EXHIBIT 99.2
AMENDED & RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement"), amends
and restates that certain Amended and Restated Employment Agreement by and
between Thermo Electron Corporation, a Delaware corporation (together with its
successors and assigns permitted under this Agreement, the "Company"), and
Xxxxxxx X. Xxxxx (the "Executive"), dated as of July 11, 2000, including any
amendments or restatements thereto. The effective date of this Amended and
Restated Employment Agreement (the "Agreement") is November 21, 2002 (the
"Effective Date").
W I T N E S S E T H
WHEREAS, the Executive has served the Company as its President and Chief
Executive Officer pursuant to an amended and restated employment agreement by
and between the Executive and the Company, effective as of July 11, 2000 and any
amendments or restatements thereto, and that certain employment agreement by and
between the Executive and the Company effective as of June 1, 1999 (together,
the "Original Agreement");
WHEREAS, the Company and the Executive desire to amend and restate the
Original Agreement in accordance with the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the promises 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) "Accrued Obligations" shall have the meaning set forth in Section
11(a)(i) of this Agreement.
(b) "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.
(c) "Base Salary" shall mean the salary provided for in Section 4
below or any increased salary granted to the Executive pursuant to Section 4.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Cause" shall mean:
(i) the Executive commits a felony or any crime involving moral
turpitude; or
(ii) in carrying out his duties, the Executive intentionally
engages in conduct that constitutes gross neglect or gross misconduct
or any material violation of this Agreement or any material violation
of applicable Company rule or policy, the violation of which amounts
to gross neglect or gross misconduct.
(f) "Change in Control" shall mean an event or occurrence set forth in
Section 1.1 of the Executive Retention Agreement (as defined below).
(g) "Disability" shall mean the Executive's inability, due to physical
or mental incapacity, to substantially perform his duties and responsibilities
as provided in this Agreement for 180 days (including weekends and holidays) in
any 365-day period. The existence of any such physical or mental incapacity
shall be 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 have the meaning set forth in the preamble
to this Agreement.
(i) "Executive Retention Agreement" shall mean that certain Executive
Retention Agreement by and between the Executive and the Company dated as of
June 1, 1999.
(j) "Exercise Period" shall mean the period in which stock options
granted under Section 7 remain exercisable pursuant to the applicable award
agreement under which such stock options were granted.
(k) "Good Reason" shall mean termination by the Executive of his
employment, after written notice to the Company within 30 days following the
occurrence of any of the following events without his consent:
(i) a reduction in the Executive's then current Base Salary or
Reference Bonus Amount opportunity;
(ii) the removal by the Board of Executive from any position
described in Section 3 of this Agreement;
(iii) a material diminution or change in the Executive's duties
or responsibilities as contemplated and approved by the Board at the
September 19, 2002 meeting;
(iv) a change in the reporting structure so that the Executive
reports to any other person or entity other than the Board;
(v) 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;
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(vi) the early retirement of the Executive with the consent of
the Board; or
(vii) a material breach of this Agreement by the Company.
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.
(l) "Severance Bonus" shall have the meaning set forth in Section
11(a)(i) of this Agreement.
(m) "Stock" shall mean the common stock of the Company.
(n) "Termination Date" shall mean in the case of either a voluntary or
involuntary termination, the last day upon which Executive works. In the event
of the Executive's death, the Termination Date is the date of death. In the case
of a Disability, the Termination Date is the date upon which the Executive
receives written notice from the Board that it has deemed him to have a
Disability, but in no event before the Executive is determined to have a
Disability (as the term is defined in Section 1(g)).
2. Term of Employment, Effect on Prior Agreements.
(a) The Term of Employment ("Term" or "Term of Employment") under this
Agreement shall extend until December 31, 2007, and shall be automatically
extended on such date for an additional one (1) year period on the same terms
and conditions as provided herein, unless the Company notifies the Executive at
least 12 months prior to the expiration of the Term. Notwithstanding the
foregoing, the Term of Employment may be earlier terminated by either Party in
accordance with the provisions of Section 11.
(b) Effect on Prior Agreements. It is specifically acknowledged,
understood and agreed by the Parties that this Agreement amends and restates the
Original Agreement, as of the Effective Date, except that the provisions of
Section 6(f) of the Original Agreement as set forth in the amendment dated March
14, 2001 shall remain in effect with respect to stock options granted after
March 14, 2001 but before the Effective Date. The Executive Retention Agreement
shall remain in effect in accordance with its terms.
3. Position, Duties and Responsibilities.
(a) During the Term of Employment, the Executive shall be employed as
the Executive Chairman of the Company and the Chairman of the Board effective as
of the Effective Date.
(b) The Executive shall be responsible for such duties and
responsibilities as those assigned to him from time to time by the Board.
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(c) The Executive, in carrying out his duties under this Agreement,
shall report directly to the Board.
(d) In the event of a termination of employment of the Executive for
any reason, the Executive shall immediately resign as a member of the Board of
the Company and each of its Affiliates, unless requested to remain a director by
the then current Board.
(e) 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 A 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(e) do not materially interfere with the proper performance of his duties and
responsibilities hereunder.
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, which amount may be increased in the discretion of the Human Resources
Committee.
5. Annual Cash Incentive Award. During the Term of Employment, the
Executive shall participate in the annual cash incentive award program of the
Company. Under such program, the Executive shall have a reference bonus each
calendar year equal to $720,000 (the "Reference Bonus Amount"), prorated for
partial years. The actual bonus paid will be a multiple of the Reference Bonus
Amount (from zero (0) to two (2) times the Reference Bonus Amount). The actual
multiple will reflect a variety of subjective and objective factors, as
determined by the Board. The Executive shall be paid his annual cash incentive
award at the same time that other senior executives are paid their annual cash
incentive awards.
6. Retention Payment. The Executive shall be paid a retention payment in
the amount of (a) $1,800,000 in cash, which shall be payable in January 2003;
and (b) as of the Effective Date, an award of that number of restricted stock
units having a market value equal to $2,200,000 based on the average of the
closing price per share of Stock on the New York Stock Exchange for the five (5)
business days preceding and including the grant date (the "Retention Restricted
Stock Units"), substantially in the form of the Restricted Stock Units Agreement
attached hereto as Exhibit B. Except as otherwise provided herein, the Retention
Restricted Stock Units shall only vest at the end of the initial Term of this
Agreement.
7. Restricted Stock Units and Stock Option Awards. The Executive shall
receive restricted stock units and stock option awards under this Agreement as
follows:
(a) Initial Restricted Stock Units. As of the Effective Date, the
Company shall grant the Executive an award of 100,000 restricted stock units
(the "Initial Restricted Stock Units"), substantially in the form of the
Restricted Stock Units Agreement attached hereto as Exhibit C. The Initial
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Restricted Stock Units shall vest one-third (1/3) per year beginning on the
first anniversary of the Effective Date, and each subsequent anniversary
thereafter; provided that the Executive is employed by the Company on each such
anniversary date.
(b) Initial Stock Option Award. As of the Effective Date, the
Company shall grant the Executive a non-qualified stock option award,
substantially in the form of the Stock Option Agreement attached hereto as
Exhibit D, as modified by the terms of this Agreement, to purchase 520,000
shares of Stock (the "Initial Stock Option") vesting one-third (1/3) per year
beginning on the third anniversary of the Effective Date and on each subsequent
anniversary thereafter; provided that the Executive is employed by the Company
on each such anniversary date. 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 (5) business days preceding and including the grant date.
The Initial Stock Option shall be exercisable for a period of 10 years from the
date of grant.
