**Exhibit 10.(c)(xxxix)**

 

**Execution Copy**

 

AGREEMENT

 

AGREEMENT made and entered into in Billerica, Massachusetts, by andbetween American Science and Engineering, Inc. (the “Company”), aMassachusetts corporation with its principal place of business at Billerica,Massachusetts, and Anthony Fabiano, (the “Executive”), effective as of the 7th dayof February, 2008 (the “Effective Date”).

 

WHEREAS,the Executive has been employed by the Company since 2002, most recently as itsChief Executive Officer;

 

WHEREAS,the Company wishes to retain the services of the Executive, and the Executivewishes to continue in the employ of the Company, from and after the EffectiveDate, under the terms and subject to the conditions set forth in thisAgreement;

 

NOW,THEREFORE, in consideration of the foregoing premises and the mutual promises,terms, provisions and conditions set forth in this Agreement, the partieshereby agree:

 

1.                                       Employment. Subject tothe terms and conditions set forth in this Agreement, the Company hereby offers,and the Executive hereby accepts, employment.

 

2.                                       Term. Subject toearlier termination as hereinafter provided, the Executive’s employmenthereunder shall be for a term of three (3) years, commencing on theEffective Date hereof, and shall renew automatically thereafter for successiveterms of one (1) year each, unless either party provides written notice tothe other at least three (3) months prior to the expiration of the original orany extension of any such term that the Agreement is not to be extended. Theterm of the Executive’s employment under this Agreement, as from time to timeextended or renewed, is hereafter referred to as “the term of this Agreement”or “the term hereof”.

 

3.                                       Capacity andPerformance.

 

(a)                                  During the termhereof, the Executive shall serve the Company as its President and ChiefExecutive Officer. The Executive shall report directly and solely to the Boardof Directors of the Company (the “Board”). The Company agrees to propose to theshareholders of the Company at each appropriate annual meeting during the termhereof the election of the Executive as a member of the Board, provided thatthe failure of the shareholders to so elect the Executive shall not constituteGood Reason for termination by the Executive hereunder, and provided furtherthat the Executive shall resign from the Board effective immediately upontermination of his employment for any reason. In addition, and without furthercompensation, the Executive shall serve as a director and/or officer of one ormore of the Company’s Affiliates if so elected or appointed from time to time.

 

(b)                                 During the termhereof, the Executive shall be employed by the Company on a full-time basis andshall, subject to the control of the Board, have general charge and supervisionof the business of the Company and such other duties and responsibilities onbehalf

 

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ofthe Company and its Affiliates as are consistent with the foregoing and as maybe reasonably designated from time to time by the Board or by its Chair orother designee (which designee shall be a member of the Board). The principalplace of performance of the Executive’s duties and responsibilities hereundershall be Billerica, Massachusetts, provided, however, that the Executive shallbe required to engage in business travel to the extent reasonably required bythe Company.

 

(c)                                  During the termhereof, the Executive shall devote all of his business time and his bestefforts, business judgment, skill and knowledge exclusively to the advancementof the business and interests of the Company and its Affiliates and to thedischarge of his duties and responsibilities hereunder. The Executive agreesthat, during his employment with the Company, he will not undertake any outsideactivity, whether or not violative of the provisions of Section 7, 8 or 9hereof, that could reasonably give rise to a conflict of interest or otherwiseinterfere with his duties and obligations to the Company or any of itsAffiliates. The Executive shall devote all of his working time and attention tothe performance of his duties and responsibilities hereunder; provided, theExecutive may make passive personal investments and otherwise manage hispersonal affairs, serve as a member of the board of directors of one companythat is not competitive with the business of the Company or any of itsAffiliates, and serve on the board of directors for one civic, educational orcharitable organization, provided that such activities do not violate theprovisions of Sections 7, 8 or 9 hereof, or otherwise interfere, individuallyor in the aggregate, with the performance of the Executive’s duties andresponsibilities.

 

4.                                       Compensationand Benefits. As compensation for all services performed by the Executiveunder and during the term hereof:

 

(a)                                  Base Salary. During theterm hereof, the Company shall pay the Executive a base salary at the rate ofFive-Hundred-Thousand Dollars ($500,000) per annum, payable in accordance withthe regular payroll practices of the Company for its executives and subject toincrease (but not decrease) from time to time by the Board, in its solediscretion. Such base salary, as from time to time increased, is hereafterreferred to as the “Base Salary.”

 

(b)                                 Incentive andBonus Compensation. Each fiscal year during the term hereof, theExecutive shall be considered by the Board (or the Compensation Committeethereof) for a cash bonus with a target of 100% of Base Salary (the “TargetBonus Amount”), and a maximum of 200% of the Base Salary (the “Bonus”). TheBonus shall be determined by performance criteria meeting the requirements forperformance-based compensation within the meaning of Section 162(m) ofthe Internal Revenue Code of 1986, as amended (the “Code”), preestablished bythe Board (or the Compensation Committee thereof), in writing, in consultationwith the Executive, no later than ninety (90) days after the period of serviceto which the performance relates (or at such earlier time as is required toqualify the Bonus as performance- based under Section 162(m) of theCode). A performance criterion must be an objectively determinable measure ofperformance relating to any or any combination of the following (measuredeither absolutely or by reference to an index or indices and determined eitheron a consolidated basis or, as the context permits, on a divisional,subsidiary, line of business, project

 

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orgeographical basis or in combinations thereof): sales; revenues; assets;expenses; earnings before or after deduction for all or any portion ofinterest, taxes, depreciation, or amortization, whether or not on a continuingoperations or an aggregate or per share basis; return on equity, investment,capital or assets; one or more operating ratios; borrowing levels, leverageratios or credit rating; market share; capital expenditures; cash flow; stockprice; stockholder return; sales of particular products or services; customeracquisition or retention; acquisitions and divestitures (in whole or in part);joint ventures and strategic alliances; spin-offs, split-ups and the like;reorganizations; or recapitalizations, restructurings, financings (issuance ofdebt or equity) or refinancings. Except as otherwise expressly provided underthe terms of this Agreement, the Executive shall not be entitled to earn anyBonus or other incentive compensation pro-rata for any period of service lessthan a full year. Any Bonus due to the Executive hereunder will be payable onor before the 75th calendar day following the close of the fiscal year forwhich the Bonus was earned (and in any event no later than March 15 of thecalendar year following the calendar year in which the Bonus was earned).

