AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
10.3
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This
Amended and Restated Employment Agreement (the "Agreement"),
entered into as of February 14, 2008, is by and between Beacon Power
Corporation, a Delaware corporation (the "Company"),
and
Xxxxxxx X. Xxxxxxxxxx (the "Executive")
WHEREAS,
the Executive is an employee of the Company, and the Company desires to retain
his services and he wishes to continue his employment by the Company;
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties agree as follows:
Section
1.
Term.
The
Company shall employ the Executive for a term commencing on the above date
and
continuing until March 31, 2009, unless renewed or terminated pursuant to
Section 9. The period of the Executive's employment hereunder is referred to
as
the "Employment
Period."
Section
2.
Duties.
The
Executive shall serve the Company as Vice President and Chief Technical Officer
and shall have duties and responsibilities consistent with such position. Such
duties and responsibilities shall include, but not be limited to, management
of
the Company's intellectual property and technology. The Executive will report
to
the Chief Executive Officer of the Company. The Executive will generally perform
his services at the Company's principal offices, which are currently located
in
Tyngsboro, Massachusetts; provided,
however,
that
the Executive may be required to travel from time to time in connection with
Company business.
Section
3.
Full
Time; Best Efforts.
During
the Employment Period the Executive shall use his best efforts to promote the
interests of the Company and shall devote his full business time and efforts
to
its business and affairs. The Executive shall not engage in any business
activity which could reasonably be expected to interfere with the performance
of
the Executive's duties, services and responsibilities hereunder.
Section
4.
Compensation.
The
Executive shall be entitled to compensation as follows:
(a) Base
Salary.
During
the Employment Period, the Executive will receive a salary at an annual gross
rate of $189,280 (as the same may be adjusted from time to time, the
"Base
Salary"),
which
shall be payable in accordance with the Company’s regular payroll practices
applicable to senior executive officers. The Executive's Base Salary shall
be
reviewed by the Board of Directors of the Company (the "Board")
at
least annually and may be increased (but not decreased) in the Board's
discretion, depending upon the performance of the Executive and of the
Company.
(b) Annual
Bonus.
The
Executive shall be eligible to receive an annual bonus based on the achievement
of individual and Company performance objectives determined annually by the
Compensation Committee of the Board in consultation with the Executive. The
amount of the annual bonus will be targeted at an amount equal to thirty-five
percent (35%) of Base Salary per year. The Executive and the Compensation
Committee of the Board will set performance goals and targets for the annual
bonus prior to March 31, 2008. The Compensation Committee shall evaluate such
performance goals and targets and such annual bonus, if any, shall be paid
on
March 1, 2009.
(c) Long
term incentive compensation.
Effective on the effective date of this Agreement, the Company has entered
into
a 2008 long term incentive compensation arrangement with Executive, consisting
of a non-qualified stock option and restricted stock units.
(d) Withholding.
The
Company may withhold from compensation payable to the Executive all applicable
federal, state, and local withholding taxes as required by law.
Section
5.
Benefits.
(a) Generally.
The
Executive will be entitled to such fringe benefits as are generally available
to
the Company's executive officers, including group health and dental insurance
coverage, group long and short-term disability insurance coverage, and 401(k)
plan and stock plan participation. He will also be entitled to a fringe benefit
consisting of reimbursement of the cost to the Executive (above any applicable
insurance coverage) of an executive physical every other year (not to exceed
$1,000 for each such physical). In the event that any insurance policy is paying
disability benefits to Executive, and if the amount of the Executive's monthly
base salary that would be paid in the absence of such disability is higher
than
the monthly insurance payments, then the Company shall pay Executive an amount
per month equal to such excess, for so long as the Executive is employed with
the Company. No such difference shall be payable after the Executive's
employment expires or is terminated.
(b) Paid
Vacation.
In
addition to U.S. statutory holidays, the Executive will be entitled to 20
business days of paid vacation per year, accruing at the rate of 1.66 days
per
month. A maximum of ten unused vacation days in any year may be carried over
and
used in the next year, subject to such policies as the Company may adopt from
time to time with respect thereto. If by December 31, each year, the Executive
has accrued in excess of ten unused vacation days, the Company shall pay
(consistent with existing Company policy) the Executive a cash amount (based
on
the Executive's then current year's base salary) equal to such excess up to
a
maximum not to exceed ten vacation days.
