(..continued)
-4-
Mr. John N. Hatsopoulos
3 Woodcock Lane
Lincoln, MA 01733
Dear John:
This letter (the "Agreement") confirms our agreement regarding
termination of your consulting services with Thermo Electron Corporation (the
"Company"). This Agreement shall be effective as of February 21, 2000 (the
"Effective Date"). This Agreement replaces and supersedes any and all prior
agreements between you and the Company regarding the engagement of you for your
services by the Company, whether written or oral, formal or informal, including
without limitation that certain letter agreement by and between you and the
Company dated September 15, 1998 relating to your retirement and engagement as a
consultant (the "Consulting Agreement"), which such Consulting Agreement shall
be, as of the Effective Date terminated and of no further force or effect.
In exchange for the mutual covenants set forth in this Agreement,
including without limitation, your execution of the General Release of all
Claims attached and incorporated herein as Exhibit 1, the Company agrees to the
following:
1. Termination of Consulting Agreement. By mutual agreement the
Consulting Agreement will terminate as of the Effective Date. As of that date
you shall have no further obligation or right to render any services to the
Company of any kind, including but not limited to consulting services,
investment management services or any other type of services.
2. Lump Sum Payment and Stock Options.
(a) As of the Effective Date, the Company shall deem the amount of
compensation owed to you from the Effective Date through December
31, 2003 under the Consulting Agreement as fully earned and
payable to you in a single lump sum payment of $1,958,333.40
(minus any applicable federal, state and local taxes and other
withholdings) as soon as reasonably practicable following the
Effective Date.
(b) If an option is (i) Vested (i.e., the underlying shares are not
subject to repurchase by the Company or its subsidiaries, as
applicable) and (ii) in the money, it shall be exercisable from
the Effective Date until May 21, 2000 or February 21, 2002, as
indicated on Exhibit 2 (attached and incorporated herein).
(c) Notwithstanding the terms of any stock option plan or agreement
pursuant to which such options were granted and regardless of the
fact that you are no longer a director of the Company or any of
its subsidiaries, the following terms and conditions shall apply
to the stock options previously granted to you that are, as of
the Effective Date, either not Vested (i.e., the underlying
shares are subject to repurchase rights by the Company or its
subsidiaries, as applicable) or not "in the money:"
(i) The resale restrictions and the Company's or it subsidiaries'
repurchase rights with respect to such options shall continue to ratably
lapse in accordance with their original terms through the earlier of (A)
the original expiration date of such option or (B) December 31, 2003;
provided that, the Company shall waive the resale restrictions to the
extent necessary to allow you to realize sufficient proceeds from such
sale to pay state and federal income taxes resulting from such sale and
from exercise of the option by which the stock was acquired.
(ii) Any option that is, under its original terms, exercisable on
December 31, 2003 shall thereafter remain exercisable until April 1,
2004.
(iii) Any option or portion of an option that is, under its original
terms, scheduled to Vest after December 31, 2003 is hereby forfeited,
unless there occurs on or before that date a change of control (as
defined by the terms of the original option) that would have accelerated
the Vesting under its original terms, in which event the option shall be
exercisable on or before April 1, 2004 to the extent its Vesting has
been so accelerated.
The options described in this subparagraph (c) are identified on Exhibit
3 (attached and incorporated herein).
3. Resignation from the Board. Effective as of the Effective Date, you
hereby resign as a member of the Company's Board of Directors, and the Boards of
Directors of its subsidiaries, as the case may be.
4. Health Insurance. At its cost, the Company will continue to provide,
or use its best efforts to obtain for you, through December 31, 2003, group
health and dental insurance coverage for you and your eligible dependents
substantially the same as group health and dental coverage currently provided to
you by the Company. If the provision of such insurance coverage provides taxable
income to you, the Company will pay you such additional amount as will, net of
tax on such amount, equal taxes on the taxable income so created.
5. Return of Company Property; Support Services and Reimbursement. On or
about March 5, 2000, you will return to the Company any and all documents,
materials and information related to the Company, or its subsidiaries,
affiliates or businesses, and all other property of the Company, including,
without limitation, Company credit cards and files. The Company shall, until
December 31, 2003, continue to provide you with (i) an office situated in an
office building that is located in a suburb west of Boston with occupancy rates
similar to your current office space; (ii) communications and office equipment
and services similar to those it now provides to you; provided that, your
personal computer will not be linked to any Thermo Electron computer network;
(iii) fully operational Bloomberg terminal and service; (iv) full-time services
of your present secretary or, if she is unable or unwilling to continue as such,
the Company shall use its best efforts to secure for you a full-time secretary
of substantially similar experience; (v) the newspapers and periodicals that you
now receive; and (vi) a non-accountable allowance for your travel and other
expenses of $100,000 per year payable $25,000 quarterly in arrears (prorated for
any fraction of a quarter).
6. Taxes. All payments by the Company under this Agreement will be
reduced by all taxes and other amounts that the Company is required to withhold
under applicable law and all other deductions authorized by you.
