EXHIBIT 10.5
OPTION EXCHANGE AGREEMENT
THIS AGREEMENT is made as of the 6th day of February, 1995,
among Thermo Process Systems Inc., a Delaware Corporation
("Thermo"), and Emil C. Herkert, an individual whose primary
residence is in the State of New Jersey ("Optionee").
WHEREAS, pursuant to a Stock Purchase and Sale Agreement of
even date herewith (the "Purchase and Sale Agreement"), Thermo
has acquired 100% of the outstanding capital stock of Engineering
Technology and Knowledge Corporation, a Delaware corporation
("ETKC");
WHEREAS, ETKC owns 100% of the capital stock of Elson T.
Killam Associates, Inc., a New Jersey corporation ("Killam");
WHEREAS, Killam adopted an Incentive Stock Option Plan
effective as of December 15, 1987 (the "Stock Option Plan");
WHEREAS, the pursuant to a stock option agreement dated as
of December 15, 1987, a copy of which is attached as Exhibit A
hereto (the "Option Agreement"), Optionee owns a vested option
(the "Killam Option") to purchase, in the aggregate, 365.52
shares of the capital stock of Killam (after taking into account
the cancellation of the Killam Option with respect to certain
shares of the capital stock of Killam (the "Killam Stock"); and
WHEREAS, Thermo wishes to acquire such Killam Option and to
substitute therefor an economically equivalent option to purchase
shares of Thermo's common stock, $.10 par value per share (the
"Thermo Stock");
NOW, THEREFORE, in consideration of the foregoing, of the
mutual promises set forth herein and of the mutual promises set
forth in the Purchase and Sale Agreement, and intending to be
legally bound, the parties hereto hereby agree as follows:
SECTION 1. ASSUMPTION OF THE STOCK OPTION PLAN AND THE
KILLAM OPTION. Except as set forth below, Thermo hereby assumes
and agrees to perform and discharge all liabilities, obligations
and commitments of Killam which are set forth in the Stock Option
Plan and the Option Agreement. Thermo and Optionee hereby agree
that the Killam Option is hereby converted, without any further
action on the part of either party, into an option (the "Thermo
Option") to purchase an aggregate of 250,000 shares of Thermo
Stock. Thermo and Optionee hereby agree that the exercise price
of the Thermo Option shall be $.0824 per share of Thermo Stock.
The assumption of the Stock Option Plan and the Killam Option and
the conversion thereof of into the Thermo Option as provided
herein shall not give Optionee additional benefits which he did
not have immediately prior to the date hereof, result in any
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acceleration of any vesting schedule for any Killam Option, or
relieve Optionee of any obligation or restriction applicable to
the Killam Option or the Killam Stock obtainable upon exercise of
the Killam Option, including without limitation obligations and
restrictions imposed by that certain Shareholders' Agreement
dated January 29, 1995, as amended from time to time. Thermo and
Optionee agree that the foregoing assumption and conversion of
the Killam Option is intended to comply with Internal Revenue
Code Regulations governing incentive stock option roll-overs.
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
OPTIONEE. Optionee represents and warrants to, and covenants
with, Thermo that:
2.1. OPTION AGREEMENT. Attached hereto as Exhibit 1 is a
true, correct and complete copy of Optionee's Option Agreement.
The Option Agreement has not been amended, and is the sole
instrument to which Optionee is a party that purports to grant
Optionee any right to acquire shares of Killam Stock. Optionee
is the sole true, legal and beneficial owner of the Killam
Option. Optionee has not previously sold or transferred any
interest in the Killam Option to any third party, has not
pledged, mortgaged, hypothecated or otherwise encumbered the
Killam Option or any or all of the Killam Stock. No third party
has been granted or has otherwise obtained, whether by operation
of law or otherwise, any lien, security interest or other
interest, contingent or otherwise, in or with respect to the
Killam Option or in or with respect to any or all of the Killam
Stock.
2.2. AUTHORITY. The execution and delivery of this
Agreement, and the consummation of the transactions contemplated
hereby, have been duly and validly authorized by all necessary
action on the part of Optionee. This Agreement constitutes the
valid and binding obligation of Optionee enforceable against him
in accordance with the terms hereof, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
the rights of creditors or by general principles of equity.
Neither the execution, delivery and performance of this Agreement
by Optionee, nor the consummation of the transactions
contemplated hereby will (i) conflict with or result in a
violation, breach, termination or acceleration of, or default
under (or would result in such a violation, breach, termination,
acceleration or default with the giving of notice or passage of
time, or both) any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, agreement or other instrument or
obligation to which Optionee is a party or by which Optionee or
any of his properties or assets may be bound or affected; or (ii)
result in the violation of any order, writ, injunction, decree,
statute, rule or regulation applicable to Optionee or his
properties or assets.