(c) Subsequent Stock Option Awards. Conditioned upon his
continued employment and subject to shareholder approval of a stock option plan
that will permit such grants, which the Company shall take all reasonable steps
to obtain, the Company shall grant to the Executive additional stock option
awards to purchase 260,000 shares of Stock in each of the years 2005, 2006 and
2007 (the "Subsequent Stock Options"). The exercise price of the Subsequent
Stock Options shall be the average of the closing prices of the Stock on the New
York Stock Exchange for the five (5) business days preceding and including the
date of each grant. The Subsequent Stock Options shall be granted in accordance
with the terms and conditions of the stock option plan then in effect. Each
grant will be evidenced by the Company's then standard employee stock option
agreement, which shall be executed by the Executive and the Company. Each
Subsequent Stock Option shall vest while the Executive remains employed by the
Company ratably on the first three anniversary dates of each grant date, and
shall be exercisable for a period of 10 years from the date each is granted.
(d) Change in Control. If a Change in Control occurs during the
Term, then, immediately prior to the consummation of a Change in Control, (i)
each outstanding option to purchase shares of Stock held by the Executive,
whether or not issued under this Agreement, shall become fully vested,
immediately exercisable in full and shares of Stock issued upon the exercise of
stock options will no longer be subject to a right of repurchase by the Company
and (ii) each outstanding restricted stock award or restricted stock unit held
by the Executive, whether or not issued under this Agreement, shall be deemed to
be fully vested and non-forfeitable.
8. Employee Benefit Programs. During the Term, 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
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plans that supplement the above-listed types of plans or programs, whether
funded or unfunded. In no way limiting the foregoing, during the Term the
Company will maintain, at its cost, term life insurance on the life of the
Executive for the benefit of his beneficiaries with a face amount equal to
$3,000,000. The Executive shall be entitled to four weeks paid vacation per year
of employment.
9. Perquisites. During the Term, 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, including without limitation, the
Company's automobile reimbursement arrangement.
10. Reimbursement of Business and Other Expenses. The Executive is
authorized to incur reasonable expenses in carrying out his duties and
responsibilities under this Agreement including, without limitation, reasonable
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.
11. Termination of Employment During the Term.
(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) the sum of (1) the Executive's Base Salary through the
end of the month during which the Termination Date occurs and (2) a
pro-rata annual cash incentive award for the year in which the Termination
Date occurs, based on the Reference Bonus Amount for such year, payable
when annual cash incentive awards are normally paid to other executives
(the "Severance Bonus"), in each case to the extent not previously paid
(the sum of the amounts described in clauses (1) and (2) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) all stock options (to the extent previously granted
under this Agreement or any other agreement) shall become fully vested and
any shares of Stock issued upon the exercise of stock options shall no
longer be subject to a right of repurchase by the Company, and all stock
options granted prior to the Effective Date shall remain exercisable until
two (2) years from the Termination Date (but in no event beyond the end of
each such stock option's Exercise Period) and all stock options granted on
or after the Effective Date shall remain exercisable for the longer of (a)
three (3) years from the Termination Date or (b) three (3) years from the
date the Executive no longer serves as a director of the Company or any of
its Affiliates (but in no event beyond the end of each such stock option's
Exercise Period); and
(iii) the transfer restrictions on all restricted stock
and/or restricted stock units granted to the Executive under this Agreement
or any other agreement shall lapse.
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(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;
(ii) Base Salary through the end of the LTD elimination
period;
(iii) the Severance Bonus;
(iv) all stock options (to the extent previously granted
under this Agreement or any other agreement) shall become fully vested and
any shares of Stock issued upon the exercise of stock options shall no
longer be subject to a right of repurchase by the Company, and all stock
options granted prior to the Effective Date shall remain exercisable until
two (2) years from the Termination Date (but in no event beyond the end of
each such stock option's Exercise Period) and all stock options granted on
or after the Effective Date shall remain exercisable for the longer of (a)
three (3) years from the Termination Date or (b) three (3) years from the
date the Executive no longer serves as a director of the Company or any of
its Affiliates (but in no event beyond the end of each such stock option's
Exercise Period);
(v) the transfer restrictions on all restricted stock and/or
restricted stock units granted to the Executive under this Agreement or any
other agreement shall lapse; and
(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 Termination Date until the
longer of (x) the remaining Term of the Agreement following the Termination
Date, (y) 24 months following the date of termination and (z) 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 Executive's employment for Disability
occur until the Party terminating his employment gives written notice to the
other Party in accordance with Section 25 below, and until Executive is
determined to have a Disability as such term is defined in Section 1(g).
(c) Termination by the Company for Cause. In the event the Company
terminates the Executive's employment for Cause, he shall be entitled to the
following benefits:
(i) Base Salary through the Termination Date;
(ii) the transfer restrictions on the Retention Restricted Stock
Units granted pursuant to Section 6(b) above shall lapse;
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(iii) no further lapsing of the Company's repurchase right with
respect to any shares of Stock issued upon the exercise of stock options
granted to the Executive, and no further vesting of stock options shall
occur, and the Executive shall have 90 days to exercise all vested and
outstanding stock options (but in no event beyond the end of each such
stock option's Exercise Period); and
(iv) except with respect to the Retention Restricted Stock Units
granted pursuant to Section 6(b) above, all restricted stock and/or
restricted stock units granted to the Executive, under this Agreement or
any other agreement, as to which transfer restrictions have not lapsed
shall be forfeited.
(d) Termination without Cause or for Good Reason. In the event the
Executive's employment is terminated by the Company without Cause or by the
Executive with Good Reason (but not in any event as a result of Disability,
death, or as the result of a termination with Cause or without Good Reason), the
Company shall pay to the Executive the Accrued Obligations. In addition, the
Executive shall be entitled to the following:
(i) the Company shall pay to the Executive in equal monthly
installments, over the period remaining in the Term of this Agreement,
beginning 30 days after the Termination Date the aggregate of the following
amounts:
(A) the sum of the Base Salary for the remaining Term of the
Agreement following the Termination Date; and
(B) the Reference Bonus Amount for each year remaining in
the Term of the Agreement following the Termination Date.
(ii) for three (3) years after the Termination Date, or such
longer period as may be provided by the term of the appropriate plan,
program, practice or policy, the Company shall continue to provide medical
and dental 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
medical and dental benefit plans in effect on the Termination Date and in
which Executive participated as of such 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 medical and dental 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) all stock options (to the extent previously granted under
this Agreement or any other agreement) shall become fully vested and any
shares of Stock issued upon the exercise of stock options shall no longer
be subject to a right of repurchase by the Company, and all stock options
granted prior to the Effective Date shall remain exercisable until two (2)
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years from the Termination Date (but in no event beyond the end of each
such stock option's Exercise Period) and all stock options granted on or
after the Effective Date shall remain exercisable for the longer of (a)
three (3) years from the Termination Date or (b) three (3) years from the
date the Executive no longer serves as a director of the Company or any of
its Affiliates (but in no event beyond the end of each such stock option's
Exercise Period);
(iv) the transfer restrictions on all restricted stock and/or
restricted stock units granted to the Executive under this Agreement or any
other agreement shall lapse; and
(v) notwithstanding anything to the contrary in this Agreement or
in the Executive Retention Agreement, if the Executive's employment with
the Company is terminated within 18 months following a Change in Control
under circumstances which entitle the Executive to receive benefits under
the terms of the Executive Retention Agreement and this Agreement, the
Executive shall be entitled to benefits equal to the greater of (1) the
benefits due and payable to him under Section 4 of the Executive Retention
Agreement as a result of such termination or (2) the benefits due and
payable to him under this Section 11 as a result of such termination, but
not both. In furtherance thereof, it is the Parties' understanding that in
the event of a termination under such circumstances, the Executive shall be
entitled to receive benefits payable under Section 11 of this Agreement or
Section 4 of the Executive Retention Agreement (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 Agreement.
