**Exhibit10.5**

 

American Science & Engineering, Inc.

Change in Control & Severance BenefitAgreement

 

This is aSEVERANCE BENEFIT & CHANGE IN CONTROL Agreement (the “Agreement”)entered into between American Science & Engineering, Inc. (the “Company”,which term shall include any successor by merger, consolidation, sale ofsubstantially all of the Company’s assets or otherwise) and                                      (“Executive”)effective as of the 29th day of July, 2008 (the “Effective Date”).

 

1.       Purpose of this Agreement.  The Company hereby agrees to provideseverance and change in control benefits to Executive on the terms andconditions set forth in this Agreement. These benefits are in lieu of any benefits that would otherwise bepayable to Executive under the severance pay plan, if any, maintained by theCompany for the benefit of senior executives or other Company employees, or bystatute.  This severance agreement doesnot represent an employment contract for any definite term or period, which meansthat either Executive or the Company can terminate Executive’s employment atany time, for any reason or no reason, and with or without notice.

 

2.       Term of Agreement.  The Agreement shall become effective on theEffective Date and shall terminate on July 29, 2011; provided that thisAgreement shall automatically be extended for successive one year terms unlessthe Board provides Executive with written notice to the contrary at leastthirty (30) days before the date the Agreement would otherwise be so extended.  Such notice, in the sole discretion of theBoard, may provide that the term will not be extended in the future, and/orthat there shall be no further automatic extensions of the Term.

 

3.       Definitions. The following termsas used in this Agreement shall have the following meanings:

 

(a)           “Affected Award” means eachStock-Based Award held by Executive immediately prior to a Change in ControlQualifying Termination.

 

(b)           “Affiliate” means any business entityin which the Company holds, directly or indirectly, an equity, profits, orvoting interest of 30% or more, and includes any subsidiary.

 

(c)           “Base Salary” means (i) thehighest annual rate of base salary payable to Executive by the Company duringthe one-year period ending on Executive’s Date of Termination or (ii) thehighest annual rate of base salary payable to Executive by the Company duringthe one-year period ending on the Change of Control, whichever is higher.

 

(d)           “Board” means the Board of Directorsof the Company.

 

(e)           “Cause” means, for purposes of thisAgreement, as determined by the Board in its reasonable judgment: (i) Executive’sfailure to perform (other than by reason of disability), or material negligencein the performance of, his duties and responsibilities to the Company or any ofits Affiliates; (ii) material breach by Executive of any provision of thisAgreement or any other agreement with the Company or any of its Affiliates; (iii) otherconduct by Executive that could be harmful to the business, interests orreputation of the Company or any of its Affiliates; (iv) fraud,embezzlement or other material dishonesty by Executive with respect to theCompany or any of its Affiliates, or (v) Executive’s conviction of, orpleading no contest to, any felony or other crime involving moral turpitude, or(vi) a breach of any confidentiality/non-competition/non-solicitationagreement. With respect to a breach of (i), (ii), (iii) or (vi), Executiveshall be given thirty (30) days, after written notice of such breach, to cure abreach to the reasonable satisfaction of the Company.

 

(f)            “Change in Control” means theoccurrence hereafter of any of the following:

 

(i)            any Person, other than the Companyor an Affiliate, becomes a beneficial owner (within the meaning of Rule 13d-3,as amended, as promulgated under the Exchange Act), directly or indirectly, inone or a series of transactions, of securities representing more than fiftypercent (50%) of the combined voting power of the Company’s then outstandingsecurities;

 

(ii)           the stockholders of the Companyapprove a merger or consolidation of the Company with any other Person, otherthan a merger or consolidation which would result in the voting securities ofthe Company outstanding immediately prior thereto continuing to represent(either by remaining outstanding or by being converted into voting securitiesof the surviving entity) more than fifty percent (50%) of the combined votingpower 

 

----

 

of the voting securities of the Company or suchsurviving entity outstanding immediately after such merger or consolidation;

 

(iii)          there occurs a closing of a sale orother disposition by the Company of all or substantially all of the assets ofthe Company;

 

(iv)          Incumbent Directors cease for anyreason to constitute at least a majority of the Board; *provided*,that any individual who becomes a member of the Board subsequent to the datehereof, whose election or nomination for election was approved by a vote of atleast two-thirds of the Incumbent Directors shall be treated as an IncumbentDirector unless he or she assumed office as a result of an actual or threatenedelection contest with respect to the election or removal of directors; or

 

(v) a completeliquidation or dissolution of the Company

 

*provided*, that if any payment orbenefit payable hereunder upon or following a Change in Control (as definedherein) would be required to comply with the limitations of Section 409A(a)(2)(A)(v) ofthe Code and the guidance thereunder in order to avoid an additional tax under Section 409Aof the Code, such payment or benefit shall be made only if such Change inControl constitutes a change in ownership or control of the Company, or achange in ownership of the Company’s assets, described in IRS Notice 2005-1 orany successor guidance.

