Exhibit 10.56
EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into as of the 12th day of March, 1999 by and
between Thermo Electron Corporation, a Delaware corporation (together with its
successors and assigns permitted under this Agreement, the "Company"), and Xx.
Xxxxxxx X. Xxxxx (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to employ the Executive and to enter into an
agreement embodying the terms of such employment (the "Agreement") and the
Executive desires to enter into the Agreement and to accept such employment,
subject to the terms and provisions of the Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a person or other
entity that directly or indirectly controls, is controlled by, or is under
common control with the person or other entity specified.
(b) "Base Salary" shall mean the salary provided for in Section 4 below
or any
increased salary granted to the Executive pursuant to Section 4.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Cause" shall mean:
(i) the Executive commits a felony or any crime involving moral
turpitude; or
(ii) in carrying out his duties, the Executive engages in conduct that
constitutes willful gross neglect or willful gross misconduct resulting in
material economic harm to the Company.
(e) A "Change in Control" shall mean an event or occurrence set forth in
Section 1.1 of the Executive Retention Agreement attached hereto as Exhibit A.
(f) "Constructive Termination Without Cause" 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 consent:
(i) a reduction in the Executive's then current Base Salary or
reference bonus opportunity;
the failure to elect or reelect the Executive to any of the positions described
in Section 3(a) or the removal of him from any such position;
(ii) a material diminution in the Executive's duties or
responsibilities;
(iii) a change in the reporting structure so that the Executive
reports to someone other than the Board; or
(iv) 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.
Following written notice from the Executive, as described above, the Company
shall have 15 days in which to cure. If the Company fails to cure, the
Executive's termination shall become effective on the 16th day following the
written notice.
(g) "Disability" shall mean the Executive's inability, due to physical or
mental incapacity, to substantially perform his duties and responsibilities
under this Agreement as determined by a medical doctor selected by the Company
and the Executive. If the Parties cannot agree on a medical doctor, each Party
shall select a medical doctor and the two doctors shall select a third who shall
be the approved medical doctor for this purpose.
(h) "Effective Date" shall mean June 1, 1999.
(i) "Stock" shall mean the Common Stock of the Company.
(j) "Transfer Restrictions" shall mean the transfer restrictions on the
Stock covered by the Initial Stock Option described in Section 6(b) below.
2. Term of Employment. The Term of Employment shall begin on the Effective Date,
and shall extend until the third anniversary of the Effective Date; provided,
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however, that the Term of Employment shall automatically extend for additional
one year periods after the third anniversary of the Effective Date unless either
Party shall give the other Party at least 12 months prior written notice that
he/it is electing not to so extend the Term of Employment. Notwithstanding the
foregoing, the Term of Employment may be earlier terminated by either Party in
accordance with the provisions of Section 10.
3. Position, Duties and Responsibilities.
(a) Commencing on the Effective Date and continuing for the remainder of
the Term of Employment, the Executive shall be employed as the President and
Chief Executive Officer and be responsible for the general management of the
affairs of the Company. The Executive, in carrying out his duties under this
Agreement, shall report to the Board.
(b) The Board will nominate the Executive for election as a Director at
the Annual Meeting of Stockholders to be held on May 27, 1999, to serve a
three-year term expiring on the date of the Annual Meeting of Stockholders to be
held in the year 2002. In the event of a termination of employment of the
Executive for any reason (other than death), the Executive shall immediately
resign as a Director of the Company and each of its subsidiaries.
(c) Nothing herein shall preclude the Executive from (i) serving on the
boards of directors of a reasonable number of other corporations subject to the
approval of the Board in each case (which approval has been given as to the
boards listed in Exhibit B attached), (ii) serving on the boards of a reasonable
number of trade associations and/or charitable organizations, (iii) engaging in
charitable activities and community affairs, and (iv) managing his personal
investments and affairs, provided that such activities set forth in this Section
3(c) do not materially interfere with the proper performance of his duties and
responsibilities under Section 3(a).
4. Base Salary. The Executive shall be paid an annualized Base Salary, payable
in accordance with the regular payroll practices of the Company, of $800,000.
The Base Salary shall be reviewed annually for increase in the discretion of the
Board.
5. Annual Incentive Award. During the Term of Employment, the Executive shall
participate in the annual incentive program of the Company. Under such program,
the Executive shall have a reference bonus each calendar year equal to $500,000,
prorated for partial years. The actual bonus paid will be a multiple of the
reference bonus (from zero to two times the reference bonus). The actual
multiple will reflect a variety of subjective and objective factors, as
determined by the Board. The Executive shall be paid his annual incentive award
no later than other senior executives are paid their annual incentive awards.
For the years 1999, 2000 and 2001, the Executive shall have a minimum guaranteed
bonus of $145,833.32 for calendar 1999, $250,000 for calendar 2000, and
$104,166.68 for the first five months of 2001 (the "Minimum Guaranteed Bonus"
amounts).
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6. Restricted Stock and Stock Option Awards.
(a) Restricted Stock Awards. On the Effective Date, and on the first and
second anniversaries of the Effective Date, the Company shall grant the
Executive an award of a number of shares of Stock (the "Restricted Stock")
having a market value equal to $200,000 based on the average of the closing
prices per share of Stock on the New York Stock Exchange for the five business
days preceding and including the corresponding grant date, substantially in
accordance with the terms set forth in Exhibit C to this Agreement, except that
vesting will occur on the third anniversary of each grant date.
(b) Initial Stock Option Award. On the Effective Date, the Company shall
grant the Executive a 7-year non-qualified stock option award, substantially in
the form attached to this Agreement as Exhibit D, as modified by the terms of
this Agreement, to purchase 1,000,000 shares of Stock,(the "Initial Stock
Option") with Transfer Restrictions lapsing on the first three anniversaries of
the date of grant (333,333 on June 1, 2000 and 2001 and 333,334 on June 1,
2002). The exercise price of the Initial Stock Option shall be the average of
the closing prices of the Stock on the New York Stock Exchange for the five
business days preceding and including June 1, 1999.
7. Employee Benefit Programs. During the Term of Employment, the Executive shall
be entitled to participate in all employee pension and welfare benefit plans and
programs made available to the Company's senior level executives or to its
employees generally, as such plans or programs may be in effect from time to
time, including, without limitation, pension, profit sharing, savings and other
retirement plans or programs, medical, dental, hospitalization, short-term and
long-term disability and life insurance plans, accidental death and
dismemberment protection, travel accident insurance, and any other pension or
retirement plans or programs and any other employee welfare benefit plans or
programs that may be sponsored by the Company from time to time, including any
plans that supplement the above-listed types of plans or programs, whether
funded or unfunded. The Executive shall be entitled to four weeks paid vacation
per year of employment.
8. Perquisites. During the Term of Employment, the Executive shall be entitled
to participate in all of the Company's executive perquisites in accordance with
the terms and conditions of such arrangements as are in effect from time to time
for the Company's senior-level executives.
9. Reimbursement of Business and Other Expenses.
(a) The Executive is authorized to incur reasonable expenses in carrying
out his duties and responsibilities under this Agreement including, without
limitation, legal fees incurred in the negotiation and preparation of this
Agreement, and the Company shall promptly reimburse him for such expenses,
subject to documentation in accordance with the Company's policy.
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(b) In connection with establishing a new principal residence in the
Boston area, the Company agrees to purchase the Executive's Bronxville house for
$1,500,000, and at the closing of the sale, the Executive shall deliver to the
Company a customary deed, together with related documents, conveying good and
marketable title to the property, free and clear of all material easements and
encumbrances. Following the purchase of the house, the Company will use its
reasonable best efforts to resell the house at a price subject to the prior
approval of the Executive, which approval shall not be unreasonably withheld.
Upon the sale of the house by the Company, either (a) the Company will pay the
Executive the excess, if any, of the gross sales price over $1,500,000, or (b)
the Executive will pay the Company the excess, if any, of $1,500,000 over the
gross sales price. The Company agrees to pay all closing costs, including
brokerage fees, incurred in connection with the purchase and subsequent sale of
the house. In addition, the Executive shall be entitled to reimbursement of his
relocation expenses including all reasonable out-of-pocket expenses of moving
his family and personal belongings to a new home in the Boston area. For a
period of up to six months, he shall also be entitled to reimbursement for
temporary living expenses in the Boston area while locating a permanent
residence. To the extent that certain relocation expenses are considered taxable
income to the Executive, the Company will relieve the Executive of the
additional tax burden (federal, FICA, and state income taxes) from such costs as
well as the tax impact of the tax reimbursement itself.
10. Termination of Employment.
(a) Termination Due to Death. In the event that the Executive's employment
is terminated due to his death, his estate or his beneficiaries, as the case may
be, shall be entitled to the following benefits:
(i) Base Salary through the end of the month in which death occurs;
(ii) a pro-rata annual incentive award for the year in which the
Executive's death occurs, based on the reference bonus for such year, but
in no event less than the Minimum Guaranteed Bonus for the year of death,
payable when annual incentive awards are normally paid to other senior
executives;
(iii) Transfer Restrictions shall lapse on all Initial Stock Options,
including previously exercised Initial Stock Options; all outstanding
Initial Stock Options shall remain exercisable until the later of June 1,
2002 or two years from the date of death (but in no event beyond the option
expiration date of June 1, 2006); and
(iv) the restrictions on the Restricted Stock granted pursuant to
Section 6 shall lapse.
