EMPLOYMENT AGREEMENT
Exhibit 10.70
This Employment Agreement (“Agreement”) made and entered into effective as of February 8, 2011
(the “Effective Date”), by and between FuelCell Energy, Inc. (the “Corporation”), a Delaware
corporation with its principal office at 0 Xxxxx Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx, 00000, and
Xxxxxx Xxxxxxx (“Executive”), an individual who resides at
[deleted].
WHEREAS, the Corporation desires to promote Executive to the position of President and Chief
Executive Officer and the Executive desires to accept such promotion, commencing as of the
Effective Date; and
WHEREAS, the Corporation and Executive desire to enter into this Agreement to set forth the
terms and conditions of their employment relationship; and
WHEREAS, Executive acknowledges that by executing and delivering this Agreement, he will
obtain certain rights, compensation, and benefits greater than those that he previously received
from the Corporation and that, accordingly, such rights, compensation, and benefits constitute
valid consideration to Executive.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged
by the parties, the parties agree as follows:
1. Employment. The Corporation shall employ Executive in the capacity of President
and Chief Executive Officer (“President & CEO”) of the Corporation during the term of this
Agreement, and Executive hereby accepts such employment on the terms and conditions set forth in
this Agreement. Executive represents that his employment by the Corporation pursuant to this
Agreement does not violate any other agreement, covenant or obligation to which he is a party or by
which he is bound.
2. Duties. During the term of this Agreement, Executive shall perform all duties,
consistent with his position as President & CEO in order to advance the Corporation’s affairs and
related business efforts, assigned or delegated to him by the Board of Directors of the Corporation
(the “Board”) and normally associated with the position of President & CEO. He shall devote all of
his full business time, attention, energies, skills, and efforts to the advancement of the
interests and business of the Corporation. Following the Effective Date of this Agreement,
Executive shall become a member of the Board.
3. Term. The term of this Agreement shall begin on the Effective Date, and shall
expire on February 8, 2012, unless earlier terminated as provided in this Agreement (the “Initial
Term”). Upon expiration of the Initial Term and any subsequent term or extension thereof, this
Agreement shall automatically be extended for an additional term of one (1) year, unless Executive
or the Corporation elect to terminate this Agreement in accordance with the provisions of Section
12 of this Agreement (the “Initial Term,” together with any subsequent terms or extensions, until
termination or expiration in accordance with the provisions of this Agreement, shall be referred to
as the “Employment Term”).
4. Compensation. As compensation for any and all services to be rendered by Executive
to the Corporation pursuant to this Agreement, the Corporation shall pay Executive and provide
Executive with the following compensation and benefits, which Executive agrees to accept in full
satisfaction for his services:
a. Base Salary. The Corporation shall pay Executive a Base Salary, payable in
equal installments at such payment intervals as are the usual payroll practices of the
Corporation, at an initial annual rate of $340,000, less such deductions or amounts to be
withheld as shall be required by applicable law or as may be allowed at the request of
Executive (the “Base Salary”). The Base Salary shall be reviewed at least annually by the
Compensation Committee of the Board after the end of each fiscal year of the Corporation and
shall be adjusted by such amount, if any, as Compensation Committee of the Board, in its
sole discretion, shall determine and approve. Any such adjustment of Base Salary shall be
made effective on the date set by the Compensation Committee of the Board.
b. Bonus. Provided Executive first meets the Corporation’s expectations for
his performance during the Employment Term and remains employed on the date of payment,
Executive shall be eligible for a discretionary bonus (a “Discretionary Bonus”) of up to
fifty percent (50%) of his Base Salary as determined and approved by the Board in its sole
discretion based upon Executive’s achievements in meeting his performance goals and those of
the Corporation for its most recently ended fiscal year. Goals shall be established after
the commencement of the Employment Term and then in the first quarter of any subsequent
fiscal year. Any such Discretionary Bonus may be payable in cash, stock options, and/or
restricted stock upon such terms and conditions as determined by the Board. The Corporation
shall pay any such Discretionary Bonus by the end of the first quarter of the following
fiscal year. Should the Executive no longer be employed by the Corporation on the date such
Discretionary Bonus is paid, such Discretionary Bonus shall be forfeited. As any bonus paid
to Executive is discretionary, the payment of any bonus in a year must not be construed as
requiring the payment of a bonus in any other year.
c. Benefits.
(i) Executive shall be entitled to participate, to the extent he is eligible, in
all group insurance programs, health, medical, dental, and disability plans
(including, without limitations, the Corporation’s 401(k) plan), and other employee
benefit plans which the Corporation may hereafter in its sole and absolute discretion
make available generally to its senior executives (other than any incentive
compensation or equity ownership plan), but the Corporation shall not be required to
establish or maintain any such program or plan.
(ii) Executive shall be entitled to four (4) weeks paid vacation during each
calendar year, in accordance with the Corporation’s vacation policies. Such vacation
may be taken at such time or times as is reasonably consistent with the Corporation’s
vacation policies and the performance by Executive of his duties and responsibilities
under this Agreement. Up to one week of unused vacation time in one year may be
carried over and used in the subsequent year.