 

(g)           “Change in Control Qualifying Termination”means a termination of employment if, during the period of twenty-four (24)months following a Change in Control either the employment of Executive isterminated by the Employer****for any reasonother than for Cause, or Executive terminates his or her employment with theEmployer for “Good Reason” (as defined in Section 3(l) below).

 

(h)           “Client” means any Person who is, orwithin the preceding eighteen (18) months was, a client, customer or portfoliocompany of the Company or any of its Affiliates.

 

(i)            “Code” means the Internal RevenueCode.

 

(j)            “Company” means American Science &Engineering, Inc.

 

(k)           “Date of Termination” means the dateon which Executive’s employment terminates.

 

(l)            “Good Reason” means (i) anyaction by the Company which results in a material adverse change in Executive’sposition, title, reporting relationship, authority, duties or responsibilitiesas in effect immediately prior to the Change in Control; *provided,however,* that a sale or transfer of less than all or substantiallyall of the business of the Company or any of its subsidiaries or otherreduction of less than all or substantially all of its business or that of itssubsidiaries, or the fact that the Company has become a subsidiary of anothercompany or that the securities of the Company are no longer publicly traded,shall not be taken into account when determining whether a material adversechange in Executive’s authority, duties or responsibilities has occurred; (ii) anyreduction in Executive’s rate of annual base salary for any fiscal year to lessthan the greater of 100% of the rate of annual base salary payable to him orher in the completed fiscal year immediately preceding the Change in Control or100% of the rate at which annual base salary was payable to Executiveimmediately prior to such reduction, (iii) any adverse change in Executive’sannual bonus opportunity, taking into account both the maximum earnable bonusand the targets on which the bonus is based, (iv) the failure to provideExecutive participation in an incentive plan tied to the long-term growth inthe value of the Company, which plan, whether equity- or cash-based, providedExecutive with a comparable financial opportunity to that provided to Executiveunder the Company’s equity-based plan immediately prior to the Change inControl, but excluding an isolated, insubstantial and inadvertent reduction ofannual base salary or annual bonus opportunity which is not taken in bad faithand which is remedied by the Employer within five (5) business days afterreceipt of notice thereof given by Executive; (v) any failure of theCompany to continue or cause to be continued in effect any retirement, life,medical, dental, disability, accidental death or travel insurance plan in whichExecutive was participating immediately prior to the Change in Control unlessthe Company provides Executive with a plan or plans that provide at leastsubstantially equivalent benefits (as to extent of coverage and as to employeecost), or the taking of any action by the Employer that would adversely effectExecutive’s participation in or materially reduce Executive’s benefits underany such plan or deprive Executive of any material fringe benefit or perquisiteenjoyed by Executive immediately prior to the Change in Control, other than anisolated, insubstantial and inadvertent failure not in bad faith and which isremedied by the Employer within five (5) business days after receipt ofnotice thereof given by Executive; or (vi) the Company requires Executiveto be based at any office or location that is more than twenty-five (25) milesdistant from Executive’s base office or work location immediately prior to theChange in Control, except if such new location is closer to Executive’sresidence at the time such requirement is imposed

 

(m)          “Incumbent Directors” mean individualswho, as of the date of this Agreement, constituted the Board.

 

----

 

(n)           “Non-Competition Period” means theperiod while Executive is employed by the Company and for one year afterExecutive’s employment terminates, except in cases of Change in ControlQualifying Terminations”.

 

(o)           “Outstanding Company Common Stock”means the outstanding shares of common stock of the Company.

 

(p)           “Outstanding Company VotingSecurities” means the outstanding voting securities of the Company entitled tovote generally in the election of directors.

 

(q)           “Person” means any individual, entityor other person, including a group within the meaning of Sections 13(d) or14(d)(2) of the Securities Exchange Act of 1934.

 

(r)            “Qualifying Termination” meanseither (a) a termination of Executive’s employment by the Employer****for any reason other than for Cause, (b) the Executiveterminates his or her employment with the Employer for “Good Reason” (asdefined in Section 3(l) above), or (c) the Executive dies.