(e) Voluntary Termination. A termination of employment by the
Executive on his own initiative, other than a termination due to death or
Disability or Good Reason, shall have the same consequences as provided in
Section 11(c) for a termination for Cause, except as provided in Section 6(f) of
the Original Agreement as set forth in the amendment dated March 14, 2001 with
respect to stock options granted after March 14, 2001 but before the Effective
Date. A voluntary termination under this Section 11(e) shall be effective upon
30 days prior written notice to the Company.
(f) Taxes.
(i) 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) (A) which of
the payments or benefits due to the Executive following such Change in
Ownership or Control constitute Contingent Compensation Payments, (B) 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"),
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by the Executive with respect to such Contingent Compensation Payment and
(C) 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
(1) that he agrees with the Company's determination pursuant to the
preceding sentence or (2) 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 (3) 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 by arbitration in
accordance with Section 15 below. The Company shall, within three (3)
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
(3) 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.
(ii) For purposes of this Section 11(f), the following terms
shall have the following respective meanings:
(A) "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.
(B) "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.
(C) "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
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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.
(g) Outplacement Services. In the event the Executive's
employment terminates in accordance with Section 11(d) or Section 12, the
Company shall provide outplacement services, including, but not limited to the
services of one or more executive search firms, a personal assistant and such
other services that the Executive believes will assist him in his job search,
and pay reasonable out-of-pocket expenses, each subject to the Executive's
presentation of appropriate vouchers, invoices or receipts in accordance with
such policies and procedures as the Company from time to time may establish, up
to an aggregate of $50,000, with such services and expense reimbursement to
extend until the earlier of (i) 12 months following the termination of the
Executive's employment or (ii) the date the Executive secures full time
employment.
(h) Other Benefits. To the extent not previously paid or
provided, the Company shall timely pay or provide to the Executive any other
amounts or benefits, including, but not limited to any deferred compensation
amounts, required to be paid or provided or which the Executive is eligible to
receive following the Executive's termination of employment for any reason,
under any plan, program, policy, practice, contract or agreement of the Company
and its Affiliates and in accordance with such plan, program, policy, practice,
contract or agreement, except that the Executive waives any rights to severance
pay thereunder.
(i) Nature of Payments. Any amounts due under this Section 11 are
in the nature of severance payments considered to be reasonable by the Company
and are not in the nature of a penalty.
(j) No Mitigation; No Offset. The Executive shall not be required
to mitigate the amount of any payment or benefit provided in this Section 11 or
Section 12 by seeking other employment otherwise. Further, except as provided in
Sections 11(b)(vi), 11(d)(ii) and Section 12(a), the amount of any payment or
benefits provided for in this Section 11 or Section 12 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.
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12. Termination of Employment Upon Expiration of the Term. In the event
that the Executive's employment is terminated upon the expiration of the Term,
the Company shall pay to the Executive the Accrued Obligations. In addition, the
Executive shall be entitled to the following:
(a) for 12 months after the Termination Date, or such longer period as
may be provided by the term of the appropriate plan, program, practice or
policy, the Company shall continue to provide medical and dental 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 medical and dental benefit plans in effect on the
Termination Date and in which Executive participated as of such 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 medical and dental
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;
(b) all stock options (to the extent previously granted under this
Agreement or any other agreement) shall become fully vested and any shares of
stock issued upon the exercise of stock options shall no longer be subject to a
right of repurchase by the Company, and all stock options granted prior to the
Effective Date shall remain exercisable until two (2) years from the Termination
Date (but in no event beyond the end of each such stock option's Exercise
Period) and all stock options granted on or after the Effective Date shall
remain exercisable for the longer of (a) three (3) years from the Termination
Date or (b) three (3) years from the date the Executive no longer serves as a
director of the Company or any of its Affiliates (but in no event beyond the end
of each such stock option's Exercise Period); and
(c) the transfer restrictions on all restricted stock and/or
restricted stock units granted to the Executive under any agreement shall lapse.
13. Confidentiality & Assignment of Inventions.
(a) The Executive shall abide by his previously executed
confidentiality and assignment of inventions agreement, set forth in Exhibit E,
attached and incorporated herein.
(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.
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14. 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 and for a period of one
(1) 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 (collectively, ("Restricted Activity")), in any Competitive
Activity.
(c) In the event the Executive's employment is terminated pursuant to
Section 11(d) or Section 12, a Competitive Activity shall mean a business that
sells or offers for sale the product line or product lines (i) of the Company or
any Affiliate at the time in question and (ii) that were being actively
considered to be included in the Company's or any Affiliate's product line or
product lines, prior to the Termination Date of the Executive's employment;
provided that a Competitive Activity shall not include a product line or product
lines of the Company contributing less than 20% of the Company's revenues for
the year in question, and provided further that a product line or product lines
shall not be deemed to be a Competitive Activity if the product line or product
lines contribute less than 20% of the revenues for the year in question of the
business by which the Executive is employed or with which he is otherwise
associated, and provided further that it is agreed and understood that the
prohibitions provided for in this Section 14(c) shall not restrict Executive
from engaging in Restricted Activity for any subsidiary, division or affiliate
or unit of a company (collectively a "Related Entity") if that Related Entity is
not engaged in Competitive Activity, irrespective of whether some other Related
Entity of that company engages in what would otherwise be considered to be
Competitive Activity (as long as Executive does not engage in Restricted
Activity for such other Related Entity).
(d) In the event the Executive is terminated pursuant to Sections
11(c) or 11(e), a Competitive Activity shall mean a business that sells or
offers for sale the product line or product lines (i) of the Company or any
Affiliate at the time in question and (ii) that were being actively considered
to be included in the Company's or any Affiliate's product line or product
lines, prior to the Termination Date of the Executive's employment; provided
that a Competitive Activity shall not include a product line or product lines of
the Company contributing less than five percent (5%) of the Company's revenues
for the year in question, and provided further that a product line or product
lines shall not be deemed to be a Competitive Activity if the product line or
product lines contribute less than five percent (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, and provided further that it is agreed and
understood that the prohibitions provided for in this Section 14(d) shall not
restrict Executive from engaging in Restricted Activity for any Related Entity
13
if that Related Entity is not engaged in Competitive Activity, irrespective of
whether some other Related Entity of that company engages in what would
otherwise be considered to be Competitive Activity (as long as Executive does
not engage in Restricted Activity for such other Related Entity).
(e) The Executive further agrees that during the Noncompetition Period
he shall not (i) in any manner, directly or indirectly, hire or cause to be
hired any employee of or advisor or consultant to the Company or any of its
Affiliates for any purpose or in any capacity whatsoever, or (ii) in connection
with any business to which Section 14(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
14(e) shall not apply to, or interfere with, the proper performance by the
Executive of his duties and responsibilities under Section 3 of this Agreement.
(f) Nothing in this Section 14 shall prohibit the Executive from being
a passive owner of not more than one percent (1%) 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.
(g) 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.
15. Resolution of Disputes. Any disputes arising under or in connection
with this Agreement shall be resolved 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.
16. Remedies. Each of the parties to this Agreement shall be entitled to
enforce its rights under this Agreement specifically, to recover damages and
costs (including reasonable attorney's fees) caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages would not be
an adequate remedy for any breach of the provisions of this Agreement and that
any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement. Nothing in this paragraph is
intended to prevent the parties from raising any and all defenses with respect
to the necessity for, and scope of, such injunctive or equitable relief.
