EXECUTIVE SEVERANCE AGREEMENT
Exhibit
10.14
2008 RESTATEMENT
OF
THIS
RESTATEMENT (the “Restatement”) to the Executive Severance Agreement dated
November 19, 2003 and amended on November 9, 2006 (the “Agreement”) by and
between THERMO XXXXXX SCIENTIFIC INC., a Delaware corporation (the “Company”),
and Xx. Xxxx X. Xxxxxx (the “Executive”) is made this 21st day of November, 2008
by and between the Company and the Executive (the “Effective
Date”).
WHEREAS, the Company recognizes that
the uncertainty regarding the future employment prospects for key personnel may
result in the departure or distraction of key personnel to the detriment of the
Company and its stockholders;
WHEREAS, the Board of Directors of the
Company (the “Board”) has determined that appropriate steps should be taken to
reinforce and encourage the continued employment and dedication of the Company's
key personnel without distraction from such uncertainty and related events and
circumstances; and
WHEREAS, the Company and the Executive
wish to amend and restate the Agreement to bring the Agreement into compliance
with Section 409A of the Internal Revenue Code of 1986;
NOW, THEREFORE, as an inducement for
and in consideration of the Executive remaining in its employ, the Company
agrees that the Executive shall receive the severance benefits set forth in this
Agreement in the event the Executive's employment with the Company is terminated
under the circumstances described below.
1. Key
Definitions.
As used herein, the following terms
shall have the following respective meanings:
1.1 “Change in Control”
means an event or occurrence set forth in any one or more of subsections (a)
through (d) below (including an event or occurrence that constitutes a Change in
Control under one of such subsections but is specifically exempted from another
such subsection):
(a) the
acquisition by an individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of
the Company if, after such acquisition, such Person beneficially owns (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more of
either (i) the then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (ii) the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the
election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for
purposes of this subsection (a), the following acquisitions shall not constitute
a Change in Control: (i) any acquisition by the Company, (ii) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (iii) any acquisition
by any corporation pursuant to a transaction which complies with clauses (i) and
(ii) of subsection (c) of this Section 1.1; or
(b)
such time as the Continuing Directors (as defined
below) do not constitute a majority of the Board (or, if applicable, the Board
of Directors of a successor corporation to the Company), where the term
“Continuing Director” means at any date a member of the Board (i) who was a
member of the Board on the date of the execution of this Agreement or (ii) who
was nominated or elected subsequent to such date by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or endorsed by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there
shall be excluded from this clause (ii) any individual whose initial assumption
of office occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Board; or
(c) the consummation
of a merger, consolidation, reorganization, recapitalization or statutory share
exchange involving the Company or a sale or other disposition of all or
substantially all of the assets of the Company in one or a series of
transactions (a “Business Combination”), unless, immediately following such
Business Combination, each of the following two conditions is satisfied: (i) all
or substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding shares of common
stock and the combined voting power of the then-outstanding securities entitled
to vote generally in the election of directors, respectively, of the resulting
or acquiring corporation in such Business Combination (which shall include,
without limitation, a corporation which as a result of such transaction owns the
Company or substantially all of the Company's assets either directly or through
one or more subsidiaries) (such resulting or acquiring corporation is referred
to herein as the “Acquiring Corporation”) in substantially the same proportions
as their ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively; and (ii) no Person (excluding the Acquiring Corporation or any
employee benefit plan (or related trust) maintained or sponsored by the Company
or by the Acquiring Corporation) beneficially owns, directly or indirectly, 50%
or more of the then outstanding shares of common stock of the Acquiring
Corporation, or of the combined voting power of the then-outstanding securities
of such corporation entitled to vote generally in the election of directors; or
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(d) approval by the
stockholders of the Company of a complete liquidation or dissolution of the
Company.
1.2 “Cause” means the
Executive's willful engagement in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company. For purposes of
this Section 1.2, 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.
