EMPLOYMENT AND CONSULTING AGREEMENT
This Employment and Consulting Agreement (the "Agreement"), dated as of
March 31, 2000, is entered into between Thermo Electron Corporation, a Delaware
corporation with its principal place of business at 81 Wyman Street, Waltham,
Massachusetts 02454 (the "Company"), and George N. Hatsopoulos, residing at 233
Tower Road, Lincoln, Massachusetts 01773 (the "Employee").
The parties desire to enter into an employment agreement on the terms set
forth herein and, subsequent to the term of the employment agreement, the
Company desires to appoint the Employee as a consultant to the Company. In
consideration of the mutual covenants and promises contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the parties agree as follows:
1. Term of Employment. The Company hereby agrees to employ the Employee on
a part-time basis, and the Employee hereby accepts employment with the Company
on a part-time basis, upon the terms set forth in this Agreement, for the period
commencing on the date hereof, and continuing until the earlier of March 31,
2002 or termination in accordance with the provisions of Section 4 (such period,
the "Employment Period").
2. Capacity. The Employee shall provide such technical and advisory
services to the Company as are requested from time to time by the Company and
are consistent with a senior executive position with the Company; however, the
parties acknowledge and agree that the scope of services requested by the
Company shall be limited to the Company's instrument businesses and
technologies, conducted primarily by Thermo Instrument Systems Inc. and its
subsidiaries. The Employee shall be treated as a common law employee of the
Company, subject to the supervision of, and shall have such authority as is
delegated and such duties as are assigned to him by, the Chief Executive Officer
or his designee.
The Employee hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position and such other duties and
responsibilities as the Chief Executive Officer or his designee shall from time
to time reasonably assign to him. In his capacity as a part-time employee, the
Employee agrees to be available to devote, on average, approximately twenty
hours per week to fulfilling such duties and responsibilities. The Employee
agrees to abide by the rules, regulations, instructions, personnel practices and
policies of the Company and any changes therein that may be adopted from time to
time by the Company.
3. Compensation and Benefits.
3.1 Base Salary. The Company shall pay to the Employee, at such
times as the Company pays its employees in general, an annual base salary equal
to $500,000.
3.2 Bonus. The Employee will be entitled to receive a bonus for the
period beginning January 1, 2000 and ending March 31, 2000, in an amount to be
determined in the discretion of the Company's Board of Directors, payable at
such time as such bonuses are normally paid. The Employee, however, will not be
eligible for any bonus during the Employment Period.
3.3 Fringe Benefits. During the Employment Period, (i) the Employee
shall be entitled to participate in all benefit programs that the Company
establishes and makes available to its employees to the extent that the
Employee's position, tenure, salary, age, part-time status and other
qualifications make him eligible to participate, it being understood that the
Employee will no longer be eligible for the Company's Executive Medical Plan or
Executive Auto Cash Allowance Program and (ii) the Company will use its best
efforts to continue to include the Employee as a named insured person under the
Company's directors and officers liability insurance policy. During the
Employment Period, the Company shall use its best efforts to obtain for the
Employee health and dental care insurance for him and his dependents with
substantially the same coverage as in effect on the date hereof, at the
Company's sole cost and expense. During the Employment Period and the consulting
period described in Section 14 below, the Company shall, at no cost to the
Employee, continue to provide the Employee with (i) an office in an office
building that is located in a suburb west of Boston with occupancy rates similar
to the Employee's current office space; (ii) communications and office equipment
and services similar to those it now provides the Employee; provided that the
Employee's personal computer will not be linked to any Company computer network;
(iii) full-time services of the Employee's present administrative assistant or,
if she is unable or unwilling to continue as such, the Company shall use its
best efforts to secure for the Employee a full-time administrative assistant of
substantially similar experience; and (iv) the newspapers and periodicals that
the Employee now receives.
3.4 Reimbursement of Expenses. During the Employment Period and the
consulting period described in Section 14 below the Company shall promptly
reimburse the Employee for his reasonable expenses incurred in the performance
of his duties hereunder, not to exceed $100,000 per year. The Employee agrees to
provide receipts or other evidence of such expenses. The reasonableness of such
expenses shall be determined on a basis consistent with the Company's and the
Employee's past practices in this regard, including the Employee's use of a
private aircraft for business travel and home entertainment of persons with an
actual or potential connection to the Company or who may be helpful to the
Company.
4. Employment Termination. The employment of the Employee by the
Company pursuant to this Agreement shall terminate upon the occurrence of any
of the following:
4.1 At the election of the Company, for Cause, immediately upon
written notice by the Company to the Employee. For the purposes of this Section
4, "Cause" for termination shall mean the Employee's (a) conviction of a felony,
or a misdemeanor involving material fraud or material dishonesty, (b) material
fraud or material dishonesty in the course of his employment with the Company,
(c) misconduct that is materially injurious to the Company or its subsidiaries
and affiliates, and (d) gross neglect of his duties and responsibilities under
the terms of this Agreement;
4.2 Upon the death of the Employee;
4.3 At the election of the Employee, upon not less than 30 days
prior written notice of termination.
