Document:

EX-10.02

 Exhibit 10.02 
 Change of Control Retention and Severance Agreement 
 This Change of
Control Retention and Severance Agreement (the “Agreement”) is made and entered into as of, May 6, 2013 by and between Cepheid and , Warren Kocmond (the “Executive”). Capitalized terms used in this
Agreement shall have the meanings set forth in Section 3 below. 
 1. Purpose. The purpose of this Agreement is to encourage
Executive to remain in the employ of the Company and to continue to devote Executive’s full attention to the success of the Company in the event of a Change of Control, as such term is defined in Section 3 of this Agreement. 

2. Termination Upon Change of Control. In the event of Executive’s Termination Upon Change of Control, Executive shall receive the following
payments and benefits: 
 2.1 Accrued Salary, Bonus, Vacation and Benefits. Executive shall receive all salary and
accrued vacation (less applicable withholding) earned through Executive’s termination date, any earned but unpaid bonus, and the benefits, if any, under Company benefit plans to which Executive may be entitled pursuant to the terms of such
plans. 
 2.2 Equity Award Acceleration. Provided that Executive complies with Section 5 below, all outstanding
equity awards, including, without limitation, stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock rights and stock bonuses, granted or issued by the Company to Executive prior to the Change of Control
shall become fully vested and exercisable, and any such outstanding equity awards that are subject to a right of repurchase, right of forfeiture, or similar right, shall be released from such right and shall be fully vested, in each case,
immediately prior to the effective date of the Termination Upon Change of Control. 
 2.3 Cash Severance Payment.
Provided that Executive complies with Section 5 below, Executive shall receive a lump sum cash payment in an amount equal to (i) eighteen (18) months of Executive’s then-effective annual base salary plus (ii) 100% of the
target bonus for which the Executive would have been eligible during the year of termination pursuant to the Company’s then-effective Key Employee Incentive Plan or equivalent cash incentive bonus plan (less applicable withholding), paid within
ten (10) business days of the effective date of the Termination Upon Change of Control. For purposes of this Section 2.3, a Termination Upon Change of Control will be determined consistent with the rules relating to “separation from
service” as defined in Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this Agreement in
connection with Executive’s termination of employment constitute deferred compensation subject to Section 409A, and Executive is deemed at the time of such termination of employment to be a “specified employee” under
Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period measured from Executive’s separation from service from the Company or (ii) the date of Executive’s
death following such a separation from service; provided, however, that such 

 
deferral shall only be effected to the extent required to avoid adverse tax treatment to Executive including, without limitation, the additional twenty-percent (20%) tax for which Executive
would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between
Executive’s termination of employment and the first payment date but for the application of this provision, and the balance of the installments (if any) will be payable in accordance with their original schedule. All forms of compensation
referred to in this Agreement are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law. To the extent that any provision of this Agreement is ambiguous as to its compliance with
Section 409A, the provision will be read in such a manner so that all payments hereunder comply with Section 409A. To the extent any payment under this Agreement may be classified as a “short-term deferral” within the meaning of
Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. 
 3. Definitions. Capitalized terms used in this Agreement shall have the meanings set forth in this Section 3. 
 3.1 “Cause” means Executive’s (a) failure to perform any reasonable and lawful duty of Executive’s position or failure to follow the lawful written directions of the Chief
Executive Officer; (b) commission of an act that constitutes misconduct and is injurious to the Company or any subsidiary; (c) conviction of, or pleading “guilty” or “no contest” to, a felony under the laws of the
United States or any state thereof; (d) committing an act of fraud against, or the misappropriation of property belonging to, the Company or any subsidiary; (e) commission of an act of dishonesty in connection with Executive’s
responsibilities as an employee and affecting the business or affairs of the Company; (f) breach of any confidentiality, proprietary information or other agreement between Executive and the Company or any subsidiary; or (g) failure or
refusal to carry out the reasonable directives of the Company. 
 3.2 “Change of Control” means (a) any
“person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than a trustee or other fiduciary holding securities of the Company under an
employee benefit plan of the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of (A) the outstanding
shares of common stock of the Company or (B) the combined voting power of the Company’s then outstanding securities; (b) the Company is party to a merger or consolidation which results in the voting securities of the Company
outstanding immediately prior thereto failing to continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving or another entity) at least fifty (50%) percent of the combined voting power
of the voting securities of the Company or such surviving or other entity outstanding immediately after such merger or consolidation; (c) the sale or disposition of all or substantially all of the Company’s assets (or consummation of any
transaction having similar effect); (d) the dissolution or liquidation of the Company; or (e) a change in the composition of the Board of Directors of the Company, as a result of which fewer than a majority of the directors are Incumbent
Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a
majority of those 

