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Exhibit
10.3
RELEASE AND SEVERANCE
AGREEMENT
This RELEASE AND SEVERANCE
AGREEMENT is made and entered into this 9 day of May, 2007, by and
between John O’Neill (“Employee”) and
Environmental Power Corporation (together with its former, current
and future parents, agents, officers, directors, employees,
successors, predecessors, and affiliated companies, the
“Company”).
For good and valuable
consideration, including the covenants hereinafter set forth, the
receipt and adequacy of which are hereby acknowledged, Employee and
the Company agree as follows:
DEFINITIONS
As used in this
Agreement:
“COBRA” means the
Consolidated Omnibus Budget Reconciliation Act.
“Common Stock”
means the Company’s common stock, $0.01 par value per
share.
“Competing
Business” means a business that competes in the Territory
with the Company’s subsidiary Microgy Holdings, L.L.C.,
Microgy, Inc., or their affiliates engaged in the business of
producing biogas and/or renewable natural gas via anaerobic
digestion from animal and other waste.
“Initial Amount”
has the meaning set forth in Exhibit A.
“Offer Letter”
means the letter dated June 29, 2005, by which the Company
offered employment to Employee.
“Options”,
“Vested Options” and “Unvested Options”
have the meaning set forth in Exhibit A.
“Proprietary
Information” means, by way of illustration and not
limitation, all information (whether or not patentable and whether
or not copyrightable) owned, possessed or used by the Company,
including, without limitation, any invention, formula, vendor
information, customer information, apparatus, equipment, trade
secret, process, research, report, technical data, know-how,
computer program, software, software documentation, hardware
design, technology, marketing or business plan, forecast,
unpublished financial statement, budget, license, price, cost and
employee list that is communicated to, learned of, developed or
otherwise acquired by Employee in the course of his service as an
employee of the Company.
“Releasees” means
the Company and its affiliated corporations of any nature, each of
their agents, directors, officers, employees, representatives,
attorneys, predecessors, successors, heirs, executors,
administrators and assigns, and all persons acting by, through,
under or in concert with any of them.
“Severance
Amount” has the meaning set forth in Exhibit A.
“Severance &
Benefit End Date” has the meaning set forth in Exhibit
A.
“Termination
Date” has the meaning set forth in Exhibit A.
“Territory” means
North America (inclusive of Mexico).
Exhibits A through D, which are attached
hereto, are incorporated herein by reference.
1. General Release; Status
Pending Termination Date
(a) Upon execution and
delivery of this Agreement and on the Termination Date, Employee
shall execute and deliver a Release in the form of Exhibit B, and
no such Release shall have been revoked within the time periods set
forth therein, as a condition to the receipt of any of the payments
or other benefits set forth in Section 5 of this
Agreement.
(b) Pending the Termination
Date Employee (i) shall continue to receive the “Base
Salary” as designated in the Offer Letter, (ii) shall
remain an employee at will as provided by the Offer Letter,
(iii) shall continue to report to work and perform the duties
that may be assigned from time to time by the Company’s Chief
Executive Officer, (iv) shall remain eligible for the items
designated as “Benefits” in the Offer Letter, and
(v) shall remain entitled to the change-in-control protections
as provided for in the Offer Letter.
2. Forbearance of
Litigation
It is further specifically
acknowledged by Employee that neither Employee nor any person,
organization or other entity acting on his behalf has or will file,
charge, claim, sue or cause or permit to be filed any charge, claim
or action for damages or other relief against the Company or any
other Releasee (a) arising from Employee’s employment by
the Company (or the termination thereof) and involving any matter
occurring in the past up to the date of this Agreement or involving
any continuing effects of actions or practices which arose prior to
the date of this Agreement, or (b) involving or based upon any
claims, demands, causes of action, obligations, damage or
liabilities which are the subject of this Agreement. Employee
further acknowledges that if any such charge, claim, suit, or cause
of action has been filed Employee will immediately cause it to be
withdrawn or dismissed with prejudice and without costs. The
foregoing shall in no respect limit Employee’s rights in
respect of the enforcement of this Agreement.
3. Return of Company
Property
Employee acknowledges that
during his employment with the Company, Employee obtained property
of the Company’s and that Employee created and/or completed,
on the Company’s behalf, documents and/or paperwork that
belong to the Company. Employee agrees that, except as otherwise
provided in Section 5 below and except as set forth in Exhibit
D hereto, Employee will return to the Company as of the Termination
Date any such property and paperwork, including but not limited to
(i) all written notes taken over the last 18 months,
(ii) all originals and copies of any documents that contain or
refer to any information regarding the Company’s business,
(iii) all Company equipment, materials and supplies,
(iv) all Company records, and (v) all other documents
that pertain in any way to the Company’s business, and any
property being leased in the Company’s name and used by or
otherwise in the possession of Employee. The Company agrees to
retain any records so returned in accordance with the
Company’s document-retention policies and applicable
law.
