Exhibit10.5


 


American Science & Engineering, Inc.


Change in Control & Severance Benefit
Agreement


 


This is a
SEVERANCE 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 of
substantially 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 provide
severance and change in control benefits to Executive on the terms and
conditions set forth in this Agreement. 
These benefits are in lieu of any benefits that would otherwise be
payable to Executive under the severance pay plan, if any, maintained by the
Company for the benefit of senior executives or other Company employees, or by
statute.  This severance agreement does
not represent an employment contract for any definite term or period, which means
that either Executive or the Company can terminate Executive’s employment at
any time, for any reason or no reason, and with or without notice.


 


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


 


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


 


(a)           “Affected Award” means each
Stock-Based Award held by Executive immediately prior to a Change in Control
Qualifying Termination.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


(v) a complete
liquidation or dissolution of the Company


 


provided, that if any payment or
benefit payable hereunder upon or following a Change in Control (as defined
herein) would be required to comply with the limitations of Section 409A(a)(2)(A)(v) of
the Code and the guidance thereunder in order to avoid an additional tax under Section 409A
of the Code, such payment or benefit shall be made only if such Change in
Control constitutes a change in ownership or control of the Company, or a
change in ownership of the Company’s assets, described in IRS Notice 2005-1 or
any 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 is
terminated by the Employer  for any reason
other than for Cause, or Executive terminates his or her employment with the
Employer for “Good Reason” (as defined in Section 3(l) below).


 


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


 


(i)            “Code” means the Internal Revenue
Code.


 


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


 


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


 


(l)            “Good Reason” means (i) any
action by the Company which results in a material adverse change in Executive’s
position, title, reporting relationship, authority, duties or responsibilities
as in effect immediately prior to the Change in Control; provided,
however, that a sale or transfer of less than all or substantially
all of the business of the Company or any of its subsidiaries or other
reduction of less than all or substantially all of its business or that of its
subsidiaries, or the fact that the Company has become a subsidiary of another
company or that the securities of the Company are no longer publicly traded,
shall not be taken into account when determining whether a material adverse
change in Executive’s authority, duties or responsibilities has occurred; (ii) any
reduction in Executive’s rate of annual base salary for any fiscal year to less
than the greater of 100% of the rate of annual base salary payable to him or
her in the completed fiscal year immediately preceding the Change in Control or
100% of the rate at which annual base salary was payable to Executive
immediately prior to such reduction, (iii) any adverse change in Executive’s
annual bonus opportunity, taking into account both the maximum earnable bonus
and the targets on which the bonus is based, (iv) the failure to provide
Executive participation in an incentive plan tied to the long-term growth in
the value of the Company, which plan, whether equity- or cash-based, provided
Executive with a comparable financial opportunity to that provided to Executive
under the Company’s equity-based plan immediately prior to the Change in
Control, but excluding an isolated, insubstantial and inadvertent reduction of
annual base salary or annual bonus opportunity which is not taken in bad faith
and which is remedied by the Employer within five (5) business days after
receipt of notice thereof given by Executive; (v) any failure of the
Company to continue or cause to be continued in effect any retirement, life,
medical, dental, disability, accidental death or travel insurance plan in which
Executive was participating immediately prior to the Change in Control unless
the Company provides Executive with a plan or plans that provide at least
substantially equivalent benefits (as to extent of coverage and as to employee
cost), or the taking of any action by the Employer that would adversely effect
Executive’s participation in or materially reduce Executive’s benefits under
any such plan or deprive Executive of any material fringe benefit or perquisite
enjoyed by Executive immediately prior to the Change in Control, other than an
isolated, insubstantial and inadvertent failure not in bad faith and which is
remedied by the Employer within five (5) business days after receipt of
notice thereof given by Executive; or (vi) the Company requires Executive
to be based at any office or location that is more than twenty-five (25) miles
distant from Executive’s base office or work location immediately prior to the
Change in Control, except if such new location is closer to Executive’s
residence at the time such requirement is imposed


 


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


 

















 


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


 


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


 


(p)           “Outstanding Company Voting
Securities” means the outstanding voting securities of the Company entitled to
vote generally in the election of directors.


