Exhibit 10.23
SEVERANCE BENEFITS
AGREEMENT
THIS SEVERANCE BENEFITS AGREEMENT
(the “ Agreement ”) is made as of the 29th day
of October, 2008 between Active Power, Inc., (the “
Company ”), and John Penver, an individual resident of
the State of Texas (“ Employee ”). Employee and
the Company are collectively referred to herein as the “
Parties .”
1. At-Will Employment Status
. Employee is currently employed by the Company. Employee is
employed on an “at will” basis, which means that either
the Company or Employee may terminate Employee’s employment
with the Company at any time and for any or no reason.
2. Severance Benefits upon
Involuntary Termination Without Cause or Resignation for Good
Reason . Although Employee’s employment is at-will, if
Employee is terminated by the Company without Cause (as defined
below) or resigns with Good Reason (as defined below), then
Employee shall be entitled to receive:
(a) continuing severance pay at a
rate equal to 100% of Employee’s base salary, as then in
effect (less applicable withholding taxes), for a period of nine
months from the date of such termination, to be paid periodically
in accordance with the Company’s normal payroll practices;
and
(b) to the extent such stock options
are outstanding and unvested as of the date of such termination,
the number of shares of stock issuable upon exercise of options
granted to Employee by the Company prior to the termination that
would have been vested and exercisable as of the date that is nine
months after the date of such termination shall vest and become
exercisable as of the date of the termination, and the shares of
stock of the Company that were purchased prior to the termination
and that are as of the date of such termination subject to a right
of repurchase by the Company (or its successor) shall have such
right of repurchase lapse with respect to the number of shares to
which such right of repurchase would have lapsed for the period
ending as of the date that is nine months after the date of such
termination; and
(c) if Employee elects continuation
coverage pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“ COBRA ”) for
Employee, within the time period prescribed pursuant to COBRA, the
Company will reimburse Employee for the COBRA premiums for such
coverage (at the coverage levels in effect immediately prior to
Employee’s termination) until the earlier of (i) a
period of nine months from the last date of employment of the
Employee with the Company, (ii) until Employee has secured
other employment, or (iii) the date Employee is no longer
eligible to receive continuation coverage pursuant to COBRA. COBRA
reimbursements shall be made by the Company to Employee consistent
with the Company’s normal expense reimbursement policy,
provided that Employee submits documentation to the Company
substantiating Employee’s payments for such COBRA coverage;
and
(d) all or a portion of
Employee’s bonus under the Company’s management
incentive program for the year in which Employee’s
termination without Cause or resignation for Good Reason occurs,
determined as follows: (i) with respect to corporate or
individual objectives
that are measured over a period of
time (such as revenue for a fiscal year), the amount of such bonus
with respect to such objective shall be determined based on a
comparison of the amount of such objective actually achieved
through the date of such termination against a pro rated portion
(based on a number of days, weeks or months, as applicable, during
the applicable measurement period for which Employee remained a
service provider of the Company) of the target objective, and shall
be payable on a pro rata basis (based on the number of days during
the applicable measurement period for which Employee remained a
service provider of the Company), and (ii) with respect to
corporate or individual objectives that are measured based on the
occurrence of a specific event at a point in time, the full amount
of such bonus with respect to such objective shall be payable if
such objective is achieved prior to the date of such termination.
All determinations of the amount of the achievement of such
objectives and the amounts of such bonuses shall be made by the
Board of Directors of the Company, in its sole
discretion.
3. Acceleration Upon Termination
After a Change in Control . Although Employee’s
employment is at-will, in the event that Employee is terminated by
the Company without Cause or resigns with Good Reason within twelve
months after a Change in Control (as defined in the Company’s
2000 Stock Incentive Plan), all shares of stock that are issuable
upon exercise of all options granted to Employee by the Company
prior to the date of the Change in Control shall fully vest as of
the date of such termination, to the extent such stock options are
outstanding and unvested at the time of such termination, and all
shares of stock of the Company that were purchased prior to the
Change in Control and that are subject to a right of repurchase by
the Company (or its successor) shall have such right of repurchase
lapse with respect to all of the shares.
4. Confidential Information/
Non-Competition Agreement .
(a) Employee is employed hereunder
by the Company in a confidential relationship wherein Employee, in
the course of his employment with the Company, has and will
continue to become familiar with and aware of Confidential
Information as defined in the Confidentiality Agreement, including
but not limited to confidential information regarding the
Company’s customers and specific manner of doing business,
including the processes, techniques and trade secrets utilized by
the Company, and future plans with respect thereto. In
consideration for Employee’s promises herein, the Company
agrees to provide Employee with such Confidential Information; in
return, Employee recognizes and acknowledges that such information
must be maintained in confidence, and to further such protection
agrees to the restrictive covenants set forth in this
Section 4.