(b) Termination Due to Disability. In the event that the Executive's
employment is terminated by either party due to his Disability, he shall be
entitled to the following benefits:
(i) disability benefits in accordance with the long-term disability
("LTD") program then in effect for senior executives of the Company;
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(ii) Base Salary through the end of the LTD elimination period;
(iii) a pro-rata annual incentive award for the year in which the
Executive's termination occurs, based on the reference bonus for such year,
but in no event less than the Minimum Guaranteed Bonus for the year of
termination, payable when annual incentive awards are normally paid to
other senior executives;
(iv) Transfer Restrictions shall lapse on all Initial Stock Options,
including previously exercised Initial Stock Options; all outstanding
Initial Stock Options shall remain exercisable until the later of June 1,
2002 or two years from the employment termination date (but in no event
beyond the option expiration date of June 1, 2006); and
(v) the restrictions on the Restricted Stock granted pursuant to
Section 6 shall lapse.
(vi) the Executive shall be entitled to continued participation at
Company expense in all medical and dental insurance coverage in which he
was participating on the date of his termination until the earlier of (x)
18 months following the date of termination and (y) the date, or dates, he
receives equivalent coverage and benefits under the plans and programs of a
subsequent employer.
In no event shall a termination of the Executive's employment for Disability
occur until the Party terminating his employment gives written notice to the
other Party in accordance with Section 24 below.
(c) Termination by the Company for Cause. In the event the Company
terminates the Executive's employment for Cause:
(i) he shall be entitled to Base Salary through the date of the
termination;
(ii) no further lapsing of Transfer Restrictions shall occur;
Executive shall have 90 days to exercise all outstanding Initial Stock
Options as to which Transfer Restrictions have previously lapsed; and
(iii) all Restricted Stock granted under Section 6 as to which
restrictions have not lapsed shall be forfeited.
(d) Termination without Cause or Constructive Termination without Cause.
In the event the Executive's employment is terminated by the Company without
Cause, other than due to Disability, death or the failure of the Company to
extend this Agreement in accordance with Section 2 hereof, or in the event there
is a Constructive Termination without Cause, the Executive shall be entitled to
the following benefits:
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(i) Base Salary through the date of termination;
(ii) Base Salary, at the annualized rate in effect on the date of
termination, for the greater of (x) 12 months and (y) the remaining Term of
Employment following such termination (the "Salary Continuation Period");
(iii) a pro-rata annual incentive award for the year in which
termination occurs, based on his reference bonus for such year, but in no
event less than the Minimum Guaranteed Bonus for the year of termination,
payable when annual incentive awards are normally paid to other senior
executives;
(iv) an annual incentive award for the Salary Continuation Period,
based on his reference bonus for the year in which termination occurs and
payable on a pro-rata basis in equal installments over the Salary
Continuation Period;
(v) Transfer Restrictions shall lapse on all Initial Stock Options,
including previously exercised Initial Stock Options; the Initial Stock
Options shall continue to be exercisable until the later of June 1, 2002 or
two years from the employment termination date (but in no event beyond the
option expiration date of June 1, 2006);
(vi) the restrictions on the Restricted Stock granted pursuant to
Section 6 shall lapse; and
(vii) the Executive shall be entitled to continued participation at
Company expense in all medical and dental insurance coverage in which he
was participating on the date of his termination until the earlier of (x)
18 months following the date of termination and (y) the date, or dates, he
receives equivalent coverage and benefits under the plans and programs of a
subsequent employer.
(e) Voluntary Termination. A termination of employment by the Executive on
his own initiative, other than a termination due to death or Disability or a
Constructive Termination without Cause, shall have the same consequences as
provided in Section 10(c) for a termination for Cause. A voluntary termination
under this Section 10(e) shall be effective upon 30 days prior written notice to
the Company.
(f) Other Termination Benefits. In the case of any of the foregoing
terminations, the Executive or his estate shall also be entitled to:
(i) the balance of any incentive awards due but not yet paid,
including awards due for performance periods which have been completed, but
which have not yet been paid;
(ii) any expense reimbursements due the Executive;
(iii) payment of all amounts when due as a result of the termination;
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(iv) payment of any amounts due under Section 15(c); and
(v) other benefits, if any, in accordance with applicable plans and
programs of the Company.
(g) Termination Following a Change in Control. Notwithstanding anything to
the contrary in this Agreement or in the Executive Retention Agreement between
the Executive and the Company, the form of which is attached hereto as Exhibit
A, in the event the Executive's employment with the Company is terminated within
18 months following a Change in Control, the Executive shall be entitled to
benefits equal to the greater of (a) the benefits due and payable to him under
Section 4 of the Executive Retention Agreement as a result of such termination,
or (b) the benefits due and payable to him under Section 10 of this Employment
Agreement as a result of such termination. In furtherance thereof, it is the
Parties' understanding that in the event of a termination under such
circumstances, the Executive shall only be entitled to receive benefits payable
under one or the other of the foregoing agreements (but not both) determined on
a benefit by benefit basis by the Executive and that the term "Other Benefits"
as defined in the Executive Retention Agreement shall not include benefits
payable under this Employment Agreement.
(h) Nature of Payments. Any amounts due under this Section 10 are in the
nature of severance payments considered to be reasonable by the Company and are
not in the nature of a penalty.
(i) No Mitigation; No Offset. The Executive shall not be required to
mitigate the amount of any payment or benefit provided in this Section 10 by
seeking other employment otherwise. Further, except as provided in Sections
10(b)(vi) and 10(d)(vii), the amount of any payment or benefits provided for in
this Section 10 shall not be reduced by any compensation earned by the Executive
as a result of employment by another employer or be offset by any amount claimed
to be owed by the Executive to the Company.
11. Confidentiality.
(a) During the Term of Employment and thereafter, the Executive shall not
disclose to anyone or make use of any trade secret or proprietary or
confidential information of the Company, including such trade secret or
proprietary or confidential information of any customer or other entity to which
the Company owes an obligation not to disclose such information, which he
acquires during the Term of Employment, including but not limited to records
kept in the ordinary course of business, except (i) as such disclosure or use
may be required or appropriate in connection with his work as an employee of the
Company or (ii) when required to do so by a court of law, by any governmental
agency having supervisory authority over the business of the Company or by any
administrative or legislative body (including a committee thereof) with apparent
jurisdiction to order him to divulge, disclose or make accessible such
information.
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(b) Upon the termination of the Executive's employment, the Executive (or
in the event of his death, the Executive's personal representative) shall
promptly surrender to the Company the original and all copies of any materials
containing confidential information of the Company which are then in the
Executive's possession or control, provided, however, the Executive shall not be
required to surrender his rolodexes, personal diaries and other items of a
personal nature.
12. Noncompetition; Nonsolicitation.
(a) The Executive acknowledges (i) that in the course of his employment
with the Company he will become familiar with trade secrets and customer lists
of, and other confidential information concerning, the Company and its
Affiliates, customers, and clients and (ii) that his services will be of
special, unique and extraordinary value to the Company.
(b) The Executive agrees that during the Term of Employment and for a
period of one year following his termination of employment (the "Noncompetition
Period") he shall not in any manner, directly or indirectly, through any person,
firm, corporation or enterprise, alone or as a member of a partnership or as an
officer, director, stockholder, investor or employee of or advisor or consultant
to any person, firm, corporation or enterprise or otherwise, engage or be
engaged, or assist any other person, firm, corporation or enterprise in engaging
or being engaged, in any Competitive Activity. A Competitive Activity shall mean
a business that (i)is being conducted by the Company or any Affiliate at the
time in question and (ii) was being conducted, or was under active consideration
to be conducted, by the Company or any Affiliate, at the date of the termination
of the Executive's employment, provided that Competitive Activity shall not
include a business of the Company contributing less than 5% of the Company's
revenues for the year in question and provided further that an activity shall
not be deemed to be a Competitive Activity if the activity contributes less than
5% of the revenues for the year in question of the business by which the
Executive is employed or with which he is otherwise associated.
(c) The Executive further agrees that during the Noncompetition Period he
shall not (i) in any manner, directly or indirectly, induce or attempt to induce
any employee of or advisor or consultant to the Company or any of its Affiliates
to terminate or abandon his or her or its employment or relationship with the
Company or any of its Affiliates for any purpose whatsoever, or (ii) in
connection with any business to which Section 12(b) applies, call on, service,
solicit or otherwise do business with any customer of the Company or any of its
Affiliates; provided, however, that the restriction contained in clause (i) of
this Section 12(c) shall not apply to, or interfere with, the proper performance
by the Executive of his duties and responsibilities under Section 3 of this
Agreement.