(c) Life
Insurance.
The
Company will provide the Executive with group term life insurance in an amount
equal to no less than two times his Base Salary plus $1,000,000.
Section
6.
Expense
Reimbursement.
The
Executive will be entitled to reimbursement of all reasonable and necessary
business expenses incurred by the Executive in the ordinary course of business
on behalf of the Company, subject to presentation of appropriate documentation
and compliance with policies established by the Board.
Section
7.
Non-Disclosure
and Assignment of Invention Agreement; Indemnification
Agreement.
The
parties acknowledge and agree that the Executive has executed and delivered
to
the Company the Company's standard form of Invention and Non-Disclosure
Agreement and that the Company and the Executive have executed and delivered
an
Indemnification Agreement in form and substance satisfactory to both parties
(the "Indemnification
Agreement").
Section
8.
Non-Competition
and Non-Solicitation Covenants.
(a) Non-competition.
The
Executive agrees that during the Employment Period and for the longer
of (i)
12 months thereafter, and (ii) the period during which the Company is providing
payment to the Executive under Section 9(c) of this Agreement, he will not
own,
manage, operate, control, be employed by, provide services as an independent
contractor or consultant to, own any stock or other investment in or debt of,
or
otherwise be connected in any manner with the ownership, management, operation
or control of, any business or enterprise that at the time of termination,
competes with the Company or conducts business in a field in respect of which
the Board is making plans to enter.
(b) Non-solicitation.
The
Executive agrees that during the Employment Period and for two year thereafter,
he will not attempt to persuade or induce any employee of the Company to
terminate his or her employment with the Company for any reason.
(c) Acknowledgments
by Executive.
The
Executive acknowledges that the covenants set forth in this Section 8 are
reasonable in scope and are no greater than is necessary to protect the
Company's legitimate business interests. The Executive further acknowledges
that
any breach by him of the covenants set forth in this Section 8 would irreparably
injure the Company, and that money damages would not adequately compensate
the
Company for the injuries that it would suffer. The parties accordingly agree
that in the event of any breach or threatened breach by the Executive of any
of
the covenants set forth in this Section 8, the Company may obtain, from any
court of competent jurisdiction, both preliminary and permanent injunctive
relief in order to prevent the occurrence or continuation of such injuries,
without being required to prove actual damages or post any bond or other
security. Nothing in this Agreement shall prohibit the Company from pursuing
any
other legal or equitable remedy that may be available to it in the event of
the
Executive's breach of any of the covenants set forth in this
Agreement.
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Section
9.
Termination.
(a) Employment
Termination.
The
employment of the Executive pursuant to this Agreement shall terminate upon
the
occurrence of any of the following:
(i)
At
the election of the Company, for Cause, immediately upon written notice by
the
Company to the Executive. For purposes of this Agreement, "Cause"
shall
be deemed to exist upon a reasonable good faith finding by the Board that the
Executive has:
(1)
committed an act constituting fraud, embezzlement or other felony, determined
in
the reasonable opinion of the Board acting in its sole discretion,
or
(2)
materially breached his obligations under this Agreement or the Inventions
and
Nondisclosure Agreement, and failed to cure same within 30 days after written
notice thereof is given to him by the Company, or
(3)
materially breached the Company's material policies, including but not limited
to the Company's policies regarding xxxxxxx xxxxxxx and sexual harassment,
or
(4)
engaged in willful misconduct and failed to cure same within 30 days after
written notice thereof is given to him by the Company.
(ii)
At
the election of the Company, without Cause, upon at least 90 days written notice
by the Company to the Executive.