5. Effect of Termination.
5.1 Termination by the Company or at the Election of the Employee.
In the event the Employee's employment is terminated by the Company pursuant to
Section 4.1 or at the election of the Employee pursuant to Section 4.3, the
Company shall pay to the Employee the compensation and benefits which would
otherwise be payable to him under Section 3 through the last day of his actual
employment by the Company, and the parties' obligations under Sections 14 and 15
shall terminate.
5.2 Termination for Death. If the Employee's employment is
terminated by death pursuant to Section 4.2, the Company shall pay to the estate
of the Employee a lump sum in an amount equal to the balance of the base salary
and consulting amounts otherwise payable to the Employee for the period from the
date of termination to March 31, 2004 as set forth in Sections 3.1 and 14.
5.3 Survival. Notwithstanding anything herein to the contrary,
Sections 9 - 13 and 16 - 22 of this Agreement shall survive the termination of
employment or the consulting arrangement.
6. Options and Restricted Stock.
6.1 During the Employment Period, the Employee shall be entitled to
retain his stock options in the Company and any of its subsidiaries, subject to
the terms and conditions of such options. Upon the termination of the Employment
Period, including upon any earlier termination of employment, all stock options
which are "in-the-money" as of the date hereof and have Vested (i.e., the
underlying shares are not subject to repurchase by the Company or its
subsidiaries, as applicable) or will have Vested as of the last day of the
Employment Period (such options being identified on Exhibit 1 attached and
incorporated herein) will no longer Vest and no further lapsing of the Company's
and its subsidiaries' repurchase rights will occur. The Employee will then have
until the earlier of (i) 90 days or two years after such termination, depending
on the terms of the option as specified by Exhibit 1 (attached and incorporated
herein) or (ii) the expiration of the exercise period, to exercise such options.
If the Employee does not exercise such options by the applicable deadline, such
options will be cancelled, and the Employee will have no further rights with
respect to such options.
6.2 Notwithstanding the terms of any stock option plan or agreement
pursuant to which such options were granted and regardless of whether the
Employee is an employee of the Company or any of its subsidiaries, the following
terms and conditions shall apply to the stock options previously granted to the
Employee that are, as of the date hereof, either not "in the money" (such
options being identified on Exhibit 2 attached and incorporated herein) or "in
the money" and Vesting in the consulting period described in Section 14 hereof
(such options being identified on Exhibit 3 attached and incorporated herein):
(i) The resale restrictions and the Company's or its
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) March 31,
2004;
(ii) Any option that is, under its original terms, exercisable
on March 31, 2004 shall thereafter remain exercisable until
June 30, 2004. If the Employee does not exercise such
options by such deadline, such options will be cancelled,
and the Employee will have no further rights with respect
to such options; and
(iii) Any option that is, under its original terms, scheduled to
Vest after March 31, 2004 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 to the extent
its Vesting has been so accelerated.
6.3 All stock of the Company previously acquired by the Employee
pursuant to the exercise of a Type B stock option shall become fully Vested and
all of the Company's repurchase rights and transfer restrictions with respect
thereto shall lapse on such date that is on or after May 10, 2000 as mutually
determined by the Employee and the Company; provided, however if the parties do
not mutually select a vesting date, such stock shall Vest on January 7, 2001.
6.4 Solely for purposes of this Section 6, the term "Employee" shall
be deemed to include GDH Partners LP and the 1994 Hatsopoulos Family Trust, to
the extent any stock option shall have been transferred to either such entity
with the consent of the Company, and each such entity may exercise the rights
granted to the Employee, and shall be subject to the obligations of the
Employee, in this Section 6 with respect to any stock options so transferred to
such entity.
6.5 In the event of any conflict between the provisions of this
Section 6 and the provisions of any option plan or option agreement covering the
options set forth in Exhibits 1, 2 or 3 attached and incorporated herein, the
provisions of this Section 6 shall prevail.
7. Retirement. The Employee hereby resigns effective as of March 31, 2000
his position as a member of the board of directors of the Company and as a
member of the board of directors of all of the Company's subsidiaries on which
he currently serves.
8. Annual Report. During the Employment Period and the consulting period
described in Section 14 below, the Company agrees to list the Employee in the
Company's Annual Report to Shareholders as the Company's founder and chairman
emeritus.
9. Cooperation. The Employee agrees to reasonably cooperate with the
Company with respect to all matters arising during or related to his employment
and consulting services, including but not limited to cooperation in connection
with any governmental investigation, litigation or regulatory or other
proceeding, subject to applicable privileges.
10. Termination of Executive Retention Agreement. The Employee and the
Company agree that, effective April 1, 2000, that certain Executive Retention
Agreement between the Employee and the Company shall hereby be terminated and
shall be of no further force or effect.
11. Company Information and Invention Agreement. The Employee agrees to
execute and comply with the terms of a Thermo Electron Company Information and
Invention Agreement, a copy of which is attached as Exhibit 4 hereto. Such
agreement supersedes any prior agreement covering the same subject matter which
the Employee may have signed with the Company.