 

(c)                                  Long-TermIncentive Plans. Each fiscal year during the term hereof, theExecutive will be eligible to participate in the Company’s long-term incentiveprograms (including but not limited to equity-based programs) (“LTIPs”). TheExecutive will be eligible to participate in such LTIPs in accordance with theterms thereof, as in effect from time to time, and on a basis at least asfavorable as awards to other senior-level executives of the Company, provided,however, that nothing contained herein shall obligate the Company to adopt orcontinue any particular LTIP.

 

(d)                                 Vacations. During theterm hereof, the Executive shall be entitled to earn vacation at the rate offour (4) weeks per year, to be taken at such times and intervals as shallbe determined by the Executive, subject to the reasonable business needs of theCompany; provided, however, that the Company agrees to consider increasing theannual rate of vacation accrual from four (4) weeks to five (5) weeksat the time of the Executive’s next annual review. Vacation shall otherwise begoverned by the policies of the Company, as in effect from time to time.

 

(e)                                  Other Benefits. During theterm hereof, the Executive shall be entitled to participate in any and allEmployee Benefit Plans from time to time in effect for employees of the Companygenerally, including but not limited to medical, dental, long-term disabilityand life insurance plans and a 401(k) plan, and on a basis at least asfavorable as benefits to other senior- level executives of the Company, exceptto the extent any such Employee Benefit Plan is a type of benefit otherwiseprovided herein to the Executive *(e.g.,*a severance payplan). Such participation shall be subject to the terms of the applicable plandocuments and generally applicable Company policies. In addition, during theterm hereof, the Company (1) shall (i) pay for and maintain a$765,000 term life insurance policy on the Executive’s life (under which theExecutive shall have the right to designate the beneficiary(s) thereunder)and (ii) promptly (and in any event within thirty (30) days of thesubmission by the Executive of documentation as may be reasonably specified bythe Company from time to time which substantiates the Executive expenditures)reimburse the Executive for the premium cost of obtaining supplemental termlife insurance coverage, which premium cost shall not exceed Five-ThousandDollars ($5,000)

 

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annually,and (2) shall (i) maintain the Executive’s current coverage under theCompany’s long-term disability insurance plan or, in its discretion, reimbursethe Executive for the premium cost of obtaining long-term disability coveragewhich provides at least $6,000 of monthly benefits, and (ii) shallpromptly (and in any event within thirty (30) days of the submission by theExecutive of documentation as may be reasonably specified by the Company fromtime to time which substantiates the Executive’s expenditures) reimburse theExecutive for the premium cost of obtaining supplemental long-term disabilityinsurance coverage, which premium cost shall not exceed Six-Thousand Dollars($6,000) annually. The Company may alter, modify, add to or delete its EmployeeBenefit Plans at any time as it, in its sole judgment, determines to beappropriate, without recourse by the Executive. For purposes of this Agreement,“Employee Benefit Plan” shall have the meaning ascribed to such term in Section 3(3) ofERISA, as amended from time to time.

 

(f)                                    BusinessExpenses. The Company shall pay or reimburse theExecutive for all reasonable and necessary business expenses incurred or paidby the Executive in the performance of his duties and responsibilitieshereunder, subject to any maximum annual limit and other restrictions on suchexpenses set by the Board and communicated in writing to the Executive and tosuch reasonable substantiation and documentation as may be specified by theCompany from time to time. All expenses eligible for reimbursement hereundershall be paid to the Executive promptly in accordance with the Company’scustomary business expense reimbursement practices but in no event later thansixty (60) days following the close of the calendar year in which such expenseswere incurred. The expenses incurred by the Executive in any calendar year thatare eligible for reimbursement hereunder shall not affect the expenses incurredby the Executive in any other calendar year that are eligible for reimbursementhereunder. The Executive’s right to reimbursement hereunder shall not besubject to liquidation or exchange for any other benefit.

 

(g)                                 Legal Fees. Within thirty(30) days after the submission by the Executive of reasonable substantiationand documentation as may be specified by the Company, the Company shall causeto be paid the legal fees and expenses the Executive incurs with respect to thenegotiation and preparation of this Agreement.

 

(h)                                 Perquisites. During theterm hereof, the Executive shall be provided perquisites on a basis no lessfavorable than provided to other similarly situated senior-level executives ofthe Company. In addition, the Executive shall be provided the followingperquisites:

 

(i)                                          The Executiveshall promptly (and in any event within thirty (30) days of the submission ofthe documentation referred to in this Section 4(h) below) bereimbursed the cost to him of an annual physical examination, which currentlycosts approximately Three-Thousand Dollars ($3,000), but which shall be subjectto reasonable increase;

 

(ii)                                       The Executiveshall promptly (and in any event within thirty (30) days of the submission ofthe documentation referred to in this Section 4(h) below) be

 

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reimbursedthe cost to him of annual financial planning and tax preparation services, in anamount not to exceed Seven-Thousand Five-Hundred Dollars ($7,500) per year; and

 

(iii)                               The Executiveshall be promptly (and in any event within thirty (30) days of the submissionof the documentation referred to in this Section 4(h) below)reimbursed the cost to him of the annual membership dues for the YoungPresidents’ Organization and the CEO Network;

 

allsubject to such reasonable substantiation and documentation as may be specifiedby the Company from time to time.

 

(i)                                Timing ofReimbursements. Any reimbursements made pursuant to this Section 4shall be paid no later than sixty (60) days following the close of the calendaryear in which the expense was incurred.

 

5.                                       Termination ofEmployment and Severance Benefits. Notwithstanding the provisionsof Section 2 hereof, the Executive’s employment hereunder shall terminateprior to the expiration of the term hereof under the following circumstances:

 

(a)                             Death. In the eventof the Executive’s death during the term hereof, the Executive’s employmenthereunder shall immediately and automatically terminate.

 

(i)                                     In such event,the Company shall, as applicable, pay or provide to the Executive’s designatedbeneficiary or, if no beneficiary has been designated by the Executive inwriting, to his estate (A) (i) any Base Salary earned but not paidduring the final payroll period of the Executive’s employment through the dateof termination in accordance with normal payroll procedures, (ii) pay forany vacation time earned but not used through the date of termination, (iii) anybonus and other incentive compensation awarded for the fiscal year precedingthat in which termination occurs, but unpaid on the date of termination payablein accordance with the applicable bonus or other incentive compensation award, (iv) anybusiness expenses incurred by the Executive but unreimbursed on the date of termination,provided that such expenses and required substantiation and documentation aresubmitted within sixty (60) days after termination and that such expenses arereimbursable under Company policy; and (v) other vested benefits, if any,that Executive has accrued under and in accordance with the terms andconditions of the Company’s Employee Benefit Plans as of the date oftermination of his employment (all of the foregoing, “Final Compensation”) and (B) alump sum amount equal to two (2) times the average of each of the lastthree (3) years of Base Salary.