(iii)
The
death of the Executive, or (in the discretion of the Company) the Disability
of
the Executive. For purposes of this Agreement, "Disability"
shall
be considered to exist:
(1)
if
the Executive fails to perform his normal duties for at least 60 days (not
counting days taken for vacation), whether or not consecutive, during any
180-day period, or
(2)
if
the Executive's insurance company has confirmed that any disability insurance
benefits are going to be paid by reason of Executive's incapacitation, or
(3)
if
the Board, acting in its sole discretion but after reasonable consultation
with
Executive, concludes that the Executive suffers from a degree of physical or
mental incapacitation as a result of illness or accident which makes it
reasonably unlikely that the Executive will be able to perform his normal duties
for a period of 60 days. In reaching this conclusion, the Board may consult
third parties, including, but not limited to, other employees, physicians,
psychiatrists, and counselors.
(iv)
At
the election of the Executive, for any reason, upon at least 90 days prior
written notice to the Company.
(v)
At
the election of the Executive for Good Reason, provided
that the
Executive shall have given written notice to the Company within 30 days after
he
becomes aware of the occurrence of any event of Good Reason specifying such
event, and such event shall be continued for a period of 30 days following
such
notice. For purposes of this Agreement, "Good
Reason"
means
any of the following events:
(1)
a
material diminution in the duties, responsibilities, position or job title
of
the Executive without the Executive's written consent. For example, it will
be
considered such a diminution if in the event of a business combination involving
the Company by means of a reorganization, merger, consolidation,
recapitalization, or asset sale (other than one described below in subparagraph
4), the Executive remains as Vice President and CTO of the Company itself but
is
not appointed as the Vice President and CTO of the other party to such
combination by the 180th
day
after closing (or, the Executive and the Company have not reached some other,
mutually acceptable arrangement by then).
(2)
a
material breach by the Company of its obligations under this Agreement or the
Indemnification Agreement, or
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(3)
a
change in the primary location where the Executive is expected to perform his
services hereunder to a location that is more than 50 miles away from Tyngsboro,
Massachusetts, or
(4)
a
Sale of the Business (as defined below) For purposes of this Agreement, a
"Sale
of the Business"
means
(A) the acquisition by a person, group, or party of 50% or more of the
outstanding capital stock of the Company in a single transaction or series
of
contractually related transactions, (B) a change of a majority of the members
of
the Board (other than by resignation or by any replacement of such resigned
Board member(s)) when the change of the various directors occurs at
substantially the same time, without the approval or consent of the members
of
the Board before such change, (C) the acquisition of the Company by means of
a
reorganization, merger, consolidation, recapitalization, or asset sale, unless
the owners of the capital stock of the Company before such transaction own
immediately after such transaction more than 50% of the capital stock of the
acquiring or succeeding entity in substantially the same proportions (without
giving effect to any funds that may be newly invested in the Company or such
acquiring or succeeding entity at about the same time), or (D) the approval
of a
liquidation or dissolution of the Company.
(b)
Effect
of Termination.
(i)
Termination
Pursuant to Section 9(a)(i) relating to termination for cause or Section
9(a)(iv) relating to termination at the election of Executive for any
reason.
In the
event the Executive's employment is terminated pursuant to Section 9(a)(i)
or
Section 9(a)(iv), the Company shall pay to the Executive his accrued Base Salary
through the last date of his employment hereunder (the "Termination
Date")
and
shall continue to provide to the Executive the benefits described in Section
5
(the "Benefits")
through the Termination Date, but shall have no further responsibility for
any
compensation or benefits to the Executive for any time period subsequent to
the
Termination Date.
(ii)
Termination
pursuant to Section 9(a)(ii) relating to termination without
cause.
In the
event the Executive's employment is terminated pursuant to Section 9(a)(ii),
the
Company shall:
(1)
Pay
to the Executive a cash amount equal to his then monthly Base Salary multiplied
by twelve.
(2)
Continue to provide the benefits described in Sections 5(a) and 5(c) to the
Executive until the first anniversary of the Termination Date.
(3)
Within five business days after the Termination Date, pay the Executive an
amount equal to his bonus which was paid (or which has been determined but
not
yet paid) with respect to the prior fiscal year multiplied by a fraction, the
numerator of which is the number of full fiscal months that have elapsed in
the
then current fiscal year prior to the Termination Date, and the denominator
of
which is 12. In no event shall payment under this Section 9(b)(ii)(3) exceed
80%
of the Executive's base salary for the prior year. If the bonus with respect
to
the prior fiscal year has not yet been determined by the date that the parties
must calculate the amount to be paid under this paragraph, then the parties
shall calculate this portion of the severance by reference to the bonus paid
with respect to the year next preceding the prior fiscal year.