12. Waiver of Jury Trial. Each of the parties hereby expressly, knowingly
and voluntarily waives all benefit and advantage of any right to a trial by
jury, and each agrees that he or it will not at any time insist upon, or plead
or in any manner whatsoever claim or take the benefit or advantage of, a trial
by jury in any action arising in connection with this Agreement.
13. Restriction on Purchase or Sale of Common Stock. The Employee
understands that he will no longer be a "Reporting Person" for purposes of
Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act"), and the
rules and regulations promulgated thereunder. However, the Employee understands
that he may be required to report certain transactions pursuant to such rules
and registrations on Forms 4 and 5 for up to six months after March 31, 2000.
The Employee is also urged to contact the Corporate Secretary of the Company,
Ms. Sandra L. Lambert, should he have any questions regarding compliance with
the insider trading regulations under the federal securities laws.
14. Consulting Services: From April 1, 2002 to March 31, 2004 (the
"Consulting Period"), the Employee agrees to provide, and make himself available
to provide, consulting services to the Company on a half-time basis, at such
time or times as is mutually agreeable by the parties. The Employee agrees to
use his best efforts, business judgment and skill in rendering consulting
services hereunder. It is expressly agreed that during the Consulting Period the
Employee will be acting as an independent contractor in performing his services
hereunder and not as an employee or agent of the Company and as such will not be
treated as an employee for any reason whatsoever, including but not limited to
federal or state tax purposes. In the event of the Employee's death, disability
or other incapacity resulting in his inability to perform his consulting duties
hereunder, all compensation due and owing under Section 15 shall continue to be
payable to him or his estate. The Company may terminate this consulting
arrangement for Cause and, in such event, the Company shall have no further
obligation to the Employee under this consulting arrangement. "Cause" shall mean
the Employee's (a) conviction of a felony, or a misdemeanor involving material
fraud or material dishonesty, (b) material fraud or material dishonesty in the
course of consulting hereunder, (c) gross misconduct that is materially
injurious to the Company or its subsidiaries and affiliates, or (d) gross
neglect of his duties and responsibilities under the terms of this consulting
arrangement.
15. Consultant Compensation: In consideration for the Employee's agreement
to provide consulting services, the Company shall pay him at the rate of
$500,000 per year during the Consulting Period, payable monthly in arrears. The
Company shall reimburse the Employee for his costs and expenses incurred by him
in connection with his provision of consulting services to the Company as
provided in Section 3.4 hereof. In addition, during the Consulting Period, the
Company shall use its best efforts to obtain for the Employee health and dental
care insurance for him and his dependents with substantially the same coverage
as in effect as of March 31, 2002, at the Company's sole cost and expense.
16. Other Activities. This Agreement shall not prohibit the Employee from
engaging in any other business activities during the Employment Period and
Consulting Period provided that such other business activities (i) shall be
subject to the prior approval of the Company, which approval shall not be
unreasonably withheld, and provided such approval or disapproval shall be
communicated to him in writing within 10 business days of such request for
approval (it being understood that the failure by the Company to so communicate
its disapproval in writing within such 10-day period shall be deemed an approval
of such request), and (ii) do not prevent him from performing his obligations
under this Agreement. In this connection, the parties agree that the Employee's
formation and operation of an "incubator" for bioengineering businesses is an
approved activity and agree that (i) the Company shall not assign to the
Employee conflicting duties and (ii) the Employee may recuse himself from
Company assignments that present a material risk of such a conflict.
17. Notices. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 17.
18. Entire Agreement. This Agreement constitutes the entire agreement
between the parties, and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
19. Amendment. This Agreement may be amended or modified only by a written
instrument executed by all of the parties hereto.
20. Governing Law. This Agreement and all issues relating to this
Agreement and the transactions contemplated hereby shall be governed by,
enforced under and construed in accordance with the laws of the Commonwealth of
Massachusetts without giving effect to any choice or conflict of law provision
or rule that would cause the application of laws of any jurisdiction other than
those of the Commonwealth of Massachusetts.
21. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of all of the parties hereto and their respective successors and
assigns, including any corporation with which, or into which, the Company may be
merged or which may succeed to its respective assets or business; provided,
however, that the obligations of the Employee are personal and shall not be
assigned by him.
22. Miscellaneous.
22.1 No delay or omission by the Company in exercising any right
under this Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
22.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
22.3 In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
THERMO ELECTRON CORPORATION
By: /s/ R. F. Syron
-------------------------------------------
Name: Richard F. Syron
Title: President and Chief Executive Officer
EMPLOYEE
/s/ George N. Hatsopoulos
-------------------------------------------
George N. Hatsopoulos
Accepted and agreed to
By:
GDH Partners LP
By: /s/ Daphne Hatsopoulos
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1994 Hatsopoulos Family Trust
By: /s/ Daphne Hatsopoulos
-------------------------------
Trustee