 

(ii)                                  In addition,the Company shall provide the Executive’s designated beneficiary or, if nobeneficiary has been designated by the Executive in writing, his estate, with apro-rata Bonus award for the fiscal year in which termination occurs,calculated based on the Target Bonus Amount for the fiscal year in whichtermination occurs and the number of days in such year that the Executive wasemployed, to be paid in a single lump sum payment within ninety (90) daysfollowing the date of termination

 

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ofemployment but in no event later than March 15 of the calendar yearfollowing the year in which termination occurs (the “Pro Rata Bonus”).

 

(iii)                               Any outstanding option, stockappreciation right, restricted stock, restricted stock unit or otherequity-based award granted by the Company to the Executive pursuant to theCompany’s 2005 Equity and Incentive Plan, any successor plan or agreement orany other equity compensation plan or agreement previously adopted by the Boardin which Executive participated (the “Stock-Based Awards”), including but notlimited to the award of stock options and restricted stock granted on November 1,2005 pursuant to the 2005 Equity and Incentive Plan (which has been referred toby the parties from time to time as “LTIP #1”), the award of stock options andrestricted stock granted on June 20, 2006 pursuant to the 2005 Equity andIncentive Plan (which has been referred to by the parties from time to time as “LTIP#2”), and the award of stock options and restricted stock granted on August 15,2007 pursuant to the 2005 Equity and Incentive Plan (which has been referred toby the parties from time to time as “LTIP #3”), shall be governed by the termsof the applicable plans and agreements.

 

(iv)                              If the Executive is enrolled inthe Company’s medical and dental plans on the date of termination of hisemployment, and if his estate elects to continue participation of his eligibledependents in those plans, then for eighteen (18) months following the date oftermination of the Executive’s employment, the Company will contribute 100% ofthe premium cost of the Executive’s eligible dependents under those plans.

 

(v)                                 The Companyshall have no further obligation to Executive hereunder for (A) compensationor (B) benefits pursuant to Employee Benefit Plans or otherwise describedin Section 4 hereof.

 

(b)                                 Disability.

 

(i)                                     The Company mayterminate the Executive’s employment hereunder, upon written notice to theExecutive, in the event that the Executive becomes unable, during hisemployment hereunder through any medically determinable illness, injury,accident or condition of either a physical or psychological nature thatconstitutes a “disability” within the meaning of the long-term disabilitypolicy then in effect at the Company, to perform substantially all of hisduties and responsibilities hereunder, notwithstanding the provision of anyreasonable accommodation, for a period of 180 consecutive days (a “Disability”).In the event of such termination:

 

(A)                         the Companyshall, as applicable, pay or provide the Executive with the Final Compensationand the Pro Rata Bonus;

 

(B)                           if theExecutive is enrolled in the Company’s medical and dental plans on the date oftermination of his employment, and if he elects to continue his participationand that of his eligible dependents in those plans under the federal law knownas “COBRA,” then for eighteen (18) months following the

 

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dateof termination of the Executive’s employment or, if earlier, until theExecutive becomes eligible for substantially equivalent (as to the extent ofcoverage and the cost to the Executive) coverage through a new employer, theCompany will contribute 100% of the premium cost of the Executive’s coverageand that of his eligible dependents under those plans, provided the Executiveand his dependents remain eligible for such coverage under applicable law andplan terms;

 

(C)                           the Companywill continue to maintain the life insurance coverage that was in effect forthe Executive on the date of termination of his employment, and will continueto reimburse the Executive for the premium cost of obtaining supplemental termlife insurance coverage, which premium cost shall not exceed Five-ThousandDollars ($5,000) annually in accordance with Section 4(e) hereof, forthe period of eighteen (18) months following the termination of the Executive’semployment or, if earlier, until the Executive becomes eligible forsubstantially equivalent (as to the extent of coverage and the cost to theExecutive) life insurance coverage through a new employer, provided suchcontinued coverage is permitted by applicable law and plan terms. In the eventsuch continued coverage is not permitted by applicable law or plan terms, theCompany shall, on the first business day of each month, in addition to thepremium cost for supplemental term life insurance provided for above, pay theExecutive monthly payments in an amount equal to the premium payments that theCompany would have made had the Executive remained eligible for such continuedcoverage, for the period of eighteen (18) months following the termination ofthe Executive’s employment or, if earlier, untilthe Executive becomes eligible for substantially equivalent (as to the extentof coverage and the cost to the Executive) life insurance coverage through anew employer;

 

(D)                          any outstandingStock-Based Awards, including but not limited to the LTIP #1, LTIP #2 and LTIP#3 Awards, shall be governed by the terms of the applicable plans andagreements, except that for purposes of the LTIP #1, LTIP #2 and LTIP #3Awards, termination by reason of Disability pursuant to this Section 5(b) shallbe treated in the same manner as termination by reason of the Executive’s deathpursuant to Section 5(a) hereof; and

 

(E)                            The Companyshall have no further obligation to Executive hereunder for (A) compensation or(B) benefits pursuant to Employee Benefit Plans or otherwise described in Section 4hereof.

 

(F)                            Any obligationof the Company to provide the compensation and benefits described in this Section 5(b)(i) isconditioned on (y) the Executive’s signing and return of a timely andeffective release of claims in the form attached to this Agreement as Exhibit A (the “EmployeeRelease”) and delivering it to the Company within thirty (30) calendar days ofthe date his employment terminates, and (z) the Executive refraining frommaking any oral or

 

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writtenstatement to any person or entity which has the effect of damaging the reputationof, or otherwise working in any way to the detriment of the Company, any of itsAffiliates, or any of their respective officers, directors, or management (the “Non-DisparagementObligation”). Notwithstanding anything to the contrary contained herein, theNon-Disparagement Obligation shall not prevent the Executive from making anytruthful statement to the extent (i) necessary with respect to anylitigation, arbitration or mediation involving this Agreement, including, butnot limited to, the enforcement of this Agreement or (ii) required by lawor by any court, arbitrator, mediator or administrative or legislative body(including any committee thereof) with jurisdiction over the Executive.