7. Restriction on Purchase or Sale of Common Stock. You understand that
you will continue to be a "Reporting Person" for purposes of Section 16 of the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder for a period of six months following the Effective Date and that you
are required to preclear transactions in the Company and its subsidiaries'
securities with the Company's Stock Transaction Coordinator, Ms. Pauline I.
Northern. You are also reminded that you will remain subject to insider trading
regulations under federal securities law. You are urged to contact the Corporate
Secretary of the Company, Ms. Sandra L. Lambert, should you have any questions
regarding compliance with the insider trading regulations under the federal
securities laws.
8. Confidentiality of this Agreement. You agree that all information
relating in any way to the subject matter of this Agreement, including the terms
of this Agreement, shall be held confidential by you and shall not be publicized
or disclosed by you to any person (other than an immediate family member, legal
counsel or financial advisor, provided that any such individual to whom
disclosure is made agrees to be bound by these confidentiality obligations),
business entity or government agency, except as mandated by state or federal
law.
9. Company Information and Invention Agreement. You agree to abide by
and comply with the terms of the Thermo Electron Corporation Information and
Invention Agreement executed by you, a copy of which is attached and
incorporated herein as Exhibit 4.
10. Non-Disparagement. You agree that you will be supportive in your
public statements about the Company and its subsidiaries and affiliates and that
you will not disparage the Company or its subsidiaries or affiliates, or any of
the people or organizations connected with them, or do or say anything that
could disrupt the good morale of the employees of the Company or otherwise harm
the reputation of the Company and its subsidiaries and affiliates and any of the
organizations or people connected with them. The Company agrees that it will
cause the officers of the Company and its subsidiaries not to disparage you or
otherwise do or say anything that harms your reputation and that the Company
shall be solely responsible for any breach of the provisions contained in this
Section 10 by any such officers. Should any party violate the requirements of
this provision, any non-breaching party shall be relieved of the requirements of
this provision to the extent necessary to respond to statements made by the
breaching party. Nothing in this provision shall prevent the parties from (i)
complying with compulsory legal process or otherwise making disclosures in
connection with litigation or administrative proceedings, (ii) making such
disclosures as are necessary to obtain legal advice, (iii) making disclosures as
are required by federal, state or local regulatory authorities, and (iv) making
disclosures which by law are required or cannot be prohibited.
11. Company's Relief on Breach. You agree that your knowing and material
breach of the terms of this Agreement, including but not limited to a knowing
and material breach of either Paragraph 8, 9 or 10, shall, notwithstanding
anything contained herein to the contrary, (i) cause all Vested options listed
on Exhibits 2 and 3 hereof to terminate and be immediately canceled 90 days
after the date the Company notifies you of the breach and you will have no
further rights with respect to such options if you do not exercise such options
within such 90 day period, (ii) cause all options which are not Vested listed on
Exhibit 3 to be canceled and forfeited as of such date and (iii) immediately
terminate the Company's obligations set forth in the last sentence of Paragraph
5. It is understood that the foregoing relief will be in addition to any other
legal or equitable remedy available to the Company, including without limitation
the right to specific performance and injunctive relief.
12. Indemnification Agreement. Notwithstanding anything contained herein
to the contrary, the Thermo Electron Corporation Amended and Restated
Indemnification Agreement, effective as of October 13, 1999 (the
"Indemnification Agreement"), by and between the Company and you and attached
and incorporated herein as Exhibit 5 shall remain in full force and effect, and
in accordance with its terms.
13. Cooperation. You agree to reasonably cooperate with the Company with
respect to all matters arising during or related to your past employment or
consulting engagement, including but not limited to cooperation in connection
with any governmental investigation, litigation or regulatory or other
proceeding which may have arisen or which may arise following the signing of
this Agreement, subject to applicable privileges.
14. Choice of Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the laws
of the Commonwealth of Massachusetts, without giving effect to the conflict of
law principles thereof.
15. Entire Agreement. This Agreement contains the entire agreement
between you and the Company and replaces all prior and contemporaneous
agreements, communications and understandings, whether written or oral, with
respect to your relationship with the Company, including but not limited to the
Consulting Agreement.
16. Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and replaced with a provision which is enforceable and comes
closest to the intent of the parties underlying the unenforceable provision.
17. Successors and Assigns. No party hereto may assign any of its rights
under this Agreement without the prior written consent of the other party. This
Agreement is binding on each of the parties' permitted assigns, successors in
interest, heirs, administrators and executors.
18. Voluntary Agreement. In signing this Agreement, you give the Company
assurance that you have signed it voluntarily and with a full understanding of
its terms and that you have sufficient opportunity to consider this Agreement
and to consult with anyone of your choosing before signing it. If the terms of
this Agreement are acceptable to you, please sign and return it to the
undersigned. Upon the execution of this Agreement, it will take effect as a
legally-binding agreement between you and the Company on the basis set forth
above, as of the Effective Date.
19. Document Under Seal. This Agreement is intended to be signed as an
instrument under seal as of the Effective Date.
THERMO ELECTRON CORPORATION
-----------------------------------
By: Richard Syron
Title: CEO and President
Accepted and Agreed to:
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John N. Hatsopoulos