December 30, 2008
James K. Prueitt
3 Chandler Drive
Ballston Lake, NY 12019
Re:
Amendment to Employment Agreement, Vice President of Engineering
and Operations, MTI MicroFuel Cells Inc.
Dear Jim:
This letter amends and restates
our agreement with respect to the terms of your employment with MTI
MicroFuel Cells Inc. (“MTI Micro” or the
“Company”), a subsidiary of Mechanical Technology,
Incorporated (“MTI”). You shall continue to serve as
Vice President of Engineering and Operations of MTI Micro. This
letter supersedes our letter to you dated April 3, 2006, and any
other letters or addendums thereto (excluding the Proprietary
Information, Developments, Non-Competition and Non-Solicitation
Agreement ), and this letter is intended to comply with the
applicable provisions of Section 409A of the Internal Revenue Code
of 1986, as amended, and the final Treasury regulations and
guidance issued thereunder (“Section 409A”). The terms
of your employment agreement, as amended and restated, effective
December 30, 2008 are as set forth below:
1. Base Salary . Your
salary will be $188,300 per year, less all applicable taxes and
withholdings.
2. Bonus . You will be
eligible to receive a retention bonus for the achievement of
certain milestones related to the Company’s business. There
shall be two such milestones, the attainment of each milestone
shall result in a cash payment equal to 5% of your base salary, of
which 75% of the applicable bonus will be paid to you in January
2009 after the applicable milestone is achieved and the remaining
25% will be paid in April 2009. These milestones shall
be:
§ Milestone 1: The delivery of a minimum of two
prototypes to the Original Equipment Manufacturers (OEMs) by
December 31, 2008.
§ Milestone 2: The completion of $1.153 million of
revenue in 2008 under the Department of Energy (DOE) contract
(which expires in April 2009) by December 31, 2008.
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3. Stock Options . In the
event the Company obtains a Series A preferred stock financing, the
Company’s Board of Directors will recommend that you are
eligible to receive options in MTI Micro representing approximately
2.34% of the total equity in MTI Micro stock; with one-half of the
shares vesting immediately and one-half of the shares vesting
quarterly over a period of three years. This is only a
recommendation and shall not be binding on the Company.
The Compensation Committee of MTI
may grant you options at their discretion in the future.
4. Other Benefits . You
will be eligible for all benefits generally available to employees
and officers of the Company, including the Company’s 401(k)
plan and health insurance plan. Benefits are subject to change at
any time in the Company’s sole discretion. You will be
eligible for 23 days of paid time off annually, which shall accrue
based upon MTI Micro regular PTO procedures.
5. At-Will Employment .
This letter shall not be construed as an agreement, either express
or implied, to employ you for any stated term, and shall in no way
alter MTI Micro’s policy of employment at-will, under which
both MTI Micro and you remain free to end the employment
relationship for any reason, at any time, with or without notice.
Similarly, nothing in this letter shall be construed as an
agreement, either express or implied, to pay you any compensation
or grant you any benefit beyond the end of your employment with MTI
Micro, except as otherwise provided herein.
6. Termination of
Employment . If the Company terminates your employment without
“cause” (as defined below), the Company shall, for four
months following your date of termination: (i) continue to pay to
you your base salary at the rate in effect at the time of your
termination, in accordance with the Company’s regularly
established payroll procedure; and (ii) provided you elect to
continue receiving group medical insurance pursuant to the federal
“COBRA” law, 29 U.S.C. § 1161 et. seq. ,
continue to pay the share of the premium for health coverage that
is paid by the Company for active and similarly situated employees
who receive the same type of coverage. It is intended that these
COBRA payments are exempt from Section 409A. For purposes of this
agreement, “cause” shall mean (i) a finding by the
Board of Directors that you have engaged in gross misconduct,
negligence, theft, dishonesty, fraud, or gross dereliction of
duties; or (ii) your indictment on any felony charge or a
misdemeanor charge involving theft, moral turpitude or a violation
of the federal securities laws (whether or not related to your
conduct at work).
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In the event you are terminated
in anticipation of, in connection with, or during the six months
following a Change of Control of the Company or MTI, if the Company
is a subsidiary of MTI at the time, you shall (i) continue to
receive your regular base salary in effect at the time of your
termination for a period of six months effective from the date of
your termination, subject to applicable payroll deductions, and
(ii) provided you elect to continue receiving group medical
insurance pursuant to the federal “COBRA” law, 29
U.S.C. § 1161 et. seq. , continue to pay the share of
the premium for health coverage that is paid by the Company for
active and similarly situated employees who receive the same type
of coverage. It is intended that these COBRA payments
