EXECUTION COPY
Exhibit 10.5
EXECUTION COPY
2009 RESTATEMENT OF
EXECUTIVE SEVERANCE AGREEMENT
EXECUTIVE SEVERANCE AGREEMENT
THIS RESTATEMENT (the “Restatement”) to the Executive Severance Agreement dated November 19, 2003
and amended on November 9, 2006 and November 21, 2008 (the “Agreement”) by and between THERMO
XXXXXX SCIENTIFIC INC., a Delaware corporation (the “Company”), and Xx. Xxxx X. Xxxxxx (the
“Executive”) is made this 21st day of November, 2009 by and between the Company and the Executive
(the “Effective Date”).
WHEREAS, the Company recognizes that the uncertainty regarding the future employment prospects
for key personnel may result in the departure or distraction of key personnel to the detriment of
the Company and its stockholders;
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that appropriate
steps should be taken to reinforce and encourage the continued employment and dedication of the
Company’s key personnel without distraction from such uncertainty and related events and
circumstances; and
WHEREAS, as of October 15, 2009, the Executive became President and Chief Executive Officer of
the Company;
NOW, THEREFORE, as an inducement for and in consideration of the Executive remaining in its
employ, the Company agrees that the Executive shall receive the severance benefits set forth in
this Agreement in the event the Executive’s employment with the Company is terminated under the
circumstances described below.
1. Key Definitions.
As used herein, the following terms shall have the following respective meanings:
1.1 “Change in Control” means an event or occurrence set forth in any one or more of
subsections (a) through (d) below (including an event or occurrence that constitutes a Change in
Control under one of such subsections but is specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person
beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more
of either (i) the then-outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (ii) the combined voting power of the then-outstanding securities of the Company
entitled to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this
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subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any
acquisition by the Company, (ii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the Company, or (iii) any
acquisition by any corporation pursuant to a transaction which complies with clauses (i) and (ii)
of subsection (c) of this Section 1.1; or
(b) such time as the Continuing Directors (as defined below) do not constitute a majority of
the Board (or, if applicable, the Board of Directors of a successor corporation to the Company),
where the term “Continuing Director” means at any date a member of the Board (i) who was a member
of the Board on the date of the execution of this Agreement or (ii) who was nominated or elected
subsequent to such date by at least a majority of the directors who were Continuing Directors at
the time of such nomination or election or whose election to the Board was recommended or endorsed
by at least a majority of the directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there shall be excluded from this
clause (ii) any individual whose initial assumption of office occurred as a result of an actual or
threatened election contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents, by or on behalf of a person other than the Board;
or
(c) the consummation of a merger, consolidation, reorganization, recapitalization or statutory
share exchange involving the Company or a sale or other disposition of all or substantially all of
the assets of the Company in one or a series of transactions (a “Business Combination”), unless,
immediately following such Business Combination, each of the following two conditions is satisfied:
(i) all or substantially all of the individuals and entities who were the beneficial owners of the
Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors, respectively, of the resulting
or acquiring corporation in such Business Combination (which shall include, without limitation, a
corporation which as a result of such transaction owns the Company or substantially all of the
Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring
corporation is referred to herein as the “Acquiring Corporation”) in substantially the same
proportions as their ownership, immediately prior to such Business Combination, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, respectively; and (ii) no Person
(excluding the Acquiring Corporation or any employee benefit plan (or related trust) maintained or
sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or
indirectly, 50% or more of the then outstanding shares of common stock of the Acquiring
Corporation, or of the combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors; or
(d) approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.