(iii) Executive shall be entitled to participate in the Corporation’s Equity
Incentive Plan (the “Plan”). Effective upon the execution of this Agreement, the
Board of Directors has approved a grant of restricted stock valued at $360,000. The
number of shares will be based upon the dollar value of the award approved by the
Board of Directors divided by the closing market price of the Company’s common stock
on the date of grant. This grant shall not be subject to accelerated vesting in the
event Executive is terminated for Cause pursuant to Section 12c hereof. Executive
understands and agrees that any stock rights granted to Executive shall be subject to
the provisions of the Plan and any separate written agreements embodying the grant of
the rights that are required by the Plan. The rights shall be set forth in a
separate agreement embodying the grant of the rights which shall be otherwise in the
form stipulated in the Plan. To the extent that there is any conflict between the
vesting provisions of this Agreement and the provisions of the Plan, the provisions
of this Agreement shall govern.
d. Taxes. All compensation and benefits are subject to applicable withholding
taxes, federal, state, and local, and any other proper deductions.
e. Benefit Plans. Executive understands that the Corporation may amend,
change, or cancel its employment policies and benefit plans at any time as allowed by law or
by any applicable plan documents.
5. Business Expenses. The Corporation shall pay, or reimburse Executive for, the
reasonable and necessary business expenses of Executive incurred in the performance of his duties
under this Agreement, provided Executive provides timely and reasonable documentation of those
expenses in accordance with the rules and regulations of the Corporation. Any such reimbursements
shall be made no later than the last day of the calendar year following the end of the calendar
year in which such expense is incurred.
6. Compliance with Policies. Executive acknowledges and agrees that, except as set
forth in this Agreement, compliance with the Corporation’s policies, practices and procedures is a
term and condition of his employment under this Agreement.
7. Intellectual Property, Inventions and Improvements. Executive acknowledges,
covenants and agrees that the Corporation shall be the sole owner of all the fruits and proceeds of
Executive’s services to the Corporation, including but not limited to all writings, inventions,
discoveries, designs, systems, processes, software or other improvements relating to the business
or products of the Corporation, whether or not patentable, registerable, or copyrightable, which
Executive may, alone or with others, conceive, create, develop, produce or make during or as a
result of his employment with the Corporation (collectively, the “Invention”), free and clear of
any claims by Executive of any kind or character whatsoever other than Executive’s rights to
compensation under this Agreement. Executive agrees that he shall disclose each of the Inventions
promptly and completely to the Corporation, and shall, at the request of the Board, execute such
assignments, certificates or other instruments as the Board or the Corporation from time to time
deem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend
the Corporation’s right, title and interest in or to any or all of the Inventions. Executive
acknowledges that all works of authorship (including, without limitation, works of authorship that
contain software program code) relating to the business of the Corporation and produced during
Executive’s employment with the Corporation, whether they are or are not created on the
Corporation’s premises or during regular
working hours, are works made for hire and are the property of the Corporation, and that
copyrights in those works of authorship are the property of the Corporation. If for any reason the
Corporation is not the author of any such work of authorship for copyright purposes, Executive
hereby expressly assigns all of his rights in and to that work to the Corporation and agrees to
sign any instrument of specific assignment requested. Executive, whether or not still employed by
the Corporation, agrees to supply evidence, give testimony, sign and execute all papers, and do all
other legal and proper things that the Corporation may deem reasonably necessary for obtaining,
maintaining, and enforcing patents for such Inventions and for vesting in the Corporation full
title. If Executive is no longer employed by the Corporation at such time, then Corporation shall
pay Executive his reasonable out-of-pocket expenses incurred in connection with his providing the
services rendered by him in the previous sentence.
8. Non-Disclosure of Confidential Information.
a. Executive acknowledges that, in and as a result of his employment by the
Corporation, he will be making use of, acquiring and/or adding to the Corporation’s
Confidential Information (as defined below). As a material inducement to the Corporation to
employ Executive and to pay Executive the compensation and benefits set forth in this
Agreement, Executive covenants and agrees that he shall not, at any time during or following
the term of his employment with the Corporation, directly or indirectly divulge or disclose
for any purposes whatsoever, any Confidential Information that has been obtained by, or
disclosed to, him as a result of his employment with the Corporation. For purposes of this
Agreement, “Confidential Information” means, collectively, all confidential matters and
materials of the Corporation, including without limitation, (i) the Corporation’s
proprietary information, inventions, trade secrets, knowledge, data, know-how, intellectual
property, systems, procedures, manuals, pricing policies, operational methods and
information relating to the Corporation’s products, processes, formulae, business plans,
marketing plans and strategies, pricing strategies, customer lists, and all other subject
matters pertaining to the business and/or financial affairs of the Corporation; (ii) the
Corporation’s information regarding plans and strategies for research, development, new
products, future business plans, budgets and unpublished financial statements, licenses,
prices and costs; (iii) information regarding the skills and compensation of other employees
of the Corporation; and (iv) information disclosed in confidence to the Corporation by a
third party with a duty on the Corporation to maintain the confidentiality of such
information. The term “Confidential Information” shall not include any information that (x)
has been made available generally to the public either by the Corporation or by a third
party with the Corporation’s consent, unless such information became available as a result
of any action by Executive in violation of this Agreement, any other agreement, or his
obligations under law, or (y) has been made available as a result of a final award, order,
or ruling by an arbitration tribunal or a court of competent jurisdiction that has
determined that such Confidential Information may be disclosed.