 

(ii)                                       The Board maydesignate another employee to act in the Executive’s place during any period ofthe Executive’s Disability. Notwithstanding any such designation, the Executiveshall continue to receive the Base Salary in accordance with Section 4(a) andbenefits in accordance with Section 4(e), to the extent permitted by thethen-current terms of the applicable Employee Benefit Plans, until theExecutive becomes eligible for disability income benefits under the Company’s disabilityincome plan or until the termination of his employment, whichever shall firstoccur.

 

(iii)                                    While receivingdisability income payments under the Company’s disability income plan, theExecutive shall not be entitled to receive any Base Salary under Section 4(a) hereof,but shall continue to participate in Company Employee Benefit Plans inaccordance with Section 4(e) and the terms of such plans, until thetermination of his employment.

 

(iv)                                   If any questionshall arise as to whether during any period the Executive is unable, throughany illness, injury, accident or condition of either a physical orpsychological nature, to perform substantially all of his duties andresponsibilities hereunder, notwithstanding the provision of any reasonableaccommodation, the Executive may, and at the request of the Company shall,submit to a medical examination by a physician selected by the Company to whomthe Executive or his duly appointed guardian, if any, has no reasonableobjection to determine whether the Executive is so disabled (within the meaningof subsection (b)(i)) and such determination shall for the purposes of thisAgreement be conclusive of the issue. If such question shall arise and theExecutive shall fail to submit to such medical examination, the Company’sdetermination of the issue shall be binding on the Executive.

 

(c)                                  By the Companyfor Cause. The Company may terminate the Executive’s employmenthereunder for Cause at any time upon written notice to the Executive settingforth in reasonable detail the nature of such Cause. The following, asdetermined by the Board in its reasonable judgment, shall constitute Cause fortermination:

 

(i)                                     The Executive’sbreach of fiduciary duty;

 

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(ii)                                       The Executive’sfailure to perform (other than by reason of Disability), or gross neglect inthe performance of, his duties and responsibilities to the Company or any ofits Affiliates, which failure or neglect, if susceptible of cure, remainsuncured or continues or recurs after fifteen (15) business days’ written noticefrom the Company specifying in reasonable detail the nature of such failure orneglect;

 

(iii)                                    Material,breach by the Executive of any provision of this Agreement or any otheragreement with the Company or any of its Affiliates, which breach, ifsusceptible to cure, remains uncured or continues or recurs after fifteen (15)business days’ written notice from the Company specifying in reasonable detailthe nature of the breach (for the avoidance of doubt, any breach of Section 7,8 and 9 hereof is not susceptible to cure);

 

(iv)                                   fraud orembezzlement or other dishonesty with respect to the Company or any of itsAffiliates; or

 

(v)                                      conviction of afelony or any crime involving moral turpitude under any applicable law.

 

Uponthe giving of written notice of termination of the Executive’s employmenthereunder for Cause setting forth in reasonable detail the nature of such Causeand following any applicable cure period, the Company shall have no furtherobligation to the Executive for (A) compensation or (B) benefitspursuant to Employee Benefit Plans or otherwise described in Section 4hereof, other than for Final Compensation. Any outstanding Stock-Based Awards,including but not limited to the LTIP #1, LTIP #2 and LTIP #3 Awards, shall begoverned by the terms of the applicable plans and agreements.

 

(d)                                 By the CompanyOther than for Cause. The Company may terminate the Executive’semployment hereunder other than for Cause at any time upon written notice tothe Executive. In the event of such termination, in addition to the FinalCompensation, and provided that no benefits are payable to the Executive undera separate severance agreement as a result of such termination, the Companyshall pay or provide, as applicable, the Executive with the following(together, the “Severance Payments and Benefits”):

 

(i)                                          the Pro RataBonus;

 

(ii)                                       an amount equalto two (2) times the sum of (A) Base Salary, at the rate in effect onthe date of termination of the Executive’s employment (prior to any reductionconstituting Good Reason), plus (B) the Target Bonus Amount for the yearin which termination occurs (the “Lump Sum Payment”);

 

(iii)                                    if theExecutive is enrolled in the Company’s medical and dental plans on the date oftermination of his employment, and if he elects to continue his participationand that of his eligible dependents in those plans under the federal law knownas “COBRA,” then for eighteen (18) months following the date of termination ofthe Executive’s employment or, if earlier, until the Executive becomes eligiblefor

 

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substantiallyequivalent (as to the extent of coverage and the cost to the Executive)coverage through a new employer, the Company will contribute 100% of thepremium cost of his coverage and that of his eligible dependents under thoseplans, provided the Executive and his dependents remain eligible for suchcoverage under applicable law and plan terms; and

 

(iv)                                   the Companywill continue to maintain the life insurance coverage that was in effect forthe Executive on the date of termination of his employment, and will continueto reimburse the Executive for the premium cost of obtaining supplemental termlife insurance coverage which premium cost shall not exceed Five ThousandDollars ($5,000) annually, all in accordance with Section 4(e) hereof,for the period of eighteen (18) months following the termination of theExecutive’s employment or, if earlier, until the Executive becomes eligible forsubstantially equivalent (as to the extent of coverage and the cost to theExecutive) life insurance coverage through a new employer, provided suchcontinued coverage is permitted by applicable law and plan terms. In the eventany such continued coverage is not permitted by applicable law or plan terms,the Company shall, on or prior to the first business day of each month, pay theExecutive monthly payments in an amount equal to the premium payments that theCompany would have made in respect of the Executive’s current term lifeinsurance coverage and the premium cost for supplemental term life insurancecoverage, had the Executive remained eligible for such coverage, for the periodof eighteen (18) months following the termination of the Executive’s employmentor, if earlier, until the Executive becomes eligible for substantiallyequivalent life insurance coverage through a new employer.

 

Anyoutstanding Stock-Based Awards, including but not limited to the LTIP #1, LTIP#2 and LTIP #3 Awards, shall be governed by the terms of the applicable plansand agreements. Any obligation of the Company to provide the Severance Paymentsand Benefits is conditioned on (y) the Executive’s signing and return of atimely and effective Employee Release and delivering it to the Company withinthirty (30) calendar days of the date his employment terminates, and (z) complyingwith the Non-Disparagement Obligation. The Pro Rata Bonus and the Lump SumPayment to which the Executive is entitled hereunder shall be payable in asingle lump sum within (60) days after the date the Executive’s employmentterminates. The Employee Release required for separation benefits in accordancewith Sections 5(d), 5(e) or 5(g) creates legally binding obligationson the part of the Executive and the Company and its Affiliates thereforeadvise the Executive to seek the advice of an attorney before signing it.