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1.2 “Cause” shall mean:
(a) the Executive commits a felony or any crime involving moral turpitude, or any conduct by
the Executive that would reasonably be expected to result in a material injury to the Company if he
were retained in his position, in each case as determined by the Board;
(b) in carrying out his duties, the Executive intentionally engages in conduct that
constitutes gross neglect or gross misconduct or any material violation of this Agreement or any
material violation of applicable Company rule or policy, the violation of which amounts to gross
neglect or gross misconduct, which, in each case that is curable, is not cured by the Executive
within 30 days following written notice of such conduct from the Board; or
(c) the Executive’s willful failure to respond to reasonable requests made by the full Board
(or by a committee of the Board that has been established by the full Board) in connection with (1)
a bona fide internal investigation relating to the Company that has been approved by the full Board
(or by a committee of the Board that has been established by the full Board) or (2) a bona fide
investigation relating to the Company by a federal or state regulatory or law enforcement
authority, or the Executive’s willful destruction of documents or other materials known by the
Executive to be relevant to such investigation, or the Executive’s willful destruction of documents
or other materials not in accordance with Company policies (including any Company retention
policy), or the Executive’s willful inducement of others to fail to cooperate or to produce
documents or other materials, in each case which has continued for more than 30 days following
written notice of such failure from the Board. Any determination to terminate the Executive’s
employment for Cause as provided above shall be made by the full Board following any applicable
cure period as provided above and following an opportunity for the Executive to be heard by the
full Board.
1.3 “Disability” means the Executive’s inability, due to a physical or mental
disability, for a period of 90 days, whether or not consecutive, during any 360-day period to
perform the Executive’s duties on behalf of the Company, with or without reasonable accommodation
as that term is defined under state or federal law. A determination of disability shall be made by
a physician satisfactory to both the Executive and the Company, provided that if
the Executive and the Company do not agree on a physician, the Executive and the Company shall each
select a physician and these two together shall select a third physician, whose determination as to
disability shall be binding on all parties.
1.4 “Good Reason” shall mean termination by the Executive of his employment, after
written notice to the Company within 30 days following the occurrence of any of the following
events without his prior written consent:
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(a) a reduction in the Executive’s then current base salary or target bonus opportunity,
except for a proportionate reduction applicable to all U.S. Band VI and VII executives of the
Company;
(b) the removal by the Board of the Executive from the position of President or Chief
Executive Officer;
(c) a material diminution in the Executive’s duties or responsibilities, including the
assumption by the Board (in its entirety or by any member(s)) of any duty or responsibility that
was previously the duty or responsibility of the Executive or his reports (other than bona fide
temporary assumptions connected with the departure of one or more of his reports, provided that the
Company in good faith is conducting a search for a replacement);
(d) a change in the reporting structure so that (A) the Executive reports to any single
person, or so that the Executive reports to any person(s) or entity other than the full Board, or
(B) any officer or other member of senior management of the Company (including the Chief Financial
Officer and General Counsel) reports to any person or entity other than the Executive (either
directly or with the Executive’s consent to another officer or member of senior management of the
Company who reports to the Executive);
(e) a change by the Company in the location at which the Executive performs the Executive’s
principal duties for the Company to a new location that is both (i) outside a radius of 50 miles
from the Executive’s principal residence and (ii) more than 30 miles from the location at which the
Executive performed the Executive’s principal duties for the Company immediately prior to the date
of this Agreement; or a requirement by the Company that the Executive travel on Company business to
a substantially greater extent than required immediately prior to the date of this Agreement;
(f) the failure of the Company to obtain the assumption in writing of its obligation to
perform this Agreement by any successor to all or substantially all of the assets of the Company
within 15 days after a merger, consolidation, sale or similar transaction; or
(g) a material breach of this Agreement by the Company.
Notwithstanding anything to the contrary, any action or event taken by the Board in good faith
after receiving advice of counsel to comply with any applicable law, regulation, rule, order or
other legal requirement, shall not constitute Good Reason. Following written notice from the
Executive, as described above, the Company shall have 30 days in which to cure. If the Company
fails to cure, the Executive’s termination shall become effective on the 31st day following the
written notice.
2. Term of Agreement; Not an Employment Contract. The term of this Agreement shall
begin on the Effective Date and shall end on the date of the termination
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of the Executive’s employment with the Company, without limitation of any obligations of the
parties hereunder following the date of termination. The Executive acknowledges that this Agreement
does not constitute a contract of employment or impose on the Company any obligation to retain the
Executive as an employee and that this Agreement does not prevent the Executive from terminating
employment at any time.
