EXHIBIT 10.56
EXECUTIVE SEVERANCE AGREEMENT
AGREEMENT made as of this 29th day of August, 2002 by and between Plug
Power Inc., a Delaware corporation with its principal place of business in
Latham, New York (the "Company"), and W. ▇▇▇▇ ▇▇▇▇▇▇▇ (the "Executive").
1. Purpose. The Company considers it essential to the best interests of its
stockholders to promote and preserve the continuous employment of key management
personnel. The Board of Directors of the Company (the "Board") recognizes,
however, that, as is the case with many publicly held corporations, the
possibility of a Change in Control (as defined in Section 2 hereof) exists and
that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders. Therefore, the
Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company's
management, including the Executive, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a Change in Control. Nothing in this Agreement shall be construed
as creating an express or implied contract of employment and, except as
otherwise agreed in writing between the Executive and the Company, the Executive
shall not have any right to be retained in the employ of the Company.
2. Change in Control. A "Change in Control" shall be deemed to have
occurred in any one of the following events:
(a) any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (other
than the Company, any of its subsidiaries, or any trustee, fiduciary or other
person or entity holding securities under any employee benefit plan or trust of
the Company or any of its subsidiaries), together with all Affiliates and
Associates (as such terms are hereinafter defined) of such person, shall become
the "beneficial owner" (as such term is defined in Rule 13d-3 of the Exchange
Act), directly or indirectly, of securities of the Company representing 25% or
more of the then outstanding shares of common stock of the Company (the "Stock")
(other than as a result of an acquisition of securities directly from the
Company); or
(b) persons who, as of the Effective Date, constitute the Company's
Board of Directors (the "Incumbent Directors") cease for any reason, including,
without limitation, as a result of a tender offer, proxy contest, merger or
similar transaction, to constitute at least a majority of the Board, provided
that any person becoming a director of the Company subsequent to the Effective
Date shall be considered an Incumbent Director if such person's election was
approved by or such person was nominated for election by either (i) a vote of at
least a majority of the Incumbent Directors or (ii) a vote of at least a
majority of the Incumbent Directors who are members of a nominating committee
comprised, in the majority, of Incumbent Directors; but provided further, that
any such person whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of members of the
Board of
Directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board, including by reason of agreement
intended to avoid or settle any such actual or threatened contest or
solicitation, shall not be considered an Incumbent Director; or
(b) Upon (A) the consummation of any consolidation or merger of the
Company where the shareholders of the Company, immediately prior to the
consolidation or merger, did not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, shares representing in the aggregate more than 50% of
the voting shares of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any), (B) the
consummation of any sale, lease, exchange or other transfer (in one transaction
or a series of transactions contemplated or arranged by any party as a single
plan) of all or substantially all of the assets of the Company or (C) the
completion of a liquidation or dissolution that has been approved by the
stockholders of the Company.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to have occurred for purposes of the foregoing clause (a) solely as the
result of an acquisition of securities by the Company which, by reducing the
number of shares of Stock outstanding, increases the proportionate number of
shares of Stock beneficially owned by any person to 25% or more of the shares of
Stock then outstanding; provided, however, that if any such person shall at any
time following such acquisition of securities by the Company become the
beneficial owner of any additional shares of Stock (other than pursuant to a
stock split, stock dividend, or similar transaction) and such person immediately
thereafter is the beneficial owner of 25% or more of the shares of Stock then
outstanding, then a "Change in Control" shall be deemed to have occurred for
purposes of the foregoing clause (a).
(c) For purposes of this Agreement, "Affiliate" and "Associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2 of the
Exchange Act, as in effect on the date of this Agreement; provided, however,
that no person who is a director or officer of the Company shall be deemed an
Affiliate or an Associate of any other director or officer of the Company solely
as a result of his position as director or officer of the Company.