b. If Executive is required by a court, arbitration tribunal, or governmental agency
(by oral questions, interrogatories, requests for information or documents, subpoena, civil
investigation demand or similar process) to disclose any Confidential Information, Executive
may disclose such Information to such court, tribunal, or agency without liability
hereunder, provided, that Executive first provides the Corporation with notice of any such
requirement(s) as promptly as practicable, but in any case with sufficient timeliness to
enable the Corporation to seek an appropriate protective order and/or waive its compliance
with the relevant provisions of this Agreement.
9. Covenants Against Competition.
a. Non-Solicitation of Employees. While employed by the Corporation and for a
period of one (1) year, followed by a second period of one (1) year, for a total period of
two (2) years, from the date of termination of Executive’s Employment Term with the
Corporation for any reason, Executive shall not directly or indirectly solicit, induce or
encourage any of the Corporation’s employees to terminate their employment with the
Corporation or to accept employment with any competitor, supplier, client, agent or broker
of the Corporation, nor shall Executive cooperate with any others in doing or attempting to
do so. As used in this paragraph, the term “solicit, induce or encourage” includes, but is
not limited to, (i) initiating communications with any employee of the Corporation relating
to possible employment or independent contractor relationship, (ii) offering bonuses or
additional compensation to encourage any employee of the Corporation to terminate his or her
employment with the Corporation and accept employment with a competitor, supplier, client,
agent or broker of the Corporation, or (iii) referring any employee of the Corporation to
recruiters, personnel or agents employed by competitors, suppliers, clients, agents or
brokers of the Corporation. Notwithstanding the foregoing, the term “solicit, induce or
encourage”, as used in this Section 9a, specifically excludes any action by the Executive
related to any of the Corporation’s employees where it is in the Corporation’s best interest
to terminate any such employees as in the case of a planned reduction in force by the
Corporation.
b. Non-Compete. While Executive is employed by the Corporation and for a
period of one (1) year, followed by a second period of one (1) year, for a total period of
two (2) years, from the date of termination of Executive’s Employment Term for any reason,
Executive shall not directly or indirectly, as a principal, agent, contractor, employee,
employer, partner, shareholder, proprietor, investor, member, director, officer or
consultant or in any other capacity, engage in or perform any managerial or executive
services (a) for any corporation, partnership, individual or entity which is engaged in a
business competitive with the Corporation or affiliate of the Corporation, or (b) to any
customer of the Corporation or affiliate of the Corporation.
c. For the purposes of this Agreement:
(i) The term “engaged in a business competitive with the Corporation” means
directly or indirectly engaging in the business of researching, developing,
designing, manufacturing, selling or distributing fuel cells or batteries or engaging
in the same or any substantially similar business as the Corporation or any of its
affiliates in any manner whatsoever within any geographic area in which the
Corporation’s products or services are offered or distributed. Executive understands
and agrees that, because the Corporation is engaged in business throughout the world,
the geographic area covered by this noncompete covenant extends throughout North
America, South America, Europe, Asia and Africa;
(ii) The term “affiliate” means any legal entity that directly or indirectly
through one or more intermediaries controls, is controlled by, or is under common
control with the Corporation; and
(iii) The term “customer” means any business, company, person, and any other
entity to whom the Corporation or any of its affiliates has provided any product
or service, whether or not for compensation, within a period of two (2) years
prior to the time Executive ceases to be employed by the Corporation.
d. Exclusion for Investments. None of the provisions of this Section 9 shall
prohibit Executive from investing in securities (i) listed on a national securities exchange
or actively traded over-the-counter so long as such investments are not greater than five
percent (5%) of the outstanding securities of any issuer of the same class or issue or (ii)
of entities engaged in a business competitive with the Corporation so long as any such
entity was not engaged in a business competitive with the Corporation at the time Executive
made such investment.
10. Reasonableness of Restrictions.
a. Executive has carefully read and considered the provisions of Section 8 and Section
9, and, having done so, agrees that:
(i) The restrictions set forth in Section 8 and Section 9, including but not
limited to the character, duration, and geographical area of restriction, are fair
and reasonable and are reasonably required for the protection of the good will and
other legitimate business interests of the Corporation and its affiliates, officers,
directors, shareholders, and other employees;
(ii) Executive has received, or is entitled to receive, adequate consideration
for such obligations; and
(iii) Such obligations do not prevent Executive from earning a livelihood.
b. If, notwithstanding the foregoing, any of the provisions of Section 8 or Section 9
shall be held to be invalid or unenforceable, the remaining provisions thereof shall
nevertheless continue to be valid and enforceable as though the invalid and unenforceable
parts had not been included therein. If any provision of Section 8 or Section 9 is
determined by a court of competent jurisdiction that the character, duration, geographical
scope, or related aspects are unreasonable in light of the circumstances as they then exist,
then it is the intention of the parties that Section 8 and/or Section 9 shall be construed
by the court in such a manner as to impose only those restrictions on the conduct of
Executive that are reasonable in light of the circumstances as they then exist and as are
necessary to assure the Corporation of the intended benefit of this Agreement and such
restrictions, as so modified, shall become and thereafter be the maximum restriction in such
regard, and the restriction shall remain enforceable to the fullest extent deemed reasonable
by such court.