3. Benefits to Executive.
3.1 Compensation.
(a) Termination Without Cause or for Good Reason. If the Executive’s employment with
the Company is terminated by the Company (other than for Cause, Disability or death) or by the
Executive for Good Reason, then the Executive shall be entitled to the following benefits:
(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the date
of termination the aggregate of the following amounts:
(1) the sum of (A) the Executive’s base salary through the date of termination, (B) the
product of (x) the annual bonus paid or payable (including any bonus or portion thereof which has
been earned but deferred) for the most recently completed fiscal year and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the date of
termination, and the denominator of which is 365 and (C) the amount of any accrued vacation pay, to
the extent not previously paid (the sum of the amounts described in clauses (A), (B), and (C) shall
be hereinafter referred to as the “Accrued Obligations”); and
(2) the sum of (A) two (2) times the Executive’s annual base salary and target bonus as in
effect immediately prior to the date of termination, and (B) the amount of any accrued vacation
pay, to the extent not previously paid; and
(ii) for 24 months after the date of termination, or such longer period as may be provided by
the terms of the appropriate plan, program, practice or policy, the Company shall continue to
provide medical, dental and life insurance benefits to the Executive and the Executive’s family at
least equal to those which would have been provided to them if the Executive’s employment had not
been terminated, in accordance with the applicable benefit plans in effect on the date of
termination or, if more favorable to the Executive and the Executive’s family, in effect generally
at any time thereafter with respect to other peer executives of the Company and its affiliated
companies; provided, however, that (A) if the terms of a benefit plan do not permit
continued participation therein by a former employee, then an equitable arrangement shall be made
by the Company (such as a substitute or alternative plan) to provide as substantially equivalent a
benefit as is reasonably possible and (B) if the Executive becomes reemployed with another employer
and is eligible to receive a particular type of benefits (e.g., medical insurance benefits) from
such employer on terms at least as
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favorable to the Executive and the Executive’s family as those being provided by the Company, then
the Company shall no longer be required to provide those particular benefits to the Executive and
the Executive’s family; and
(iii) to the extent not previously paid or provided, the Company shall timely pay or provide
to the Executive any other amounts or benefits required to be paid or provided or which the
Executive is eligible to receive following the Executive’s termination of employment under any
plan, program, policy, practice, contract or agreement of the Company and its affiliated companies
(other than severance benefits) (such other amounts and benefits shall be hereinafter referred to
as the “Other Benefits”).
(b) Termination for Cause, Disability or Death. If the Company terminates the
Executive’s employment with the Company for Cause, then the Company shall (i) pay the Executive in
a lump sum in cash within 30 days after the date of termination, the Executive’s base salary
through the date of termination and (ii) timely pay or provide to the Executive the Other Benefits.
If the Company terminates the Executive’s employment with the Company because of the Executive’s
disability or the Executive’s death, then the Company shall (i) pay the Executive or the
Executive’s estate, in a lump sum in cash within 30 days after the date of termination, the Accrued
Obligations and (ii) timely pay or provide to the Executive the Other Benefits.
3.2 Outplacement Services. In the event the Executive is terminated by the Company
(other than for Cause, Disability or death), the Company shall provide outplacement services
through one or more outside firms of the Executive’s choosing up to an aggregate of $20,000, with
such services to extend until the earlier of (i) 12 months following the termination of the
Executive’s employment or (ii) the date the Executive secures full time employment.
3.3 Mitigation. The Executive shall not be required to mitigate the amount of any
payment or benefits provided for in this Section 3 by seeking other employment or otherwise.
Further, except as provided in Section 3.1(a)(ii), the amount of any payment or benefits provided
for in this Section 3 shall not be reduced by any compensation earned by the Executive as a 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.
3.4. Release of Claims by Executive. The Executive shall not be entitled to any
payments or other benefits hereunder unless the Executive executes and, if applicable, does not
revoke, a full and complete release of claims and a reasonable and customary separation agreement
that includes nondisparagement and cooperation provisions. The parties further agree that the
separation agreement shall not include any restrictive covenants that are in addition to those
already contained in the Noncompetition Agreement between the Company and the Executive dated
November 21, 2009.
