EXHIBIT 99.3
EMPLOYMENT AGREEMENT
This Agreement is made as of September 25, 1999 by and between American Science
and Engineering, Inc. (the "Company"), a Massachusetts corporation having its
principal place of business in Billerica, Massachusetts, and Xxxxx X. Xxxxxxxx
(the "Executive").
The Company desires to retain the services of the Executive, and the Executive
is willing to render such services in accordance with the terms hereinafter set
forth.
The Board of Directors of the Company (the "Board") has by appropriate
resolutions authorized the employment of the Executive as provided for in this
Agreement.
Accordingly, the Company and the Executive agree:
ARTICLE I
1.1 Term. The term of this Agreement shall begin as of September 25, 1999 (the
"Effective Date") and shall extend until September 25, 2002, unless earlier
terminated pursuant to Article V hereto ( the "Term"). The Executive's
employment under this Agreement may be extended or renewed solely by means of a
written agreement signed by the Executive and a representative of the Company
expressly authorized by the Board.
ARTICLE II
2.1 President and Chief Executive Officer. The Executive shall be the President
and the Chief Executive Officer of the Company, shall report solely and directly
to the Board on all matters relating to the Executive's performance of his
duties, and shall perform such duties and responsibilities on behalf of the
Company and its subsidiaries as may be designated from time to time by the
Board.
The Executive shall devote his full business time and his best efforts, business
judgment, skill and knowledge exclusively to the advancement of the business and
interests of the Company and its subsidiaries and to the discharge of his duties
and responsibilities hereunder. The Executive will use his best judgment not to
accept any outside responsibilities that will jeopardize his ability to fulfill
his responsibilities as President and Chief Executive Officer of the Company.
One or more members of the Compensation Committee of the Board shall meet with
the Executive at least annually during the Term, shall review with him the
Company's performance to date, shall discuss his management accomplishments as
well as any areas requiring improvement, and shall review his base compensation
as provided in Section 3.1.
2.2 Director. Subject to the vote of the stockholders at subsequent annual
meetings, the Executive shall continue to serve as a Director of the Company
during the term of this Agreement.
ARTICLE III
3.1 Base Salary. For services rendered by the Executive under this Agreement
during the Term, the Company shall pay or cause to be paid to the Executive, in
accordance with the Company's normal payroll practices for senior executives of
the Company, a base salary ("Base Salary") for the initial year of employment at
the annual rate of $270,000. The Base Salary will be formally reviewed on an
annual basis by the Compensation Committee and increased in the ensuring years
if the Committee determines that an increase is warranted.
3.2 Bonuses. In addition to Base Salary, the Executive shall be paid an annual
bonus not to exceed $270,000 annually (the "Maximum Bonus"), which bonus will be
established by the Compensation Committee (the "Bonus"). Promptly following the
execution of this Employment Agreement, the Company and the Executive will meet
to establish the performance goals (the "Bonus Goals") upon which the award of
the Bonus for the first year of employment pursuant to this Employment Agreement
(the "First Bonus Period") will be determined. Seventy-five percent of the Bonus
will be based upon an agreed-upon pre-tax income goal plus the amount expended
by the Company in such year for research and development ("Target Income").
Target Income will be adjusted each year by the mutual consent of the
Compensation Committee and the Executive. Twenty-five percent of the Bonus will
be based on personal performance goals which will be established annually the
Compensation Committee and the Executive promptly after the execution of this
Employment Agreement and revised on an annual basis in each subsequent year of
this Employment Agreement. During each subsequent year of employment pursuant to
the terms of this Employment Agreement ("Subsequent Bonus Periods"), the
Chairman of the Board and the Executive shall meet periodically to discuss the
Executive's progress concerning the Bonus Goals. Promptly after the end of each
such Subsequent Bonus Period, the Compensation Committee shall meet to discuss
the Executive's performance with regard the Bonus Goals and shall, in its
discretion, determine the amount, if any, of the Bonus to be paid to the
Executive for such Subsequent Bonus Period. For the purpose of this
determination, the goals shall be laddered so that attainment of some, but not
all, goals will give rise to the payment of a partial Bonus.