 

(e)                                  By theExecutive for Good Reason. The Executive may terminatehis employment hereunder for Good Reason, but must first provide written noticeto the Company of the condition giving rise to the Good Reason nolater than sixty (60) days following the date on which the Executive obtainsknowledge of the occurrence of the condition and give the Company thirty (30)days to remedy the condition. The following conditions arising without theExecutive’s prior written consent shall constitute Good Reason for terminationby the Executive:

 

(i)                                     any action bythe Company (including, for this purpose, the Board or any committee thereof)which results in a diminution in Executive’s position, titles,

 

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reportingrelationship, authority, duties or responsibilities; provided, however, that asale or transfer of less than all or substantially all of the business of theCompany or any of its subsidiaries or other reduction of less than all of itsbusiness or that of its subsidiaries, or the fact that the Company has become asubsidiary of another company or that the securities of the Company are nolonger publicly traded, shall not be taken into account when determiningwhether a material diminution in Executive’s authority, duties orresponsibilities has occurred;

 

(ii)                                  a diminution inExecutive’s rate of annual Base Salary or bonus opportunity pursuant to Section 4(b) hereof;

 

(iii)                               the Company’srequiring the Executive to be based at any office or location that is more thantwenty-five (25) miles distant from Executive’s then-current base office orwork location, unless the new location is closer to the Executive’s residenceat the time the requirement is imposed; or

 

(iv)                              any otheraction or inaction that constitutes a material breach by the Company of thisAgreement.

 

Inthe event of termination in accordance with this Section 5(e), andprovided that no benefits are payable to the Executive under a separateseverance agreement as a result of such termination, then the Executive will beentitled to the same payments and benefits, and at the same time(s), he wouldhave been entitled to receive had the Executive been terminated by the Companyother than for Cause in accordance with Section 5(d) above; providedthat the Executive signs and delivers to the Company a timely and effectiveEmployee Release and complies with the Non-Disparagement Obligation.

 

(f)                                    By the ExecutiveOther than for Good Reason. The Executive mayterminate his employment hereunder at any time for other than Good Reason uponsixty (60) days’ written notice to the Company. In the event of termination ofthe Executive pursuant to this Section 5(f), the Board may elect to waivethe period of notice, or any portion thereof, without additional compensationto the Executive. In such circumstances, the Company shall have no furtherobligation to the Executive for (A) compensation or (B) benefits pursuantto Employee Benefit Plans or otherwise described in Section 4 hereof,other than for any Final Compensation due to him. Any outstanding Stock-BasedAwards, including but not limited to the LTIP #1, LTIP #2 and LTIP #3 Awards,shall be governed by the terms of the applicable plans and agreements.

 

(g)                                 Upon a Changeof Control.

 

(i)                                     If a Change ofControl occurs and, within two years following such Change of Control, theCompany terminates the Executive’s employment other than for Cause, or theExecutive terminates his employment for Good Reason, then, in lieu of anypayments to or on behalf of the Executive under Section 5(d) or 5(e) hereof,and provided that the Executive signs and delivers to the Company a timely andeffective Employee

 

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Release,and complies with the Non-Disparagement Obligation, then in addition to theFinal Compensation, the Company shall provide the Executive with the following:

 

(A)                              the Pro RataBonus;

 

(B)                                an amount equalto 2.9 times the sum of (A) Base Salary at the rate in effect on the dateof termination of the Executive’s employment (prior to any reductionconstituting Good Reason), plus (B) the Target Bonus Amount for the yearin which termination occurs (the “Change of Control Severance Payment”);

 

(C)                                if theExecutive is enrolled in the Company’s medical and dental plans on the date oftermination of his employment, and if he elects to continue his participationand that of his eligible dependents in those plans under the federal law knownas “COBRA,” then for thirty six (36) months following the date of terminationof the Executive’s employment or, if earlier, until the Executive becomeseligible for substantially equivalent (as to the extent of coverage and thecost to the Executive) coverage through a new employer (the “ContinuationPeriod”), the Company will contribute 100% of the premium cost of his coverageand that of his eligible dependents under those plans, provided the Executiveand his dependents remain eligible under applicable law and plan terms. In theevent that such continued coverage is not permitted under applicable law orplan terms, the Company shall, on or prior to the first business day of eachmonth, pay the Executive monthly payments in an amount equal to the premiumpayments that the Company would have made had the Executive remained eligiblefor such coverage, for the remainder of the Continuation Period;

 

(D)                               the Companywill continue to maintain the life insurance coverage that was in effect forthe Executive on the date of termination of his employment, and will continueto reimburse the Executive for the premium cost of obtaining supplemental termlife insurance coverage which premium cost shall not exceed Five ThousandDollars ($5,000) annually, all in accordance with Section 4(e) hereof,for the Continuation Period or, if earlier, until the Executive becomeseligible for substantially equivalent (as to the extent of coverage and thecost to the Executive) life insurance coverage through a new employer, providedsuch continued coverage is permitted by applicable law and plan terms. In theevent any such continued coverage is not permitted by applicable law or planterms, the Company shall, on or prior to the first business day of each month,pay the Executive monthly payments in an amount equal to the premium paymentsthat the Company would have made in respect of the Executive’s current termlife insurance coverage, the premium cost for supplemental term life insurancecoverage, had the Executive remained eligible for such coverage, for theremainder of the Continuation Period;

 

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(E)                                 notwithstandinganything to the contrary in the applicable plans and agreements, any and alloutstanding and unvested Stock-Based Awards shall immediately become vested andfully exercisable on the date of termination of the Executive’s employmenthereunder. Except as otherwise expressly provided herein, all Stock-BasedAwards shall be governed by the terms of the applicable plans and agreements.

 

ThePro Rata Bonus and the Change of Control Severance Payment shall be payable inone lump sum on the date which is sixty (60) calendar days from the date theExecutive’s employment terminates.

 

(ii)                                  Notwithstandinganything to the contrary contained herein or in any plan or agreement, if aStock-Based Award held by Executive is not assumed or replaced, or to beassumed or replaced, upon a Change of Control, each unvested Stock-Based Awardheld by the Executive, whether or not his employment has been terminatedhereunder, shall become fully vested and exercisable effective immediatelyprior to the Change of Control, and in the event the Executive holds aStock-Based Award requiring exercise, the Company shall give the Executiveadequate notice and opportunity to exercise the Stock-Based Award.