4. No Admission of
Liability
It is further understood and
agreed by the parties that this settlement is a compromise of
doubtful and disputed claims and that this agreement is not and is
not to be construed as an admission of liability on the part of
Employee, the Company, the other Releasees or any of them, by whom
liability is expressly denied. The parties have entered into this
Agreement for the sole purpose of avoiding the burden, expenses,
delay and uncertainties of litigation.
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5. Payments to Employee;
Amendment of Options
In consideration for the
release of claims and all other obligations undertaken herein by
Employee, the Company agrees with Employee that as of the
Termination Date (provided that the Release to be delivered on the
date thereof has not been revoked):
(a) Company will pay to
Employee the Initial Amount by check.
(b) During the period
commencing as of the first day following the Termination Date and
ending as of the Severance & Benefit End Date, and subject
to Employee’s continuing compliance with the terms of this
Agreement:
(i) Company will pay to
Employee the Severance Amount in semi-monthly installments
consistent with the Company’s regular payroll schedule and
practices until said amount is paid in full. Said payments shall
not be affected by Employee’s commencement of employment or
consultancy with a new employer.
(ii) Company will continue to
pay the premiums of, and permit Employee to participate in, the
medical, dental and life insurance plans as offered by the Company
from time to time to its employees for a period of one year
following the Termination Date, provided that said payments and
participation shall cease on the 60 th day following Employee’s commencement of full-time
employment with a new employer, and further provided, that Employee
shall be required to contribute toward premiums (via
Company’s withholding from payments of the Severance Amount)
and make co-payments to the same extent that active employees are
required to contribute or pay. Commencing as of the expiration of
the benefit provided by this subsection, Employee shall have rights
afforded under COBRA.
(c) Company shall be deemed
to transfer title to Employee to the laptop computer currently in
his possession for no further consideration, provided that on or
before the Termination Date Employee shall deliver the computer to
the Company’s information-technologies personnel for removal
of all Company data.
(d) Effective as of the
Termination Date, each of the Options is hereby amended as
follows:
(i) Provisions in the
applicable option agreement that would require Employee to exercise
the Option within one year of the date of termination of employment
shall be deemed to be amended to allow exercise within twenty-four
(24) months of the Termination Date.
(ii) All Unvested Options
shall continue to vest during the extended exercise-period set
forth above (but not thereafter) as though no termination of
employment had occurred, according to the applicable terms of the
Options. In no event shall the number of Unvested Options that
continue to vest exceed the number set forth in Exhibit A under the
tabular column entitled “Unvested Options Subject to
Incremental Vesting”.
(iii) If Options are
exercised by Employee, they shall be exercised only on a net-share
basis in accordance with the procedures set forth in Exhibit
C.
(iv) Employee’s rights
as amended by this subsection (d) shall inure to the benefit
of Employee’s legal representative in the event of
Employee’s death or legal incapacity (but in no event shall
the legal representative or any other party have any greater rights
than those extended to Employee as provided herein).
(v) Employee acknowledges and
agrees that, as a result of these changes, certain of the Options
will no longer qualify as “incentive stock options”
within the meaning of the applicable provisions of the Internal
Revenue Code and rules and regulations promulgated thereunder.
Employee agrees to comply with applicable provisions of the Options
relating to notice to the Company of exercise upon any exercise of
such options regardless of whether the disposition of the shares of
Common Stock acquired upon such exercise occurs within the time
periods set forth therein.
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(vi) Employee acknowledges
and agrees that the Options shall terminate immediately upon any
material breach by him of this Agreement, provided that the
occurrence of a material breach shall be determined by arbitration
in accordance with the terms of Paragraph 6(b). Until said
determination is made, the Company agrees to deposit any funds due
to the Employee pursuant to the terms of this Agreement in escrow
with the arbitrator. Further, pending said determination Employee
will be allowed to exercise Options in accordance with Exhibit C
provided that any shares realized from the transaction shall be
placed in escrow with the arbitrator, net of shares required to
fulfill any withholding-tax obligation arising from such an
exercise.
(e) The Initial Amount is for
anticipated expenses associated with, and in full and complete
satisfaction of any obligation of the Company for, all costs
incurred by Employee related to Employee’s employment with
and exit from the Company. Said expenses include (without
limitation) legal fees, costs of travel, job-search assistance,
professional fees, association dues, and phone- and other
connection-charges.
(f) All payments to be made
to Employee hereunder, including the issuance of shares upon
exercise of the Options, shall be made net of all taxes required by
law to be withheld by the Company.
6. Choice of Law;
Disputes
(a) This document is deemed
to have been delivered within the State of New York, and the rights
and obligations of the parties hereto shall be construed and
enforced in accordance with, and governed by, the laws of the State
of New York without regard
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