3.3 Stock Options.
Grant of Unconditional Option. The Company grants to the Executive a
non-statutory stock option (the "Unconditional Option"), in the form of the
stock option agreement attached hereto as Exhibit B (the "Stock Option
Agreement"), to purchase in the aggregate 225,000 shares of the Company's Common
Stock. The purchase price per share of the 225,000 shares covered by the
Unconditional Option shall be the fair market value of the stock as of the date
of the execution of the stock option agreement granting the Unconditional
Option. The option to acquire the first seventy-five thousand shares will vest
on the first anniversary date of the commencement of this Employment Agreement.
The option to acquire an additional 75,000 shares will vest on the second
anniversary and a final option to acquire 75,000 shares will vest on the third
anniversary of this Employment Agreement. The stock options shall be subject to
termination only if: (a) employment is terminated by the Company for Cause; or
(b) the Executive voluntarily requests termination prior to September 25, 2002
for reasons other than for Good Reason. All stock options will immediately vest
if the Executive terminates employment
for Good Reason as defined in Article V 5.1(b) herein or in the event of a
Change of Control as defined in Section 2(b) of the Stock Option Agreement.
3.4 Securities Act of 1933. The Company agrees to register the shares subject to
the stock options referred to in this Article III pursuant to the Securities Act
of 1933, as promptly as practicable.
ARTICLE IV
4.1 Benefits During the Term. During the Term, the Executive will be covered by
and receive the benefits of the payment provisions set forth in Article V of
this Agreement in the event of termination of employment, which are intended to
be exclusive, and certain additional benefits under the benefit plans and
programs maintained by the Company from time to time for its senior executives.
The Executive shall also be entitled to such other perquisites of office as are
generally provided from time to time by the Company to its senior executive
officers. The Executive shall be reimbursed for all reasonable out-of-pocket
expenses reasonably incurred by him in the performance of his duties hereunder,
upon submission of appropriate documentation in accordance with the Company's
written policies.
4.2 Automobile. The Company shall provide the Executive, at his request, with an
automobile for his use during the Term. The Company will pay for all expenses
associated with the Executive's business use of the automobile. At the end of
the Term, the Executive shall return the automobile to the Company in
substantially the same condition as on the date he first received it, reasonable
wear and tear excepted.
ARTICLE V
5.1 Termination by the Company without Cause or by the Executive for Good
Reason.
(a) The Company may, upon written notice to the Executive, immediately terminate
the Executive's employment hereunder without Cause. For purposes of this Article
V, "Cause" shall mean:
(i) the Executive's willful and continuing failure to perform his duties
in the course of his employment under this Agreement, which failure is
not cured by the Executive within 30 days after notice specifically
describing such failure is provided in writing by the Company to the
Executive; or
(ii) the conviction of the Executive for, or his plea of nolo contendere
to, a felony or any other crime which involves fraud, dishonesty or
moral turpitude.
(b) The Executive may, upon 15 days' written notice to the Company, terminate
his employment hereunder for Good Reason. For purposes of this Article V, "Good
Reason" shall mean:
(i) the assignment of the Executive of any duties, inconsistent in any
respect with the Executive's position as the President and Chief
Executive Officer of the Company
or any other action by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company within 30 days
after receipt of written notice thereof given by the Executive,
provided, however, that any change or diminution of the business of
the Company or of any subsidiary or subsidiaries of the Company,
including without limitation the sale or transfer of such
subsidiaries, or any or all of their assets, shall not constitute
"Good Reason";
(ii) any failure of the Company to comply with any of the provisions of the
Employment Agreement, other than in insubstantial failure (not
occurring in bad faith and) which is remedied by the Company within 30
days after receipt of written notice thereof given by the Executive;
(iii) failure of the Company to bargain in good faith relative to fixing an
annual Base Salary for the second and third year of this contract
pursuant to Section 3.1 above or relative to matters covered by
Section 3.2 above;
(iv) any failure of the Company to obtain a satisfactory agreement from any
successor to all or substantially all of the business or assets of the
Company to assume and agree to perform this Agreement; or
(v) any purported termination by the Company of the Executive's employment
otherwise than as expressly permitted by the Employment Agreement.