3. Terminating Event. A "Terminating Event" shall mean any of the events
provided in this Section 3 occurring subsequent to a Change in Control as
defined in Section 2:
(a) termination by the Company of the employment of the Executive with
the Company for any reason other than (A) a willful act of dishonesty by the
Executive with respect to any matter involving the Company or any subsidiary or
affiliate, or (B) conviction of the Executive of a crime involving moral
turpitude, or (C) the gross or willful failure by the Executive to substantially
perform the Executive's duties with the Company (other than any such failure
after the Executive gives notice of termination for "Good Reason"), which
failure is not cured within 30 days after a written demand for substantial
performance is received by the Executive from the Board of Directors of the
Company which specifically identifies the manner in which the Board of Directors
believes the Executive has not substantially performed the Executive's duties,
or (D) the failure by the Executive to perform his full-time duties with the
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Company by reason of his death or disability; provided, however, that a
Terminating Event shall not be deemed to have occurred pursuant to this
Section 3(a) solely as a result of the Executive being an employee of any
direct or indirect successor to the business or assets of the Company,
rather than continuing as an employee of the Company following a Change in
Control. For purposes of clauses (A) and (C) of this Section 3(a), no act,
or failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive without reasonable belief
that the Executive's act, or failure to act, was in the best interests of
the Company and its subsidiaries and affiliates. For purposes of clause (D)
of this Section 3(a), Section 6 and Section 8(b) hereof, "disability" shall
mean the Executive's incapacity due to physical or mental illness which has
caused the Executive to be absent from the full-time performance of his
duties with the Company for a period of six (6) consecutive months if the
Company shall have given the Executive a Notice of Termination and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of his duties.
(b) termination by the Executive of the Executive's employment with
the Company for "Good Reason." "Good Reason" shall mean the occurrence of any of
the following events:
(i) a material adverse change, not consented to by the Executive,
in the nature or scope of the Executive's responsibilities, authorities, powers,
functions or duties from the responsibilities, authorities, powers, functions or
duties exercised by the Executive immediately prior to the Change in Control; or
(ii) a reduction in the Executive's annual base salary as in
effect on the date hereof or as the same may be increased from time to time
hereafter; or
(iii) unless otherwise consented to by the Executive, the
relocation of the Company's offices at which the Executive is principally
employed immediately prior to the date of a Change in Control (the "Current
Offices") to any other location more than fifty (50) miles from the Current
Offices, or the requirement by the Company for the Executive to be based
anywhere other than the Current Offices, except for required travel on the
Company's business to an extent substantially consistent with the Executive's
business travel obligations immediately prior to the Change in Control; or
(iv) the failure by the Company to pay to the Executive any
portion of his compensation or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation program of
the Company within fifteen (15) days of the date such compensation is due
without prior written consent of the Executive; or
(v) the failure by the Company to obtain an effective agreement
from any successor to assume and agree to perform this Agreement, as required by
Section 18.
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4. Severance Payment. In the event a Terminating Event occurs within
twenty-four (24) months after a Change in Control,
(a) the Company shall pay to the Executive an amount equal to the sum
of (i) the Executive's average annual base salary over the three (3) fiscal
years immediately prior to the Terminating Event (or the Executive's annual base
salary in effect immediately prior to the Change in Control, if higher) and (ii)
the Executive's average annual bonus over the three (3) fiscal years immediately
prior to the Change in Control (or the Executive's annual bonus for the last
fiscal year immediately prior to the Change in Control, if higher), payable in
one lump-sum payment no later than five (5) days following the Date of
Termination; and
(b) the Executive shall continue to vest in Executive's options, in
accordance with the governing stock options and all of the terms of those plans
shall continue to be in effect, as though Executive had remained an active
employee, for twelve (12) months; and
(c) the Company shall, regardless of whether the Company is unable to
utilize Company-related benefit plans, continue to provide to the Executive
certain benefits, including, without limitation, health, dental and life
insurance on the same terms and conditions as though the Executive had remained
an active employee, for twelve (12) months; and
(d) the Company shall provide COBRA benefits to the Executive following
the end of the period referred to in Section 4(b) above, such benefits to be
determined as though the Executive's employment had terminated at the end of
such period; and
(e) the Company shall pay to the Executive all reasonable legal and
arbitration fees and expenses incurred by the Executive in obtaining or
enforcing any right or benefit provided by this Agreement, except in cases
involving frivolous or bad faith litigation.