1.3 “Disability” means the
Executive's inability, due to a physical or mental disability, for a period of
90 days, whether or not consecutive, during any 360-day period to perform the
Executive’s duties on behalf of the Company, with or without reasonable
accommodation as that term is defined under state or federal law. A
determination of disability shall be made by a physician satisfactory to both
the Executive and the Company, provided that if the Executive
and the Company do not agree on a physician, the Executive and the Company shall
each select a physician and these two together shall select a third physician,
whose determination as to disability shall be binding on all
parties.
1.4 “Good Reason” means
the occurrence, without the Executive's written consent, of any of the events or
circumstances set forth in clauses (a) through (f)
below. Notwithstanding the occurrence of any such event or
circumstance, such occurrence shall not be deemed to constitute Good Reason if,
prior to the effective date of termination (which shall be not less than 15 days
following delivery of written notice of termination by Executive to the
Company), such event or circumstance has been fully corrected and the Executive
has been reasonably compensated for any losses or damages resulting
therefrom.
(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 as of the date of this
Agreement 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 date of this Agreement or
as the same was or may be increased hereafter 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 program or policy, in
which the Executive participates or which is applicable to the Executive (a
“Benefit Plan”), unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan or
program, (ii) continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable than
the basis previously existing (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 and Executive’s performance or (iv)
continue to provide any material fringe benefit previously enjoyed by
Executive;
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(d) a change by the
Company in the location at which the Executive performs the Executive’s
principal duties for the Company to a new location that is both (i) outside a
radius of 50 miles from the Executive's principal residence and (ii) more than
30 miles from the location at which the Executive performed the Executive’s
principal duties for the Company immediately prior to the date of this
Agreement; or a requirement by the Company that the Executive travel on Company
business to a substantially greater extent than required immediately prior to
the date of this Agreement;
(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;
and
(f) 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 (provided, however, that
in the case of benefits, the Company shall have a period of 30 days after
receipt of notice from Executive to cure any default), or any material breach by
the Company of this Agreement or any employment agreement with the
Executive.
The Executive's right to terminate the
Executive’s employment for Good Reason shall not be affected by the Executive’s
incapacity due to physical or mental illness.
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) or (b) the fulfillment by the Company of all of its obligations under
Sections 4 and 6.2 if the Executive's employment with the Company terminates
prior to the expiration of the Term. “Term” shall mean the period
commencing as of the Effective Date and continuing in effect through November 9,
2011; provided,
however, that
on November 9, 2011 and each November 9 thereafter, the Term shall be
automatically extended for one additional year unless, not later than six months
prior to the scheduled expiration of the Term (including any extension) thereof,
the Company shall have given the Executive written notice that the Term will not
be extended.
3. 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.
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4. Benefits to
Executive.
4.1 Compensation.
(a) Termination Without Cause or
for Good Reason. If the Executive's employment with the
Company is terminated by the Company (other than for Cause, Disability or death)
or by the Executive for Good Reason, then the Executive shall be entitled to the
following benefits:
(i) the Company
shall pay to the Executive in a lump sum in cash within 30 days after the date
of termination the aggregate of the following amounts:
(1) the sum of
(A) the Executive's base salary through the date of termination, (B) the product
of (x) the annual bonus paid or payable (including any bonus or portion thereof
which has been earned but deferred) for the most recently completed fiscal year
and (y) a fraction, the numerator of which is the number of days in the current
fiscal year through the date of termination, and the denominator of which is 365
and (C) the amount of any accrued vacation pay, to the extent not previously
paid (the sum of the amounts described in clauses (A), (B), and (C) shall be
hereinafter referred to as the “Accrued Obligations”); and
(2) the sum of
(A) two (2) times the Executive's annual base salary and target bonus as in
effect immediately prior to the date of termination, and (B) the amount of any
accrued vacation pay, to the extent not previously paid; and
(ii) for 24
months after the date of termination, or such longer period as may be provided
by the terms of the appropriate plan, program, practice or policy, the Company
shall continue to provide medical, dental and life insurance benefits to the
Executive and the Executive's family at least equal to those which would have
been provided to them if the Executive's employment had not been terminated, in
accordance with the applicable benefit plans in effect on the date of
termination or, if more favorable to the Executive and the Executive’s family,
in effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies; provided, however, that (A) if
the terms of a benefit plan do not permit continued participation therein by a
former employee, then an equitable arrangement shall be made by the Company
(such as a substitute or alternative plan) to provide as substantially
equivalent a benefit as is reasonably possible and (B) if the Executive becomes
reemployed with another employer and is eligible to receive a particular type of
benefits (e.g., medical insurance benefits) from such employer on terms at least
as favorable to the Executive and the Executive’s family as those being provided
by the Company, then the Company shall no longer be required to provide those
particular benefits to the Executive and the Executive’s family;
and
(iii) to the extent
not previously paid or provided, the Company shall timely pay or provide to the
Executive any other amounts or benefits required
to be paid or provided or which the Executive is eligible to receive following
the Executive's termination of employment under any plan, program, policy,
practice, contract or agreement of the Company and its affiliated
companies (other than severance benefits) (such other amounts and
benefits shall be hereinafter referred to as the “Other
Benefits”).