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(d) Nothing in this Section 12 shall prohibit the Executive from being a
passive owner of not more than one percent of the outstanding common stock,
capital stock and equity of any firm, corporation or enterprise so long as the
Executive has no active participation in the management of business of such
firm, corporation or enterprise.
(e) If the restrictions stated herein are found by a court to be
unreasonable, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area and that the court shall revise the
restrictions contained herein to cover the maximum period, scope and area
permitted by law.
13. Resolution of Disputes. Any disputes arising under or in connection with
this Agreement shall be resolved by third party mediation of the dispute and,
failing that, by binding arbitration, to be held in Boston, Massachusetts, in
accordance with the rules and procedures of the American Arbitration
Association. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. Costs of the mediation,
arbitration or litigation including, without limitation, reasonable attorneys'
fees of both parties, shall be borne by the Company. Pending the resolution of
the dispute, the Company shall continue payment of all amounts due and
provisions of all benefits to which Executive is entitled, which amounts shall
be subject to repayment to the Company if the Company prevails.
14. Remedies. The Parties acknowledge that in the event of a breach or
threatened breach of Section 11 or 12 the Company shall not have an adequate
remedy at law. Accordingly, in the event of any breach or threatened breach of
Section 11 or 12, the Company shall be entitled to seek such equitable and
injunctive relief as may be available to restrain the Executive and any
business, firm, partnership, individual, corporation or entity participating in
the breach or threatened breach from the violation of the provisions of Section
11 or 12.
15. Indemnification.
(a) The Executive shall continue to be indemnified under the
Indemnification Agreement signed as of September 25, 1997, a copy of which is
attached as Exhibit E.
(b) The Company agrees to continue and maintain a directors' and officers'
liability insurance policy covering the Executive to the extent the Company
provides such coverage for its other senior executives.
(c) The Company acknowledges the possibility that the Executive may lose
significant benefits at his current employer because of his entering into this
Agreement. In the event his current employer refuses to pay any such benefit,
the Executive agrees to use his best efforts to obtain the benefit, including
possible arbitration proceedings, if necessary. The Company will fully indemnify
the Executive for all his expenses, including legal fees, incurred in attempting
to obtain such benefits. If the Executive is not able to obtain the benefit
before June 1, 2000, the Company will indemnify the Executive by paying an
amount equal to the value of the benefit forfeited, but in no event more than
$1.5 million.
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16. Assignability; Binding Nature. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors, heirs (in
the case of the Executive) and assigns. Rights or obligations of the Company
under this Agreement may be assigned or transferred by the Company pursuant to a
merger or consolidation in which the Company is not the continuing entity, or
the sale or liquidation of all or substantially all of the assets of the
Company, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Agreement, either contractually or as a matter of law. The Company further
agrees that, in the event of a sale of assets or liquidation as described in the
preceding sentence, it shall take whatever action it reasonably can in order to
cause such assignee or transferee to expressly assume the liabilities,
obligations and duties of the Company hereunder. No rights or obligations of the
Executive under this Agreement may be assigned or transferred by the Executive
other than his rights to compensation and benefits, which may be transferred
only by will or operation of law.
17. Representations. The Company represents and warrants that it is fully
authorized and empowered to enter into this Agreement and that the performance
of its obligations under this Agreement will not violate any agreement between
it and any other person, firm or organization. The Executive represents that he
knows of no agreement between him and any other person, firm or organization
that would be violated by the performance of his obligations under this
Agreement.
18. Entire Agreement. This Agreement contains the entire understanding and
agreement between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the Parties with respect thereto.
19. Amendment or Waiver. No provision in this Agreement may be amended unless
such amendment is agreed to in writing and signed by the Executive and an
authorized officer of the Company. No waiver by either Party of any breach by
the other Party of any condition or provision contained in this Agreement to be
performed by such other Party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent time.
Any waiver must be in writing and signed by the Executive or an authorized
officer of the Company, as the case may be.
20. Severability. In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, in whole or
in part, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by law
so as to achieve the purposes of this Agreement.
21. Survivorship. Except as otherwise expressly set forth in this Agreement, the
respective rights and obligations of the Parties hereunder shall survive any
termination of the Executive's employment. This Agreement itself (as
distinguished from the Executive's employment) may not be terminated by either
Party without the written consent of the other Party.
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22. References. In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative.
23. Governing Law/Jurisdiction. This Agreement shall be governed in accordance
with the laws of Massachusetts without reference to principles of conflict of
laws.
24. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed given when (a) delivered
personally, (b) sent by certified or registered mail, postage prepaid, return
receipt requested or (c) delivered by overnight courier (provided that a written
acknowledgment of receipt is obtained by the overnight courier) to the Party
concerned at the address indicated below or to such changed address as such
Party may subsequently give such notice of:
If to the Company: Thermo Electron Corporation
00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Vice President and General Counsel
Copy: Chairman, Human Resources Committee
of the Board of Directors
If to the Executive: Xxxxxxx X. Xxxxx
c/o Thermo Electron Corporation
00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000 .
25. Headings. The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
26. Counterparts. This Agreement may be executed in two or more counterparts.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
THERMO ELECTRON CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxxxxx
Chairman
/s/ Xxxxxxx X. Xxxxx
----------------------------------
Xxxxxxx X. Xxxxx
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EXHIBIT A
Executive Retention Agreement
THIS AGREEMENT by and between THERMO ELECTRON CORPORATION, a Delaware
corporation (the "Company"), and _________________ (the "Executive") is made as
of __________, 1999 (the "Effective Date").
WHEREAS, the Company recognizes that, as is the case with many
publicly-held corporations, the possibility of a change in control of the
Company exists and that such possibility, and the uncertainty and questions
which it may raise among 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 the possibility of a change in control of the Company and
related events and circumstances; and
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 subsequent to a Change in Control (as defined in Section 1.1).
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) 40% 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 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 60% 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, 40% 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.
2
1.2 "Change in Control Date" means the first date during the Term
(as defined in Section 2) on which a Change in Control occurs. Anything in this
Agreement to the contrary notwithstanding, if (a) a Change in Control occurs,
(b) the Executive's employment with the Company is terminated prior to the date
on which the Change in Control occurs, and (c) it is reasonably demonstrated by
the Executive that such termination of employment (i) was at the request of a
third party who has taken steps reasonably calculated to effect a Change in
Control or (ii) otherwise arose in connection with or in anticipation of a
Change in Control, then for all purposes of this Agreement the "Change in
Control Date" shall mean the date immediately prior to the date of such
termination of employment.
1.3 "Cause" means the Executive's willful engagement in illegal
conduct or gross misconduct after the Change in Control Date which is materially
and demonstrably injurious to the Company. For purposes of this Section 1.3, no
act or failure to act by the Executive shall be considered "willful" unless it
is done, or omitted to be done, in bad faith and without reasonable belief that
the Executive's action or omission was in the best interests of the Company.
1.4 "Good Reason" means the occurrence, without the Executive's
written consent, of any of the events or circumstances set forth in clauses (a)
through (g) below. Notwithstanding the occurrence of any such event or
circumstance, such occurrence shall not be deemed to constitute Good Reason if,
prior to the Date of Termination specified in the Notice of Termination (each as
defined in Section 3.2(a)) given by the Executive in respect thereof, such event
or circumstance has been fully corrected and the Executive has been reasonably
compensated for any losses or damages resulting therefrom (provided that such
right of correction by the Company shall only apply to the first Notice of
Termination for Good Reason given by the Executive).
(a) the assignment to the Executive of duties inconsistent in
any material respect with the Executive's position (including status, offices,
titles and reporting requirements), authority or responsibilities in effect
immediately prior to the earliest to occur of (i) the Change in Control Date,
(ii) the date of the execution by the Company of the initial written agreement
or instrument providing for the Change in Control or (iii) the date of the
adoption by the Board of Directors of a resolution providing for the Change in
Control (with the earliest to occur of such dates referred to herein as the
"Measurement Date") or a material diminution in such position, authority or
responsibilities;
(b) a reduction in the Executive's annual base salary as in
effect on the Measurement Date or as the same was or may be increased thereafter
from time to time;
3
(c) the failure by the Company to (i) continue in effect any
material compensation or benefit plan or program (including without limitation
any life insurance, medical, health and accident or disability plan and any
vacation or automobile program or policy) (a "Benefit Plan") in which the
Executive participates or which is applicable to the Executive immediately prior
to the Measurement Date, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan or
program, (ii) continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable than
the basis existing immediately prior to the Measurement Date (iii) award cash
bonuses to the Executive in amounts and in a manner substantially consistent
with past practice in light of the Company's financial performance or (iv)
continue to provide any material fringe benefit enjoyed by Executive immediately
prior to the Measurement Date;
(d) a change by the Company in the location at which the
Executive performs his 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 immediately prior to the Measurement Date and (ii) more than 30 miles
from the location at which the Executive performed his principal duties for the
Company immediately prior to the Measurement Date; or a requirement by the
Company that the Executive travel on Company business to a substantially greater
extent than required immediately prior to the Measurement Date;
(e) the failure of the Company to obtain the agreement from
any successor to the Company to assume and agree to perform this Agreement, as
required by Section 6.1;
(f) a purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3.2(a); or
(g) any failure of the Company to pay or provide to the
Executive any portion of the Executive's compensation or benefits due under any
Benefit Plan within seven days of the date such compensation or benefits are
due, or any material breach by the Company of this Agreement or any employment
agreement with the Executive.