14
17. Indemnification.
(a) The Executive shall continue to be indemnified under the amended
and restated Indemnification Agreement, dated as of October 13, 1999, a copy of
which is attached hereto as Exhibit F, in accordance with the terms of such
agreement.
(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.
18. 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.
19. Representations.
(a) 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.
(b) Executive hereby represent and warrants that he is not bound by
the terms of any agreement with any previous employer or other party to refrain
from competing, directly or indirectly, with the business of such previous
employer or any other party. Executive further represents and warrants that
Executive's performance of all the terms of this Agreement and as an employee of
the Company does not and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by Executive in confidence
or in trust prior to Executive's employment with the Company. Executive will not
disclose to the Company or induce the Company to use any confidential or
proprietary information or material belonging to any previous employer or
others. Executive will not hereafter grant anyone any rights inconsistent with
the terms of this Agreement.
15
20. 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,
except as otherwise provided in Section 2(b) of this Agreement; provided,
however, that nothing contained herein shall modify or amend the terms of any
restricted stock or stock option granted to the Executive pursuant to the
Original Agreement in a manner adverse to the Executive. This is an integrated
document.
21. 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. 22. 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.
23. 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.
24. Governing Law/Jurisdiction. This Agreement shall be governed in
accordance with the laws of Massachusetts without reference to principles of
conflict of laws.
25. 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
16
If to the Executive: Xxxxxxx X. Xxxxx
c/o Thermo Electron Corporation
00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
26. 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.
27. Counterparts. This Agreement may be executed in two or more
counterparts.
[Remainder Intentionally Left Blank]
17
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
THERMO ELECTRON CORPORATION
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Xxxxx X. Xxxxx
Chairman of the Human Resources
Committee of the Board of Directors
/s/ Xxxxxxx X. Xxxxx
------------------------------------
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx - Executive Chairman
- Responsibilities and duties
- Such responsibilities and duties as shall be assigned to him from time
to time by the Board of Directors, initially to include the following:
A. Chair of the Executive Committee of the Board of Directors. The
Executive Committee shall have as its responsibilities the following:
(i) such matters as may in the discretion of the Executive Chairman,
the CEO or the Executive Committee require consideration between
regularly scheduled meetings of the Board of Directors; and (ii) such
other matters as the Board of Directors may delegate to the Executive
Committee.
B. Responsibility, as an adjunct to the internal audit function and the
Audit Committee, for the monitoring of the internal accounting and
internal and external audit functions.
C. Responsibility for the investor relations function including approval
of quarterly earnings releases and other press releases.
D. Responsibility for review and approval of financing activities
including debt financings and refinancings, and equity financings and
equity repurchase activity.
E. Responsibility for review and approval of acquisition strategy,
including the responsibility for (i) approving particular acquisition
candidates prior to presentation to the full Board of Directors, (ii)
subject to Board of Directors direction and approval, approving the
amount and form of consideration and structure of any proposed
acquisition, and (iii) selection of the professional advisors utilized
by the Company in such transactions.
F. Participation in the strategic planning process and in the monthly
business unit and sector planning meetings.
G. Responsibility for the monitoring and review of compliance with, and
any possible violation of, the Company's disclosure policies and
practices and SEC rules and regulations.
H. Responsibility for the monitoring and review of compliance with, and
any possible violation of, NYSE rules.
I. Responsibility for the monitoring and review of compliance with, and
any possible violation of, the Company's Code of Ethics.
J. Responsibility for considering all aspects of the Company's status as
an independent public company with the objective of maximizing
shareholder value.
K. Responsibility to meet no less frequently than weekly with the CEO for
an update on (i) the implementation of the strategic plan, (ii) the
status of the annual operating plan, (iii) quarterly performance
relative to the operating plan and analysts' expectations, and (iv)
such other matters as the Executive Chairman may deem of significance
to the Board of Directors in the interests of the Company's
stockholders.
EXHIBIT A
OUTSIDE INVOLVEMENTS
Publicly Traded Companies
Xxxx Xxxxxxx Financial Services - Board Member
McKesson Corporation (Pharmaceutical Distribution) - Board Member
Not-for-Profit Companies
American Stock Exchange - Member, Board of Governors
Eleemosynary Institutions
Boston College - Trustee
Xxxxx Hole Oceanographic Institution - Corporator
Mass Taxpayers Foundation - Board Member
EXHIBIT B
Grant ID#
THERMO ELECTRON CORPORATION
EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNITS AGREEMENT
Xxxxxxx X. Xxxxx
Name of Recipient
111,845
Number of Restricted
Stock Units Awarded
Vesting Schedule for Restricted Stock Units Awarded:
# of Shares Vesting Date
111,845 December 31, 2007
November 21, 2002
Grant Date
Thermo Electron Corporation (the "Company") has selected you to receive the
restricted stock units award identified above, subject to the provisions of the
Equity Incentive Plan (the "Plan") and the terms, conditions and restrictions
contained in this agreement (the "Agreement"). Please confirm your acceptance of
this Award, your agreement to other terms of the Plan and this Agreement, your
receipt of a copy of the Plan, and your receipt of a memorandum regarding the
tax treatment of awards of restricted stock units, by signing both copies of
this Agreement. You should keep one copy for your records and return the other
copy promptly to the Stock Option Manager of the Company, c/o Thermo Electron
Corporation, 00 Xxxxx Xxxxxx, Xxxx Xxxxxx Xxx 0000, Xxxxxxx, Xxxxxxxxxxxxx
00000-0000.
THERMO ELECTRON CORPORATION
By:
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxx
Vice President, Human Resources
Accepted and Agreed:
/s/ Xxxxxxx X. Xxxxx
---------------------------
Recipient
1. Preamble. This Agreement contains the terms and conditions of an award of
restricted stock units of the Company (the "Restricted Units") made to the
Recipient identified on the first page of this Agreement pursuant to the Plan.
Any consideration due to the Company on the issuance of the Restricted Units has
been deemed to be satisfied by past services rendered by the Recipient to the
Company. For purposes of this Agreement, the defined terms used herein and not
otherwise defined shall have the meaning set forth in that certain Amended and
Restated Employment Agreement dated as of November 21, 2002 by and between the
Recipient and the Company, as the same may be amended from time to time (the
"Employment Agreement").
2. Restrictions on Transfer. The Restricted Units shall not be sold,
transferred, pledged, assigned or otherwise encumbered or disposed of, until and
unless the Restricted Units shall have vested as provided in Section 3 of this
Agreement and a certificate has been issued pursuant to Section 6 of this
Agreement.
3. Vesting. The term "vest" as used in this Agreement means the lapsing of the
restrictions that are described in this Agreement with respect to the Restricted
Units. The Restricted Units shall vest in accordance with the schedule set forth
on the first page of this Agreement, provided in each case that the Recipient is
then, and since the Grant Date has continuously been, employed by the Company or
its subsidiaries. Once a Restricted Unit has become vested, it shall be referred
to as an Unrestricted Unit. Notwithstanding the foregoing, the Recipient shall
become vested in the Restricted Units prior to the vesting date set forth on the
first page of this Agreement in the following circumstances:
(a) Immediately prior to the consummation of a Change of Control, all
Restricted Units shall immediately vest; provided that, the Recipient is then
employed by the Company or its Affiliates; or
(b) In the event the Recipient's employment is terminated for any
reason, all Restricted Units shall immediately vest.