(c) In case of any termination of the Executive's employment hereunder without
Cause or for Good Reason (as defined above), the Company shall pay to the
Executive (or in the event of his death, his designated beneficiary or his
estate, as the case may be): (1) a sum equal to the Executive's then annual Base
Salary in cash payable at the times such sum would have been paid to the
Executive if he had remained in the employ of the Company and was entitled to
receive such sum in the form of Base Salary during the 12-month period following
his termination of employment, and (2) the amount the Executive earned in Bonus
payments and, if such termination occurs prior to September 25, 2000, the value
of any stock received in the year previous to such termination, payable at such
time such Bonus would have been paid had the Executive remained in the employ of
the Company. In addition, any unvested stock options outstanding on the date of
the Executive's termination of employment under this Section 5.1(c) shall become
vested and exercisable as follows: there shall vest such number of unvested
shares (if any) as shall equal the product of (x) 75,000 and (y) a fraction, the
numerator of which is the number of calendar days from the start of the year
during the Term which have occurred up to and including the effective date of
such termination, and the denominator of which is 365 (rounded upwards to the
nearest whole share). The failure of the Company to extend the term of this
Employment Agreement or any extension of this Employment Agreement for an
additional term of not less than one year on terms no less favorable to the
Company than those contained herein and if requested by the Executive shall be
deemed a termination for Good Reason requiring the Company to make the severance
and benefits to the Executive as described in this Section.
5.2 Termination by the Company for Cause or by the Executive Other Than for Good
Reason. During the Term, the Company, by action of the board, may terminate the
Executive's employment hereunder for Cause by written notice to the Executive'
stating in detail the reasons for such termination. During the Term, the
Executive may, by written notice to the Board, terminate his employment
hereunder other than for Good Reason. In the event of any such termination for
Cause or other than for Good Reason (and other than by reason of his death or
disability), the Executive shall not be entitled to any unpaid bonus that may
have been earned through such date, nor shall he be entitled to exercise any
portion of the Unconditional Option which has not vested.
5.3 Termination for Disability.
(a) The Company may terminate the Executive's employment hereunder, upon notice
to him, in the event that he becomes disabled through any illness, injury,
accident or condition of either a physical or psychological nature and, as
a result, is unable to perform substantially all of his duties and
responsibilities hereunder for any consecutive 60 day period.
(b) If any question shall arise as to whether during any period the Executive
is disabled through any illness, injury, accident or condition of either a
physical or psychological nature so as to be unable to perform
substantially all of his duties hereunder, the Executive may, and at the
request of the Company shall, submit to a medical examination by a
physician mutually acceptable to the Company and the Executive or his
guardian to determine whether the Executive is so disabled, and such
determination shall for the purposes of this Agreement be conclusive of the
issue. In the event that a physician cannot be selected by mutual
agreement, a physician shall be appointed by the Massachusetts Medical
Society.
(c) If the Executive's employment hereunder is terminated as the result of his
disability, the Executive will receive his Base Salary through the date of
termination, together with any unpaid Bonus that may have been earned
through such date, but shall otherwise look solely to the Company's
disability insurance policy or policies for compensation (except that any
waiting period for eligibility purposes shall be waived by the Company).
5.4 Termination in the Event of Death. In the event of the Executive's death
during the Term, his employment hereunder shall be deemed to have terminated for
all purposes of this Agreement on his date of death and neither his designated
beneficiary nor his estate shall be entitled to any of the compensation or
benefits provided for herein, other than the Executive's Base Salary, and any
unpaid Bonus earned by the Executive, through his date of death (it being
understood that his designated beneficiary or estate, as the case may be, shall
be entitled to receive the life insurance benefits available under the Company's
executive life insurance policies), and to exercise the Unconditional Option to
the extent exercisable on his date of death, within one year of his date of
death, but not later than the expiration date of such Option.