The Executive's right to terminate his employment for Good Reason shall
not be affected by his incapacity due to physical or mental illness.
1.5 "Disability" means the Executive's absence from the full-time
performance of the Executive's duties with the Company for 180 consecutive
calendar days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative.
4
2. Term of Agreement. This Agreement, and all rights and obligations of
the parties hereunder, shall take effect upon the Effective Date and shall
expire upon the first to occur of (a) the expiration of the Term (as defined
below) if a Change in Control has not occurred during the Term, (b) the date 18
months after the Change in Control Date, if the Executive is still employed by
the Company as of such later date, or (c) the fulfillment by the Company of all
of its obligations under Sections 4 and 5.2 if the Executive's employment with
the Company terminates within 18 months following the Change in Control Date.
"Term" shall mean the period commencing as of the Effective Date and continuing
in effect through December 31, 2003; provided, however, that commencing on
January 1, 2003 and each January 1, thereafter, the Term shall be automatically
extended for one additional year unless, not later than 90 days prior to the
scheduled expiration of the Term (or any extension thereof), the Company shall
have given the Executive written notice that the Term will not be extended.
3. Employment Status; Termination Following Change in Control.
3.1 Not an Employment Contract. 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. If the
Executive's employment with the Company terminates for any reason and
subsequently a Change in Control shall occur, the Executive shall not be
entitled to any benefits hereunder except as otherwise provided pursuant to
Section 1.2.
3.2 Termination of Employment.
(a) If the Change in Control Date occurs during the Term, any
termination of the Executive's employment by the Company or by the Executive
within 18 months following the Change in Control Date (other than due to the
death of the Executive) shall be communicated by a written notice to the other
party hereto (the "Notice of Termination"), given in accordance with Section 7.
Any Notice of Termination shall: (i) indicate the specific termination provision
(if any) of this Agreement relied upon by the party giving such notice, (ii) to
the extent applicable, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) specify the Date of
Termination (as defined below). The effective date of an employment termination
(the "Date of Termination") shall be the close of business on the date specified
in the Notice of Termination (which date may not be less than 15 days or more
than 120 days after the date of delivery of such Notice of Termination), in the
case of a termination other than one due to the Executive's death, or the date
of the Executive's death, as the case may be. In the event the Company fails to
satisfy the requirements of Section 3.2(a) regarding a Notice of Termination,
the purported termination of the Executive's employment pursuant to such Notice
of Termination shall not be effective for purposes of this Agreement.
(b) The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting any such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
5
(c) Any Notice of Termination for Cause given by the Company
must be given within 90 days of the occurrence of the event(s) or
circumstance(s) which constitute(s) Cause. Prior to any Notice of Termination
for Cause being given (and prior to any termination for Cause being effective),
the Executive shall be entitled to a hearing before the Board of Directors of
the Company at which he may, at his election, be represented by counsel and at
which he shall have a reasonable opportunity to be heard. Such hearing shall be
held on not less than 15 days prior written notice to the Executive stating the
Board of Directors' intention to terminate the Executive for Cause and stating
in detail the particular event(s) or circumstance(s) which the Board of
Directors believes constitutes Cause for termination.
(d) Any Notice of Termination for Good Reason given by the
Executive must be given within 90 days of the occurrence of the event(s) or
circumstance(s) which constitute(s) Good Reason.
4. Benefits to Executive.
4.1 Stock Acceleration. If the Change in Control Date occurs during
the Term, then, effective upon the Change in Control Date, (a) each outstanding
option to purchase shares of Common Stock of the Company held by the Executive
shall become immediately exercisable in full and will no longer be subject to a
right of repurchase by the Company and (b) each outstanding restricted stock
award shall be deemed to be fully vested and will no longer be subject to a
right of repurchase by the Company.
4.2 Compensation. If the Change in Control Date occurs during the
Term and the Executive's employment with the Company terminates within 18 months
following the Change in Control Date, the Executive shall be entitled to the
following benefits:
(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 within 18
months following the Change in Control Date, 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
6
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 compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case 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 amount equal to (A) three multiplied by
(B) the sum of (x) the Executive's highest annual base salary in any twelve-
month period (on a rolling basis) during the five-year period prior to the
Change in Control Date and (y) the Executive's highest annual bonus in any
twelve-month period (on a rolling basis) during the five-year period prior to
the Change in Control Date.
(ii) for three years 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 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 Measurement
Date or, if more favorable to the Executive and his family, in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies; provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive a
particular type of benefits (e.g., health insurance benefits) from such employer
on terms at least as favorable to the Executive and his 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 his family;
(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 (such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits"); and
(iv) for purposes of determining eligibility (but not
the time of commencement of benefits) of the Executive for retiree benefits to
which the Executive is entitled, the Executive shall be considered to have
remained employed by the Company until three years after the Date of
Termination.
(b) Resignation without Good Reason; Termination for Death or
Disability. If the Executive voluntarily terminates his employment with the
Company within 18 months following the Change in Control Date, excluding a
termination for Good Reason, or if the Executive's employment with the Company
is terminated by reason of the Executive's death or Disability within 18 months
following the Change in Control Date, then the Company shall (i) pay the
Executive (or his estate, if applicable), 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.
7
(c) Termination for Cause. If the Company terminates the
Executive's employment with the Company for Cause within 18 months following the
Change in Control Date, then the Company shall (i) pay the Executive, in a lump
sum in cash within 30 days after the Date of Termination, the sum of (A) the
Executive's annual base salary through the Date of Termination and (B) the
amount of any compensation previously deferred by the Executive, in each case to
the extent not previously paid, and (ii) timely pay or provide to the Executive
the Other Benefits.
4.3 Taxes.
(a) In the event that the Company undergoes a "Change in
Ownership or Control" (as defined below), and thereafter, the Executive becomes
eligible to receive "Contingent Compensation Payments" (as defined below) the
Company shall, as soon as administratively feasible after the Executive becomes
so eligible determine and notify the Executive (with reasonable detail regarding
the basis for its determinations) (i) which of the payments or benefits due to
the Executive following such Change in Ownership or Control constitute
Contingent Compensation Payments, (ii) the amount, if any, of the excise tax
(the "Excise Tax") payable pursuant to Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), by the Executive with respect to such
Contingent Compensation Payment and (iii) the amount of the "Gross-Up Payment"
(as defined below) due to the Executive with respect to such Contingent
Compensation Payment. Within 30 days after delivery of such notice to the
Executive, the Executive shall deliver a response to the Company (the "Executive
Response") stating either (A) that he agrees with the Company's determination
pursuant to the preceding sentence or (B) that he disagrees with such
determination, in which case he shall indicate which payment and/or benefits
should be characterized as a Contingent Compensation Payment, the amount of the
Excise Tax with respect to such Contingent Compensation Payment and the amount
of the Gross-Up Payment due to the Executive with respect to such Contingent
Compensation Payment. If the Executive states in the Executive Response that he
agrees with the Company's determination, the Company shall make the Gross-Up
Payment to the Executive within three business days following delivery to the
Company of the Executive Response. If the Executive states in the Executive
Response that he disagrees with the Company's determination, then, for a period
of 15 days following delivery of the Executive Response, the Executive and the
Company shall use good faith efforts to resolve such dispute. If such dispute is
not resolved within such 15-day period, such dispute 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. The Company
shall, within three business days following delivery to the Company of the
Executive Response, make to the Executive those Gross-Up Payments as to which
there is no dispute between the Company and the Executive regarding whether they
should be made. The balance of the Gross-Up Payments shall be made within three
business days following the resolution of such dispute. The amount of any
payments to be made to the Executive following the resolution of such dispute
shall be increased by the amount of the accrued interest thereon computed at the
prime rate announced from time to time by The Wall Street Journal compounded
monthly from the date that such payments originally were due. In the event that
the Executive fails to deliver an Executive Response on or before the required
date, the Company's initial determination shall be final.
8
(b) For purposes of this Section 4.3, the following terms
shall have the following respective meanings:
(i) "Change in Ownership or Control" shall mean a
change in the ownership or effective control of the Company or in the
ownership of a substantial portion of the assets of the Company determined in
accordance with Section 280G(b)(2) of the Code.
(ii) "Contingent Compensation Payment" shall mean any
payment (or benefit) in the nature of compensation that is made or supplied to a
"disqualified individual" (as defined in Section 280G(c) of the Code) and that
is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a
Change in Ownership or Control of the Company.
(iii) "Gross-Up Payment" shall mean an amount equal to
the sum of (i) the amount of the Excise Tax payable with respect to a
Contingent Compensation Payment and (ii) the amount necessary to pay all
additional taxes imposed on (or economically borne by) the Executive (including
the Excise Taxes, state and federal income taxes and all applicable
withholding taxes) attributable to the receipt of such Gross-Up Payment.