4. Dividend Equivalents.
(a) The Recipient shall be entitled to be credited with additional
Unrestricted Units based on all cash dividends paid with respect to the common
shares of the Company, par value $1.00 per share (the "Shares"), as determined
in accordance with the following formula:
W = (X multiplied by Y) divided by Z, where:
W = the number of additional Unrestricted Units to be credited to the
Recipient on such dividend payment date;
X = the aggregate number of Restricted Units and Unrestricted Units
credited to the Recipient as of the record date of the dividend;
Y = the cash dividend per share amount; and
2
Z = the fair market value per Share (the fair market value shall be
the average of the closing prices of the common stock of the Company listed
on the New York Stock Exchange or such other exchange for the five (5)
business days preceding and including the dividend payment date).
(b) In the case of a dividend paid on Shares in the form of Shares,
including without limitation a distribution of Shares by reason of a stock
dividend, stock split or otherwise, the number of Units credited to the
Recipient shall be increased by a number equal to the product of (i) the
aggregate number of Restricted Units and Unrestricted Units that have been
awarded to the Recipient through the related dividend record date, and (ii) the
number of Shares (including any fraction thereof) payable as dividend on one
Share. In the case of a dividend payable in property other than Shares or cash,
the per Share value of such dividend shall be determined in good faith by the
Board of Directors of the Company and shall be converted to additional Units
based on the formula in (a) above. Such additional Units shall be Unrestricted
Units if they are attributable to dividend equivalents on Unrestricted Units and
shall be Restricted Units if they are attributable to dividend equivalents on
Restricted Units. Any additional Restricted Units shall be subject to the
restrictions of this Agreement in the same manner and for so long as the
Restricted Units remain subject to such restrictions, and shall be promptly
forfeited to the Company if and when the Restricted Units are so forfeited.
5. Unrestricted Units.
(a) As soon as practicable following the Recipient's termination of
employment, the Company shall issue to the Recipient a certificate representing
the number of Shares equal to the aggregate number of Unrestricted Units
credited to the Recipient on such date in full satisfaction of such Unrestricted
Units.
(b) Upon a Change in Control, the Company shall issue to the Recipient
a certificate representing the number of Shares equal to the aggregate number of
Unrestricted Units credited to the Recipient on such date (determined after
giving effect to Section 3(a) above) in full satisfaction of such Units;
provided, however, that in the event that the Company is involved in a
transaction in which the Shares will be exchanged for cash or other
consideration, the Company shall issue to the Recipient immediately prior to the
consummation of such transaction a certificate representing the number of Shares
equal to the aggregate number of Unrestricted Units credited to the Recipient on
such date (determined after giving effect to Section 3(a) above).
(c) In each instance above, the certificate or certificates issued to
the Recipient covering the Shares shall be subject to the payment by the
Recipient by cash or other means acceptable to the Company of any federal,
state, local and other applicable taxes required to be withheld in connection
with such issuance in accordance with Section 6 of this Agreement. The Recipient
understands that once a certificate has been delivered to the Recipient in
respect of the Unrestricted Units, the Recipient will be free to sell the Shares
evidenced by such certificate, subject to applicable requirements of federal and
state securities laws. Immediately after the issuance of Shares, this Agreement
shall terminate and be of no further force or effect.
3
6. Tax Withholding. The Recipient expressly acknowledges that the issuance of a
certificate to him pursuant to the provisions of Section 6 will give rise to
"wages" subject to withholding. The Recipient expressly acknowledges and agrees
that the Recipient's rights hereunder are subject to the Recipient's paying to
the Company in cash or by having the Company hold back from the Shares to be
delivered, Shares having a value calculated to satisfy the minimum withholding
requirement of all federal, state, local and any other applicable taxes required
to be withheld in connection with such award or vesting. The Recipient further
acknowledges that he will be subject to employment taxes on the market value of
the Restricted Units on the date of vesting and he agrees that he will pay to
the Company an amount in cash sufficient to satisfy the employment tax
withholding.
7. Administration. The Board of Directors of the Company, or the Human Resources
Committee or other committee designated in the Plan, shall have the authority to
manage and control the operation and administration of this Agreement. Any
interpretation of the Agreement by any of the entities specified in the
preceding sentence and any decision made by any of them with respect to the
Agreement is final and binding. Notwithstanding the foregoing, any dispute
relating to the vesting provisions of Section 3 of this Agreement shall be
determined in accordance with Section 14 of the Employment Agreement.
8. Plan Definitions. Notwithstanding anything in this Agreement to the contrary,
the terms of this Agreement shall be subject to the terms of a Plan, a copy of
which has already been provided to the Recipient.
9. Amendment. This Agreement may be amended only by written agreement between
the Recipient and the Company, without the consent of any other person.
4
EXHIBIT C
Grant ID#
THERMO ELECTRON CORPORATION
EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNITS AGREEMENT
Xxxxxxx X. Xxxxx
Name of Recipient
100,000
Number of Restricted
Stock Units Awarded
Vesting Schedule for Restricted Stock Units Awarded:
# of Shares Vesting Date
33,333 November 21, 2003
33,333 November 21, 2004
33,334 November 21, 2005
November 21, 2002
Grant Date
Thermo Electron Corporation (the "Company") has selected you to receive the
restricted stock units award identified above, subject to the provisions of the
Equity Incentive Plan (the "Plan") and the terms, conditions and restrictions
contained in this agreement (the "Agreement"). Please confirm your acceptance of
this Award, your agreement to other terms of the Plan and this Agreement, your
receipt of a copy of the Plan, and your receipt of a memorandum regarding the
tax treatment of awards of restricted stock units, by signing both copies of
this Agreement. You should keep one copy for your records and return the other
copy promptly to the Stock Option Manager of the Company, c/o Thermo Electron
Corporation, 00 Xxxxx Xxxxxx, Xxxx Xxxxxx Xxx 0000, Xxxxxxx, Xxxxxxxxxxxxx
00000-0000.
THERMO ELECTRON CORPORATION
By:
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx
Vice President, Human Resources
Accepted and Agreed:
/s/ Xxxxxxx X. Xxxxx
-----------------------------
Recipient
1. Preamble. This Agreement contains the terms and conditions of an award of
restricted stock units of the Company (the "Restricted Units") made to the
Recipient identified on the first page of this Agreement pursuant to the Plan.
Any consideration due to the Company on the issuance of the Restricted Units has
been deemed to be satisfied by past services rendered by the Recipient to the
Company. For purposes of this Agreement, the defined terms used herein and not
otherwise defined shall have the meaning set forth in that certain Amended and
Restated Employment Agreement dated as of November 21, 2002 by and between the
Recipient and the Company, as the same may be amended from time to time (the
"Employment Agreement").
2. Restrictions on Transfer. The Restricted Units shall not be sold,
transferred, pledged, assigned or otherwise encumbered or disposed of, until and
unless the Restricted Units shall have vested as provided in Section 3 of this
Agreement and a certificate has been issued pursuant to Section 6 of this
Agreement.
3. Vesting. The term "vest" as used in this Agreement means the lapsing of the
restrictions that are described in this Agreement with respect to the Restricted
Units. The Restricted Units shall vest in accordance with the schedule set forth
on the first page of this Agreement, provided in each case that the Recipient is
then, and since the Grant Date has continuously been, employed by the Company or
its Affiliates. Once a Restricted Unit has become vested, it shall be referred
to as an Unrestricted Unit. Notwithstanding the foregoing, the Recipient shall
become vested in the Restricted Units prior to the vesting date set forth on the
first page of this Agreement in the following circumstances:
(a) Immediately prior to the consummation of a Change in Control, all
Restricted Units that have not previously been forfeited shall immediately vest;
provided that, the Recipient is then employed by the Company or its Affiliates.
(b) In the event of the Recipient's death or Disability, all Restricted
Units that have not previously been forfeited shall immediately vest; provided
that, the Recipient was employed by the Company or its Affiliates immediately
prior to the date of death or Disability.