  
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directors whose election or nomination was not in connection with any transactions described in subsections (a), (b), (c) or (d) or in connection with an actual or threatened proxy
contest relating to the election of directors of the Company. 
 3.3 ‘‘Company” means Cepheid and any
successor or assign to substantially all the business and/or assets of Cepheid. 
 3.4 “Diminution of
Responsibilities” means the occurrence of any of the following conditions, without Executive’s consent: (a) a significant diminution in the nature or scope of Executive’s authority, title, function or duties from
Executive’s authority, title, function or duties in effect immediately preceding any Change of Control; (b) a ten percent (10%) reduction in Executive’s base salary or a twenty-five percent (25%) reduction in
Executive’s target bonus opportunity, if any, in effect immediately preceding any Change of Control (in either case, unless such reduction is part of a Company officer-wide program to reduce expenses); (c) the Company’s requiring
Executive to be based at any office or location more than 50 miles from the office where Executive was employed immediately preceding the Change of Control; (d) any material breach of the terms of this Agreement by the Company; or
(e) failure of any successor or assignee to the Company to assume this Agreement; provided, however, that Executive shall provide notice to the Company within 90 days of the occurrence of a condition listed above constituting a
Diminution of Responsibilities and allow the Company 30 days in which to cure such condition. 
 3.5 “Termination Upon
Change of Control” means: 
 (a) any involuntary termination of the employment of Executive by the Company without
Cause within twelve (12) months following a Change of Control; or 
 (b) any resignation by Executive based on a Diminution
of Responsibilities where (i) such Diminution of Responsibilities occurs within twelve (12) months following the Change of Control, and (ii) such resignation occurs within ninety (90) days following such Diminution of
Responsibilities. 
 4. Federal Excise Tax. If the payments and benefits provided for in this Agreement constitute “parachute
payments” within the meaning of the Internal Revenue Code of 1986, as amended (the “Code”), but for this Section 4, would be subject to the excise tax imposed by Section 4999 of the Code, then the payments and
benefits under this Agreement will be payable, at Executive’s election, either in full or in such lesser amount as would result, after taking into account the applicable federal, state and local income taxes and excise tax imposed by
Section 4999 of the Code, in Executive’s receipt on an after-tax basis of the greatest amount of benefits. In the event Executive elects to receive such lesser amount of the payments and benefits under this Agreement, the payments and
benefits shall be reduced in the following order: (A) a pro rata reduction of (i) cash payments that are subject to Section 409A as deferred compensation and (ii) cash payments not subject to Section 409A; (B) a pro
rata reduction of (i) employee benefits that are subject to Section 409A as deferred compensation and (ii) employee benefits not subject to Section 409A; and (C) a pro rata cancellation of (i) accelerated vesting of
stock and other equity-based awards that are subject to Section 409A as deferred compensation and (ii) stock and other equity-based awards not subject to Section 409A. In the event that acceleration of vesting of

  
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stock and other equity-based award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of Executive’s stock and other
equity-based awards unless Executive elects in writing a different order for cancellation. 
 5. Release of Claims. The Company may
condition the payments and benefits set forth in Sections 2.2 and 2.3 of this Agreement upon the delivery by Executive of a signed release of claims in a form satisfactory to the Company. 
 6. Agreement Not to Solicit. If Company performs its obligations to deliver the severance compensation set forth in Sections 2.2 and 2.3 of this Agreement, then for a period of one (1) year
after Executive’s termination of employment, Executive will not solicit any employee of the Company to discontinue that person’s employment relationship with the Company. 
 7. Arbitration. Any claim, dispute or controversy arising out of this Agreement, the interpretation, validity or enforceability of this Agreement or the alleged breach thereof shall be submitted by
the parties to binding arbitration by the American Arbitration Association. The site of the arbitration proceeding shall be in Santa Clara County, California, or another location mutually agreed to by the parties. 