 


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


 


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


 


(s)           “Short Term Incentive” means payments
made pursuant to  the Company’s short-term
incentive plan.


 


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


 


4.   Change in Control Severance Benefits


 


(a)           Executive agrees that once any Person
other than the Company, a direct or indirect subsidiary of the Company, or an
employee benefit plan of the Company or any such subsidiary begins a tender or
exchange offer or a solicitation of proxies from the Company’s security holders
or 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 efforts
to effect a Change in Control or until a Change in Control has occurred.  In the event that Executive voluntarily
terminates his or her employment prior to the Change in Control, he/she will
not be entitled to any payments or benefits under this Agreement or any
severance pay plan, if any, of the Company.


 


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


 


(i)  Accrued Salary.  The
Company shall pay to Executive in a single cash lump sum, within ten (10) days
following the date of termination, the sum of (1) all salary and
commissions earned by Executive as of the date of termination but not yet paid
and (2) Executive’s accrued bonuses and accrued vacation earned through
the date of termination.  In addition,
the Company shall pay to Executive in cash within five (5) business days
of the date of termination, reimbursement for any unpaid, valid business
expenses that are approvable in accordance with Company policy.


 


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


 


(iii)  COBRA Premiums.  The
Company 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, if
Executive becomes employed by another employer and is eligible for medical,
dental or life insurance coverage that is substantially equivalent (as to extent
of coverage and as to employee cost) to the coverage of the same type that he
or she were entitled to receive under this subsection, the Employer’s
obligation to Executive and his or her dependents under this subsection shall
cease with respect to that type of coverage. 
In addition, in the event that the Company is unable to provide COBRA to
Executive as provided herein, Company will pay to Executive an equivalent
amount 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 and
exercisable, each Affected Award shall become fully vested and exercisable upon
the occurrence of the Change in Control Qualifying Termination.  In the event Executive holds an Affected
Award requiring exercise, the Company shall give Executive adequate notice and
opportunity to exercise the Affected Award. 
Notwithstanding the foregoing, to the extent permitted by the equity plan
under which the Stock-Based Award was granted, nothing in 


 

















 


this Agreement
shall preclude the Company from accelerating the vesting and exercisability of
an Affected Award to an earlier period, and terminating unexercised awards as
provided under the equity plan.


 


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


 


(v) Additional Discretionary
Payments.  The Company may
make an additional cash or stock settlement at the sole discretion of the
Board.


 


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


 


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


 


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


 


(c)           COBRA Premiums.  The Company shall pay 100% of the
premium toward COBRA coverage for Executive, Executive’s spouse and his
qualifying dependents, for a period of one (1) year following the date of
employment termination.  Notwithstanding
the foregoing provisions of this subsection, if Executive becomes employed by
another employer and is eligible for medical, dental or life insurance coverage
that is substantially equivalent (as to extent of coverage and as to employee
cost) to the coverage of the same type that he or she were entitled to receive
under this subsection, the Employer’s obligation to Executive and his or her
dependents under this subsection shall cease with respect to that type of
coverage.


 


6.       Limitation on Payments.  If any payments pursuant to the Agreement
would be subject to tax under Section 4999 of the Internal Revenue Code
(the “Payments”), then Executive shall receive either (i) the full
Payments or (ii) such lesser amount of the Payment which would result in
no 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 required
pursuant to subpart (ii), then Executive will be permitted to request which
component items of the Payment will be reduced provided, however, that
Executive must provide to the Company in writing his/her request within the
reasonable time period established by the Company and the Company must in its
discretion consent to such request (or else the Company shall make its own
determinations with respect to which Payment items are to be reduced).  The Company may elect to contest at its
expense any initial IRS determination with respect to an Executive.  Executive shall cooperate reasonably with the
Company in any effort by the Company to contest an IRS determination under this
paragraph, including by the making of such filings and appeals as the Company
may reasonably require, but nothing herein shall be construed as requiring
Executive to bear any cost or expense of such a contest or in connection
therewith to compromise any tax item (including without limitation any
deduction or credit) other than the Section 4999 tax and related interest
and penalties, if any, that are the subject of the contested IRS
determination.  In the event of any
underpayment or overpayment under this Agreement, as determined by the
nationally recognized accounting firm, the amount of such underpayment or
overpayment shall be promptly paid to Executive or refunded to the Company, as
the case may be, with interest at 120% of the applicable Federal rate provided
for in Section 7872(f)(2) of the Internal Revenue Code.