 

(iii)                               “Change ofControl” means the occurrence of any of the following:

 

(A)                              any Person,other than the Company or an Affiliate, becomes a beneficial owner (within themeaning of Rule 13d-3, as amended, as promulgated under the SecuritiesExchange Act of 1934, as amended), directly or indirectly, in one or a seriesof transactions, of securities representing more than fifty percent (50%) ofthe combined voting power of the Company’s then outstanding securities;

 

(B)                                thestockholders of the Company approve a merger or consolidation of the Companywith any other Person, other than a merger or consolidation which would resultin the voting securities of the Company outstanding immediately prior theretocontinuing to represent (either by remaining outstanding or by being convertedinto voting securities of the surviving entity) more than fifty percent (50%)of the combined voting power of the voting securities of the Company or suchsurviving entity outstanding immediately after such merger or consolidation;

 

(C)                                there occurs aclosing of a sale or other disposition by the Company of all or substantiallyall of the assets of the Company;

 

(D)                               IncumbentDirectors 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 tothe date hereof, whose election or nomination for election was approved by avote of at least two-thirds of the Incumbent Directors shall be treated as anIncumbent Director unless he or she assumed

 

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officeas a result of an actual or threatened election contest with respect to theelection or removal of directors; or

 

(E)                                 a completeliquidation or dissolution of the Company.

 

(h)                                      Limitation onPayments. If any payments pursuant to this Agreementwould be subject to tax under Section 4999 of the Internal Revenue Code(the “Payments”), then the Executive shall receive either (i) thePayments, 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 the Executive on an after-tax basis(applying the then-highest aggregate marginal tax rates). If a reduction of thePayments is required pursuant to subpart (ii), then Executive will be permittedto request which component items of the Payment will be reduced, provided,however, that the Executive must provide to the Company in writing his/her request(or else the Company shall make its own determinations with respect to whichPayment items are to be reduced). The Company may elect to contest at itsexpense any initial IRS determination with respect to the Executive. TheExecutive shall cooperate reasonably with the Company in any effort by theCompany to contest an IRS determination under this paragraph, including by themaking of such filings and appeals as the Company may reasonably require, butnothing herein shall be construed as requiring the Executive to bear any costor expense of such a contest or in connection therewith to compromise any taxitem (including without limitation any deduction or credit) other than the Section 4999tax and related interest and penalties, if any, that are the subject of thecontested IRS determination. In the event of any underpayment or overpaymentunder this Agreement, as determined by the nationally recognized accountingfirm, the amount of such underpayment or overpayment shall be promptly paid tothe Executive or refunded to the Company, as the case may be, with interest at120% of the applicable Federal rate provided for in Section 7872(f)(2) ofthe Internal Revenue Code. All tax determinations under this Section 5(h) shallbe made at the Company’s expense by a nationally recognized accounting firmselected by the Company in its reasonable discretion. Any good faithdetermination of this accounting firm made hereunder shall be final, bindingand conclusive upon the Company and the Executive.

 

(i)                                          Timing of Paymentsand other 409A Issues. All payments by the Companyto the Executive under this Section 5 shall, except as otherwise expresslyprovided in this Section 5, be made on or before the sixtieth (60th) dayafter the date on which the Executive’s employment terminates hereunder.Notwithstanding the foregoing or anything to the contrary contained in anyother provision of this Agreement, if the Executive is a “specified employee”within the meaning of the Section 409A Rules (as defined below) atthe time of the Executive’s “separation from service” within the meaning of theSection 409A Rules, then any payment otherwise required to be made to theExecutive under this Agreement on account of the Executive’s separation fromservice, to the extent such payment (after taking in to account all exclusionsapplicable to such payment under the Section 409A Rules) is properlytreated as deferred compensation subject to the Section 409A Rules, shallnot be made until the first business day after (i) the expiration of six (6) monthsfrom the date of the Executive’s separation from service or (ii) ifearlier, the date of the Executive’s death (the “Delayed Payment Date”). On theDelayed Payment Date, there shall be paid to the Executive or, if the Executivehas died,

 

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tothe Executive’s estate, in a single cash lump sum, an amount equal to theaggregate amount of the payments delayed pursuant to the preceding sentence.For purposes of the foregoing, the “Section 409A Rules” shall mean Section 409Aof the Code, the regulations issued thereunder, and all notices, rulings andother guidance issued by the Internal Revenue Service interpreting the same.For the avoidance of doubt, the compensation, benefits and other payments describedin this Agreement (collectively, the “Payments”) are intended either to complywith the Section 409A Rules (to the extent they are subject to such Section) orto be exempt from the requirements of the Section 409A Rules (where anexemption is available), and shall be construed accordingly. The Executiveacknowledges, however, that any payment pursuant to this Agreement could betreated as deferred compensation under the Section 409A Rules, and accordinglycould be subject to excise tax, interest and other payments pursuant to the Section409A Rules (the “409A Tax Payments”). The Executive acknowledges and agreesthat the Executive shall be solely responsible for all 409A Tax Payments. TheCompany shall have no obligation to indemnify or reimburse the Executive forany 409A Tax Payments or otherwise be liable for any 409A Tax Payments that maybe due.

 

(j)                                     Mitigation, Etc. The Executiveshall not be obligated to seek other employment or take other action by way ofmitigation of the amounts payable to the Executive under any of the provisionsof this Agreement and, except as otherwise expressly provided herein, in noevent shall the amount of any payment hereunder be reduced by any compensationearned by, or any benefit provided to, the Executive as a result of employmentby another employer.

 

(k)                                  Post-AgreementEmployment. In the event the Executive remains in theemploy of the Company or any of its Affiliates following termination of theterm of this Agreement, by the expiration of the term or otherwise, then suchemployment shall be at will.

 

6.                                       Effect ofTermination. The provisions of this Section 6 shallapply to any termination, whether due to the expiration of the term hereof,pursuant to Section 5 or otherwise.

 

(a)                                  Payment by theCompany of any severance pay and benefits that may be due the Executive in eachcase under the applicable termination provision of Section 5 shallconstitute the entire obligation of the Company to the Executive for (A) compensationor (B) benefits pursuant to Employee Benefit Plans or otherwise describedin Section 4 hereof. The Executive shall promptly give the Company noticeof all facts necessary for the Company to determine the amount and duration ofits obligations in connection with any termination pursuant to Section 5(b),5(d), 5(e) or 5(g) hereof.