(c) In the event Recipient's employment is terminated by the Company
without Cause or in the event the Recipient terminates employment for Good
Reason (it being understood that in this context, a termination of employment by
the Company without Cause or by the Recipient with Good Reason does not include
a termination due to the Recipient's death or Disability or a termination with
Cause or without Good Reason), all Restricted Units that have not previously
been forfeited shall immediately vest.
4. Forfeiture. In the event the Company terminates the Recipient's employment
for Cause or the Recipient terminates his employment on his own initiative (it
being understood that in this context, a termination of employment on the
Recipient's own initiative does not include a termination due to his death or
Disability or with Good Reason), all Restricted Units that have not previously
been forfeited on such date shall be immediately forfeited to the Company.
2
5. Dividend Equivalents.
(a) The Recipient shall be entitled to be credited with additional
Unrestricted Units based on all cash dividends paid with respect to the common
shares of the Company, par value $1.00 per share (the "Shares"), as determined
in accordance with the following formula:
W = (X multiplied by Y) divided by Z, where:
W = the number of additional Unrestricted Units to be credited to the
Recipient on such dividend payment date;
X = the aggregate number of Restricted Units and Unrestricted Units
credited to the Recipient as of the record date of the dividend;
Y = the cash dividend per share amount; and
Z = the fair market value per Share (the fair market value shall be the
average of the closing prices of the common stock of the Company listed on the
New York Stock Exchange or such other exchange for the five (5) business days
preceding and including the dividend payment date).
(b) In the case of a dividend paid on Shares in the form of Shares,
including without limitation a distribution of Shares by reason of a stock
dividend, stock split or otherwise, the number of Units credited to the
Recipient shall be increased by a number equal to the product of (i) the
aggregate number of Restricted Units and Unrestricted Units that have been
awarded to the Recipient through the related dividend record date, and (ii) the
number of Shares (including any fraction thereof) payable as dividend on one
Share. In the case of a dividend payable in property other than Shares or cash,
the per Share value of such dividend shall be determined in good faith by the
Board of Directors of the Company and shall be converted to additional Units
based on the formula in (a) above. Such additional Units shall be Unrestricted
Units if they are attributable to dividend equivalents on Unrestricted Units and
shall be Restricted Units if they are attributable to dividend equivalents on
Restricted Units. Any additional Restricted Units shall be subject to the
restrictions of this Agreement in the same manner and for so long as the
Restricted Units remain subject to such restrictions, and shall be promptly
forfeited to the Company if and when the Restricted Units are so forfeited.
6. Unrestricted Units.
(a) As soon as practicable following the Recipient's termination of
employment, the Company shall issue to the Recipient a certificate representing
the number of Shares equal to the aggregate number of Unrestricted Units
credited to the Recipient on such date in full satisfaction of such Unrestricted
Units.
(b) Upon a Change in Control, the Company shall issue to the Recipient a
certificate representing the number of Shares equal to the aggregate number of
Unrestricted Units credited to the Recipient on such date (determined after
giving effect to Section 3(a) above) in full satisfaction of such Units;
provided, however, that in the event that the Company is involved in a
transaction in which the Shares will be exchanged for cash or other
3
consideration, the Company shall issue to the Recipient immediately prior to the
consummation of such transaction a certificate representing the number of Shares
equal to the aggregate number of Unrestricted Units credited to the Recipient on
such date (determined after giving effect to Section 3(a) above).
(c) In each instance above, the certificate or certificates issued to the
Recipient covering the Shares shall be subject to the payment by the Recipient
by cash or other means acceptable to the Company of any federal, state, local
and other applicable taxes required to be withheld in connection with such
issuance in accordance with Section 7 of this Agreement. The Recipient
understands that once a certificate has been delivered to the Recipient in
respect of the Unrestricted Units, the Recipient will be free to sell the Shares
evidenced by such certificate, subject to applicable requirements of federal and
state securities laws. Immediately after the issuance of Shares, this Agreement
shall terminate and be of no further force or effect.
7. Tax Withholding. The Recipient expressly acknowledges that the issuance of a
certificate to him pursuant to the provisions of Section 6 will give rise to
"wages" subject to withholding. The Recipient expressly acknowledges and agrees
that the Recipient's rights hereunder are subject to the Recipient's paying to
the Company in cash or by having the Company hold back from the Shares to be
delivered, Shares having a value calculated to satisfy the minimum withholding
requirement of all federal, state, local and any other applicable taxes required
to be withheld in connection with such award or vesting. The Recipient further
acknowledges that he will be subject to employment taxes on the market value of
the Restricted Units on the date of vesting and he agrees that he will pay to
the Company an amount in cash sufficient to satisfy the employment tax
withholding.
8. Administration. The Board of Directors of the Company, or the Human Resources
Committee or other committee designated in the Plan, shall have the authority to
manage and control the operation and administration of this Agreement. Any
interpretation of the Agreement by any of the entities specified in the
preceding sentence and any decision made by any of them with respect to the
Agreement is final and binding. Notwithstanding the foregoing, any dispute
relating to the vesting provisions in Section 3 of this Agreement shall be
determined in accordance with Section 14 of the Employment Agreement.
9. Plan Definitions. Notwithstanding anything in this Agreement to the contrary,
the terms of this Agreement shall be subject to the terms of a Plan, a copy of
which has already been provided to the Recipient.
10. Amendment. This Agreement may be amended only by written agreement between
the Recipient and the Company, without the consent of any other person.
4
EXHIBIT D
Grant ID #
THERMO ELECTRON CORPORATION
2001 EQUITY INCENTIVE PLAN
As amended and restated effective February 7, 2002
STOCK OPTION AGREEMENT
Xxxxxxx X. Xxxxx
Optionee
520,000 $19.67
Number of Shares of Exercise Price
Common Stock Subject Per Share
to the Option ("Option Shares")
Vesting Schedule
# of Shares Vesting Date(s)
PERCENTAGE DATE
33.33% November 21, 2005
33.33% November 21, 2006
33.34% November 21, 2007
November 21, 2002 November 21, 2012
Grant Date Expiration Date
Thermo Electron Corporation (the "Company") confirms the grant to you of an
option (the "Option") to acquire the number of shares of common stock (the
"Common Stock") specified above, of the Company, subject to the provisions of
the 2001 Equity Incentive Plan (the "Plan") and the terms, conditions and
restrictions contained in this agreement (the "Agreement"). You acknowledge
receipt of the Plan and the Agreement for your records.
THERMO ELECTRON CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
1. Grant of Option. This Agreement contains the terms and conditions of a
grant of a nonqualified stock option to purchase the shares of the common stock
of the Company (the "Option Shares") made to the Optionee, pursuant to the Plan.
Attached is a copy of the Plan, which is incorporated in this Agreement by
reference and made a part hereof. This Option is intended to be a non-statutory
stock option under the Internal Revenue Code of 1986, as amended. For purposes
of this Agreement, the defined terms used herein and not otherwise defined shall
the meaning set forth in that certain Amended and Restated Employment Agreement,
dated as of November 21, 2002, by and between the Optionee and the Company, as
the same may be amended from time to time (the "Employment Agreement").
2. Exercisability and Vesting of Option. The Option may be exercised only
to the extent the Option shall have vested in accordance with this Agreement.
The Option shall vest and become exercisable in accordance with the terms of
this Section 2.
(a) General Rule. Except as otherwise provided in this Section 2, the
Option shall vest and be exercisable in accordance with the vesting
schedule set forth on the first page of this Agreement, provided that on
each vesting date the Optionee is then, and has been since the Grant Date,
continuously employed by the Company or its Affiliates.