(iii)
Termination
pursuant to Section 9(a)(v) relating to termination at the election of Executive
for Good Reason.
In the
event the Executive's employment is terminated pursuant to Section 9(a)(v),
the
Company shall:
(1)
Pay
to the Executive a cash amount equal to his then monthly Base Salary multiplied
by twelve.
(2)
Continue to provide the benefits described in Sections 5(a) and 5(c) to the
Executive until the first anniversary of the Termination Date.
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(3)
Within five business days after the Termination Date, pay the Executive an
amount equal to his bonus which was paid (or which has been determined but
not
yet paid) with respect to the prior fiscal year multiplied by a fraction, the
numerator of which is the number of full fiscal months that have elapsed in
the
then current fiscal year prior to the Termination Date, and the denominator
of
which is 12. In no event, shall payment under this Section 9(b)(iii)(3) exceed
80% of the Executive's base salary for the prior year. If the bonus with respect
to the prior fiscal year has not yet been determined by the date that the
parties must calculate the amount to be paid under this paragraph, then the
parties shall calculate this portion of the severance by reference to the bonus
paid with respect to the year next preceding the prior fiscal year.
(iv)
Termination
pursuant to Section 9(a)(iii) relating to the death or disability of the
Executive.
In the
event the Executive's employment is terminated pursuant to Section 9(a)(iii),
the Company shall:
(1)
Continue to pay to Executive or his estate, as the case may be, an amount equal
to his then current Base Salary for the three-month period following the
Termination Date.
(2)
Continue for the 12-month period following the Termination Date all health
and
dental insurance benefits the Executive was entitled to at the Termination
Date.
(v)
Golden
Parachute Payment Excise Tax Protection.
In the
event that the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"),
(or
any successor penalty or excise tax subsequently imposed by law) applies to
any
payments or benefits specifically paid or conferred only under this Agreement
(which shall not include any payments or benefits paid or conferred under the
long-term incentive compensation arrangement or the performance based long-term
incentive compensation arrangement referenced in Section 4(c)) (the
“Excise
Tax”),
an
additional amount shall be paid by the Company to the Executive equal
to
the amount of such Excise Tax (the “Gross
Up Payment”);
provided, however in no event shall the aggregate amount payable by the Company
to Executive for any excise tax imposed by Section 4999 of the Code pursuant
to
this Agreement and all other agreements between the Company and Executive exceed
$250,000. The Company and its advisers shall make the determination of the
amount of the Gross Up Payment. To the extent that the amount of such Gross
Up
Payment exceeds the amount of Excise Tax actually paid by Executive, Executive
shall promptly pay to the Company such excess amount.
(c) Continuation/Nonrenewal.
Unless
this Agreement has been otherwise terminated before the end of the scheduled
Employment Period as described in Section 1, the Company and the Executive
agree
to discuss in good faith the possible continuation of the Executive’s
employment, commencing six months prior to such date. If the Company fails
to
offer the Executive a new employment agreement, with at least equivalent
material terms to this Agreement, by such date and in fact the Executive ceases
to be an employee of the Company (other than for Cause) following such date
the
Company shall pay the Executive a monthly amount for twelve months equal to
his
last prevailing monthly Base Salary, plus one-twelfth of the Executive’s bonus
for the most recent fiscal year of the Company, in accordance with the Company’s
regular payroll practices, less applicable withholdings required by law. If
the
bonus with respect to the most recent fiscal year has not yet been determined
by
the date that the parties must calculate the amount to be paid under this
paragraph with respect to bonus, then the parties shall calculate this portion
of the severance by reference to the bonus paid with respect to the year next
preceding such most recent fiscal year.
Section
10.
No
Conflicting Agreements.
The
Executive represents and warrants to the Company that he is not a party to
or
bound by any confidentiality, non-competition, non-solicitation or other
agreement or restriction that could conflict with or be violated by the
performance of his duties for the Company.
Section
11.
No
Disparagement.