 

(b)                                 Except for anyright of the Executive to continue medical and dental plan participation andlife insurance participation in accordance with the applicable terminationprovision of Section 5 and applicable law, benefits shall terminatepursuant to the terms of the applicable benefit plans based on the date oftermination of the Executive’s employment without regard to any continuation ofBase Salary or other payment to the Executive following such date oftermination.

 

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(c)                                  Provisions of this Agreement shall surviveany termination if so provided herein or if necessary or desirable toaccomplish the purposes of other surviving provisions, including withoutlimitation Sections 5(h), 5(i), 5(j) and 5(k), the obligations of theExecutive under Sections 7, 8 and 9 hereof and the obligations of both partiesunder Sections 13 and 14. The obligation of the Company to make payments to oron behalf of the Executive under Section 5 hereof is expressly conditionedupon the Executive’s continued full performance of obligations under Sections7, 8 and 9 hereof. The Executive recognizes that, except as expressly providedin Section 5(a), 5(b), 5(d) or 5(e) or 5(g), no compensation isearned after termination of employment.

 

7.                                       ConfidentialInformation.

 

(a)                                  The Executive acknowledges that the Companyand its Affiliates continually develop Confidential Information, that theExecutive may develop Confidential Information for the Company or itsAffiliates and that the Executive may learn of Confidential Information duringthe course of employment. The Executive will comply with the policies andprocedures of the Company and its Affiliates disclosed to him for protectingConfidential Information and shall not disclose to any Person or use, otherthan for the proper performance of his duties and responsibilities to theCompany and its Affiliates, any Confidential Information obtained by theExecutive incident to his employment or other association with the Company orany of its Affiliates. The Executive understands that this restriction shallcontinue to apply after his employment terminates, regardless of the reason forsuch termination. The confidentiality obligation under this Section 7shall not apply to information (i) which is generally known or readilyavailable to the public or in the relevant trade or industry at the time ofdisclosure or becomes so generally known through no wrongful act on the part ofthe Executive, (ii) when disclosure is required by law or by any court,arbitrator, mediator or administrative or legislative body (including anycommittee thereof) with jurisdiction to order the Executive to disclose or makeaccessible any information, or (iii) with respect to any litigation,arbitration or mediation involving enforcement of this Agreement.

 

(b)                                 All documents, records, tapes and other mediaof every kind and description relating to the business, present or otherwise,of the Company or its Affiliates and any copies, in whole or in part, thereof(the “Documents”), whether or not prepared by the Executive, shall be the soleand exclusive property of the Company and its Affiliates. The Executive shallsafeguard all Documents in his possession or control and shall surrender to theCompany at the time his employment terminates, or at such earlier time or timesas the Board or its designee may specify, all Documents then in the Executive’spossession or control. Anything to the contrary notwithstanding, the Executiveshall be entitled to retain (i) papers and other materials of a personalnature, including, but not limited to, photographs and personal correspondence,(ii) information showing his compensation or relating toreimbursement of expenses, (iii) information that he reasonably believesmay be needed for tax purposes, and (iv) copies of plans, programs andagreements relating to his employment, or termination thereof, with theCompany; provided, however, that the Executive may not retain any of the itemsspecified in (i) through (iv) hereof if the item containsConfidential Information.

 

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8.                                  Assignmentof Rights to Intellectual Property. The Executive shall promptly and fullydisclose all Intellectual Property to the Company. The Executive hereby assignsand agrees to assign to the Company (or as otherwise directed by the Company)the Executive’s full right, title and interest in and to all IntellectualProperty. The Executive agrees to execute any and all applications for domesticand foreign patents, copyrights or other proprietary rights and to do suchother acts (including without limitation the execution and delivery ofinstruments of further assurance or confirmation) reasonably requested by theCompany to assign the Intellectual Property to the Company and to permit theCompany to enforce any patents, copyrights or other proprietary rights to theIntellectual Property. The Executive will not charge the Company for timereasonably requested to be spent in complying with these obligations. Allcopyrightable works that the Executive creates shall be considered “work madefor hire” and shall, upon creation, be owned exclusively by the Company. TheCompany will promptly reimburse the Executive’s out-of-pocket expenses incurredin complying with Company requests hereunder. Prior to commencing any projecton behalf of the Company, the Executive shall disclose any information orIntellectual Property that may be relevant to such project to which he mayclaim a right or interest by reason of having invented, discovered, or originatedthe same prior to the commencement of employment for the Company; the burden ofproving such prior right or interest shall be on the Executive, and theExecutive’s failure to notify the Company of such rights or interests will bedeemed a waiver of such rights and interests.

 

9.                                  RestrictedActivities. The Executive agrees that some restrictions on his activitiesduring and after his employment are necessary to protect the goodwill,Confidential Information and other legitimate interests of the Company and itsAffiliates:

 

(a)                                  Whilethe Executive is employed by the Company and for a period of one (1) yearafter his employment terminates (unless the Executive’s employment is terminated by the Company withoutCause or by the Executive for Good Reason within two (2) years following aChange of Control pursuant to Section 5(g) hereof) (together, the “Non-CompetitionPeriod”), the Executive shall not, directly or indirectly, whether as owner,partner, investor, consultant, agent, employee, co-venturer or otherwise,compete with the Company or any of its Affiliates within the United States orin any other geographic area in which the Company or any of its Affiliates isthen doing business. Specifically, but without limiting the foregoing, theExecutive agrees not to engage in any manner in any activity that is directlyor indirectly competitive with the business of the Company or any of itsAffiliates as conducted or under active consideration by the Company at thetime the Executive’s employment is terminated hereunder or at any time duringthe two year period prior to the termination of the Executive’s employment, andfurther agrees not to work or provide services, in any capacity, whether as anemployee, independent contractor or otherwise, whether with or withoutcompensation, to any Person who is engaged in any business that is competitivewith the business as conducted or under active consideration by the Company orany of its Affiliates for which the Executive has provided services at the timeof termination of the Executive’s employment hereunder or at any time duringthe two year period prior to the termination of the Executive’s employment. Forthe purposes of this Section 9, the business of the Company and itsAffiliates shall include all Products and the Executive’s undertaking shallencompass all items, products and services that may be used in substitution for

 

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Products.The foregoing, however, shall not prevent the Executive’s passive ownership oftwo percent (2%) or less of the equity or other securities of any publiclytraded company.