ARTICLE VI
6.1 Designation of a Beneficiary or Beneficiaries. The Executive may designate
in a writing filed with the Company one or more persons (including his estate)
as the beneficiary or beneficiaries
of the benefits provided for under the Agreement after the Executive's death.
The Executive may change his designation of beneficiary or beneficiaries from
time to time, and the last designation in writing filed with the Company prior
to his death will control. If the Executive has failed to file a designation of
beneficiary at the time of the Executive's death, or if all designated
beneficiaries have predeceased him, the amounts payable under this Agreement
shall be paid to the Executive's estate.
ARTICLE VII
7.1 Notices. All notices required by this Agreement shall be in writing and
delivered by hand, by overnight courier against receipt, by registered or
certified mail, postage prepaid, or by telephonic facsimile transmission duly
acknowledged, and, in the case of the Executive, addressed to the Executive at
00 Xxxxx Xxxx, Xxxxxx, XX 00000, or, in the case of the Company, to its
principal office, addressed to the attention of the Clerk. Either party may from
time to time designate a new address by notice given in accordance with this
Section 7.1.
7.2 Assignment. The Company may not assign all or any part of its obligation
under this Agreement, except in conjunction with a sale of its business as a
going concern or substantially all of its assets, merger or consolidation. The
Company will 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
succession had taken place. As used in this Agreement, unless the context
requires otherwise, the "Company" shall mean the Company as defined above or any
successor to its business or assets as aforesaid which assumes and agrees to
perform this Agreement, by operation of law, or otherwise. This Agreement shall
inure to the benefit of and be enforceable by and binding upon (i) any such
successor and (ii) the Executive's personal or legal representatives, executors,
administrators and designated beneficiaries.
7.3 Entire Agreement. This Agreement contains the entire agreement between the
parties and supersedes all prior oral and written agreements, understandings and
commitments between the parties relating to this Agreement. No amendment to this
Agreement shall be made except by a written instrument signed by both parties.
7.4 Proprietary Information and Non Competition. The Executive acknowledges and
stipulates that, in the performance of his duties hereunder, the Executive is
entrusted by the Company and its subsidiaries with confidential and secret
information of a proprietary nature, including, but not limited to scientific
data, financial and statistical information regarding affairs of the Company and
its subsidiaries, supplier and subcontractor lists, price and cost information,
business plans and programs, expansion plans, data methods, techniques,
marketing data, designs and know-how, developed or obtained by the Company or
its subsidiaries (collectively, "Proprietary Information"). The Executive may
not at any time use, or cause or permit others to use, the Proprietary
Information except in the performance of his duties for the Company and shall
not directly or indirectly disclose at any time either during the Term or for a
period of two years thereafter any such Proprietary Information to any third
party other than in the course of the performance of his duties for the Company.
"Proprietary Information" shall not include any
(i) information which is part of the public domain (other than by act of the
Executive), or (ii) any information required to be disclosed by law.
Executive agrees that, subsequent to the termination of this Employment
Agreement, unless terminated by the Company without Cause or by the Executive
for Good Reason, Executive shall not:
(i) request, cause or encourage any person or entity to cancel, terminate
or refuse to enter into any business relationship with the Company;
(ii) during the one-year period following such termination solicit or
encourage, directly or indirectly, any employee of the Company to
leave the employment of the Company; or
(iii) during the one-year period following such termination either engage
in any business or undertake employment or consulting services in the
area of x-ray detection devices which would directly compete with
devices then manufactured and/or marketed by the Company.
The provisions of this Section 7.4 shall continue in effect after the Term.
7.5 Partial Invalidity. If for any reason any provision of this Agreement shall
be held invalid in whole or in part, such invalidity shall not affect such
provision to the extent not so held invalid, nor any other provisions of this
Agreement not held so invalid, and such provisions and all other such provisions
shall to the full extent be consistent with law continue in full force and
effect.