2.3. INVESTMENT REPRESENTATIONS.
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(a) Optionee has, in connection with his decision to
acquire the Thermo Option, relied solely upon Thermo's
Confidential Placement Memorandum dated January 29, 1995 and
the documents incorporated therein by reference; and
(b) Taking into account the personnel and resources
Optionee can practically bring to bear on the acquisition of
the Thermo Options and the Thermo Stock contemplated hereby,
Optionee is knowledgeable, sophisticated and experienced in
making, and is able to make, decisions with respect to
investments in securities presenting an investment decision
like that involved in the acquisition of the Thermo Option
and the Thermo Stock, including investments in securities
issued by Thermo, and to assess the risks and merits
presented by the acquisition of the Thermo Stock and the
Thermo Options, and has requested, received, reviewed and
considered all information he deems relevant in making an
informed decision to acquire the Thermo Stock and the Thermo
Options.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THERMO. Thermo hereby represents and warrants to, and covenants
with, Optionee as follows:
3.1. ORGANIZATION AND QUALIFICATION. Thermo is a
corporation validly existing and in good standing under the laws
of the State of Delaware, and has all requisite corporate power
and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted.
3.2. AUTHORITY. The execution and delivery of this
Agreement, and the consummation of the transactions contemplated
hereby, have been duly and validly authorized by all necessary
corporate action on the part of Thermo. This Agreement
constitutes the valid and binding obligation of Thermo
enforceable against Thermo in accordance with the terms hereof,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the rights of creditors or by general principles of
equity. Neither the execution, delivery and performance of this
Agreement by Thermo, nor the consummation of the transactions
contemplated hereby will (i) conflict with or result in a
violation, breach, termination or acceleration of, or default
under (or would result in such a violation, breach, termination,
acceleration or default with the giving of notice or passage of
time, or both) any of the terms, conditions or provisions of the
certificate of incorporation or bylaws of Thermo, each as
amended, or of any note, bond, mortgage, indenture, agreement or
other instrument or obligation to which Thermo is a party or by
which Thermo or any of its properties or assets may be bound or
affected; or (ii) result in the violation of any order, writ,
injunction, decree, statute, rule or regulation applicable to
Thermo or its properties or assets.
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3.3. ASSUMPTION OF THE STOCK OPTION PLAN AND THE KILLAM
OPTION; ISSUANCE, SALE AND DELIVERY OF THE THERMO STOCK. The
assumption of the Stock Option Plan and the Killam Option in
accordance with the terms of this Agreement, and the conversion
of the Killam Option into the Thermo Option, have been duly
authorized under applicable law by all requisite corporate
action. The Thermo Stock (as set forth in Section 1) will be
delivered to Optionee upon exercise of the Thermo Option, and
upon payment by Optionee of the exercise price therefor, and as
and when delivered, will be validly issued and outstanding, fully
paid and nonassessable.
3.4. ACCURACY OF INFORMATION. The information contained
in the Memorandum is true and correct in all material respects as
of the date thereof.
SECTION 4. NOTICES. All notices, requests, demands,
consents and other communications which are required or permitted
hereunder shall be in writing, and shall be deemed given when
actually received or if earlier, two days after deposit with the
U.S. postal authorities, certified or registered mail, return
receipt requested, postage prepaid or two days after deposit with
an internationally recognized air courier or express mail,
charges prepaid, addressed as follows:
If to Thermo:
Thermo Process Systems Inc.
c/o Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254-9046
Attention: President
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
If to Optionee:
Emil C. Herkert
c/o Killam Associates Inc.
27 Bleeker Street
P. O. Box 32
Millburn, New Jersey 07041-0032
With a copy to:
Norris, McLaughlin & Marcus
721 Route 202-206
P. O. Box 1018
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Somerville, New Jersey 08876-1018
Attention: John J. Eagan, Esq.
or to such other address as any party hereto may designate in
writing to the other parties, specifying a change of address for
the purpose of this Agreement.
SECTION 5. CHANGES. This Agreement may not be modified or
amended except pursuant to an instrument in writing signed by
Thermo and Optionee.
SECTION 6. HEADINGS. The headings of the various sections
of this Agreement have been inserted for convenience of reference
only and shall not be deemed to be part of this Agreement.
SECTION 7. SEVERABILITY. In case any provision contained
in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality, and enforceability of the
remaining provisions contained herein shall not in any way be
affected or impaired thereby.
SECTION 8. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws governing the Option
Agreement.
SECTION 9. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all
of which, when taken together, shall constitute but one
instrument, and shall become effective when one or more
counterparts have been signed by each party hereto and delivered
to the other parties.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives
as of the day and year first above written.
THERMO PROCESS SYSTEMS INC. OPTIONEE
By: /s/ John P. Appleton /s/ Emil C. Herkert
Printed Name: John P. Appleton Printed Name: Emil C. Herkert
Title: President