8. Conflict in Benefits; Effect of Agreement. This Agreement shall supersede all prior arrangements, whether written or oral, and understandings
regarding severance compensation following a Change of Control and shall be the exclusive agreement for the determination of any severance compensation due upon Executive’s termination of employment upon a Change of Control. 

9. Miscellaneous. 
 9.1
Successors of the Company. The Company will require any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, expressly,
absolutely and unconditionally to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. 

9.2 No Employment Agreement. This Agreement does not alter Executive’s at-will employment status or obligate the Company to
continue to employ Executive for any specific period of time, or in any specific role or geographic location. 
 9.3
Modification of Agreement. This Agreement may be modified, amended or superceded only by a written agreement signed by Executive and the Chief Executive Officer. 
 9.4 Governing Law. This Agreement shall be interpreted in accordance with and governed by the laws of the State of California. 

9.5 Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to the subject
matter of this Agreement, and supersedes all prior understandings and agreements, whether oral or written between or among the parties hereto with respect to the specific subject matter hereof. 

  
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	EXECUTIVE	 		 	CEPHEID
				
	 /s/ Warren C. Kocmond
	 		 	By:	 	 /s/ John L. Bishop

	 		 	Name:	 	 John L. Bishop

	 		 	Title:	 	 Chairman & Chief Executive

 [Signature Page to Change of Control Retention and Severance Agreement]EX-4.1

 Exhibit 4.1 
 FINAL ISSUED 
 FUEL TECH, INC. 

2013 Executive Officer Incentive Plan 
  

	1.	THE PLAN 

1.1    Objectives. The Executive Officer Incentive Plan (“EOIP”) of Fuel Tech, Inc., a Delaware corporation, (the
“Company”), is designed to provide each Participant with financial incentives based upon Company financial results, measured in terms of Adjusted EBITDA, Revenues and APC Bookings. The EOIP is an annual bonus plan based on the
Company’s fiscal performance in 2013. Capitalized terms not otherwise defined shall have the meanings set forth in Section 4 below. 

1.2    Plan Supersedes All Prior Incentive Compensation Programs. This EOIP supersedes and replaces all prior cash incentive
compensation programs for all Participants. 
  

	2.	ELIGIBILITY 

2.1    Participants. The Company’s Chief Executive Officer, Chief Financial Officer, Executive Vice President of
Marketing and Sales and Executive Vice President of Worldwide Operations shall each be a Participant in the EOIP. The Committee, in its business discretion, may subjectively decide to designate additional full-time senior management employees of the
Company to be Participants in the EOIP after consideration of the recommendations of the Company’s Chief Executive Officer. The addition of new full-time senior management employees to the EOIP would require modification to the EOIP’s
formulaic funding or payout mechanics, subject to approval by the Committee. 
 Participants must be employed on the last day of a fiscal year
(December 31) in order to be eligible for a payout under the EOIP based on that fiscal year’s performance. No amounts will be deemed earned or payable under the EOIP by any Participant whose employment with the Company ends on or before the
last day of the fiscal year. A Participant deemed to be eligible for a payout in accordance with the provisions of the EOIP for a given fiscal year, need not be employed on the day of a bonus payout under this EOIP for such fiscal year in order to
be eligible for the payout. 
 2.2    Involuntary Termination of Employment. Notwithstanding the preceding paragraph,
if, during a fiscal year in which the EOIP is in effect, a Participant’s employment with the Company is involuntarily terminated: (a) not for cause by the Company, or (b) on account of the Participant’s death, or (c) on
account of the Participant’s disability (as that term is defined below), then to the extent and at the time the Company determines there shall be a payout for that fiscal year under the EOIP, the affected Participant shall be eligible for a pro
rata EOIP payment (or, in the case of death, to that employee’s estate) in accordance with the applicable calculations of Section 4, “EOIP Payouts” and subject to all the other provisions of the EOIP; provided, however, that only
the normal employee wages paid to the affected employee (as determined by the Company in its sole discretion and excluding bonuses, allowances, paid leave, vacation or severance payments) through that Participant’s separation date from the
Company shall be used in such pro rata allocations. 
 Any funds not paid out to a Participant under the EOIP, whether due to voluntary
termination of employment, termination of employment for cause or otherwise, will automatically revert back to the Company. 