7.6 Withholding. All payments made by the Company under this Agreement shall be
reduced by any tax or other amounts required to be withheld by the Company under
applicable law.
7.7 Governing Law. This Agreement shall be construed and enforced under and be
governed in all respects by the law of The Commonwealth of Massachusetts,
without regard to the conflict of law principles thereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed on its
behalf by a duly authorized officer and the Executive has executed this
instrument, all as of the date set forth above.
AMERICAN SCIENCE AND ENGINEERING, INC.
By: /s/ [ILLEGIBLE], CFO
-----------------------------------
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxx
EXHIBIT B
AMERICAN SCIENCE AND ENGINEERING, INC.
NON-STATUTORY STOCK OPTION AGREEMENT
Covering 225,000 Shares of Common Stock
AGREEMENT made as of this 25th day of September, 1999, by and between AMERICAN
SCIENCE AND ENGINEERING, INC., a corporation duly organized under the laws of
The Commonwealth of Massachusetts (the "Company"), and Xxxxx X. Xxxxxxxx, the
President and Chief Executive Officer of the Company (the "Optionee").
WITNESSETH THAT:
WHEREAS, the Company and the Optionee have entered into an Employment Agreement
dated as of September 25, 1999 (the "Employment Agreement"), providing among
other things for the employment of the Optionee as President and Chief Executive
Officer of the Company and the grant of non-statutory stock options to the
Optionee (capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Employment Agreement); and
WHEREAS, the Board of Directors of the Company has appointed the Compensation
Committee to administer this Agreement (the Board of Directors, such committee
or any successor to such committee being hereinafter referred to as the
"Board");
NOW, THEREFORE, for and in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, it is agreed as follows:
1. GRANT OF OPTION. The Company hereby grants to the Optionee a non-statutory
stock option (the "Option") to purchase 225,000 shares of its common stock
at $7.44 per share, being 100% of the fair market value of such stock on
the date hereof. The Optionee's right to purchase said stock shall be
exercised in the manner and subject to the terms and conditions hereinafter
provided. The Company shall, at all times while the Option is in force,
reserve such number of shares of common stock as will be sufficient to
satisfy the requirements of this Agreement.
2. TIME OF EXERCISE OF THE OPTION.
(a) Subject always to the provisions of Sections 2(b) and 3 hereof and the
terms and conditions of the Employment Agreement: (i) the Option may not be
exercised prior to September 25, 2000; (ii) on and after September 25,
2000, the Option may be exercised as to seventy-five thousand shares
covered thereby; (iii) on and after September 25, 2001, the Option may be
exercised as to an additional seventy five thousand shares covered thereby;
and (iv) on and after September 25, 2002, the Option may be exercised as to
the remaining seventy five thousand shares covered thereby.
(b) Notwithstanding Section 2(a) hereof, the Option may be exercised as to all
of the shares covered thereby upon the occurrence of a Change in Control of
the Company. For the purposes of this Section 2(b), a "Change in Control"
of the Company shall be deemed to have occurred if:
(i) any person (as defined in Section 13(d) or 14(d)(2) of the 0000 Xxx)
shall have become the beneficial owner of 50 percent or more of the
combined voting power of the Company's voting securities;
(ii) the Continuing Directors and the Optionee shall have ceased for any
reason to constitute a majority of the Board of Directors of the
Company. For this purpose, a "Continuing Director" shall include
member of the Board of Directors of the Company as of September 26,
1999 and any person nominated for election to the Board of Directors
of the Company by a vote of a majority of the then Continuing
Directors;
(iii) the stockholders approve the complete liquidation or dissolution of
the Company, or
(iv) the stockholders approve by the requisite vote any of the following
transactions: (x) a merger or consolidation of the Company (except for
a merger in respect of which no vote of the stockholders of the
Company is required); (y) a sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or series of
transactions), whether as part of a dissolution or otherwise, of
assets of the Company or of any direct or indirect majority-owned
subsidiary or the Company (other than to any direct or indirect
wholly-owned subsidiary or the Company (other than to any direct or
indirect wholly-owned subsidiary or to the Company) having an
aggregate market value equal to 50% or more of either that aggregate
market value of all of the assets of the Company determined on a
consolidated basis or the aggregate market value of all the
outstanding stock of the Company; or (z) a proposed tender or exchange
offer for 50% or more of the outstanding voting stock of the Company.