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(b) Termination for Cause,
Disability or Death. If the Company terminates the Executive's
employment with the Company for Cause, then the Company shall (i) pay the
Executive in a lump sum in cash within 30 days after the date of termination,
the Executive’s base salary through the date of termination and (ii) timely pay
or provide to the Executive the Other Benefits. If the Company terminates
the Executive's employment with the Company because of the Executive’s
disability or the Executive’s death, then the Company shall (i) pay the
Executive or the Executive’s estate, in a lump sum in cash within 30 days after
the date of termination, the Accrued Obligations and (ii) timely pay or provide
to the Executive the Other Benefits.
4.2 Outplacement
Services. In the event the Executive is terminated by the
Company (other than for Cause, Disability or death), the Company shall provide
outplacement services through one or more outside firms of the Executive’s
choosing up to an aggregate of $20,000, with such services to extend until the
earlier of (i) 12 months following the termination of the Executive’s employment
or (ii) the date the Executive secures full time employment.
4.3 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 4.1(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.
4.4. Release of Claims by
Executive. The Executive shall not be entitled to any
payments or other benefits hereunder unless the Executive executes and, if
applicable, does not revoke, a full and complete release of claims and a
reasonable and customary separation agreement that includes nondisparagement and
cooperation provisions. The parties further agree that the separation
agreement shall not include any restrictive covenants that are in addition to
those already contained in the Noncompetition Agreement between the Company and
Executive dated November 9, 2006.
5. Disputes. All
claims by the Executive for benefits under this Agreement shall be directed to
and determined by the Board and shall be in writing. Any denial by
the Board of a claim for benefits under this Agreement shall be delivered to the
Executive in writing and shall set forth the specific reasons for the
denial. The Board shall afford a reasonable opportunity to the
Executive for a review of the decision denying a claim. Any further
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in Boston, Massachusetts, in accordance
with the rules
of the American Arbitration Association then in effect. Judgment may
be entered on the arbitrator's award in any court having
jurisdiction.
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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. 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 the Executive’s family hereunder if the Executive
had continued to live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to the executors,
personal representatives or administrators of the Executive's
estate.
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.
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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
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, except as provided in the next sentence. Notwithstanding
the foregoing sentence, if the Executive is party to an agreement with the
Company providing for the payment of benefits in the event employment is
terminated after a Change in Control (a “Change in Control Agreement”), such
Change in Control Agreement shall not be terminated or cancelled by this
Agreement and such Change in Control Agreement shall survive and remain in
effect in accordance with its own terms. In the event the Executive
actually receives benefits under the Change in Control Agreement, the Executive
shall not also be entitled to receive benefits under this
Agreement.
8.8 Amendments. This
Agreement may be amended or modified only by a written instrument executed by
both the Company and the Executive.