 

(s)           “Short Term Incentive” means paymentsmade pursuant to****the Company’s short-termincentive plan.

 

(t)            “Stock-Based Award” means anyoption, stock appreciation right, restricted stock or restricted stock unitgranted by the Company to Executive pursuant to the Company’s 2005 Equity &Incentive Plan or any successor plan or agreement, or any other equitycompensation plan or agreement previously adopted by the Board of Directors ofthe Company in which Executive participated.

 

4.   Change in Control Severance Benefits

 

(a)           Executive agrees that once any Personother than the Company, a direct or indirect subsidiary of the Company, or anemployee benefit plan of the Company or any such subsidiary begins a tender orexchange offer or a solicitation of proxies from the Company’s security holdersor takes other actions to effect a “Change in Control,” as hereinafter defined,Executive will not voluntarily terminate his or her employment with the Company(or its Affiliates) until such Person has abandoned or terminated such effortsto effect a Change in Control or until a Change in Control has occurred.  In the event that Executive voluntarilyterminates his or her employment prior to the Change in Control, he/she willnot be entitled to any payments or benefits under this Agreement or anyseverance pay plan, if any, of the Company.

 

(b)           In the case of a Change in ControlQualifying Termination, then Executive shall receive the following payments andbenefits, subject to the limitation set forth in Section 6:

 

(i)  *Accrued Salary. *TheCompany shall pay to Executive in a single cash lump sum, within ten (10) daysfollowing the date of termination, the sum of (1) all salary andcommissions earned by Executive as of the date of termination but not yet paidand (2) Executive’s accrued bonuses and accrued vacation earned throughthe date of termination.****In addition,the Company shall pay to Executive in cash within five (5) business daysof the date of termination, reimbursement for any unpaid, valid businessexpenses that are approvable in accordance with Company policy.

 

(ii)  *Severance Pay. *TheCompany shall pay to Executive in a single lump sum, within sixty (60) calendardays of the date of termination, an amount equal to two times the sum ofExecutive’s annualized Base Salary plus the target Short Term Incentive amount.

 

(iii)  *COBRA Premiums. *TheCompany shall pay 100% of the premium toward COBRA coverage for Executive,Executive’s spouse and his qualifying dependents, for a period of eighteen (18)months following the Date of Termination. Notwithstanding the foregoing provisions of this subsection, ifExecutive becomes employed by another employer and is eligible for medical,dental or life insurance coverage that is substantially equivalent (as to extentof coverage and as to employee cost) to the coverage of the same type that heor she were entitled to receive under this subsection, the Employer’sobligation to Executive and his or her dependents under this subsection shallcease with respect to that type of coverage. In addition, in the event that the Company is unable to provide COBRA toExecutive as provided herein, Company will pay to Executive an equivalentamount in reimbursement for medical insurance (of equivalent benefits and cost)premiums paid by Executive.  

 

(iv)  *Stock-Based*Awards.

 

(1)           To the extent not already vested andexercisable, each Affected Award shall become fully vested and exercisable uponthe occurrence of the Change in Control Qualifying Termination.  In the event Executive holds an AffectedAward requiring exercise, the Company shall give Executive adequate notice andopportunity to exercise the Affected Award. Notwithstanding the foregoing, to the extent permitted by the equity planunder which the Stock-Based Award was granted, nothing in 

 

----

 

this Agreementshall preclude the Company from accelerating the vesting and exercisability ofan Affected Award to an earlier period, and terminating unexercised awards asprovided under the equity plan.

 

(2)           Notwithstanding the provisions ofthis Section 4 to the contrary, if a Stock-Based Award held by Executiveis not assumed or replaced, or to be assumed or replaced, upon a Change inControl, each Stock-Based Award held by such Executive, whether or not he orshe has experienced a Qualifying Termination, shall become fully vested andexercisable, effective immediately prior to the Change in Control.

 

(v) *Additional DiscretionaryPayments. *The Company maymake an additional cash or stock settlement at the sole discretion of theBoard.

 

5.       Severance Benefits.   In the case of a Qualifying Termination thatis not a Change in Control Qualifying Termination, then Executive shall receivethe following payments and benefits, subject to the limitation set forth in Section 6:

 

(a)           *Accrued Salary. *The Company shall pay to Executivein a single cash lump sum, within ten (10) days following the date oftermination, the sum of (i) all salary and commissions earned by Executiveas of the date of termination but not yet paid and (ii) Executive’saccrued bonuses and accrued vacation earned through the date of termination. **  **In addition, theCompany shall pay to Executive in cash within five (5) business days ofthe date of termination, reimbursement for any unpaid, valid business expensesthat are approvable in accordance with Company policy.