(c) Notwithstanding Section 2(a) and subject to Section 4 hereof, the Option
may be exercised as to all of the shares covered thereby in the event that
the Optionee's employment shall have been terminated for Good Reason as
provided by Section 5.1 of the Employment Agreement. In the event that the
Optionee's employment shall have been terminated without Cause, any
unvested shares covered by the Option shall become vested and exercisable
as follows: there shall vest such number of unvested shares (if any) as
shall equal the product of (x) 75,000 and (y) a fraction, the numerator of
which is the number of calendar days from the start of the year during the
Term which have occurred up to and including the effective date of such
termination, and the denominator of which is 365 (rounded upwards to the
nearest whole share).
(d) Notwithstanding any of the foregoing, the Option shall not be exercisable
after the expiration of 10 years from the date hereof.
3. METHOD OF EXERCISE.
(a) Stock purchased under the Option shall at the time of exercise be paid in
full. The Option may be exercised from time to time by written notice to
the Company stating the number
of shares with respect to which the Option is being exercised, and the time
of the delivery thereof, which time shall be at least five business days
after the giving of such notice unless an earlier date shall have been
mutually agreed upon. At the time specified in such notice, the Company
shall, without transfer or issue tax to the Optionee (or other person
entitled to exercise the Option), deliver to the Optionee (or other person
entitled to exercise the Option) at the main office of the Company, or such
other place as shall be mutually acceptable, a certificate or certificates
for such shares (as the number of such shares may be reduced subject to
subsection (c) below) out of theretofore authorized but unissued shares or
reacquired shares of its common stock, as the Company may elect, against
payment of the Option price in full for the number of shares to be
delivered by certified or bank cashier's check or the equivalent thereof
acceptable to the Company (including, but not limited to, shares of capital
stock of the Company); provided, however, that the time of such delivery
may be postponed by the Company for such period as may be required for it
with reasonable diligence to comply with any applicable listing
requirements of any national securities exchange. If the Optionee (or other
person entitled to exercise the Option) fails to accept delivery of and pay
for all or any part of the number of shares specified in such notice upon
tender of delivery thereof, his right to exercise the Option with respect
to such undelivered shares may be terminated by the Board.
(b) Promptly upon receipt of the written notice provided for in subsection (a)
above, the Board shall, with the assistance of appropriate employees of the
Company, determine if any portion of such intended exercise (the
"Disallowance Portion") may reasonably be expected to result in receipt of
compensation by the Optionee as to which the Company will not be allowed to
claim a deduction in respect of the Company's taxable year during which
such exercise occurs, when the amount of remuneration attributable to such
exercise is taken together with the Optionee's base salary and the
reasonably likely cash and stock bonuses payable to him in respect of such
taxable year, pursuant to Section 162(m) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder.
(c) The Board shall promptly notify the Optionee of its determination as to the
Disallowance Portion, and, subject to subsection (d) below, the exercise
contemplated by the written notice in subsection (a) shall be deemed to be
reduced by the number of shares in the Disallowance Portion.
(d) Notwithstanding the foregoing, in the event of a Change in Control (as
defined in Section 2(b), the Disallowance Portion shall be deemed to be
zero (0) shares.