Each
party agrees that at all times following the termination of the Executive's
employment hereunder, such party shall not make or cause to be made, directly
or
indirectly, any statements to any third party that disparage or denigrate the
other party or, in the case of the Company, any of its current or former
directors, officers or employees, unless required by law.
Section
12.
Enforceability,
etc.
This
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision hereof shall be prohibited or invalid
under any such law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating or nullifying the remainder
of
such provision or any other provisions of this Agreement. If any one or more
of
the provisions contained in this Agreement shall for any reason be held to
be
excessively broad as to duration, geographical scope, activity, or subject,
such
provisions shall be construed by limiting and reducing it so as to be
enforceable to the maximum extent permitted by applicable law.
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Section
13.
Notices.
Any
notice or other communication given pursuant to this Agreement shall be in
writing and shall be personally delivered, sent by nationally recognized
overnight courier or express mail, or mailed by first class certified or
registered mail, postage prepaid, return receipt requested as
follows:
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(a)
If
to the Executive:
Xxxxxxx
X. Xxxxxxxxxx
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(b)
If
to the Company:
Beacon
Power Corporation
00
Xxxxxxxxx Xxxx
Xxxxxxxxx,
XX 00000
Attn:
Compensation Committee and Chief Executive
Officer
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or
to
such other address as a party shall have designated by notice to the other
party.
Section
14.
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the Commonwealth of Massachusetts without giving effect to any choice
or
conflict of laws provision or rule that would cause the application of the
domestic substantive laws of any other jurisdiction.
Section
15.
Amendments
and Waivers.
No
amendment or waiver of this Agreement or any provision hereof shall be binding
upon the party against whom enforcement of such amendment or waiver is sought
unless it is made in writing and signed by or on behalf of such party. The
waiver by either party of a breach of any provision of this Agreement by the
other party shall not operate and be construed as a waiver or a continuing
waiver by that party of the same or any subsequent breach of any provision
of
this Agreement by the other party. To the extent that the final regulations
under Section 409A of the Code require modifications to this Agreement in order
to avoid that section’s penalty tax, the parties agree to discuss amending this
Agreement accordingly. Notwithstanding the foregoing, to the extent the Company
reasonably determines that any portion of the payments or benefits payable
under
this Agreement is subject to Section 409A of the Code, such portion of payments
or benefits payable shall (i) to the extent required by Section 409A of the
Code, be delayed for six months from the Termination Date or (ii) to the extent
permitted under subsequent guidance from the Internal Revenue Service, be
otherwise made to comply with such Section 409A requirements, provided, however,
that any such action under this subsection (ii) that is more detrimental to
Executive than that in subsection (i) shall only be made with Executive’s
consent.
Section
16.
Binding
Effect.
This
Agreement shall be binding on and inure to the benefit of the parties hereto
and
their respective heirs, executors and administrators, successors and assigns,
except that it may not be assigned by the Company without the Executive's
consent, provided that the Company may assign this Agreement to an entity that
acquires substantially all of the Company's assets by means of an asset sale,
merger or otherwise, provided further that such entity shall agree in writing
to
assume and be bound by this Agreement. This Agreement is personal to the
Executive and is not assignable by him.
Section
17.
Entire
Agreement.
This
Agreement constitutes the final and entire agreement of the parties with respect
to the matters covered hereby and replaces and supersedes all other agreements
and understandings relating hereto, other than the RSU (restricted stock unit)
and option agreements already in place.
Section
18.
Pronouns.
Whenever the context may require, any pronouns used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural, and vice
versa.
Section
19. Survivability.
Sections
6-20 herein
shall
survive the termination of this
Agreement.
Section
20.
Counterparts.
This
Agreement may be executed in any number of counterparts, and with counterpart
signature pages, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN
WITNESS WHEREOF, this Agreement has been executed as a sealed instrument as
of
the date first above written.
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EXECUTIVE
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BEACON
POWER CORPORATION
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/s/
Xxxxxxx X. Xxxxxxxxxx
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By:
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/s/
F. Xxxxxxx Xxxx
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Xxxxxxx
X. Xxxxxxxxxx
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Name:
F. Xxxxxxx Xxxx
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Title:
President and Chief Executive
Officer
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