11. Remedies for Breach of Executive’s Covenants of Non-Disclosure and
Non-Competition. Executive recognizes and agrees that the Corporation’s remedy at law
for any breach of Section 8 or Section 9 would be inadequate as such a breach would cause
irreparable harm to the Corporation, and he agrees that, for any actual or threatened breach
of such provisions, the Corporation shall, in addition to such other remedies as may be
available to it at law or in equity, be entitled to injunctive relief and to enforce its
rights by an action for specific performance. All of the Corporation’s remedies for any
breach of this Agreement shall be cumulative and the pursuit of any one remedy shall not
exclude the Corporation’s pursuit of any other remedies.
12. Termination and Severance.
a. Death. In the event that Executive dies during the Employment Term, this
Agreement shall terminate automatically upon his death, upon which event Executive’s legal
representatives shall be entitled to receive, and the Corporation shall pay or cause to be
paid to Executive’s legal representatives, any Base Salary and other compensation or
benefits accrued but as yet unpaid on the date of Executive’s death.
b. Incapacity or Disability. If during the Employment Term, Executive is
prevented from performing the duties or fulfilling responsibilities of his employment under
this Agreement by reason of any incapacity or disability for a continuous period of six (6)
months, as determined by an independent qualified physician selected by the Corporation and
reasonably acceptable to Executive (or his representative), then the Corporation may
terminate Executive’s employment hereunder, but Executive shall continue to be eligible to
receive any benefits to which he may be entitled under the terms of any long-term disability
plan or insurance policy maintained by the Corporation for its employees generally or for
Executive specifically. In the event of such incapacity or disability, the Corporation
shall continue to pay full compensation to Executive in accordance with the terms of this
Agreement until the date of such termination of employment.
c. By Corporation for Cause. The Corporation may, upon written notice to
Executive, terminate Executive’s employment hereunder for Cause (as defined hereafter);
provided that the Corporation shall first provide Executive with an opportunity to be heard
by the Board on any proposed termination for Cause by the Board. For purposes of this
Agreement, the term “Cause” shall mean (i) Executive’s material breach of this Agreement if
the Corporation has notified Executive of such breach and he has not cured such breach
within 15 days of having received such notice; (ii) Executive’s material failure to adhere
to any policy of the Corporation generally applicable to employees of the Corporation if
Executive has been given a reasonable opportunity to comply with such policy or cure his
failure to comply; (iii) Executive’s appropriation (or attempted appropriation) of a
business opportunity of the Corporation, including attempting to secure or securing any
personal profit in connection with any transaction entered into on behalf of the
Corporation; (iv) Executive’s misappropriation (or attempted misappropriation) of any of the
Corporation’s funds or property; (v) Executive’s conviction of, or the entering of a guilty
plea or plea of no contest with respect to, a felony, the equivalent thereof, or of a lesser
crime having as its predicate element fraud, dishonesty or misappropriation of property of
the Corporation; (vi) Executive’s willful misconduct or insubordination; (vii) Executive’s
physical or mental disability or other inability to perform the essential functions of his
position for a consecutive six (6) month period, with or without reasonable accommodation,
as determined by an independent qualified physician selected by the Corporation and
reasonably acceptable to Executive (or his representative) if Executive is not eligible for
benefits under the terms of any long-term disability policy or insurance policy maintained
by the Corporation for its employees generally or for Executive specifically; (viii)
Executive’s engaging in bad faith or gross negligence in the performance of his duties
under this Agreement as determined in good faith by the Board; or (ix) any other conduct of
Executive sufficiently detrimental to the Corporation so as to warrant immediate termination
of Executive’s employment with the Corporation.
In the event of termination for Cause of Executive’s employment, Executive’s right to
receive compensation and other benefits hereunder (other than any Base Salary and any
vacation accrued but as yet unpaid on the effective date of such termination) shall
terminate on the effective date of such termination, and Executive shall not be entitled to
any severance payments or other benefits.
d. Termination by the Corporation without Cause. The Corporation may elect to
terminate Executive’s employment at any time without Cause upon written notice to Executive.
In the event of such termination without Cause, Executive shall be entitled to a
severance payment in an amount equal to two (2) years of (i) Executive’s Base Salary as
of the date of termination plus (ii) the average of the bonuses paid Employee since the
inception of the Agreement. Such severance payment shall be made over the six month period
beginning on the Executive’s date of termination of employment, with payments made to the
Executive in equal installments during each of the Corporation’s usual pay periods during
such six month period.
Payments under this Paragraph (d) in excess of two (2) times the lesser of
| (i) | the sum of the Executive’s annualized compensation based upon
the annual rate of pay for services provided to the Corporation for the taxable
year of the Executive preceding the taxable year of the Executive in which the
Executive has a separation from service with the Corporation (adjusted for any
increase during that year that was expected to continue indefinitely if the
Executive had not separated from service), or |
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| (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
the Executive has a separation from service |
shall be subject to the payment timing restrictions set forth in Section 12(n) of this
Agreement.