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4. Disputes. All claims by the Executive for benefits under this Agreement shall be
directed to and determined by the Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered to the Executive in writing and shall
set forth the specific reasons for the denial. The Board shall afford a reasonable opportunity to
the Executive for a review of the decision denying a claim. Any further dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively by arbitration in
Boston, Massachusetts, in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.
5. Successors.
5.1 Successor to Company. 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 expressly to assume and agree to perform this Agreement to the
same extent that the Company would be required to perform it if no such succession had taken place.
As used in this Agreement, “Company” shall mean the Company as defined above and any successor to
its business or assets as aforesaid which assumes and agrees to perform this Agreement, by
operation of law or otherwise.
5.2 Successor to Executive. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should die while any
amount would still be payable to the Executive or the Executive’s family hereunder if the Executive
had continued to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the executors, personal representatives or
administrators of the Executive’s estate.
6. Notice. All notices, instructions and other communications given hereunder or in
connection herewith shall be in writing. Any such notice, instruction or communication shall be
sent either (i) by registered or certified mail, return receipt requested, postage prepaid, or (ii)
prepaid via a reputable nationwide overnight courier service, in each case addressed to the
Company, at 00 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx and to the Executive at the Executive’s
principal residence as currently reflected on the Company’s records (or to such other address as
either the Company or the Executive may have furnished to the other in writing in accordance
herewith). Any such notice, instruction or communication shall be deemed to have been delivered
five business days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or one business day after it is sent via a reputable nationwide overnight courier
service. Either party may give any notice, instruction or other communication hereunder using any
other means, but no such notice, instruction or other communication shall be deemed to have been
duly delivered unless and until it actually is received by the party for whom it is intended.
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7. Miscellaneous.
7.1 Resignation as Director and Officer. In the event of a termination of employment
of the Executive for any reason, the Executive shall immediately resign as a member of the Board
and as an officer of the Company, and the Executive shall immediately resign as a member of the
board and as an officer of each of the Company’s subsidiaries and affiliates, unless requested by
the Board to remain in any such position.
7.2 Term Life Insurance Policy. The Company shall use its commercial best efforts to
maintain a term life insurance policy on the life of the Executive providing for a death benefit of
at least $3,000,000 payable to a beneficiary or beneficiaries designated by the Executive. The
premiums for such policy will be paid by the Company until the earlier of (i) the date that the
Executive no longer serves as an employee, officer, director or consultant of the Company or any of
its subsidiaries or (ii) December 31, 2026. Upon the termination of the Executive’s service, the
Company agrees to transfer the policy to a party designated by the Executive, subject to applicable
laws or regulations.
7.3 Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
7.4 Injunctive Relief. The Company and the Executive agree that any breach of this
Agreement by the Company is likely to cause the Executive substantial and irrevocable damage and
therefore, in the event of any such breach, in addition to such other remedies which may be
available, the Executive shall have the right to specific performance and injunctive relief.
7.5 Governing Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the internal laws of the Commonwealth of Massachusetts, without
regard to conflicts of law principles.
7.6 Waivers. No waiver by the Executive at any time of any breach of, or compliance
with, any provision of this Agreement to be performed by the Company shall be deemed a waiver of
that or any other provision at any subsequent time.
7.7 Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original but both of which together shall constitute one and the same
instrument.
7.8 Tax Withholding. Any payments provided for hereunder shall be paid net of any
applicable tax withholding required under federal, state or local law.
7.9 Entire Agreement. This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
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warranties, whether oral or written, by any officer, employee or representative of any party hereto
in respect of the subject matter contained herein, and any prior agreement of the parties hereto in
respect of the subject matter contained herein is hereby terminated and cancelled, except as
provided in the next sentence. Notwithstanding the foregoing sentence, if the Executive is party
to an agreement with the Company providing for the payment of benefits in the event employment is
terminated after a Change in Control (a “Change in Control Agreement”), such Change in Control
Agreement shall not be terminated or cancelled by this Agreement and such Change in Control
Agreement shall survive and remain in effect in accordance with its own terms. In the event the
Executive actually receives benefits under the Change in Control Agreement, the Executive shall not
also be entitled to receive benefits under this Agreement.