5. Additional Limitation.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event that any compensation, payment or distribution by the Company to or for
the benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the
"Severance Payments"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the
following provisions shall apply:
(i) If the Severance Payments, reduced by the sum of (A) the
Excise Tax and (B) the total of the Federal, state, and local income and
employment taxes payable by the Executive on the amount of the Severance
Payments which are in excess of the Threshold Amount (as defined below), are
greater than or equal to the Threshold Amount, the Executive shall be entitled
to the full benefits payable under this Agreement.
(ii) If the Threshold Amount is less than (A) the Severance
Payments, but greater than (B) the Severance Payments reduced by the sum of (1)
the Excise Tax and (2) the total of the Federal, state, and local income and
employment taxes on the amount of the
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Severance Payments which are in excess of the Threshold Amount, then the
benefits payable under this Agreement shall be reduced (but not below zero) to
the extent necessary so that the maximum Severance Payments shall not exceed the
Threshold Amount. To the extent that there is more than one method of reducing
the payments to bring them within the Threshold Amount, the Executive shall
determine which method shall be followed; provided that if the Executive fails
to make such determination within 45 days after the Company has sent the
Executive written notice of the need for such reduction, the Company may
determine the amount of such reduction in its sole discretion.
For the purposes of this Section 5, "Threshold Amount" shall mean three (3)
times the Executive's "base amount" within the meaning of Section 280G(b)(3) of
the Code and the regulations promulgated thereunder less one dollar ($1.00); and
"Excise Tax" shall mean the excise tax imposed by Section 4999 of the Code, and
any interest or penalties incurred by the Executive with respect to such excise
tax.
(b) The determination as to which of the alternative provisions of
Section 5(a) shall apply to the Executive shall be made by a nationally
recognized accounting firm selected by the Executive (the "Accounting Firm"),
which shall provide detailed supporting calculations both to the Company and the
Executive within fifteen (15) business days of the Date of Termination, if
applicable, or at such earlier time as is reasonably requested by the Company or
the Executive. For purposes of determining which of the alternative provisions
of Section 5(a) shall apply, the Executive shall be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation applicable to
individuals for the calendar year in which the determination is to be made, and
state and local income taxes at the highest marginal rates of individual
taxation in the state and locality of the Executive's residence on the Date of
Termination, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. The Company
shall bear the costs of the Accounting Firm in connection with such firm's
services provided hereunder.
6. Term. This Agreement shall take effect on the date first set forth above
and shall terminate upon the earlier of (a) the termination by the Company of
the employment of the Executive because of (A) a willful act of dishonesty by
the Executive with respect to any matter involving the Company or any subsidiary
or affiliate, or (B) conviction of the Executive of a crime involving moral
turpitude, or (C) the gross or willful failure by the Executive to substantially
perform the Executive's duties with the Company, or (D) the failure by the
Executive to perform his full-time duties with the Company by reason of his
death or disability (as defined in Section 3(a)), (b) the resignation or
termination of the Executive for any reason prior to a Change in Control, (c)
the termination of the Executive's employment with the Company after a Change in
Control for any reason other than the occurrence of any of the events enumerated
in Section 3(b)(i)-(v) or Section 3(c) of this Agreement, or (d) the date which
is twenty-four (24) months after a Change in Control if the Executive is still
employed by the Company.
7. Withholding. All payments made by the Company under this Agreement shall
be net of any tax or other amounts required to be withheld by the Company under
applicable law.
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8. Notice and Date of Termination; Disputes; Etc.
(a) Notice of Termination. After a Change in Control and during the
term of this Agreement, any purported termination of the Executive's employment
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
this Section 8. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and the Date of Termination. Further, a Notice of
Termination pursuant to one or more of clauses (A) through (C) of Section 3(a)
hereof is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than two-thirds (2/3) of the entire membership of
the Board at a meeting of the Board (after reasonable notice to the Executive
and an opportunity for the Executive, accompanied by the Executive's counsel, to
be heard before the Board) finding that, in the good faith opinion of the Board,
the termination met the criteria set forth in one or more of clauses (A) through
(C) of Section 3(a) hereof.