 

(b)           *Severance Pay. *The Company shall pay to Executivein a single lump sum, within sixty (60) calendar days of the date oftermination, an amount equal to one times the Executive’s annualized BaseSalary.

 

(c)           *COBRA Premiums. *The Company shall pay 100% of thepremium toward COBRA coverage for Executive, Executive’s spouse and hisqualifying dependents, for a period of one (1) year following the date ofemployment termination.  Notwithstandingthe foregoing provisions of this subsection, if Executive becomes employed byanother employer and is eligible for medical, dental or life insurance coveragethat is substantially equivalent (as to extent of coverage and as to employeecost) to the coverage of the same type that he or she were entitled to receiveunder this subsection, the Employer’s obligation to Executive and his or herdependents under this subsection shall cease with respect to that type ofcoverage.

 

6.       Limitation on Payments.  If any payments pursuant to the Agreementwould be subject to tax under Section 4999 of the Internal Revenue Code(the “Payments”), then Executive shall receive either (i) the fullPayments or (ii) such lesser amount of the Payment which would result inno portion of such Payments being subject to the Section 4999 tax,whichever yields the greatest net amount to Executive on an after-tax basis(applying the then highest aggregate marginal tax rates).  If a reduction of the Payments is requiredpursuant to subpart (ii), then Executive will be permitted to request whichcomponent items of the Payment will be reduced provided, however, thatExecutive must provide to the Company in writing his/her request within thereasonable time period established by the Company and the Company must in itsdiscretion consent to such request (or else the Company shall make its owndeterminations with respect to which Payment items are to be reduced).  The Company may elect to contest at itsexpense any initial IRS determination with respect to an Executive.  Executive shall cooperate reasonably with theCompany in any effort by the Company to contest an IRS determination under thisparagraph, including by the making of such filings and appeals as the Companymay reasonably require, but nothing herein shall be construed as requiringExecutive to bear any cost or expense of such a contest or in connectiontherewith to compromise any tax item (including without limitation anydeduction or credit) other than the Section 4999 tax and related interestand penalties, if any, that are the subject of the contested IRSdetermination.  In the event of anyunderpayment or overpayment under this Agreement, as determined by thenationally recognized accounting firm, the amount of such underpayment oroverpayment shall be promptly paid to Executive or refunded to the Company, asthe case may be, with interest at 120% of the applicable Federal rate providedfor in Section 7872(f)(2) of the Internal Revenue Code.

 

All taxdeterminations under this Section 6 shall be made at the Company’s expenseby a nationally recognized accounting firm selected by the Company in itsreasonable discretion.  Any good faithdeterminations of this accounting firm made hereunder shall be final, bindingand conclusive upon the Company and Executive.

 

7.       Noncompetition.  During the Non-Competition Period, Executiveshall not, directly or indirectly, whether as owner, partner, investor (nothingcontained in this Agreement, however, shall prevent Executive from passiveownership of two percent (2%) or less of the voting stock of any publiclytraded company (other than the Company)), consultant, agent, employee,co-venturer or otherwise, compete with the Company or any of its Affiliateswithin the United States or in any country in which the Company or any of itsAffiliates is then doing business. Specifically, but without limiting theforegoing, Executive agrees not to engage in any manner in any activity that isdirectly or indirectly competitive or potentially 

 

----

 

competitive withthe business of the Company or any of its Affiliates as conducted or underconsideration at any time during Executive’s employment. Executive furtheragrees that while Executive****is employed bythe Company and during the Non-Competition Period, Executive will not hire orattempt to hire any employee of the Company or any of its Affiliates, assist insuch hiring by any Person, encourage any such employee to terminate his or herrelationship with the Company or any of its Affiliates, or solicit or encourageany customer or vendor of the Company or any of its Affiliates to terminate ordiminish its relationship with them, or, in the case of a customer, to conductwith any Person any business or activity which such customer conducts or couldconduct with the Company or any of its Affiliates.