7.10 Amendments. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive.
8. Payments Subject to Section 409A. Subject to the provisions in this Section 8, any
severance payments or benefits under this Agreement shall begin only upon the date of the
Executive’s “separation from service” (determined as set forth below) which occurs on or after the
date of termination of the Executive’s employment. The following rules shall apply with respect to
distribution of the payments and benefits, if any, to be provided to the Executive under this
Agreement:
a. It is intended that each payment or provision of any benefit, as the case may be, provided
under this Agreement shall be treated as a separate “payment” for purposes of Section 409A of the
Code and the guidance issued thereunder (“Section 409A”). Neither the Company nor the Executive
shall have the right to accelerate or defer the delivery of any such payments or benefits except to
the extent specifically permitted or required by Section 409A.
b. If, as of the date of the Executive’s “separation from service” from the Company, the
Executive is not a “specified employee” (within the meaning of Section 409A), then each installment
of the severance payments and benefits shall be made on the dates and terms set forth in this
Agreement.
c. If, as of the date of the Executive’s “separation from service” from the Company, the
Executive is a “specified employee” (within the meaning of Section 409A), then:
i. Each installment of the severance payments and benefits due under this Agreement that, in
accordance with the dates and terms set forth herein, will in all circumstances, regardless of when
the separation from service occurs, be paid within the Short-Term Deferral Period (as hereinafter
defined) shall be treated as a short-term deferral within the meaning of Treasury Regulation §
1.409A-1(b)(4) to the maximum extent permissible under Section 409A. For purposes of this
Agreement, the “Short-Term Deferral Period” means the period ending on the later of the fifteenth
day of the third month following the end of the Executive’s tax year in which the separation
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from service occurs and the fifteenth day of the third month following the end of the Company’s tax
year in which the separation from service occurs; and
ii. Each installment of the severance payments and benefits due under this Agreement that is
not described in paragraph c(i) above and that would, absent this subsection, be paid within the
six-month period following the Executive’s “separation from service” from the Company shall not be
paid until the date that is six months and one day after such separation from service (or, if
earlier, the Executive’s death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that is six months and
one day following the Executive’s separation from service and any subsequent installments, if any,
being paid in accordance with the dates and terms set forth herein; provided, however, that the
preceding provisions of this sentence shall not apply to any installment of severance payments and
benefits if and to the maximum extent that such installment is deemed to be paid under a separation
pay plan that does not provide for a deferral of compensation by reason of the application of
Treasury Regulation § 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary
separation from service).
d. The determination of whether and when the Executive’s separation from service from the
Company has occurred shall be made and in a manner consistent with, and based on the presumptions
set forth in, Treasury Regulation § 1.409A-1(h). Solely for purposes of this paragraph d,
“Company” shall include all persons with whom the Company would be considered a single employer
under Section 414(b) and 414(c) of the Code.
e. All reimbursements and in-kind benefits provided under this Agreement shall be made or
provided in accordance with the requirements of Section 409A to the extent that such reimbursements
or in-kind benefits are subject to Section 409A, including, where applicable, the requirements that
(i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter
period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement
during a calendar year may not affect the expenses eligible for reimbursement in any other calendar
year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the
calendar year following the year in which the expense is incurred and (iv) the right to
reimbursement is not subject to set off or liquidation or exchange for any other benefit.
f. Notwithstanding anything herein to the contrary, the Company shall have no liability to the
Executive or to any other person if the payments and benefits provided hereunder that are intended
to be exempt from or compliant with Section 409A are not so exempt or compliant.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the day
and year first set forth above.
| THERMO XXXXXX SCIENTIFIC INC. |
||||
| Dated: November 21, 2009 | By: | /s/ Xxxx X. Xxxxxxxxx | ||
| Name: | Xxxx X. Xxxxxxxxx | |||
| Title: | Senior Vice President, General Counsel and Secretary | |||
| EXECUTIVE |
||||
| /s/ Xxxx X. Xxxxxx | ||||
| Xxxx X. Xxxxxx | ||||
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