For purposes of this Agreement, the Executive’s termination of employment must
constitute a separation from service under Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and its accompanying regulations.
e. Nonrenewal of Agreement. The Corporation may elect to not renew or extend this
Agreement at any time without cause upon written notice to Executive not later than thirty
(30) days prior to the end of any Initial Term or any extended Employment Term. In the
event of a nonrenewal or non-extension pursuant to this Paragraph, Executive’s rights to
receive compensation and other benefits (other than any Base Salary and vacation accrued but
as yet unpaid on the effective date of such termination) shall terminate at the expiration
of the Initial Term or Employment Term. In the event of such termination, Executive shall
be entitled to a severance payment following the end of such Initial Term or Employment Term
in an amount equal to the amounts specified in Section 12(d).
f. By Executive for Good Reason. Executive may, at his option, upon at least
thirty (30) days written notice to the Corporation, terminate his employment hereunder for
Good Reason. The Executive shall be considered to have terminated his employment for Good
Reason if the separation from service occurs during the one year period following the
initial existence of one or more of the following conditions arising without the
consent of the Executive:
| (1) | a material diminution in the Executive’s base compensation; |
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| (2) | a material diminution in the Executive’s authority, duties, or
responsibilities; |
| (3) | a material diminution in the authority, duties, or
responsibilities of the Executive such that that Executive is required to report
to a corporate officer or employee instead of reporting directly to the board of
directors of Corporation; |
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| (4) | a material diminution in the budget over which the Executive
retains authority; |
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| (5) | a material change in the geographic location at which the
Executive must perform the services; or |
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| (6) | any other action or inaction that constitutes a material breach
by the Corporation of this Agreement. |
Upon any termination by Executive under this Paragraph (f), the Corporation shall be
obligated to pay Executive the severance payments specified in Section 12(d).
For this provision to apply, the Executive must provide notice to the Corporation of
the existence of the condition constituting a Good Reason within a period not to exceed
ninety (90) days of the initial existence of the condition, upon the notice of which the
Corporation must be provided a period of at least thirty (30) days during which it may
remedy the condition and not be required to pay the amount due under this Paragraph (f).
g. By Executive Following Change of Control. Executive may, at his option,
upon thirty (30) days written notice to the Corporation, terminate his employment hereunder
for Good Reason (as defined in Section 12(f) above) following a Change of Control of the
Corporation. Upon any termination by Executive under this Paragraph (g), the Corporation
shall be obligated to pay Executive the amounts specified in Section 12(d). Termination by
Executive pursuant to this paragraph shall not be deemed a voluntary termination by
Executive pursuant to Section 12(j) hereof.
h. Change of Control Defined. For purposes of this Agreement, a “Change of
Control” shall be deemed to have occurred if the transaction is of a nature that would be
required to be reported in response to Item l(a) of the Current Report on Form 8-K, as in
effect on January 1, 2003, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (the “Exchange Act”); provided that, without limitation, such a “Change of Control”
shall be deemed to have occurred if: (i) a third Person, including a “group” as such term is
used in Section 13(d)(3) of the Exchange Act, other than the trustee of any employee benefit
plan of the Corporation, becomes the beneficial owner, directly or indirectly, of 35% or
more of the combined voting power of the Corporation’s outstanding voting securities
ordinarily having the right to vote for the election of directors of the Corporation; (ii)
during any period of twenty-four (24) consecutive months individuals who, at the beginning
of such consecutive twenty-four (24) month period, constitute the Board of Directors of the
Corporation (the “Board”) cease for any reason (other than retirement upon reaching normal
retirement age, disability, or death) to constitute at least a majority of the Board;
provided that any person
becoming a director subsequent to the date hereof whose election, or nomination for
election by the Corporation’s shareholders, was approved by a vote of at least three
quarters of the directors comprising the Incumbent Board shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent Board; or (iii)
the Corporation shall cease to be a publicly owned corporation having its outstanding Common
Stock listed on the New York Stock Exchange or quoted in the NASDAQ National or Small Cap
Market System, except where the delisting is related to a private purchase of the
Corporation’s stock by a group consisting of the Corporation’s current officers.
For these purposes, a “Change of Control” also shall not be deemed to have occurred
where, with respect to any transaction otherwise constituting a “Change of Control,”
Executive is reasonably expected to maintain his existing position as President and CEO with
the Corporation.