 

8.       Payment Obligations Absolute.  Upon a Change in Control QualifyingTermination or a Qualifying Termination, the Company’s obligations to pay thebenefits described in Section 4 (or the benefits described in Section 5for a Qualifying Termination) shall be absolute and unconditional and shall notbe affected by any circumstances, including, without limitation, any set-off,counterclaim, recoupment, defense or other right which the Company or anyAffiliate may have against any Executive; provided, however, that the Companymay delay the payment of any amounts due hereunder for six months followingtermination of Executive’s employment with the Company if necessary to complywith the “specified employee” rules pursuant to Section 409A of theCode.  In no event shall Executive beobligated to seek other employment or take any other action by way ofmitigation of the amounts payable to Executive under any of the provisions ofthe Agreement and, except as otherwise provided in Section 7, in no eventshall the amount of any payment hereunder be reduced by any compensation earnedby Executive as a result of employment by another employer.

 

9.       Amendment.  This Agreement may be amended or modifiedonly by a written instrument signed by Executive and by an expressly authorizedrepresentative of the Company.

 

10.     Withholding.  All payments and benefits hereunder shall besubject to reduction for applicable tax withholdings.

 

11.     Indemnification.  The Company agrees to pay all costs andexpenses (including without limitation fees and expenses of counsel) incurredby any Executive in connection with efforts to enforce his or her rights underthis Agreement and will indemnify and hold harmless any Executive from andagainst any damages, liabilities and expenses (including without limitationfees and expenses of counsel) incurred by Executive in connection with anylitigation or threatened litigation, including any regulatory proceedings,arising out of the making, performance or enforcement of this Agreement.

 

12.     Source of Payment.  Nothing herein shall be construed asestablishing a trust or as requiring the Company to set aside funds to meet itsobligations hereunder.  Notwithstandingthe foregoing, if the Board in its discretion so determines, the Company mayestablish a so-called “rabbi trust” or similar arrangement to assist it inmeeting any such obligations that it may have.

 

13.     Required Release and Non-Disparagement.  The Company’s obligation to provide severancepay and other benefits under this Agreement, however, is subject (a) toExecutive’s signing in a timely manner a release of claims in favor of theCompany in the form to be provided by the Company (the “Release”) and ofExecutive not revoking the Release in a timely manner thereafter; and (b) toExecutive’s meeting in full his or her obligations under any other agreementsin effect between you and the Company. You agree to not make any oral orwritten communication to any person or entity which has the effect of damagingthe reputation of, or otherwise working in any way to the detriment of,AS&E, its officers, directors or management. You also acknowledge yourcontinuing responsibility to honor the non-compete and non-solicitationobligations previously undertaken by you for a period of one year from theTermination Date.

 

14.     Notices.  Any and all notices, requests, demands andother communications provided for by this Agreement shall be in writing andshall be effective when delivered in person or deposited in the United Statesmail, postage prepaid, registered or certified, and addressed to Executive athis last known address on the books of the Company or, in the case of theCompany, at its principal place of business, attention of the President, or tosuch other address as either party may specify by notice to the other actuallyreceived.

 

15.     Entire Agreement.  This Agreement constitutes the entireagreement between the parties and supersedes all prior communications,agreements and understandings, written or oral, with respect to the terms andconditions of Executive’s severance from employment with the Company and itsAffiliates, including any prior Change in Control & Severance BenefitAgreement with the Company.

 

16.     Severability.  Each provision of this Agreement shall beconsidered severable such that if any one provision or clause conflicts withexisting or future applicable law, or may not be given full effect because ofsuch law, this shall not affect any other provision of the Agreement which,consistent with such law, shall remain in full force and effect.  All surviving clauses shall be construed soas to effectuate the purpose and intent of the parties.

 

17.     Headings.  The headings and captions in this Agreementare for convenience only and in no way define or describe the scope or contentof any provision of this Agreement.

 

----

 

18.     Counterparts.  This Agreement may be executed in two or morecounterparts, each of which shall be an original and all of which togethershall constitute one and the same instrument.

 

19.     Governing Law.  This Agreement shall be governed by the lawsof the Commonwealth of Massachusetts without regard to its conflicts of lawsprinciples.

 

 
| EXECUTIVE |   | AMERICAN  SCIENCE & ENGINEERING, INC. |
|-----------|--------|------------------------------------------------|
|      |   |                                           |
|      |   |                                           |   |   |   |   |
|      |   | By:                                            |   |   |   |   |
|      |   |                                           |   |   |   |   |
|      |   | Name:                                          |   |   |   |   |
|      |   |                                           |   |   |   |   |
|      |   | Title:                                         |   |   |   |   |

 

----