9. Payments Subject to Section
409A. Subject to the provisions in this Section 9, any
severance payments or benefits under this Agreement shall begin only upon the
date of the Executive’s “separation from service” (determined as set forth
below) which occurs on or after the date of termination of the Executive’s
employment. The following rules shall apply with respect to
distribution of the payments and benefits, if any, to be provided to the
Executive under this Agreement:
a. It is
intended that each installment of the severance payments and benefits provided
under this Agreement shall be treated as a separate “payment” for purposes
of Section 409A of the Code and the guidance issued thereunder (“Section
409A”). Neither the Company nor the Executive shall have the right to
accelerate or defer the delivery of any such payments or benefits except to the
extent specifically permitted or required by Section 409A.
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b. If, as of
the date of Executive’s “separation from service” from the Company, the
Executive is not a “specified employee” (within the meaning of Section 409A),
then each installment of the severance payments and benefits shall be made on
the dates and terms set forth in this Agreement.
c.
If, as of the date of the
Executive’s “separation from service” from the Company, the Executive is a
“specified employee” (within the meaning of Section 409A), then:
i. Each
installment of the severance payments and benefits due under this Agreement
that, in accordance with the dates and terms set forth herein, will in all
circumstances, regardless of when the separation from service occurs, be paid
within the Short-Term Deferral Period (as hereinafter defined) shall be treated
as a short-term deferral within the meaning of Treasury Regulation §
1.409A-1(b)(4) to the maximum extent permissible under Section
409A. For purposes of this Agreement, the “Short-Term Deferral
Period” means the period ending on the later of the fifteenth day of the third
month following the end of the Executive’s tax year in which the separation from
service occurs and the fifteenth day of the third month following the end of the
Company’s tax year in which the separation from service occurs; and
ii. Each
installment of the severance payments and benefits due under this Agreement that
is not described in paragraph c(i) above and that would, absent this subsection,
be paid within the six-month period following the Executive’s “separation from
service” from the Company shall not be paid until the date that is six months
and one day after such separation from service (or, if earlier, the Executive’s
death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that
is six months and one day following the Executive’s separation from service and
any subsequent installments, if any, being paid in accordance with the dates and
terms set forth herein; provided, however, that the preceding provisions of this
sentence shall not apply to any installment of severance payments and benefits
if and to the maximum extent that such installment is deemed to be paid under a
separation pay plan that does not provide for a deferral of compensation by
reason of the application of Treasury Regulation § 1.409A-1(b)(9)(iii) (relating
to separation pay upon an involuntary separation from service).
d. The
determination of whether and when the Executive’s separation from service from
the Company has occurred shall be made and in a manner consistent with, and
based on the presumptions set forth in, Treasury Regulation §
1.409A-1(h). Solely for purposes of this paragraph d, “Company” shall
include all persons with whom the Company would be considered a single employer
under Section 414(b) and 414(c) of the Code.
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e. All
reimbursements and in-kind benefits provided under this Agreement shall be made
or provided in accordance with the requirements of Section 409A to the extent
that such reimbursements or in-kind benefits are subject to Section 409A,
including, where applicable, the requirements that (i) any reimbursement is for
expenses incurred during the Executive’s lifetime (or during a shorter period of
time specified in this Agreement), (ii) the amount of expenses eligible for
reimbursement during a calendar year may not affect the expenses eligible for
reimbursement in any other calendar year, (iii) the reimbursement of an eligible
expense will be made on or before the last day of the calendar year following
the year in which the expense is incurred and (iv) the right to reimbursement is
not subject to set off or liquidation or exchange for any other
benefit.
f.
Notwithstanding anything
herein to the contrary, the Company shall have no liability to the Executive or
to any other person if the payments and benefits provided hereunder that are
intended to be exempt from or compliant with Section 409A are not so exempt or
compliant.
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement under seal as of the day and year first set forth
above.
THERMO
XXXXXX SCIENTIFIC INC.
By:
/s/ Xxxxxxx X.
Xxxxxxx
Xxxxxxx
X. Xxxxxxx
Senior
Vice President, Human Resources
EXECUTIVE:
/s/
Xxxx X.
Xxxxxx
Xxxx X. Xxxxxx
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