For purposes of the preceding sentence, all taxes attributable to the
receipt of the Gross-Up Payment shall be computed assuming the application
of the maximum tax rates provided by law.
4.4 Outplacement Services. In the event the Executive is terminated
by the Company (other than for Cause, Disability or Death), or the Executive
terminates employment for Good Reason, within 18 months following the Change in
Control Date, the Company shall provide outplacement services through one or
more outside firms of the Executive's choosing up to an aggregate of $25,000,
with such services to extend until the earlier of (i) 12 months following the
termination of Executive's employment or (ii) the date the Executive secures
full time employment.
4.5 Mitigation. The Executive shall not be required to mitigate the
amount of any payment or benefits provided for in this Section 4 by seeking
other employment or otherwise. Further, except as provided in Section
4.2(a)(ii), the amount of any payment or benefits provided for in this Section 4
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.
9
5. Disputes.
5.1 Settlement of Disputes; Arbitration. All claims by the Executive
for benefits under this Agreement shall be directed to and determined by the
Board of Directors of the Company and shall be in writing. Any denial by the
Board of Directors 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 and the specific provisions of this Agreement relied upon. The
Board of Directors 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.
5.2 Expenses. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal, accounting and other fees and expenses which
the Executive may reasonably incur as a result of any claim or contest
(regardless of the outcome thereof) by the Company, the Executive or others
regarding the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive regarding the amount of any payment or benefits
pursuant to this Agreement), plus in each case interest on any delayed payment
at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the
Code.
6. Successors.
6.1 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. Failure
of the Company to obtain an assumption of this Agreement at or prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
constitute Good Reason if the Executive elects to terminate employment, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. 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.
10
6.2 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 his 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.
7. 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.
8. Miscellaneous.
8.1 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.
8.2 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.
8.3 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.
8.4 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.
11
8.5 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.
8.6 Tax Withholding. Any payments provided for hereunder shall be
paid net of any applicable tax withholding required under federal, state or
local law.
8.7 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 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.
8.8 Amendments. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first set forth above.
THERMO ELECTRON CORPORATION
--------------------------------
By: Xxxx Pol
Title: Senior Vice President, Human Resources
EXECUTIVE
-----------------------------------
[Name]
Exhibit B
Boards of Directors
1. Dreyfus Corporation
2. Xxxx Xxxxxxx Mutual Life Insurance Company
EXHIBIT C
================================================================================
SUMMARY OF TERMS*
RESTRICTED STOCK
--------------------------------------------------------------------------------
Date of Award: Date approved by the Human Resources Committee of the
Board of Directors
Restrictions: Restricted shares may not be transferred or sold to
parties other than the Company until vested and
restrictions lapse
A stock certificate representing the award will be
held in "Escrow" until the restrictions have lapsed
Length of Restriction: January 2, 2002 (approximately three years from the
date of award)
Vesting Schedule: 100% on January 2, 2002
Purchase Price of Par Value (deemed satisfied by past services)
Restricted Shares:
Tax Treatment: Ordinary income is recognized on the value of the
shares either:
(see separate when they vest and restrictions lapse
memorandum regarding OR
tax consequences) on the date of grant (if a Section 83(b) election is
made within 30 days of date of grant)
Payment of Taxes: Check payable to employer Company, or "Stock
Witholding" from Restricted Shares awarded:
If tax collected when shares vest, amount withheld
will be limited to minimum statutory federal (28%)
and state rates, and statutory FICA rates up to
specified limits.
If tax collected upon Section 83(b) election, amoun
will be withheld at maximum federal (39.6%) and
state rates, and statutory FIC rates up to
specified limits.
Rights on Termination:
Voluntary or
Discharge (for cause).. Non-vested shares will be transferred back to the
Company and the recipient will have no further rights
to the shares
Death, Release, or Shares fully vest and are released from "Escrow"
Disability... net of shares required to satisfy tax withholding
requirements)
Change of Control ... Shares fully vest upon change of control as defined in
the Company's Equity Incentive Plan and are released
from "Escrow" (net of shares required to satisfy tax
withholding requirements)
*This summary is qualified in its entirety by the terms and conditions of a
written and signed restricted stock agreement between the employee and the
Company.
================================================================================
2
EXHIBIT D
Grant ID # 21-0XXX
[A/7]
THERMO ELECTRON CORPORATION
EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
Optionee
#### $$$$
Number of Shares of Exercise Price
Common Stock Subject Per Share
to the Option
Grant Date
We are pleased to inform you that, pursuant to the Thermo Electron
Corporation Equity Incentive Plan (the "Plan"), you have been granted the option
to acquire the number of shares of common stock, par value $1.00 per share (the
"Common Stock"), of Thermo Electron Corporation (the "Company"), specified
above, subject to the provisions of the Plan and the terms, conditions and
restrictions hereinafter set forth (the "Option"), to be exercisable any time
after the Grant Date specified above (the "Grant Date") and prior to the Option
Termination Date (as defined herein). Attached is a copy of the Plan which is
incorporated in this Stock Option Agreement (the "Agreement") by reference and
made a part hereof. The Option granted hereunder is intended to be a
non-statutory stock option and not a "qualified", "incentive", or "employee
stock purchase plan" stock option as those terms are defined in Sections 422,
422A and 423, respectively, of the Internal Revenue Code of 1954, as amended.
1. Termination of Option. The Option shall terminate on the date which is
the earliest of (a) seven years after the Grant Date, (b) three months after the
date on which you cease to be a director or employee of the Company or a
subsidiary of the Company (the "Employment Termination Date"), or six months
after the Employment Termination Date if such cessation is a result of your
death, provided that immediately on the Employment Termination Date, the Option
shall terminate with respect to any Optioned Shares (as defined herein) as to
which the Transfer Restrictions (as defined herein) shall not have lapsed, or
(c) the date of the dissolution or liquidation of the Company. The date on which
the Option shall terminate in whole or in part as provided in this Section 1 is
hereinafter referred to as the "Option Termination Date."
2. Transfer Restrictions and Company Repurchase Option.
(a) Shares of Common Stock subject to the Option ("Optioned Shares")
and purchased upon exercise of the Option may not, without the prior written
consent of the Company, be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of, except by will or by the applicable laws of descent and
distribution or to the Company pursuant to the provisions of ARTICLE NINTH,
Section (9) of the Company's Restated Certificate of Incorporation, as amended
from time to time (the "Transfer Restrictions") unless and until the Transfer
Restrictions with respect to such Optioned Shares shall have lapsed as provided
herein. The Transfer Restrictions shall lapse in their entirety with respect to
one-fifth of the number of Optioned Shares specified on the first page of this
Agreement at the close of business on each of the first, second, third, fourth
and fifth anniversaries of the Grant Date which occurs prior to the Employment
Termination Date, provided you shall have remained continuously a director or
employee of the Company or a subsidiary of the Company since the Grant Date.
From and after the Employment Termination Date, no further lapsing of the
Transfer Restrictions shall occur, and thereupon the Company shall have the
right, exercisable in accordance with Section 2(b) hereof, to repurchase all or
any portion of the Optioned Shares purchased by you upon exercise of the Option
with respect to which the Transfer Restrictions shall not have lapsed, at a
price per share equal to the Exercise Price specified on the first page of this
Agreement (the "Exercise Price"). The right of the Company to repurchase
Optioned Shares at the Exercise Price as provided in this Section 2(a) is
hereinafter referred to as the "Company Repurchase Option".
(b) The Company may exercise the Company Repurchase Option by
mailing to you at your last address listed in the records of the Company or the
relevant subsidiary of the Company, or by delivering to you, a notice that it
has exercised the Company Repurchase Option and the number of Optioned Shares
with respect to which it has exercised the Company Repurchase Option, within six
(6) months after the date that the Company shall first have been entitled to
exercise the Company Repurchase Option (the "Repurchase Option Period"). Such
notice shall be accompanied by a check payable to you in the amount of the
Exercise Price times the number of Optioned Shares with respect to which the
Company has exercised the Company Repurchase Option. Upon exercise by the
Company of the Company Repurchase Option as provided herein, the certificate or
certificates representing the Optioned Shares, and representing shares of Common
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Stock or other shares (or other property) received in any Non-Cash Distribution
(as defined herein) in respect of such Optioned Shares, which have been
repurchased shall forthwith be released from the escrow arrangement provided for
in Section 4 hereof and transferred of record to the Company. The Company
Repurchase Option shall lapse and be of no further force or effect if it shall
not have been exercised prior to the expiration of the Repurchase Option Period.
3. No Assignment of Rights. Except for assignments or transfers by will
or the applicable laws of descent and distribution, your rights and interests
under this Agreement and the Plan may not be assigned or transferred in whole or
in part either directly or by operation of law or otherwise, including without
limitation by way of execution, levy, garnishment, attachment, pledge or
bankruptcy, and no such rights or interests shall be subject to any of your
obligations or liabilities.