(b) Employee acknowledges that
Employee’s fulfillment of the obligations contained in this
Agreement, including, but not limited to, Employee’s
obligation neither to use, except for the benefit of the Company,
or to disclose the Company’s Confidential Information and
Employee’s obligation not to compete contained in this
Section 4 is necessary to protect the Company’s
Confidential Information and to preserve the Company’s value
and goodwill. Employee further acknowledges the time, geographic
and scope limitations of Employee’s obligations under this
Section 4 are reasonable, especially in light of the
Company’s desire to protect its Confidential Information, and
that Employee will not be precluded from gainful employment if
Employee is obligated not to compete with the Company during the
period and within the Territory as described in
Section 4.
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(c) Employee will not, during the
period of his employment by or with the Company, and for a period
of nine (9) months immediately following the termination of
his employment with the Company, for any reason whatsoever,
directly or indirectly, for himself or on behalf of or in
conjunction with any other person, company, partnership,
corporation, business or entity of whatever nature:
(i) engage, as an officer, director,
shareholder, owner, partner, joint venturer, or in a managerial
capacity, whether as an employee, independent contractor,
consultant or advisor, or as a sales representative, in any
business selling any products or services in direct competition
with the Company, within 100 miles of (i) the principal
executive offices of the Company or (ii) any place where the
Company conducts business, provides products or services, or in
which the Company (including the subsidiaries thereof) is in the
process of initiating business operations as of the date on which
Employee’s employment by the Company hereunder is terminated
(the “ Territory ”);
(ii) call upon any person who is, at
that time, within the Territory, an employee of the Company
(including the subsidiaries thereof) in a managerial capacity for
the purpose or with the intent of enticing such employee away from
or out of the employ of the Company (including the subsidiaries
thereof);
(iii) call upon any person or entity
which is, at that time, or which has been, within one (1) year
prior to that time, a customer of the Company (including the
subsidiaries thereof’) within the Territory for the purpose
of soliciting or selling products or services in direct competition
with the Company within the Territory;
(iv) call upon any prospective
acquisition candidate, on Employee’s own behalf or on behalf
of any competitor, which candidate was either called upon by the
Company (including the subsidiaries thereof) or for which the
Company made an acquisition analysis, for the purpose of acquiring
such entity, provided however, that this section (iv) will not
apply if the Company affirmatively declined to proceed with the
acquisition; or
(v) disclose customers of the
Company (or the subsidiaries thereof) to any person, firm,
partnership, corporation or business for any competitive
reason.
As used in Section 4(c),
references to the business, customers, Territory, etc. of the
Company refer to the status of the Company prior to any Change in
Control ( i.e. , such breadth of business, customers,
Territory, etc. shall not automatically be expanded to include
those of a successor to the Company resulting from a Change in
Control). Notwithstanding the above, the foregoing covenant shall
not be deemed to prohibit Employee from acquiring as an investment
not more than three percent (3%) of the capital stock of a
competing business, whose stock is traded on a national securities
exchange or over-the-counter.
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(d) Because of the difficulty of
measuring economic losses to the Company as a result of a breach of
the foregoing covenant, and because of the immediate and
irreparable damage that could be caused to the Company for which it
would have no other adequate remedy, Employee agrees that the
foregoing covenant may be enforced by the Company in the event of
breach by him by injunctions and restraining orders without the
necessity of posting any bond therefor.
(e) In the course of
Employee’s employment with the Company, Employee will become
exposed to certain of the Company’s confidential information
and business relationships, which the above covenants are designed
to protect and Employee agrees to keep such confidential
information in the strictest confidence. It is agreed by the
parties that the foregoing covenants in this Section 4 impose
a reasonable restraint on Employee in light of the activities and
business of the Company (including the Company’s
subsidiaries) on the date of the execution of this Agreement and
the current plans of the Company (including the Company’s
subsidiaries); but it is also the intent of the Company and
Employee that such covenants be construed and enforced in
accordance with the changing activities, business and locations of
the Company (including the Company’s subsidiaries) throughout
the term of this covenant, subject to the following paragraph. For
example, if, during Employee’s term of employment, the
Company (including the Company’s subsidiaries) engages in new
and different activities, enters a new business or established new
locations for its current activities or business in addition to or
other than the activities or business enumerated under the Recitals
above or the locations currently established therefor, then, to the
extent described in Section 4(c), Employee will be precluded
from soliciting the customers or employees of such new activities
or business or from such new location and from directly competing
with such new business within 100 miles of its then-established
operating locations through the term of this covenant.