For these purposes, Incumbent Board means the Board as in existence twenty-four (24)
months prior to the date the action is being considered. Notwithstanding the foregoing, if
the Incumbent Board specifically determines that any transaction does not constitute a
Change of Control for purposes of this Agreement such determination shall be conclusive and
binding.
i. Person Defined. For purposes of this Agreement, the term “Person” means any
individual, corporation, association, partnership, limited partnership, limited liability
company, limited liability partnership, organization, business, joint venture, sole
proprietorship, governmental agency, entity or subdivision or other entity of any kind or
nature.
j. Voluntary Termination by Executive. Executive may, at his option, upon
thirty (30) days prior written notice to the Corporation, terminate his employment
hereunder. In the event of a voluntary termination of his employment by the Executive
pursuant to this Paragraph (j), Executive’s rights to receive compensation and other
benefits (other than any Base Salary and vacation accrued but as yet unpaid on the effective
date of such termination) shall terminate on the effective date of such termination, and
Executive shall not be entitled to any severance payments or other benefits.
k. Eligibility for Severance; Requirement of Release. Except as provided in
Sections 12(d), 12(e), 12(f), and 12(g), Executive shall not be eligible for or entitled to
any severance payments in the event of termination of his employment hereunder. No
severance shall be paid under this Agreement unless Executive first executes and agrees to
be bound by a release of all claims, on a form provided by the Corporation, which releases
any and all claims that Executive has or might have against the Corporation and which
contains terms customary in such agreements. If the Corporation does not receive an
executed release prior to the date occurring sixty (60) days after the date of termination
of the Executive’s employment with the Corporation (including within such sixty day period
any applicable revocation period), the Corporation shall have no obligation to make
severance payments to the Executive.
l. Resignation. In the event of termination of his employment other than for
death, Executive shall be deemed to have resigned from all positions held in the
Corporation, including without limitation any position as a director, officer, agent,
trustee, or consultant of the Corporation or any affiliate of the Corporation. Upon request
of the Corporation,
Executive shall promptly sign and deliver to the Corporation any and all documents
reflecting such resignations as of the date of termination of his employment.
m. Compliance with Section 409A of the Code. Notwithstanding anything to the
contrary in this Agreement, to the extent that the Corporation in the exercise of its
reasonable judgment shall determine that Section 409A of the Code, applies to any amounts
payable under this Section 12, then any such amounts shall be paid in such fashion and at
such times so as to ensure that the Corporation and Executive are in compliance with Section
409A of the Code.
n. Six Month Delay for Specified Employee. In the event that any stock of the
Corporation or any entity within the same controlled group (as defined in Section 414(b) of
the Code), is publicly traded on an established securities market as defined in Section
1.409A-1(i) of the Regulations under Section 409A of the Code, distributions to the
Executive will not be made until the date that is six (6) months plus one day after the
Executive’s date of separation from service, or, if earlier than the end of the six-month
period, the date of the death of the Executive, if the Executive is a Specified Employee.
Any payments delayed under this Paragraph (n) shall be paid in a single lump sum payment on
such date. For purposes of this Paragraph (n), “Specified Employee” means a key employee
(as defined in Code Section 416(i) without regard to paragraph (5) thereof) of the
Corporation or any affiliated organization with employees in the United States. The
Executive will be considered a key employee for the period commencing April 1 and ending on
the March 31 thereafter if he was a key employee on the previous December 31 and such
designation shall be effective solely for that period.
o. Compliance with Section 162(m). In no event shall any payment be made under this
Agreement that shall exceed the limitations of Section 162(m) of the Code and any
regulations thereunder applicable to the Corporation.
13. Vesting upon Change of Control. Any stock options and restricted stock granted to
Executive by the Corporation shall accelerate and immediately vest upon the occurrence of the
following events: if (a) any “person,” as such term is used in Sections 13(d) and 14(e) of the
Securities and Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Corporation,
any trustee or other fiduciary holding securities under an employee benefit plan of the
Corporation, or any corporation owned directly or indirectly by the stockholders of the Corporation
in substantially the same proportion as their ownership of stock in the Corporation) is or becomes
the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Corporation representing 50% or more of the combined voting power of the
Corporation’s then outstanding securities (other than as a result of acquisitions of such
securities from the Corporation); (b) individuals who, as of the date hereof, constitute the Board
of Directors of the Corporation (the “Incumbent Board”) cease for any reason to constitute at least
a majority of the Board, provided that any person becoming a director after the date hereof whose
election, or nomination for election by the Corporation’s stockholders, was approved by a majority
of the directors then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Corporation) shall be, for
purposes of this Agreement, considered to be a member of the Incumbent Board; (c) the stockholders
of the Corporation approve a merger or consolidation of the Corporation with any other corporation,
other than (i) a merger or consolidation that would result in the voting securities of the
Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting securities of the
Corporation or such surviving entity outstanding immediately after such merger or consolidation or
(ii) a merger or consolidation effected to implement a recapitalization of the Corporation (or
similar transaction) in which no “person” (as defined above, acquires more than 20% of the combined
voting power of the Corporation’s then outstanding securities; or (d) the stockholders of the
Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale
or disposition of the Corporation of all or substantially all of the Corporation’s assets. To the
extent permitted by applicable law, Executive shall be entitled to exercise, for a period of 12
months from the effective date of termination of his employment, all of his stock options and
restricted grants, which vest pursuant to this Section or were otherwise vested prior to the
termination of his employment.