4. TERMINATION OF EMPLOYMENT. The Optionee may, at any time within three
months after the date of termination of his employment with the Company or
any of its subsidiaries for any reason except death, but not later than the
date of expiration of the Option, exercise the Option to the extent he was
entitled to do so on the date of termination; provided that the Optionee
shall not be deemed to be so entitled on the date of termination of his
employment if he shall have been terminated for Cause, or other than for
Good Reason as provided by Section 5.2 of the Employment Agreement. If the
Option or any portion of the Option is not
so exercised, or if the Optionee shall be deemed not to be entitled to
exercise it or any portion thereof, the Option or portion thereof shall
terminate. However, the Option shall not be affected by any change in the
duties or position of the Optionee (including transfer to or from a
subsidiary) so long as the Optionee continues in the employ of the Company
or one of its subsidiaries. Nothing in this Agreement shall confer on the
Optionee any right to continue in the employ of the Company or its
subsidiaries; affect the right of the Company or its subsidiaries to
terminate the Optionee's employment at any time; or be deemed a waiver or
modification of any provision contained in the Employment Agreement of any
other agreement between the Optionee and the Company of any such
subsidiary.
5. EXERCISE BY REPRESENTATIVE, ETC. If the Optionee dies while in the employ
of the Company or its subsidiaries or within three months after termination
of employment (except termination for Cause, or other than for Good Reason,
as provided by Section 5.2 of the Employment Agreement), the person or
persons to whom the Option is transferred by will or the laws of decent and
distribution may, at any time within one year after the date of death but
not later than the date of expiration of the Option, exercise the Option to
the extent the Optionee was entitled to do so on the date of his death. If
the Option or any portion of the Option of the deceased Optionee is not so
exercised, it shall terminate.
6. NON-TRANSFERABILITY OF OPTION. The Option may not be transferred except by
will or by the laws of the descent and distribution nor may it be otherwise
assigned, transferred, pledged, hypothecated or disposed of in any way (by
operation of law or otherwise) and it shall not be subject to execution,
attachment or similar process. During the lifetime of the Optionee, the
Option may be exercised only by the Optionee or the Optionee's duly
appointed guardian or personal representative.
7. CHANGES IN COMMON STOCK. In the event of any reorganization,
recapitalization, stock split, stock dividend, merger, consolidation,
combination of shares or other change affecting the Company's common stock,
the Board shall make adjustments in the number and kind of securities to be
subject to the Option, such adjustments to be consistent with adjustments
made with respect to options held by other employees and directors of the
Company. Any such adjustment made by the Board shall be conclusive. This
Agreement shall not affect the right of the Company or any of its
subsidiaries to reclassify, recapitalize or otherwise change its capital or
debt structure or to merge, consolidate, convey any or all of its assets,
dissolve, or liquidate, wind up or otherwise reorganize.
8. RESTRICTION ON ISSUANCE OF SHARES. The Company shall not be obligated to
sell or issue any shares pursuant to the Option unless the shares with
respect to which the Option is being exercised are at that time effectively
registered or exempt from registration under the Securities Act of 1933, as
amended.
9. RIGHTS AS A STOCKHOLDER. The Optionee shall have no rights as a stockholder
with respect to any shares covered by the Option until the date of issuance
of a stock certificate to the Optionee for such shares. No adjustment shall
be made for dividends or other rights for which the record date is prior to
the date such stock certificate is issued.
10. WITHHOLDING. The Company or any subsidiary that employs the Optionee shall
have the right to deduct any sums that federal, state or local tax law
requires to be withheld with respect to the exercise of the Option. In the
alternative, the Optionee or other person exercising the Option may elect
to pay such sums to the employer corporation either by check or with
capital stock of the Company by delivering written notice of that election
to the Clerk of the Company no less than 30 days nor more than 60 days
prior to exercise. There is no obligation hereunder that the Optionee be
advised of the amount which the employer corporation or the Company will be
required to withhold.
11. INTERPRETATION OF PLAN AND OPTION. As used herein the term "subsidiary of
the Company" shall mean a subsidiary corporation as defined in Section 425
of the Internal Revenue Code of 1986. In all other respects, questions of
interpretation and application of this Agreement shall be determined by a
majority of the Board, and the determinations of such majority shall be
final and binding upon all persons.
EXECUTED as a sealed instrument at Billerica, Massachusetts, as of the date
appearing in the first paragraph of this Agreement.
AMERICAN SCIENCE AND ENGINEERING, INC.
By: /s/ Xxx X. Xxxxxx
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Xxx X. Xxxxxx Vice President and CFO
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