(b) Date of Termination. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in Control
and during the term of this Agreement, shall mean (i) if the Executive's
employment is terminated for disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
full-time performance of the Executive's duties during such 30-day period) and
(ii) if the Executive's employment is terminated for any other reason, the date
specified in the Notice of Termination. In the case of a termination by the
Company other than a termination pursuant to one or more of clauses (A) through
(C) of Section 3(a) (which may be effective immediately), the Date of
Termination shall not be less than 30 days after the Notice of Termination is
given. In the case of a termination by the Executive, the Date of Termination
shall not be less than fifteen (15) days from the date such Notice of
Termination is given. Notwithstanding Section 3(a) of this Agreement, in the
event that the Executive gives a Notice of Termination to the Company, the
Company may unilaterally accelerate the Date of Termination and such
acceleration shall not result in a Terminating Event for purposes of Section
3(a) of this Agreement.
(c) No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Sections
4(a) and (b) hereof. Further, the amount of any payment provided for in this
Agreement shall not be reduced by any compensation earned by the Executive as
the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Company or
otherwise.
(d) Settlement and Arbitration of Disputes. Any controversy or claim
arising out of or relating to this Agreement or the breach thereof shall be
settled exclusively by arbitration in accordance with the laws of the state of
New York by three arbitrators, one of whom shall be appointed by the Company,
one by the Executive and the third by the first two arbitrators. If the first
two arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Albany. Such arbitration shall be conducted in the City of Boston in
accordance with the rules of the American Arbitration Association for commercial
arbitrations, except with respect to the
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selection of arbitrators which shall be as provided in this Section 8(d).
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof.
9. Successor to Executive. This Agreement shall inure to the benefit of and
be enforceable by the Executive's personal representatives, executors,
administrators, heirs, distributees, devisees and legatees. In the event of the
Executive's death after a Terminating Event but prior to the completion by the
Company of all payments due him under Section 4(a) and (b) of this Agreement,
the Company shall continue such payments to the Executive's beneficiary
designated in writing to the Company prior to his death (or to his estate, if
the Executive fails to make such designation).
10. Enforceability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
11. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
12. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Company, or to the Company at its main office, attention of the Board of
Directors.
13. Effect on Other Plans. An election by the Executive to resign after a
Change in Control under the provisions of this Agreement shall not be deemed a
voluntary termination of employment by the Executive for the purpose of
interpreting the provisions of any of the Company's benefit plans, programs or
policies. Nothing in this Agreement shall be construed to limit the rights of
the Executive under the Company's benefit plans, programs or policies except as
otherwise provided in Section 5 hereof, and except that the Executive shall have
no rights to any severance benefits under any severance pay plan.
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14. No Offset. The Company's obligation to make the payments provided for
in this Agreement and otherwise perform its obligations hereunder shall not be
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company or any of its
Affiliates may have against the Executive or others whether by reason of the
Executive's breach of this Agreement, subsequent employment of the Executive, or
otherwise.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes in
all respects all prior agreements between the parties concerning such subject
matter.
16. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by a duly authorized representative of
the Company.
17. Governing Law. This is a New York contract and shall be construed under
and be governed in all respects by the laws of the state of New York.
18. Obligations of Successors. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place.
19. Confidential Information. The Executive shall never use, publish or
disclose in a manner adverse to the Company's interests, any proprietary or
confidential information relating to (a) the business, operations or properties
of the Company or any subsidiary or other affiliate of the Company, or (b) any
materials, processes, business practices, technology, know-how, research,
programs, customer lists, customer requirements or other information used in the
manufacture, sale or marketing of any of the respective products or services of
the Company or any subsidiary or other affiliate of the Company; provided,
however, that no breach or alleged breach of this Section 19 shall entitle the
Company to fail to comply fully and in a timely manner with any other provision
hereof. Nothing in this Agreement shall preclude the Company from seeking money
damages, or equitable relief by injunction or otherwise without the necessity of
proving actual damage to the Company, for any breach by the Executive hereunder.
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company by its duly authorized officer, and by the Executive,
as of the date first above written.
PLUG POWER INC.
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and CEO
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Name:
Title:
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