14. Payment or Benefit in Connection with Change of Control.
a. Notwithstanding any other provision of this Agreement, in the event that any payment
or benefit received or to be received by the Executive (i) is deemed to be in connection
with a Change of Control (whether payable pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Corporation, its successors, any person whose
actions result in a Change of Control or any corporation (“Affiliates”) affiliated (or
which, as a result of the completion of the transactions causing a Change of Control will
become affiliated) with the Corporation within the meaning of Section 1504 of the Code
(collectively with the payments and benefits pursuant to this Agreement if deemed to be paid
pursuant to a Change of Control, “Total Payments”) and (ii) is determined by the
Corporation’s independent certified accounting firm (the “Tax Advisor”) that such amount
exceeds 2.99 times the base amount (as such term is defined under Section 280G(b)(3) of the
Code) but that is less than 4 times the base amount and that an excise tax is payable by
Executive under Section 4999 of the Code, then the amount of payments to the Executive shall
be reduced so that the payments do not exceed the limits then set forth in Section 280G of
the Code.
b. Notwithstanding any other provisions of this Agreement or the provisions of Section
(a) above, in the event that the Total Payments received or to be received by Executive in
connection with a Change of Control would be subject (in whole or part), to an excise tax
pursuant to Section 4999 of the Code (such tax hereinafter referred to as the “Excise Tax”)
because the amount of the Total Payments equals or exceeds four (4) times the base amount
(as such term is defined under Section 280G(b)(3) of the Code), then the Total Payments
shall be grossed up to the extent necessary to reflect any Excise Taxes due by Executive and
the income taxes attributable thereto so that the Executive will be entitled to a net amount
equal to the Total Payments (the “Grossed-Up Payment”). For purposes of determining whether
and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion
of the Total Payments the receipt or enjoyment of which Executive shall have effectively
waived in writing prior to the date of this termination of employment shall be taken into
account, (ii) no portion of the Total Payments shall be taken into account which in the
opinion of tax counsel selected by Corporation does not constitute a “parachute payment”
within the meaning of Section 280G(b)(2) of the Code, (including by reason of Section
280(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total
Payment shall be taken into account which constitutes reasonable compensation for services
actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the
base amount as defined in Section 280G(b)(3) of the Code allowable to such reasonable
compensation, and (iii) the value of any non-cash benefit or any deferred payment or
benefit included in the Total Payments shall be determined by Corporation in accordance with
the principles of Sections 280G(d)(3) and (4) of the Code. Prior to the thirtieth day
following the date of Executive’s termination of employment, Corporation shall provide
Executive with its calculation of the amounts referred to in this Section and such
supporting materials as are reasonably necessary for Executive to evaluate Corporation’s
calculations but the Corporation’s calculations shall be used for purposes of any payments
pursuant to this Section.
c. If the Corporation’s Tax Advisor determines that the Total Payments received or to
be received by Executive fall under subparagraph (a) above and upon audit by the Internal
Revenue Service the IRS determines that an Excise Tax is due and payable due to the amount
of the Total Payments received by Executive, then the Corporation agrees to make a
Grossed-Up Payment calculated in the same manner as provided in subparagraph (b).
d. In the event of any IRS audit concerning to the Total Payments payable or paid to
Executive, the Corporation may in its sole discretion choose to respond to the audit. If
the Corporation chooses not to respond, then it shall be the sole responsibility of
Executive to respond to the audit.
e. Any payment for a gross up of taxes made under Paragraph (b) above will be made no
later than by the end of the calendar year next following the calendar taxable year in which
the Executive remits the related taxes.
15. Waiver. A party’s failure to insist on compliance or enforcement of any provision
of this Agreement shall not affect the validity or enforceability or constitute a waiver of future
enforcement of that provision or of any other provision of this Agreement by that party or any
other party.
16. Governing Law. This Agreement shall in all respects be subject to, and governed
by, the laws of the State of Connecticut without reference to its conflict of laws
17. Severability. Subject to the provisions of Section 18, Executive and the
Corporation agree that the invalidity or unenforceability of any provision in the Agreement shall
not in any way affect the validity or enforceability of any other provision and this Agreement
shall be construed in all respects as if such invalid or unenforceable provision had never been in
the Agreement.
18. Judicial Modification. If a court of competent jurisdiction determines that the
character, duration, geographic scope, activity and/or subject of the provisions in Sections 8, 9,
or 10 of this Agreement is or are unreasonable under the circumstances as they then exist, then
Executive and the Corporation agree that such provisions should be limited and reduced, and request
that any reviewing court limit and reduce such provisions, so as to make them enforceable under
applicable law to assure the Corporation of the intended maximum benefit of such provisions under
this Agreement.
19. Notice. Any and all notices required or permitted herein shall be in writing and
shall be deemed to have been duly given (a) when delivered if delivered personally, (b) on the
fifth day following the date of deposit in the United States mail if sent first class, postage
prepaid, or by certified mail, or (c) one day after delivery to a nationally recognized overnight
courier service. The
parties’ respective addresses for such notices shall be those set forth below, or such other
address or addresses as either party may hereafter designate in writing to the other.
| If to the Corporation: | FuelCell Energy, Inc. 0 Xxxxx Xxxxxxx Xxxx Xxxxxxx, XX 00000 Attention: Chairman of the Board of Directors Facsimile No.: (000) 000-0000 |
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| With a copy to: | Xxxxxxxx & Xxxx LLP Financial Centre 0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxxxx, XX 00000-0000 Attention: Xxxxxxx X. Xxxxxx, Esq. Facsimile No.: (000) 000-0000 |
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| If to Employee: | Xxxxxx Xxxxxxx |
20. Assignment. This Agreement shall inure to the benefit of, and shall be binding
upon, the parties hereto and their respective successors, assigns, heirs, and legal
representatives, including any entity with which the Corporation may merge or consolidate or to
which all or substantially all of its assets may be transferred. The duties and covenants of
Executive under this Agreement, being personal, may not be delegated.
