER CORPORATION

OPTION AGREEMENT

 

This Option Agreement (this “Agreement”), dated as of March 2, 2007 (the “Effective Date”), is by and between Beacon Power Corporation (the “Company”) and F. William Capp (“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 set forth herein;

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:
 
	
            89,524
 	
            $1.58
 
			

 

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
  
	
            33.33%
 	
            March 2, 2007
 	
            29,838
 	
            29,838
 
	
            8.33%
 	
            March 31, 2007
 	
            7,457
 	
            37,292
 
	
            8.33%
 	
            June 30, 2007
 	
            7,457
 	
            44,749
 
	
            8.33%
 	
            September 30, 2007
 	
            7,457
 	
            52,206
 
	
            8.33%
 	
            December 31, 2007
 	
            7,457
 	
            59,663
 
	
            8.33%
 	
            March 31, 2008
 	
            7,457
 	
            67,120
 
	
            8.33%
 	
            June 30, 2008
 	
            7,457
 	
            74,577
 
	
            8.33%
 	
            September 30, 2008
 	
            7,457
 	
            82,034
 
	
            8.36%
 	
            December 31, 2008
 	
            7,490
 	
            89,524
 

 

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.

 

	
            1.3
 	
            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 

 

BOS 574461.3 

 

 

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 interest 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.

 

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.

 

 

	
            - 2 -
 

BOS 574461.3 

 

 

 

 “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: (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) upon written notice to Executive, provide that any portion of the Shares underlying the Option that are vested but not exercised will become converted or exercisable, as the case may be, 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; (iii) in the event of an Acquisition Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share of Common Stock surrendered pursuant to such Acquisition Event (the “Acquisition Price”), 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 Acquisition Price 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; and (iv) provide that the Option (A) shall become
exercisable, realizable or vested in full, or shall be free of all conditions or restrictions, prior to the consummation of the Acquisition Event, or (B), if applicable, shall be assumed, or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof).

 

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, 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 $500,000.  The Company and its advisers shall make the determination of the amount of the Gross 

 

	
            - 3 -
 

BOS 574461.3 

 

 

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.  In such event the Option shall revest in Executive as if such transfer in trust had not occurred.  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 any shares of Common Stock that may be acquired through conversion of the Shares underlying the Option to Common Stock, 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 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.  

 

 

	
            - 4 -
 

BOS 574461.3 

 

 

 

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, 234 Ballardvale Street, Wilmington, MA 01887, 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 grant of 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 -
 

BOS 574461.3 

 

 

 

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

	
            EXECUTIVE:

 

By:              /s/ F. William Capp                                            

Signature

 

Name:  F. William Capp

 

Address:                                             

 
 	
            BEACON POWER CORPORATION

 

By:              /s/ Jack P. Smith                                                           

Signature

 

Name:  Jack P. Smith

 

Title:  Chairman, Compensation Committee

 
 
	
             
 	
             
 

 

 

 

 

	
            - 6 -
 

BOS 574461.3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}]]