 


All tax
determinations under this Section 6 shall be made at the Company’s expense
by a nationally recognized accounting firm selected by the Company in its
reasonable discretion.  Any good faith
determinations of this accounting firm made hereunder shall be final, binding
and conclusive upon the Company and Executive.


 


7.       Noncompetition.  During the Non-Competition Period, Executive
shall not, directly or indirectly, whether as owner, partner, investor (nothing
contained in this Agreement, however, shall prevent Executive from passive
ownership of two percent (2%) or less of the voting stock of any publicly
traded company (other than the Company)), consultant, agent, employee,
co-venturer or otherwise, compete with the Company or any of its Affiliates
within the United States or in any country in which the Company or any of its
Affiliates is then doing business. Specifically, but without limiting the
foregoing, Executive agrees not to engage in any manner in any activity that is
directly or indirectly competitive or potentially 


 

















 


competitive with
the business of the Company or any of its Affiliates as conducted or under
consideration at any time during Executive’s employment. Executive further
agrees that while Executive  is employed by
the Company and during the Non-Competition Period, Executive will not hire or
attempt to hire any employee of the Company or any of its Affiliates, assist in
such hiring by any Person, encourage any such employee to terminate his or her
relationship with the Company or any of its Affiliates, or solicit or encourage
any customer or vendor of the Company or any of its Affiliates to terminate or
diminish its relationship with them, or, in the case of a customer, to conduct
with any Person any business or activity which such customer conducts or could
conduct with the Company or any of its Affiliates.


 


8.       Payment Obligations Absolute.  Upon a Change in Control Qualifying
Termination or a Qualifying Termination, the Company’s obligations to pay the
benefits described in Section 4 (or the benefits described in Section 5
for a Qualifying Termination) shall be absolute and unconditional and shall not
be affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company or any
Affiliate may have against any Executive; provided, however, that the Company
may delay the payment of any amounts due hereunder for six months following
termination of Executive’s employment with the Company if necessary to comply
with the “specified employee” rules pursuant to Section 409A of the
Code.  In no event shall Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to Executive under any of the provisions of
the Agreement and, except as otherwise provided in Section 7, in no event
shall the amount of any payment hereunder be reduced by any compensation earned
by Executive as a result of employment by another employer.


 


9.       Amendment.  This Agreement may be amended or modified
only by a written instrument signed by Executive and by an expressly authorized
representative of the Company.


 


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


 


11.     Indemnification.  The Company agrees to pay all costs and
expenses (including without limitation fees and expenses of counsel) incurred
by any Executive in connection with efforts to enforce his or her rights under
this Agreement and will indemnify and hold harmless any Executive from and
against any damages, liabilities and expenses (including without limitation
fees and expenses of counsel) incurred by Executive in connection with any
litigation 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 as
establishing a trust or as requiring the Company to set aside funds to meet its
obligations hereunder.  Notwithstanding
the foregoing, if the Board in its discretion so determines, the Company may
establish a so-called “rabbi trust” or similar arrangement to assist it in
meeting any such obligations that it may have.


 


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


 


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


 


15.     Entire Agreement.  This Agreement constitutes the entire
agreement between the parties and supersedes all prior communications,
agreements and understandings, written or oral, with respect to the terms and
conditions of Executive’s severance from employment with the Company and its
Affiliates, including any prior Change in Control & Severance Benefit
Agreement with the Company.


 


16.     Severability.  Each provision of this Agreement shall be
considered severable such that if any one provision or clause conflicts with
existing or future applicable law, or may not be given full effect because of
such 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 so
as to effectuate the purpose and intent of the parties.


 


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


 

















 


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


 


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


 


 


	
  EXECUTIVE

  	
   

  	
  AMERICAN
  SCIENCE & ENGINEERING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
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