21. Amendments. This Agreement may be amended at any time by mutual consent of the
parties hereto, with any such amendment to be invalid unless in writing and signed by the
Corporation and Executive and expressly referring to this Agreement.
22. Entire Agreement. This Agreement contains the entire agreement and understanding
by and between Executive and the Corporation with respect to the employment of Executive and
supersedes all existing agreements between the Corporation and Executive with respect to such
subject matter. No representations, promises, agreements, or understandings, written or oral,
relating to the employment of Executive by the Corporation, or any of its officers, directors,
employees, or agents, not contained herein shall be of any force or effect, provided that, Xxxxxxxx
0, 0, 0, 0, xxx 0 xxxxx xx supplemental to any other agreement of Executive with the Corporation
related to the matters identified therein.
23. No Undue Influence; Construction. This Agreement is executed voluntarily and
without any duress or undue influence. Executive acknowledges that he has read this Agreement and
executed it with his full and free consent. No provision of this Agreement shall be construed
against any party by virtue of the fact that such party or its counsel drafted such provision or
the entirety of this Agreement.
24. References to Gender and Number Terms. In construing this Agreement, feminine or
number pronouns shall be substituted for those masculine in form and vice versa, and plural terms
shall be substituted for singular and singular for plural in any place in which the context so
requires.
25. Counterparts; Headings; Sections. This Agreement may be executed in multiple
counterparts, each of which shall be considered to have the force and effect of any original but
all of which taken together shall constitute but one and the same instrument. The various headings
in this Agreement are inserted for convenience only and are not part of the Agreement. All
references to “Sections” and “Paragraphs” in this Agreement refer to the various corresponding
sections and paragraphs of this Agreement.
26. Survival. The covenants and agreements contained in Sections 5 through 10 shall
survive any termination of Executive’s employment with the Corporation.
27. Arbitration; Waiver of Trial by Jury. Executive and the Corporation shall submit
any disputes arising under this Agreement to an arbitration panel conducting a binding arbitration
in Hartford, Connecticut or at such other location as may be agreeable to the parties, in
accordance with the National Rules for the Resolution of Employment Disputes of the American
Arbitration Association in effect on the date of such arbitration (the “Rules”), and judgment upon
the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction
thereof; provided, however, that nothing herein shall impair the Corporation’s right to seek
equitable relief in any court for any breach or threatened breach of Section 8 or Section 9. The
award of the arbitrators shall be final and shall be the sole and exclusive remedy between the
parties regarding any claims, counterclaims, issues or accountings presented to the arbitration
panel. The parties hereto further agree that the arbitration panel shall consist of one (1) person
mutually acceptable to the Corporation and Executive, provided that if the parties cannot agree on
an arbitrator within thirty (30) days of filing a notice of arbitration, the arbitrator shall be
selected by the manager of the principal office of the American Arbitration Association serving
Hartford County in the State of Connecticut. Each party will pay for the fees and expenses of its
own attorneys, experts, witnesses, and preparation and presentation of proofs and post-hearing
briefs (unless (i) the party prevails on a claim for which attorney’s fees and expenses are
recoverable under the Rules and those amounts are included as part of the award or (ii) Executive
prevails on a claim for breach of this Agreement after the Corporation has terminated Executive
pursuant to Section 12c hereof, in which case, the Corporation will pay for Executive’s
above-described fees and expenses related to such claim). Any action to enforce or vacate the
arbitrator’s award shall be governed by the federal Arbitration Act, if applicable, and otherwise
by applicable state law. If either the Corporation or Executive pursues any claim, dispute or
controversy against the other in a proceeding other than the arbitration provided for herein, the
responding party shall be entitled to dismissal or injunctive relief regarding such action and
recovery of all costs, losses and attorney’s fees related to such action. Executive acknowledges
and expressly agrees that this arbitration provision constitutes a knowing and voluntary waiver of
trial by jury in any action or proceeding to which Executive and the Corporation may be parties
arising out of or pertaining to this Agreement.
THE NEXT PAGE IS THE SIGNATURE PAGE
IN WITNESS WHEREOF, the Corporation and Executive have duly executed this Agreement on the
date set forth below.
CORPORATION: |
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FUELCELL ENERGY, INC.
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WITNESS: | |||||
By: /s/ R. Xxxxxx Xxxxx
Name:
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/s/ Xxxxxxx Xxxxxxxx
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Its: |
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Date: 2/8/11 |
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EXECUTIVE:
|
WITNESS: | |||||
/s/ Xxxxxx Xxxxxxx
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/s/ Xxxxxxx Xxxxxxxx | |||||
Name: Xxxxxx Xxxxxxx
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Name: | |||||
Date: 2/8/11 |