(b) Exceptions. Notwithstanding subsection (a) above, the Option shall
fully vest and become exercisable as to 100% of the Option Shares in the
following circumstances:
(i) Immediately prior to the consummation of a Change in Control,
all Option Shares that have not previously vested shall immediately
vest; provided that the Optionee was then employed by the Company or
its Affiliates.
(ii) In the event of the Optionee's death or Disability, all
Option Shares that have not previously vested shall immediately vest;
provided that the Optionee was employed by the Company or its
Affiliates immediately prior to the date of death or Disability.
(iii) In the event the Optionee's employment is terminated by the
Company without Cause or in the event the Optionee terminates
employment for Good Reason (it being understood in this context, a
termination of employment by the Company without Cause or by the
Optionee with Good Reason does not include a termination due to the
Optionee's death or Disability or termination with Cause or without
Good Reason), all Option Shares that have not previously vested shall
immediately vest.
(c) Forfeiture. In the event the Company terminates the Optionee's
employment for Cause or in the event the Optionee terminates employment on
his own initiative (it being understood that in this context, a termination
of employment on the Optionee's own initiative does not include termination
due to his death, Disability or with Good Reason), all Option Shares that
2
have not previously vested on such date shall be immediately forfeited to
the Company.
3. Termination of Option. This Option shall terminate on the date that is
(a) three (3) years after the Termination Date if the Optionee is terminated due
to death or Disability, or the Optionee is terminated by the Company without
Cause, or the Optionee's employment terminates upon expiration of the Term, or
the Optionee terminates employment for Good Reason or (b) three (3) years after
the date on which the Optionee is no longer a director of the Company or any of
its Affiliates; provided, however, that in any event the Option shall terminate
on the Expiration Date listed on the first page of this Agreement.
Notwithstanding the foregoing, in the event the Company terminates the
Optionee's employment for Cause or in the event the Optionee terminates
employment on his own initiative (it being understood that in this context, a
termination of employment on the Optionee's own initiative does not include
termination due to his death, Disability or with Good Reason), the Option shall
terminate 90 days after the Termination Date.
4. No Assignment of Rights. Except for assignments or transfers by will or
applicable laws of descent and distribution, the Optionee's 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 the
Optionee's obligations or liabilities. Notwithstanding the foregoing, the
Company consents to the transfer of this Option by the Optionee to an immediate
member of his family, a family trust or family partnership, provided that the
Company shall not be required to recognize any such transfer or assignment until
such time as the Company, the transferee and the Optionee execute a written
assignment of the Option in the form specified by the Company and upon the terms
satisfactory to the Company.
5. Exercise of Option; Delivery and Deposit of Certificate(s). The Optionee
(or in the case of his death, his legal representative) may exercise the Option
(to the extent the Option has vested) in whole or in part in accordance with the
instructions described in "The Guide for employees of Thermo Electron
Corporation Stock Option Plans," as may be amended from time to time (the
"Guide").
6. Rights With Respect to Option Shares. Prior to the date the Option is
exercised, the Optionee shall not be deemed for any purpose to be a stockholder
of the Company with respect to any of the Option Shares. Upon issuance to the
Optionee of the Option Shares, the Optionee shall have ownership of such Option
Shares, including the right to vote and receive dividends, subject, however, 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 Certificate of
Incorporation or the By-Laws of the Company.
7. Adjustments in the Event of Certain Transactions. The provisions of the
Plan covering the treatment of Options in the event of (a) stock dividends,
stock splits, or combination of shares, or other distribution with respect to
holders of Common Stock other than normal cash dividends occurring after the
3
date of this Agreement and (b) recapitalizations, mergers or consolidations
involving the Company, any transaction in which the Company becomes a subsidiary
of another entity, any sale or other disposition of all or a substantial portion
of the assets of the Company or any similar transaction, as determined by the
Board, (any of the foregoing, a "covered transaction" as defined in the Plan)
occurring while the Option is outstanding, are hereby made applicable hereunder
and are incorporated herein by reference.
8. 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 Option Shares.
9. Taxes. No later than the date on which part or all of the value of any
Option Shares received under the Plan first becomes includible in the Optionee's
gross income for income tax purposes, the Optionee shall satisfy his obligations
to pay any federal, state or local taxes required to be withheld with respect to
such income in accordance with the provisions of the Guide.
10. Determination of Rights. Any dispute or disagreement that may arise
under or as a result of or pursuant to the Plan or this Agreement shall be
determined by the Board, in its sole discretion, and any decision made by the
Board (as defined by the Plan) in good faith shall be conclusive on all parties.
The interpretation and construction by the Board 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.
Notwithstanding the foregoing, any dispute relating to the vesting provisions in
Section 2(b) of this Agreement shall be determined in accordance with Section 14
of the Employment Agreement.
11. Limitation of Employment Rights. The award of this Option does not
entitle the Optionee to any benefit other than that granted under the Plan; any
benefits granted under the Plan are not part of the Optionee's ordinary salary,
and shall not be considered as part of such salary in the event of severance,
redundancy or resignation.
12. 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 c/o Thermo Electron Corporation, 00 Xxxxx Xxxxxx, Xxxx Xxxxxx Xxx 0000,
Xxxxxxx, Xxxxxxxxxxxxx 00000-0000, and if to the Optionee, to the address last
furnished by the Optionee to the Company.
4
EXHIBIT E
[THERMO ELECTRON LOGO]
COMPANY INFORMATION AND INVENTION AGREEMENT
In consideration and as a condition of my employment, or if now employed,
the continuation of my employment by Thermo Electron Corporation or a subsidiary
thereof (hereinafter collectively called the "Company") and the compensation
paid therefor:
1. I agree not to disclose to others or use for my own benefit during my
employment by the Company or thereafter any trade secrets or Company
private information pertaining to any of the actual or anticipated business
of the Company or any of its customers, consultants, or licensees acquired
by me during the period of my employment, except to such an extent as may
be necessary in the ordinary course of performing my particular duties as
an employee of the Company.
2. I agree not to disclose to the Company, or to induce the Company to use,
any confidential information or material belonging to others.
3. I understand that the making of inventions, improvements, and discoveries
is one of the incidents of my employment, or that if not I may nonetheless
make inventions while employed by the Company, and I agree to assign to
Thermo Electron Corporation or its nominee my entire right, title, and
interest in any invention, idea, device, or process, whether patentable or
not, hereafter made or conceived by me solely or jointly with others during
the period of my employment by the Company in an executive, managerial,
planning, technical, research, engineering, or other capacity and which
relates in any manner to the business of the Company, or relates to its
actual or planned research or development, or is suggested or results from
any task assigned to me or work performed by me for or in behalf of the
Company, except any invention or idea which cannot be assigned by the
Company because of a prior agreement with __________________________
effective until __________________________ (give name and date or write
"none").
4. I agree, in connection with any invention, idea, device, or process covered
by paragraph 3:
a) To disclose it promptly in writing to the proper officers or attorney
of the Company.
b) To execute promptly, on request, patent applications and assignments
thereof to Thermo Electron or its nominees and to assist the Company
in any reasonable manner to enable it to secure a patent therefor in
the United States and any foreign countries, all without further
compensation except as provided herein.
5. I further agree that all papers and records of every kind relating to any
invention or improvement included with the terms of the Agreement, which
shall at any time come into my possession shall be the sole and exclusive
property of the Company and shall be surrendered to the Company or upon
request at any other time either during or after the termination of such
employment.