4. Exercise of Option; Delivery and Deposit of Certificate(s). You (or in
the case of your death, your legal representative) may exercise the Option in
whole or in part by giving written notice to the Company on the form attached
hereto as Exhibit A (the "Exercise Notice") prior to the Option Termination
Date, accompanied by full payment for the Optioned Shares being purchased (a) in
cash or by certified or bank cashier's check payable to the order of the
Company, in an amount equal to the number of Optioned Shares being purchased
multiplied by the Exercise Price (the "Aggregate Exercise Price"), (b) in shares
of the Company's Common Stock (the "Tendered Shares") with a market value equal
to the Aggregate Exercise Price or (c) any combination of cash, certified or
bank cashier's check or Tendered Shares having a total value equal to the
Aggregate Exercise Price (such cash, check or Tendered Shares with such value
being referred to as the "Exercise Consideration"). However, Tendered Shares may
be surrendered as all or part of the Exercise Consideration only if you shall
have acquired such Tendered Shares more than six months prior to the date of
exercise and, if such Tendered Shares are then subject to Transfer Restrictions,
only with the prior written consent of the Company as provided in Section 2(a)
hereof. As a condition to such consent, the Company may require that a number of
Optioned Shares acquired by you upon your exercise of the Option equal to the
number of Tendered Shares surrendered upon such exercise shall be subject to the
Transfer Restrictions and the Company Repurchase Option to the same extent that
such Tendered Shares surrendered upon such exercise were so subject immediately
prior to such surrender. Receipt by the Company of the Exercise Notice and the
Exercise Consideration shall constitute the exercise of the Option or a part
thereof. As soon as reasonably practicable thereafter, the Company shall deliver
or cause to be delivered to you a certificate or certificates representing the
number of Optioned Shares purchased, registered in your name. If such
certificate(s) represent(s) Optioned Shares with respect to which the Transfer
Restrictions shall not have lapsed, such certificate(s) shall, immediately upon
your receipt thereof, be deposited by you, together with a stock power endorsed
in blank, in escrow with the Company. In addition, any certificate(s)
representing shares of Common Stock, or other property other than cash,
distributed (including pursuant to any stock split) in respect of Optioned
Shares purchased by you (a "Non-Cash Distribution") with respect to which the
Transfer Restrictions shall not have lapsed shall, immediately upon your receipt
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thereof, be deposited by you, together with a stock power endorsed in blank (if
applicable), in escrow with the Company, and shall be subject to the Transfer
Restrictions and the Company Repurchase Option to the same extent as the
Optioned Shares in respect of which such Non-Cash Distribution was made. All
such deposited certificate(s) may have set forth thereon a legend or legends (in
addition to the legend referred to in Section 7 hereof) indicating that the
shares of Common Stock (or other property) represented by such certificate(s)
are subject to the Transfer Restrictions and, to the extent applicable, to the
Company Repurchase Option, as provided herein. All shares of Common Stock
delivered upon the exercise of the Option as provided herein shall be fully paid
and non-assessable.
5. Rights With Respect to Optioned Shares. Prior to the date the Option
is exercised, you shall not be deemed for any purpose to be a stockholder of the
Company with respect to any of the Optioned Shares. Upon initial issuance to you
of a certificate or certificates representing Optioned Shares or shares (or
other property) received in any Non-Cash Distribution in respect of Optioned
Shares purchased by you, you shall have ownership of such shares (or other
property), including the right to vote and receive dividends, subject, however,
in the case of any such shares (or other property) with respect to which the
Transfer Restrictions shall not have lapsed, to the Transfer Restrictions and
the Company Repurchase Option, to the extent applicable, and to the other
restrictions and limitations imposed thereon pursuant to the Plan and this
Agreement and which may be now or hereafter imposed by the Restated Certificate
of Incorporation or the By-Laws of the Company.
6. Release of Optioned Shares. As soon as reasonably practicable after
the Transfer Restrictions shall have lapsed with respect to any Optioned Shares
purchased by you upon exercise of the Option, the Company shall deliver to you,
or your legal representative in the case of your death, the certificate or
certificates representing such shares and any shares (or other property)
received in any Non-Cash Distribution in respect of such shares, previously
deposited in escrow with the Company pursuant to Section 4 hereof, without any
legend referring to the Transfer Restrictions or the Company Repurchase Option.
7. Securities Laws. You hereby represent and warrant that you will not
transfer, sell or otherwise dispose of any Optioned Shares purchased by you
except in compliance with the Securities Act of 1933, as amended (the "Act"),
the rules and regulations thereunder and all applicable state securities laws
and the rules and regulations thereunder. You hereby acknowledge and agree that
any routine sales of the Optioned Shares purchased by you upon exercise of the
Option made in reliance upon Rule 144 under the Act may be made only in limited
amounts in accordance with the terms and conditions of that Rule. You also
acknowledge and agree that the certificate(s) representing Optioned Shares
delivered to you pursuant to Section 4 hereof may have set forth thereon a
legend indicating that such shares may be transferred, sold or otherwise
disposed of only after receipt by the Company of an opinion of counsel
reasonably satisfactory to it that the transfer, sale or other disposition will
not violate the Act or the regulations thereunder or any applicable state
securities laws or the regulations thereunder.
4
8. Dilution and Other Adjustments. In the event of any stock dividend
payable in Common Stock or any split-up or contraction in the number of shares
of Common Stock occurring after the date of this Agreement and prior to the
exercise in full of the Option, the number of shares for which the Option may
thereafter be exercised and the Exercise Price shall be proportionately
adjusted. In the case of any reclassification or change of outstanding shares of
the Common Stock or in case of any consolidation or merger of the Company with
or into another company or in case of any sale or conveyance to another company
or entity of the property of the Company as a whole or substantially as a whole,
you shall, upon exercise of the Option, be entitled to receive shares of stock
or other securities in its place equivalent in kind and value to those shares
which you would have received if you had exercised the Option in full
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance and had continued to hold the Optioned Shares (together with all
other shares, stock and securities thereafter issued in respect thereof) to the
time of the exercise of the Option; provided, that if any recapitalization is to
be effected through an increase in the par value of the Common Stock without an
increase in the number of authorized shares and such new par value will exceed
the Exercise Price hereunder, the Company shall notify you of such proposed
recapitalization, and you shall then have the right, exercisable at any time
prior to such recapitalization becoming effective, to purchase all of the
Optioned Shares not theretofore purchased by you (anything in Section 1 hereof
to the contrary notwithstanding), but if you fail to exercise such right before
such recapitalization becomes effective, the Exercise Price hereunder shall be
appropriately adjusted. Upon dissolution or liquidation of the Company, the
Option shall terminate, but you (if at the time you are a director or employee
of the Company or a subsidiary of the Company) shall have the right, immediately
prior to such dissolution or liquidation, to purchase all or any portion of the
Optioned Shares not theretofore purchased by you. No adjustment provided for in
this Section 8 shall apply to any Optioned Shares purchased prior to the
effective date of such adjustment. No fraction of a share or fractional shares
shall be purchasable or deliverable under this Agreement, but in the event any
adjustment hereunder of the number of Optioned Shares shall cause such number to
include a fraction of a share, such fraction shall be adjusted to the nearest
smaller whole number of shares.
9. Reservation of Shares. The Company shall at all times during the term
of this Agreement reserve and keep available such number of shares of the Common
Stock as will be sufficient to satisfy the requirements of this Agreement and
shall pay all fees and expenses necessarily incurred by the Company in
connection with this Agreement and the issuance of Optioned Shares.
10. Taxes. If the Company, in its sole discretion, determines that the
Company or any subsidiary of the Company or any other person has incurred or
will incur any liability to withhold any federal, state or local income or other
taxes by reason of the grant of the Option, the issuance of Optioned Shares to
you upon the exercise thereof or the lapse of the Transfer Restrictions or the
Company Repurchase Option or any other restrictions upon the Optioned Shares,
5
you will, promptly upon demand therefor by the Company or any such subsidiary of
the Company, pay to the Company or such subsidiary any amount requested by it
for the purpose of satisfying such liability. If the amount so requested is not
paid promptly, the Company may refuse to permit the issuance to you of Optioned
Shares and may, without further consent by you, cancel the Optioned Shares
issued to you.
You may satisfy the minimum statutory withholding tax requirement (the
"Obligation") arising from exercise of all or a part of the Option by making an
election (an "Election") to have the Company withhold from the number of shares
to be issued upon exercise of the Option, or to otherwise tender to the Company,
that number of shares of Common Stock having a value equal to the amount of the
Obligation. The value of the shares to be withheld or tendered shall be based
upon the closing price of the Common Stock on the New York Stock Exchange on the
date that the amount of the Obligation shall be determined (the "Tax Date").
Each Election must be made at the time the Option is exercised or the Tax Date,
whichever is later. The Committee may disapprove of any Election or may suspend
or terminate the right to make Elections. An Election is irrevocable.
If you are a Section 16(a) reporting person of the Company, the Election
will be subject to the following additional requirements:
(1) No Election shall be effective for a Tax Date that occurs within six
months of the date the Option is granted.
(2) An Election must be made six months prior to the Tax Date or must be
made during a period beginning on the third business day following
the date of release of publication of the Company's quarterly or
annual summary statements of sales and earnings and ending on the
12th business day following such date.