It is further agreed by the parties
hereto that, in the event that Employee shall cease to be employed
by the Company, and shall later enter into a business or pursue
other activities not in competition with the Company (including the
Company’s subsidiaries) as of Employee’s last date of
employment with the Company, or similar activities or business in
locations the operation of which, under such circumstances, does
not violate clause (i) of this Section 4, and in any
event such new business, activities or location are not in
violation of this Section 4 or of Employee’s obligations
under this Section 4, if any, Employee shall not be chargeable
with a violation of this Section 4 if the Company (including
the Company’s subsidiaries) shall thereafter enter the same,
similar or a competitive (i) business, (ii) course of
activities or (iii) location, as applicable.
(f) The covenants in this
Section 4 are severable and separate, and the unenforceability
of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest
extent which the court deems reasonable, and the Agreement shall
thereby be reformed to such extent.
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(g) All of the covenants in this
Section 4 shall be construed as an agreement independent of
any other provision in this Agreement, and the existence of any
claim or cause of action of Employee against the Company, whether
predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of such
covenants.
(h) It is specifically agreed that
the period of nine (9) months following Employee’s
employment set forth at the beginning of this Section 4,
during which the agreements and covenants of Employee made in this
Section 4 shall be effective, shall be computed by excluding
from such computation any time during which Employee is in
violation of any provision of this Section 4.
5. Conditions Precedent . Any
severance payments and/or benefits contemplated by Sections 2
and 3 above are conditional on Employee:
(a) continuing to comply with the
terms of this Agreement and the Proprietary Information and
Nondisclosure Agreement between Employee and the Company (the
“ Confidentiality Agreement ”);
(b) delivering prior to or
contemporaneously with any such severance payments, and not
revoking, a separation agreement including a general release of
claims relating to Employee’s employment and/or this
Agreement against the Company or its successor, its subsidiaries
and their respective directors, officers and stockholders and
affirmation of obligations hereunder and under the Confidentiality
Agreement in a form acceptable to the Company or its successor, the
key terms of which are included in the attached Exhibit A ;
and
(c) in the event of a resignation
for Good Reason, providing the Company with written notice of the
acts or omissions constituting the grounds for Good Reason within
ninety (90) days of the initial existence of the grounds for
Good Reason and a reasonable opportunity for the Company to cure
the conditions giving rise to such Good Reason, which shall not be
less than thirty (30) days following the date of notice from
Employee. If the Company cures the conditions giving rise to such
Good Reason within thirty (30) days of the date of such
notice, Employee will not be entitled to severance payments and/or
benefits contemplated by Sections 2 or 3 above if Employee
thereafter resigns from the Company based on such grounds. Unless
otherwise required by law, no severance payments and/or benefits
under Sections 2 or 3 will be paid and/or provided until after
the expiration of any relevant revocation period.
6. Definitions . For purposes
of this Agreement,
(a) Cause . For purposes of
this Agreement, “ Cause ” shall mean
(i) Employee’s continued failure to substantially
perform the duties and obligations of Employee’s position
(for reasons other than death or Disability), which failure, if
curable within the discretion of the Company, is not cured to the
reasonable satisfaction of the Company within thirty (30) days
after receipt of written notice from the Company of such failure;
(ii) Employee’s failure or refusal to comply with
reasonable written policies, standards and regulations established
by the Company from time to time which failure, if curable in the
discretion of the Company, is not cured to the
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reasonable satisfaction of the
Company within thirty (30) days after receipt of written
notice of such failure from the Company; (iii) any act of
personal dishonesty, fraud, embezzlement, misrepresentation, or
other unlawful act committed by Employee that results in a
substantial gain or personal enrichment of Employee at the expense
of the Company; (iv) Employee’s violation of a federal
or state law or regulation applicable to the Company’s
business, which violation was or is reasonably likely to be
materially injurious to the Company; (v) Employee’s
violation of, or a plea of nolo contendere or guilty to, a felony
under the laws of the United States or any state; or (vi) the
Employee’s material breach of the terms of Section 4 of
this Agreement or of the Confidentiality Agreement.
(b) Good Reason . For
purposes of this Agreement, “ Good Reason ”
sha