6. I further agree that the obligations and undertakings stated above in
paragraph 4b shall continue beyond the termination of my employment by the
Company, but if I am called upon to render such assistance after the
termination of my employment, then I shall be entitled to a fair and
reasonable per diem in addition to reimbursement of any expenses incurred
at the request of the Company.
7. I agree to identify in an attachment to this Agreement all inventions or
ideas related to the business or actual or planned research or development
of the Company in which I have right, title, or interest, and which were
conceived either wholly or in part by me prior to my employment by the
Company but neither published nor filed in the U.S. Patent and Trademark
Office.
8. I understand that this Agreement supersedes any agreement previously
executed by me relating to the disclosure, assignment and patenting of
inventions, improvements, and discoveries made during my employment by the
Company. This Agreement shall inure to the benefits of the successors and
assigns of the Company and shall be binding upon my heirs, assigns,
administrators, and representatives.
9. I understand that this Agreement does not apply to an invention which
qualifies fully under the provisions of any statute or regulation which
renders unenforceable the required assignment or transfer of certain
inventions made by an employee such as, but not limited to, Section 2870 of
the California Labor Code.
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Employee
/s/ Xxxxxx X. Xxxxxx November 13, 2002
----------------------- -----------------------------------
Witness Date
THERMO ELECTRON CORPORATION
/s/ Xxxxxx X. Xxxxxx
----------------------- By: /s/ Xxxx X. Xxxxxxxxx
Witness --------------------------------
November 13, 2002
-----------------------------------
Date
EXHIBIT F
THERMO ELECTRON CORP451ORATION
AMENDED AND RESTATED
INDEMNIFICATION AGREEMENT
This Agreement, made and entered into this 13th day of October, 1999
("Agreement"), by and between Thermo Electron Corporation, a Delaware
corporation (the "Company"), and 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;
WHEREAS, uncertainties relating to the continued availability of adequate
directors and officers liability insurance ("D&O Insurance") and uncertainties
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 to
obligate itself contractually 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 or
she be so indemnified and that such indemnification be so guaranteed;
WHEREAS, the Company and Indemnitee have previously entered into an
Indemnification Agreement and wish to amend and restate such Indemnification
Agreement;
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 serve
as a director or officer of the Company. This Agreement shall not impose any
obligation on Indemnitee or the Company to continue 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 or her Corporate Status (as
hereinafter defined), Indemnitee is, or is threatened to be made, a party to any
threatened, pending, or completed action, suit, arbitration, alternative dispute
resolution proceeding, investigation, administrative hearing or other proceeding
whether civil, criminal, administrative or investigative (other than an action,
suit or proceeding covered by Section 4 hereof). Pursuant to this Section 3,
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines
and/or amounts paid in settlement incurred by Indemnitee or on his or her behalf
in connection with such action, suit, arbitration, alternative dispute
resolution proceeding, investigation, administrative hearing or other proceeding
whether civil, criminal, administrative or investigative or any claim, issue or
matter therein and whether or not Indemnitee is made a party thereto, if
Indemnitee acted in good faith and in a manner Indemnitee 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 or her
conduct was unlawful.
4. Proceedings by or in the Right of the Company. In the case of any
threatened, pending or completed action, suit or proceeding by or in the right
of the Company, indemnification shall be made to the maximum extent permitted
under Delaware law.
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 or her Corporate Status, a party to and is
successful, on the merits or otherwise, in any action, suit, arbitration,
alternative dispute resolution proceeding, investigation, administrative hearing
or other proceeding whether civil, criminal, administrative or investigative,
Indemnitee shall be indemnified against all Expenses incurred by Indemnitee or
on his or her 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 proceeding, investigation, administrative hearing
or other proceeding whether civil, criminal, administrative or investigative,
the Company shall indemnify Indemnitee against all Expenses incurred by
Indemnitee or on his or her 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.
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 proceeding, investigation, administrative hearing
or other proceeding involving his or her Corporate Status whether civil,
criminal, administrative or investigative within twenty (20) days after the
2
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
proceeding, 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 (but only to the extent
required) by applicable law as a precondition to payment, 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 Disinterested Directors (as hereinafter defined), even if
less than a quorum, or (B) by a committee of Disinterested Directors designated
by a majority vote of Disinterested Directors, even if less than a quorum, or
(C) if the Disinterested Directors so direct, by Independent Counsel in a
written opinion to the Board, a copy of which shall be delivered to Indemnitee
or (D) 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
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
3
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 or her 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 seven (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 Independent 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 particularity 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), either 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 of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected 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 under Section 7(b) hereof. The Company shall pay reasonable
fees and expenses of Independent Counsel incurred in connection with its acting
in such capacity 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) of this Agreement, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then prevailing).
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
4
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 one hundred twenty (120) 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 one hundred five
(105) 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 proceeding, 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 Indemnitee 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
or her conduct was unlawful.
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
5
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 Indemnitee's entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his or her 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.
(e) In the event that Indemnitee, pursuant to this Section 9, seeks a
judicial adjudication of or an award in arbitration to enforce Indemnitee's
rights under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company, and shall be indemnified by the
Company against, any and all expenses (of the types described in the definition
6
of Expenses in Section 14 of this Agreement) actually and reasonably incurred by
him or her in such judicial adjudication or arbitration, but only if Indemnitee
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 Indemnitee and approved by the
Board, the Company shall at any time and from time to time provide security to
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 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 are in addition to and 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.
Without limiting the foregoing, the Company shall indemnify Indemnitee to the
fullest extent permitted under Delaware law. 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 officer of the Company or
director, officer or other 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
proceedings, 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 or her 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 or officer 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
7
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
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 Indemnitee (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 an event or occurrence set forth in any one
or more of subsection (i) through (iv) 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):
(i) 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 (A) the then-outstanding shares of
common stock of the Company (the "Outstanding Company Common Stock") or (B)
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 (i), the following acquisitions shall not constitute a Change in
Control: (A) any acquisition by the Company, (B) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (C) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (A) and (B) of subsection (iii) of this Section 14(a); or
8
(ii) 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 (A) who was a
member of the Board on September 23, 1999 or (B) 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;
provided, however, that there shall be excluded form this clause (B) 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
(iii) 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: (A) 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 (B) 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
(iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company; or
(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 a director, officer or fiduciary 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.
9
(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
proceeding, 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 and expenses of experts, including but not
limited to fees and expenses of investment bankers and/or consultants which the
Company has authorized Indemnitee to hire and attorneys for such experts, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, deliver service fees, a reasonable per diem fee to compensate
Indemnitee for his or her professional time 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 proceeding, investigation,
administrative hearing or any other proceeding whether civil, criminal,
administrative or investigative.
(e) "Independent Counsel" means a law firm, with over 100 lawyers, 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 (including any
subsidiary thereof) or Indemnitee in any matter material to either such party or
(ii) any other party to the action, suit, arbitration, alternative dispute
resolution proceeding, 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.
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;
10
provided, however, that the failure to give any such notice shall not disqualify
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.
20. 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.
11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
Attest: THERMO ELECTRON CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxxxx
------------------------ --------------------------------
Xxxxxx X. Xxxxxxx Xxxx X. Xxxxxxxxx
Vice President, Secretary Vice President and General Counsel
INDEMNITEE
/s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx
Address:
12
EXECUTIVE RETENTION AGREEMENT
THIS AGREEMENT by and between THERMO ELECTRON CORPORATION, a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxxx (the "Executive") is made as
of June 1, 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
1
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.
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
2
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;
(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
3
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.
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"
4
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 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
6
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.
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(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
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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.
(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.
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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.
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.
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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.
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
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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
/s/ Xxxx Pol
----------------------------------
By: Xxxx Pol
Senior Vice President, Human Resources
EXECUTIVE
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx
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