11. Determination of Rights. You hereby represent and warrant for
yourself, your personal representatives and beneficiaries, that as a condition
of the granting of the Option, any dispute or disagreement which may arise under
or as a result of or pursuant to the Plan or this Agreement shall be determined
by the Company's Board of Directors, in its sole discretion, and that any
decision made by it in good faith shall be conclusive on all parties. The
interpretation and construction by the Company's Board of Directors of any
provision of, and the determination of any question arising under, this
Agreement, the Plan, or any rule or regulation adopted pursuant to the Plan,
shall be final and conclusive.
12. Limitation of Employment Rights. The Option confers upon you no right
to continue in the employ of the Company and its subsidiaries or interferes in
any way with the right of the Company and its subsidiaries to terminate your
employment at any time.
6
13. Communications. Any communication or notice required or permitted to
be given under this Agreement shall be in writing, and mailed by registered or
certified mail or delivered in hand, if to the Company to its Stock Option
Manager at 00 Xxxxx Xxxxxx, Xxxx Xxxxxx Xxx 0000, Xxxxxxx, Xxxxxxxxxxxxx
00000-0000, and if to the Optionee, to the address set forth below, or such
other address, in each case, as the addressee shall last have furnished to the
communicating party.
Please confirm your acceptance of the Option, your receipt of a copy of
the Plan and your acceptance of and agreement to the terms of the Plan and this
Agreement, by executing the enclosed copy of this letter and returning such copy
promptly under confidential cover to the Stock Option Manager of the Company, 00
Xxxxx Xxxxxx, Xxxx Xxxxxx Xxx 0000, Xxxxxxx, Xxxxxxxxxxxxx 00000-0000.
THERMO ELECTRON CORPORATION
By
Name: Xxxx Pol
Title: Senior Vice President, Human
Resources
Accepted and agreed:
-------------------------
Optionee
-------------------------
-------------------------
-------------------------
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Home Address
7
EXHIBIT E
THERMO ELECTRON CORPORATION
INDEMNIFICATION AGREEMENT
This Agreement, made and entered into this 25th day of September, 1997
("Agreement"), by and between Thermo Electron Corporation, a Delaware
corporation (the "Company"), and Xx. Xxxxxxx X. Xxxxx ("Indemnitee"):
WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to, and activities on behalf of, the corporation; and
WHEREAS, uncertainties relating to the contained availability of adequate
directors and officers liability insurance ("D&O Insurance") and relating to
indemnification have increased the difficulty of attracting and retaining such
persons;
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that the difficulty in attracting and retaining such persons is
detrimental to the best interests of the Company's stockholders and that the
Company should act to assure such persons that there will be increased certainty
of such protection in the future;
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons so that they will
serve or continue to serve the Company free from undue concern that they will
not be so indemnified;
WHEREAS, Indemnitee is willing to serve, continue to serve and/or take on
additional service for or on behalf of the Company on the condition that he be
so indemnified and that such indemnification be so guaranteed;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. Services by Indemnitee. Indemnitee agrees to serve or continue to
service as a Director of the Company. This Agreement shall not impose any
obligation on the Indemnitee or the Company to continue the Indemnitee's
position with the Company beyond any period otherwise applicable.
2. Indemnity. The Company shall indemnify, and shall advance Expenses (as
hereinafter defined) to, Indemnitee as provided in this Agreement and to the
fullest extent permitted by law.
3. General. Indemnitee shall be entitled to the rights of indemnification
provided in this Section 3 if, by reason of his Corporate Status (as hereinafter
defined), he is, or is threatened to be made, a party to any threatened,
pending, or completed action, suit, arbitration, alternative dispute resolution
mechanism, investigation, administrative hearing or other proceeding whether
civil, criminal, administrative or investigative. Pursuant to this Section 3,
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines
and amounts paid in settlement incurred by him or on his behalf in connection
with such action, suit, arbitration, alternative dispute resolution mechanism,
investigation, administrative hearing or other proceeding whether civil,
criminal, administrative or investigative or any claim, issue or matter therein,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
4. Proceedings by or in the Right of the Company. In the case of any
action or suit by or in the right of the Company, indemnification shall be made
only (i) for Expenses or (ii) in respect of any claim, issue or matter as to
which Indemnitee shall have been adjudged to be liable to the Company is such
indemnification is permitted by Delaware law; provided, however, that
indemnification against Expenses shall nevertheless be made by the Company in
such event to the extent that the Court of Chancery of the State of Delaware, or
the court in which such action or suit shall have been brought or is pending,
shall determine to be proper despite the adjudication of liability but in view
of all the circumstances of the case.
5. Indemnification for Expenses of a Party who is Wholly or Partly
Successful. Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of his Corporation Status, a party to and is
successful, on the merits or otherwise, in any action, suit, arbitration,
alternative dispute resolution mechanism, investigation, administrative hearing
or other proceeding whether civil, criminal, administrative or investigative, he
shall be indemnified against all Expenses incurred by him or on his behalf in
connection therewith. If Indemnitee is not wholly successful but is successful,
on the merits or otherwise, as to one or more but less than all claims, issues
or matters in such action, suit, arbitration, alternative dispute resolution
mechanism, investigation, administrative hearing or other proceeding whether
civil, criminal, administrative or investigative, the Company shall indemnify
Indemnitee against all Expenses incurred by him or on his behalf in connection
with each successfully resolved claim, issue or matter. For purposes of this
Section and without limitation, the termination of any claim, issue or matter by
dismissal, or withdrawal with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.
2
6. Advance of Expenses. The Company shall advance all Expenses incurred by
or on behalf of Indemnitee in connection with any action, suit, arbitration,
alternative dispute resolution mechanism, investigation, administrative hearing
or other proceeding whether civil, criminal, administrative or investigative
within twenty (20) days after the receipt by the Company of a statement or
statements from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such action, suit,
arbitration, alternative dispute resolution mechanism, investigation,
administrative hearing or other proceeding whether civil, criminal,
administrative or investigative. Such statement or statements shall reasonably
evidence the Expenses incurred by Indemnitee and shall include or be preceded or
accompanied by an undertaking by or on behalf of Indemnitee to repay any
Expenses advanced if it shall ultimately be determined that Indemnitee is not
entitled to be indemnified against such Expenses, which undertaking shall be
accepted by or on behalf of the Company without reference to the financial
ability of Indemnitee to make repayment.
7. Procedure for Determination of Entitlement to Indemnification.
(a) To obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to
Section 7(a) hereof, a determination, if required by applicable law, with
respect to Indemnitee's entitlement thereto shall be made in the specific case:
(i) if a Change in Control (as hereinafter defined) shall have occurred, by
Independent Counsel (as hereinafter defined) in a written opinion to the Board,
a copy of which shall be delivered to Indemnitee (unless Indemnitee shall
request that such determination be made by the Board or the stockholders, in
which case the determination shall be made in the manner provided below in
clauses (ii) or (iii)); (ii) if a Change of Control shall not have occurred, (A)
by the Board by a majority vote of a quorum consisting of Disinterested
Directors (as hereinafter defined), or (B) if a quorum of the Board consisting
of Disinterested Directors is not obtainable or, even if obtainable, such quorum
of Disinterest Directors so directs, by Independent Counsel in a written opinion
to the Board, a copy of which shall be delivered to Indemnitee or (C) by the
stockholders of the Company; or (iii) as provided in Section 8(b) of this
Agreement; and, if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten (10) days after
such determination. Indemnitee shall cooperate with the person, persons or
3
entity making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorney's fees and disbursements) incurred by
Indemnitee in so cooperating shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the Company
hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification is to
be made by Independent Counsel pursuant to Section 7(b) of this Agreement, the
Independent Counsel shall be selected as provided in this Section 7(c). If a
Change of Control shall not have occurred, the Independent Counsel shall be
selected by the Board, and the Company shall give written notice to Indemnitee
advising him of the identity of the Independent Counsel so selected. If a Change
of Control shall have occurred, the Independent Counsel shall be selected by
Indemnitee (unless Indemnitee shall request that such selection be made by the
Board, in which event the preceding sentence shall apply), and Indemnitee shall
give written notice to the Company advising it of the identity of the
Independent Counsel so selected. In either event, Indemnitee or the Company, as
the case may be, may, within 7 days after such written notice of selection shall
have been given, deliver to the Company or to Indemnitee, as the case may be, a
written objection to such selection. Such objection may be asserted only on the
ground that the Indepedent Counsel so selected does not meet the requirements of
"Independent Counsel" as defined in Section 14 of this Agreement, and the
objection shall set forth with particularly the factual basis of such assertion.