  

					
	 2013 Executive Officer Incentive Plan
 Final Issued
	 	Fuel Tech, Inc. Confidential and Proprietary	 	1

 FINAL ISSUED 
  

	3.	EOIP Payouts 

3.1    Incentive Pool. EOIP payouts are based on the Company’s performance for three financial metrics – Adjusted
EBITDA, Revenues and APC Bookings. An “Incentive Pool” may or may not be created dependent on the Company’s financial performance pertaining to all or some of those metrics during the fiscal year. If the Incentive Pool is created,
each Participant is then awarded that Participant’s designated portion of the Incentive Pool on or before March 31, 2014. The methodology for calculating EOIP payouts to Participants is more fully described below. 

3.2    Minimum Adjusted EBITDA Threshold. No amounts shall be payable under this EOIP for any fiscal year unless the Company
has achieved the established minimum threshold of Adjusted EBITDA for such fiscal year. Accordingly, if the Company’s financial performance for the fiscal year falls below the established minimum threshold of Adjusted EBITDA, there is no payout
under the EOIP of any kind, regardless of the annual Revenue or annual APC Bookings amounts achieved. 
  

	3.3	Funding and Payout. 

3.3.1    A percentage of Adjusted EBITDA is set aside in an Incentive Pool with respect to each fiscal year to
provide for bonus payments under this EOIP based on performance in the following three categories: (i) Adjusted EBITDA, (ii) Revenue and (iii) APC Bookings. The percentage of Adjusted EBITDA that is set aside based on the
Company’s actual level attained in each of these three categories shall be determined by the Committee after consideration of the recommendations of the Company’s Chief Executive Officer. 

3.3.2    Once the Company’s minimum threshold of Adjusted EBITDA is met, the percentage of Adjusted EBITDA set
aside in the Incentive Pool rises pro rata incrementally based on actual Company performance in each of the Adjusted EBITDA, Revenues, and APC Bookings financial metrics subject to an overall Incentive Pool funding percentage upper limit cap, all as
shown in the chart below. The payout formula for a Participant is shown in the chart below. 
 (Amounts shown in thousands)

  

																					
	 Executive Officer Incentive Plan Mechanics
	 
	 	  	Minimums	 	  	Funding
Percentage	 	 	Incremental
Value	 	  	Incremental
Percentage	 	 	Percentage Cap	 
	 Adjusted EBITDA, as defined
	  	$	10,000	  	  	 	1.00	% 	 	 	500	  	  	 	0.10	% 	 	 	2.00	% 
	 Revenue
	  	$	104,500	  	  	 	0.50	% 	 	 	2,500	  	  	 	0.05	% 	 	 	1.00	% 
	 APC Bookings
	  	$	44,500	  	  	 	0.50	% 	 	 	25,00	  	  	 	0.05	% 	 	 	1.00	% 
		  				  	  
	  
	 	 				  				 	  
	  
	 
		  				  	 	2.00	% 	 				  				 	 	4.00	% 

 

					
	 Executive Officer Plan Incentive Summary
	 
		
	 Title
	  	Percentage of Pool	 
	 Chief Executive Officer
	  	 	35.0	% 
	 EVP, Worldwide Operations
	  	 	20.0	% 
	 Chief Financial Officer
	  	 	15.0	% 
	 EVP, Marketing & Sales
	  	 	15.0	% 
	 SVP, General Counsel
	  	 	15.0	% 
		  	  
	  
	 
		  	 	100.0	% 

  

 

 
 

  

					
	 2013 Executive Officer Incentive Plan
 Final Issued
	 	Fuel Tech, Inc. Confidential and Proprietary	 	2

 FINAL ISSUED 
  

	3.4	New Product Incentive Payout. 

 In addition to the payment of amounts from the Incentive Pool as described in Sections 3,1, 3.2 and 3.3 above and subject to meeting the Minimum Adjusted EBITDA threshold as described in Section 3.2,
the Company will fund an additional amount for payment under this Plan, to be divided equally between each Participant in this Plan, as follows: 
 3.4.1    Two Hundred Thousand Dollars ($200,000) will be funded if, during any three month period occurring from January 1, 2013 through and including December 31, 2013, the
Company recognizes aggregate Revenues of Two Million Dollars ($2,000,000) or more from the commercial sale or out-licensing of any internally developed product offering for the reduction of emissions of hydrochloric acid, sulfur dioxide or mercury;
and 
 3.4.2    Two Hundred Thousand Dollars ($200,000) will be funded if, during any three month period
occurring from January 1, 2013 through and including December 31, 2013, the Company recognizes aggregate Revenues of Two Million Dollars ($2,000,000) or more from the commercial sale or out-licensing of any product or technology licensed
by the Company from a third party after January 1, 2013. 
  

