THERMO ELECTRON CORPORATION
EXECUTIVE SEVERANCE AGREEMENT
THIS AGREEMENT by and between THERMO ELECTRON CORPORATION, a Delaware
corporation (the "Company"), and Brian D. Holt (the "Executive") is made as of
January 27, 2000 (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
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) 40% or more of either (i) the then-outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then-outstanding securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition by the Company, (ii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (iii) any acquisition by any corporation pursuant
to a transaction which complies with clauses (i) and (ii) of subsection (c) of
this Section 1.1; or
(b) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board (or, if applicable, the Board of Directors of
a successor corporation to the Company), where the term "Continuing Director"
means at any date a member of the Board (i) who was a member of the Board on the
date of the execution of this Agreement or (ii) who was nominated or elected
subsequent to such date by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election or whose
election to the Board was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election; provided, however, that there shall be excluded from this clause (ii)
any individual whose initial assumption of office occurred as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents, by
or on behalf of a person other than the Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving the Company or a sale or
other disposition of all or substantially all of the assets of the Company in
one or a series of transactions (a "Business Combination"), unless, immediately
following such Business Combination, each of the following two conditions is
satisfied: (i) all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns the Company or substantially all of the
Company's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, respectively; and (ii)
no Person (excluding the Acquiring Corporation or any employee benefit plan (or
related trust) maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 40% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors; or
(d) approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.
1.2 "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.
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 5.2 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 December 31, 2002.
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.
4. Benefits to Executive.
4.1 Compensation.
(a) Termination Without Cause. If the Executive's employment with the
Company is terminated by the Company (other than for Cause) 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) two times the Executive's annual base salary as in
effect immediately prior to the date of termination, and (B) the amount of any
cash compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each case
to the extent not previously paid; and
(ii) for two years after the date of termination, or such longer period as
may be provided by the terms of the appropriate plan, program, practice or
policy, the Company shall continue to provide benefits to the Executive and the
Executive's family at least equal to those which would have been provided to
them if the Executive's employment had not been terminated, in accordance with
the applicable benefit plans in effect on the 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 if the Executive becomes
reemployed with another employer and is eligible to receive a particular type of
benefits (e.g., health insurance benefits) from such employer on terms at least
as favorable to the Executive and 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;
(iii) to the extent not previously paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive following the
Executive's termination of employment under any plan, program, policy, practice,
contract or agreement of the Company and its affiliated companies (such other
amounts and benefits shall be hereinafter referred to as the "Other Benefits");
and
(iv) for purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits to which the
Executive is entitled, the Executive shall be considered to have remained
employed by the Company until two years after the date of termination.
(b) Termination for Cause. 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 sum of (A) the Executive's base salary through the date of termination and
(B) the amount of any cash compensation previously deferred by the Executive, in
each case to the extent not previously paid and (ii) timely pay or provide to
the Executive the Other Benefits.
4.2 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.
5. Disputes.
5.1 Settlement of Disputes; Arbitration. All claims by the Executive for
benefits under this Agreement shall be directed to and determined by the Board
of Directors of the Company and shall be in writing. Any denial by the Board of
Directors of a claim for benefits under this Agreement shall be delivered to the
Executive in writing and shall set forth the specific reasons for the denial and
the specific provisions of this Agreement relied upon. The Board of Directors
shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Boston, Massachusetts, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction.
5.2 Expenses. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal, accounting and other fees and expenses which the
Executive may reasonably incur as a result of any claim or contest (regardless
of the outcome thereof) by the Company, the Executive or others regarding the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Executive regarding the amount of any payment or benefits
pursuant to this Agreement), plus in each case interest on any delayed payment
at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the
Internal Revenue Code.
6. Successors.
6.1 Successor to Company. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no such succession had taken place. 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
81 Wyman Street, Waltham, Massachusetts and to the Executive at the Executive's
principal residence as currently reflected on the Company's records (or to such
other address as either the Company or the Executive may have furnished to the
other in writing in accordance herewith). Any such notice, instruction or
communication shall be deemed to have been delivered five business days after it
is sent by registered or certified mail, return receipt requested, postage
prepaid, or one business day after it is sent via a reputable nationwide
overnight courier service. Either party may give any notice, instruction or
other communication hereunder using any other means, but no such notice,
instruction or other communication shall be deemed to have been duly delivered
unless and until it actually is received by the party for whom it is intended.
8. Miscellaneous.
8.1 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
8.2 Injunctive Relief. The Company and the Executive agree that any breach
of this Agreement by the Company is likely to cause the Executive substantial
and irrevocable damage and therefore, in the event of any such breach, in
addition to such other remedies which may be available, the Executive shall have
the right to specific performance and injunctive relief.
8.3 Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal laws of the
Commonwealth of Massachusetts, without regard to conflicts of law principles.
8.4 Waivers. No waiver by the Executive at any time of any breach of, or
compliance with, any provision of this Agreement to be performed by the Company
shall be deemed a waiver of that or any other provision at any subsequent time.
8.5 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
8.6 Tax Withholding. Any payments provided for hereunder shall be paid net
of any applicable tax withholding required under federal, state or local law.
8.7 Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and 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
cance lled 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
THERMO ELECTRON CORPORATION
By:________________________________
Anne Pol
Senior Vice President, Human Resources
EXECUTIVE:
___________________________________
Brian D. Holt
HOLT EXEC SEV AGMT [2] 1/27/00
DOC 7669