If such written objection is made, the Independent Counsel so selected may not
serve as Independent Counsel unless and until a court has determined that such
objection is without merit. If, within twenty (20) days after submission by
Indemnitee of a written request for indemnification pursuant to Section 7(a)
hereof, no Independent Counsel shall have been selected or if selected, shall
have been objected to, in accordance with this Section 7(c), whether the Company
or Indemnitee may petition the Court of Chancery of the State of Delaware or
other court of competent jurisdiction for resolution of any objection which
shall have been made by the Company or Indemnitee to the other's selection by
the Court or by such other person as the Court shall designate, and the person
with respect to whom an objection is favorably resolved or the person so
appointed shall act as Independent Counsel in connection with acting pursuant to
Section 7(b) hereof. The Company shall pay any and all reasonable fees and
expenses incident to the procedures of this Section 7(c), regardless of the
manner in which such Independent Counsel was selected or appointed. Upon the due
commencement of any judicial proceeding or arbitration pursuant to Section
9(a)(iii) of this Agreement, Independent Counsel shall be discharged and relieve
of any further responsibility in such capacity (subject to the applicable
standards of professional conduct then prevailing).
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8. Presumptions and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in making a determination
with respect to entitlement to indemnification hereunder, the person, persons or
entity making such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a request for
indemnification in accordance with Section 7(a) of this Agreement, and the
Company shall have the burden of proof to overcome that presumption in
connection with the making by any person, persons or entity of any determination
contrary to that presumption.
(b) If the person, persons or entity empowered or selected under Section 7
of this Agreement to determine whether Indemnitee is entitled to indemnification
shall not have made such determination within sixty (60) days after receipt by
the Company of the request therefor, the requisite determination of entitlement
to indemnification shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable
law; provided, however, that such 60-day period may be extended for a reasonable
time, not to exceed an additional thirty (30) days, if the person, persons or
entity making the determination with respect to entitlement to indemnification
in good faith requires such additional time for the obtaining or evaluating of
documentation and/or information relating thereto; and provided, further, that
the foregoing provisions of this Section 8(b) shall not apply (i) if the
determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 7(b) of this Agreement and if (A) within
fifteen (15) days after receipt by the Company of the request for such
determination the Board has resolved to submit such determination to the
stockholders for their consideration at an annual meeting thereof to be held
within seventy-five (75) days after such receipt and such determination is made
thereat, or (B) a special meeting of stockholders is called within fifteen (15)
days after such receipt for the purpose of making such determination, such
meeting is held for such purpose within sixty (60) days after having been so
called and such determination is made thereat, or (ii) if the determination of
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 7(b) of this Agreement.
(c) The termination of any action, suit, arbitration, alternative dispute
resolution mechanism, investigation, administrative hearing or other proceeding
whether civil, criminal, administrative or investigative or of any claim, issue
or matter therein by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal action or
proceeding, that Indemnitee had reasonable cause to believe that his conduct was
unlawful.
5
9. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section 7 of
this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 6
of this Agreement, (iii) the determination of entitlement to indemnification is
to be by Independent Counsel pursuant to Section 7(b) of this Agreement and such
determination shall not have been made and delivered in a written opinion within
ninety (90) days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made pursuant to Section
5 of this Agreement within ten (10) days after receipt by the Company of a
written request therefor, or (v) payment of indemnification is not made within
ten (10) days after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 8 of this Agreement, Indemnitee shall be entitled to an adjudication in
an appropriate court of the State of Delaware, or in any other court of
competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
rules of the American Arbitration Association. Indemnitee shall commence such
proceeding seeking an adjudication or an award in arbitration within one hundred
eighty (180) days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 9(a). The Company shall not
oppose Indemnitee's right to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to
Section 7 of this Agreement that Indemnitee is not entitled to indemnification,
any judicial proceeding or arbitration commenced pursuant to this Section 9
shall be conducted in all respects as a de novo trial, or arbitration, on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination. If a Change of Control shall have occurred, in any judicial
proceeding or arbitration commenced pursuant to this Section 9 the Company shall
have the burden of proving that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have been made
pursuant to Section 7 or 8 of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 9, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 9 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
6
(e) In the event that Indemnitee, pursuant to this Section 9, seeks a
judicial adjudication of or an award in arbitration to enforce his rights under,
or to recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and shall be indentified by the Company
against, any and all expenses (of the types described in the definition of
Expenses in Section 14 of this Agreement) actually and reasonably incurred by
him in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in said judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification
or advancement of expenses sought, the expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be appropriately
prorated.
10. Security. To the extent requested by the Indemnitee and approved by
the Board, the Company may at any time and from time to time provide security to
the Indemnitee for the Company's obligations hereunder through an irrevocable
bank line of credit, funded trust or other collateral. Any such security, once
provided to the Indemnitee, may not be revoked or released without the prior
written consent of Indemnitee.
11. Non-Exclusivity; Duration of Agreement; Insurance; Subrogation.
(a) The rights of indemnification and to receive advancement of Expenses
as provided by this Agreement shall not be deemed exclusive of any other rights
to which Indemnitee may at any time be entitled under applicable law, the
Company's certificate of incorporation or by-laws, any other agreement, a vote
of stockholders or a resolution of directors, or otherwise. This Agreement shall
continue until and terminate upon the later of (a) ten (10) years after the date
that Indemnitee shall have ceased to serve as a director or executive officer of
the Company or fiduciary of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise which Indemnitee served at the
request of the Company; or (b) the final termination of all pending actions,
suits, arbitrations, alternative dispute resolution mechanisms, investigations,
administrative hearings or other proceedings whether civil, criminal,
administrative or investigative in respect of which Indemnitee is granted rights
of indemnification or advancement of expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 9 of this Agreement relating
thereto. This Agreement shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of Indemnitee and his heirs, executors
and administrators.
(b) To the extent that the Company maintains D&O Insurance, Indemnitee
shall be covered by such D&O Insurance in accordance with its terms to the
maximum extent of the coverage available for any Director under such policy or
policies.
(c) In the event of any payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all action necessary
to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
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12. Severability; Reformation. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
13. Exception to Right of Indemnification or Advancement of Expenses.
Notwithstanding any other provision of this Agreement, Indemnitee shall not be
entitled to indemnification or advancement of Expenses under this Agreement with
respect to any action, suit or proceeding, or any claim therein, initiated,
brought or made by him (i) against the Company, unless a Change in Control shall
have occurred, or (ii) against any person other than the Company, unless
approved in advance by the Board.
14. Definitions. For purposes of this Agreement:
(a) "Change in Control" means a change in control of the Company of a
nature that would be required to be reported in response to Item 5(f) of
Schedule 14A of Regulation 14A (or in response to any similar item on any
similar schedule or form) promulgated under the Securities Exchange Act of 1934
(the "Act"), whether or not the Company is then subject to such reporting
requirement; provided, however, that, without limitation, such a Change in
Control shall be deemed to have occurred if (i) any "person" (as such term is
used in Section 13(d) and 14(d) of the Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Act), directly or indirectly, of securities
of the Company representing 20% or more of the combined voting power of the
Company's then outstanding securities without the prior approval of at least
two-thirds of the members of the Board in office immediately prior to such
person attaining such percentage interest; (ii) the Company is a party to a
merger, consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board in office immediately
prior to such transaction or event constitute less than a majority of the Board
thereafter; or (iii) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board (including for this
purpose any new director whose election or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board.
8
(b) "Corporate Status" describes the status of a person who is or was or
has agreed to become a director of the Company, or is or was an officer or
fiduciary of the Company or of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise which such person is
or was serving at the request of the Company.
(c) "Disinterested Director" means a director of the Company who is not and
was not a party to the action, suit, arbitration, alternative dispute resolution
mechanism, investigation, administrative hearing or any other proceeding whether
civil, criminal, administrative or investigative in respect of which
indemnification is sought by Indemnitee.
(d) "Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage, deliver service
fees, and all other disbursements or expenses of the types customarily incurred
in connection with prosecuting, defending, preparing to prosecute or defend or
investigating an action, suit, arbitration, alternative dispute resolution
mechanism, investigation, administrative hearing or any other proceeding whether
civil, criminal, administrative or investigative.
(e) "Independent Counsel" means a law firm, or a member of a law firm, that
is experienced in matters of corporation law and neither currently is, nor in
the past five years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party or (ii) any other party
to the action, suit, arbitration, alternative dispute resolution mechanism,
investigation, administrative hearing or any other proceeding whether civil,
criminal, administrative or investigative giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee's Rights under this Agreement.
15. Headings. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
16. Modification and Waiver. This Agreement may be amended from time to
time to reflect changes in Delaware law or for other reasons. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
9
17. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company
in writing upon being served with any summons, citation, subpoena, complaint,
indictment, information or other document relating to any matter which may be
subject to indemnification or advancement of Expenses covered hereunder;
provided, however, that the failure to give any such notice shall not disqualify
the indemnitee from indemnification hereunder.
18. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Indemnitee, to: The address shown beneath
his or her signature on
the last page hereof
(b) If to the Company to: Thermo Electron Corporation
00 Xxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Attn: Corporate Secretary
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
19. Governing Law. The parties agree that this Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of
Delaware.
10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
Attest: THERMO ELECTRON CORPORATION
By: By:
----------------------------------- -----------------------------------
Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxxxxxx
Secretary Chief Executive Officer
INDEMNITEE
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Xxxxxxx X. Xxxxx
Address:
