EMPLOYMENT AGREEMENT
EXHIBIT
10.60
This
Employment Agreement (“Agreement”) made and entered into effective as of January
12, 2006 (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 R. Xxxxxx Xxxxx (“Executive”), an individual who resides
at 000 Xxxx Xxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000.
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 and its Executive Committee.
3. Term.
The
term of this Agreement shall begin on the Effective Date, and shall expire
on
December 31, 2006, 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 $350,000, 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. 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.
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(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 Stock Option Plan (the “Plan”) and the Compensation Committee of
the Board has previously granted Executive options to purchase 250,000 shares
of
the Corporation’s common stock. The Option 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.
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.
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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.
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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:
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(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.
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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.
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.
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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 payment to be made in equal
installments over a six (6) month period on the Corporation’s usual pay
periods
during
that period of time; provided, however, that in order to be eligible to receive
such severance payment, Executive must sign a waiver of any claims against
the
Corporation on a waiver and release form approved by the Corporation at that
time.
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).
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f. By
Executive for Certain Reasons.
Executive may, at his option, upon at least thirty (30) days written notice
to
the Corporation, terminate his employment hereunder, if the Corporation, without
Executive’s express written consent, (i) removes him as an officer of the
Corporation, (ii) demotes him from President and CEO, (iii) assigns him duties
materially inconsistent with the position and/or duties described in Sections
1
or 2, (iv) materially diminishes his responsibilities and/or duties described
in
Sections 1 or 2, or (v) breaches any material obligations to Executive under
this Agreement. Upon any termination by Executive under this Paragraph the
Corporation shall be obligated to pay Executive the severance payments specified
in Section 12(d).
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 hereinafter
defined) following a Change of Control of the Corporation. Upon any termination
by Executive under this Paragraph, 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 12k hereof.
h. Good
Reason Defined.
For
purposes of this Agreement, the term “Good Reason” means, during the thirty (30)
day period prior to or the twelve (12) month period following a Change of
Control, without Executive’s express written consent, the occurrence of any of
the following circumstances:
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(i)
|
the
assignment to Executive of any duties inconsistent (except in the
nature
of a promotion) with the position in the Corporation that he held
immediately prior to the Change of Control or substantial adverse
alteration in the nature or status of his position or responsibilities
or
the conditions of his employment from those in effect immediately
prior to
the Change of Control;
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(ii)
|
a
reduction,
other than a de minimis reduction, by
the Corporation in Executive’s annual Base Salary as in effect on the date
hereof, as the same may be increased from time to time;
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(iii) |
the
failure by the Corporation to continue in effect any material compensation
or benefit plan in which Executive participates immediately prior
to the
Change of Control unless an equitable arrangement (embodied in
an ongoing
substitute or alternative plan) has been made with respect to such
plan,
or the failure by the Corporation to continue Executive’s participation
therein (or in such substitute or alternative plan) on a basis
not
materially less favorable, both in terms of the amount of benefits
provided and the level of his participation relative to other
participants, than existed immediately prior to the Change of
Control;
or
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(iv)
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the
failure by the Corporation or its successor or any surviving entity
to
maintain Executive as the President and CEO of the top level operating
company affiliated with the Corporation or its successor or surviving
entity.
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i. 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.
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j. 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.
k. 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,
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.
l. Eligibility
for Severance; Requirement of Release.
Except
as provided in Sections 12d, 12e, 12f, and 12g, 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.
m. 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.
n. 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 Internal Revenue Code of 1986, as amended (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.
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.
11
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 Internal Revenue Code
of
1986, as amended (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.
12
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.
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.
13
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
| With a copy to: |
Xxxxxxxx
& Xxxx LLP
|
000
Xxxx
Xxxx Xxxxxx
Xxxxxxxx,
XX 00000-0000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
Facsimile
No.: (000) 000-0000
| If to Employee: |
R.
Xxxxxx Xxxxx
|
| 000 Xxxx Xxxxx Xxxx |
| Xxxxxxxxx, XX 00000 |
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.
14
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.
15
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
16
IN
WITNESS WHEREOF, the Corporation and Executive have duly executed this Agreement
on the date set forth below.
| CORPORATION: |
WITNESS:
|
|
|
FUELCELL
ENERGY, INC.
|
||
| By: _______________________________________ | ||
| Name: | Name: | |
| Its: | ||
| Date: ___________ | ||
| EXECUTIVE: | WITNESS: | |
| Name: R. Xxxxxx Xxxxx | Name: | |
|
Date:
____________
|
17