	4.	DEFINITIONS 

“Adjusted EBITDA” – means generally earnings before interest expense, taxes, depreciation and amortization, profit
sharing plan contributions, legal expenses out of the ordinary course of the Company’s business and incentive pay (excluding sales commissions), but shall be as determined by the Company, in its sole discretion, with the assistance of its
accountants. 
 “APC Bookings” – means generally to revenue (a) to which the Company has a legally
binding, contractual right pursuant to a Sales Contract signed after December 31, 2010, and (b) which involves the sale of equipment or services associated the Company’s APC product line, all as determined by the Company, in its sole
discretion. For purposes of clarity, it is understood that APC Bookings shall not include revenue (i) for equipment or services included in the scope of work of contracts executed and entered into prior to January 1, 2013 and restated in
newly executed contracts; (ii) revenues relating to work for which authorization to proceed from the customer is required but has not been obtained in writing; or (iii) revenues relating to any equipment or services the delivery of which
has been cancelled by the customer. 
 “Committee” – means the Compensation & Nominating
Committee of the Company’s Board of Directors or such other committee as may from time to time succeed or perform the functions of that Committee. 
 "Disability” – means that a Participant, after exhausting any applicable leave available under the Company's policies, is unable because of physical or mental condition to perform the
essential functions of such Participant's position, with or without a reasonable accommodation. 
 “Revenue”
– means the Company’s net sales, as determined by the Company in its sole discretion. 
 “Sales
Contract” – means a comprehensive set of executed, legally binding documents between the Company and a customer, in form and substance acceptable to the Company. 

  

					
	 2013 Executive Officer Incentive Plan
 Final Issued
	 	Fuel Tech, Inc. Confidential and Proprietary	 	3

 FINAL ISSUED 
  

	5.	OTHER CONDITIONS 

5.1    No Alienation of Awards. Payouts under this EOIP may not be assigned or alienated, except that payouts earned and
payable may be assigned under the laws of descent and distribution of the Participant’s domicile. 
 5.2    No Right
of Employment. Neither the EOIP nor any action taken under the EOIP shall be construed, expressly or by implication, as either giving to any Participant the right to be retained in the employ of the Company or any affiliate, or altering or
limiting the employment-at-will relationship between the Company and any Participant. 
 5.3    Taxes, Withholding.
The Company or any affiliate shall have the right to deduct from any payout under the EOIP any applicable federal, state or local taxes or other amounts required by applicable law, rule, or regulation to be withheld with respect to such payment.

 5.4    Code Section 409A. The EOIP is intended to be exempt from or comply with Section 409A of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. 

5.5    Plan Administration; Effectiveness for any Fiscal Year. The EOIP shall be administered by or under
the authority of the Committee which shall have the full discretionary power to administer and interpret this EOIP and to establish rules for its administration. The EOIP will not be deemed effective for any fiscal year until such time, if any, as
the determination of the EOIP Adjusted EBITDA, Revenues, and APC Bookings minimum targets and Incentive Pool funding percentage amounts contemplated by Paragraph 3 above have been released for communication to EOIP participants, which date shall be
no later than March 31st of each fiscal year.

 5.6    Reservation of Rights; Governing Law; Contract Disclaimer. The Company reserves the right to amend or
cancel the EOIP in whole or in part at any time without notice. There can be no guaranty that the EOIP will be in effect in any subsequent fiscal year. The Company also reserves the right to decide all questions and issues arising under the EOIP and
its decisions are final. The EOIP shall be construed in accordance with and governed by the laws of the State of Illinois. The EOIP is a statement of the Company’s intentions and does not constitute a guarantee that any particular EOIP payment
amount will be paid. It does not create a contractual relationship or any contractually enforceable rights between the Company or its wholly owned subsidiaries and the Participant. 

  

					
	 2013 Executive Officer Incentive Plan
 Final Issued
	 	Fuel Tech, Inc. Confidential and Proprietary	 	4

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