 

(b)                                 The Executive agrees that, during theNon-Competition Period, the Executive will not directly or indirectly (a) solicitor encourage any customer or vendor of the Company or any of its Affiliates toterminate or diminish its relationship with them; or (b) seek to persuadeany such customer, vendor or prospective customer or vendor of the Company orany of its Affiliates to conduct with anyone else any business or activitywhich such customer, vendor or prospective customer or vendor conducts or couldreasonably conduct with the Company or any of its Affiliates.

 

(c)                                  The Executive agrees that during theNon-Competition Period, the Executive will not, and will not assist any otherPerson to, (a) hire or solicit for hiring any employee of the Company orany of its Affiliates or seek to persuade any employee of the Company or any ofits Affiliates to discontinue employment or (b) solicit or encourage anyindependent contractor providing services to the Company or any of itsAffiliates to terminate or diminish its relationship with them. For thepurposes of this Agreement, an “employee” of the Company or any of itsAffiliates is any person who was such at any time within the preceding twoyears.

 

10.                            Reserved.

 

11.                            Enforcementof Covenants. The Executiveacknowledges that he has carefully read and considered all the terms andconditions of this Agreement, including the restraints imposed upon himpursuant to Sections 7, 8 and 9 hereof. The Executive agrees withoutreservation that each of the restraints contained herein is necessary for thereasonable and proper protection of the goodwill, Confidential Information andother legitimate interests of the Company and its Affiliates; that each andevery one of those restraints is reasonable in respect to subject matter,length of time and geographic area; and that these restraints, individually orin the aggregate, will not prevent him from obtaining other suitable employmentduring the period in which the Executive is bound by these restraints. TheExecutive further agrees that he will never assert, or permit to be asserted onhis behalf, in any forum, any position contrary to the foregoing. The Executivefurther acknowledges that, were he to breach any of the covenants contained inSections 7, 8 or 9 hereof, the damage to the Company would be irreparable. TheExecutive therefore agrees that the Company, in addition to any other remediesavailable to it, shall be entitled to preliminary and permanent injunctiverelief against any breach or threatened breach by the Executive of any of saidcovenants, without having to post bond. The parties further agree that, in theevent that any provision of Section 7, 8 or 9 hereof shall be determinedby any court of competent jurisdiction to be unenforceable by reason of itsbeing extended over too great a time, too large a geographic area or too greata range of activities, such provision shall be deemed to be modified to permitits enforcement to the maximum extent permitted by law. The Executive agreesthat the Non-Competition Period shall be tolled, and shall not run, during anyperiod of time in which he is in violation of the terms of Sections 7, 8 or 9hereof, in order that the Company shall have the agreed upon temporalprotection set forth in this Agreement. No breach of any provision of thisAgreement or any other purported violation of

 

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lawby the Company shall operate to excuse the Executive’s obligation to fulfillthe requirements of Sections 7, 8 and 9 hereof.

 

12.                            Reserved.

 

13.                            Insurance and Indemnification.During the term hereof, the Company will maintain directors’ and officers’(D&O) liability insurance coverage and will provide such coverage to theExecutive on the same basis as other senior executives of the Company, inaccordance with the terms of the applicable insurance policy. The Company shallindemnify the Executive to the extent provided in its then-current Articles andBy-Laws (provided, however, that if the Company amends the indemnificationprovisions in its Articles or By-Laws following the Effective Date, any suchamendment shall be applicable to directors and officers of the Companygenerally and shall not apply exclusively to the Executive). The Executiveagrees to promptly notify the Company of any actual or threatened claim arisingout of or as a result of his employment with the Company.

 

14.                            Dispute Resolution.Except for disputes arising under Sections 7, 8 or 9 of this Agreement, if anydispute arises between the parties with respect to this Agreement, such disputeshall be submitted to binding arbitration for resolution in Boston,Massachusetts in accordance with the rules and procedures of theEmployment Dispute Resolution Rules of the American ArbitrationAssociation then in effect. The decision of the appointed arbitrator shall befinal and binding on both parties, and any court of competent jurisdiction mayenter judgment upon the award. In the event that an action is brought toenforce a provision of this Agreement (pursuant to this Section 14 orotherwise), the Company shall reimburse the Executive for the legal fees heincurs in connection with such action to the extent that the Executive prevailson any material issue raised in such action, otherwise, each party shall bearits own costs and expenses, including legal fees, in connection with any suchaction.

 

15.                            Definitions. Words or phrases whichare initially capitalized or are within quotation marks shall have the meaningsprovided in this Section and as provided elsewhere herein. For purposes ofthis Agreement, the following definitions apply:

 

(a)                                  “Affiliates” means any business entity inwhich the Company holds, directly or indirectly, an equity, profits or votinginterest of 30% or more, and includes any subsidiary.

 

(b)                                 “Confidential Information” means any and allinformation of the Company and its Affiliates that is not generally known bythose with whom the Company or any of its Affiliates competes or does business,or with whom the Company or any of its Affiliates actively plans to compete ordo business and any and all information, publicly known in whole or in part ornot, which, if disclosed by the Company or any of its Affiliates would assist incompetition against them. Confidential Information includes without limitationsuch information relating to (i) the development, research, testing,manufacturing, marketing and financial activities of the Company and itsAffiliates, (ii) the Products, (iii) the costs, sources of supply,financial performance and strategic plans of the Company and its Affiliates, (iv) theidentity and

 

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special needs of the customers of the Company and its Affiliates and (v) thepeople and organizations with whom the Company and its Affiliates have businessrelationships and the nature and substance of those relationships. ConfidentialInformation also includes any information that the Executive knows or shouldknow that the Company or any of its Affiliates has received, or may receivehereafter, belonging to customers or others with respect to which there is anyunderstanding, express or implied, that the information would not be disclosed.

 

(c)                                  “EmployeeBenefit Plan” shall have the meaning ascribed to such term in Section 3(3) ofERISA, as amended from time to time.

 

(d)                                 “IncumbentDirectors” means individuals who, as of the Effective Date, constituted theBoard.

 

(e)                                  “IntellectualProperty” means inventions, discoveries, developments, methods, processes,compositions, works, concepts and ideas (whether or not patentable orcopyrightable or constituting trade secrets) conceived, made, created,developed or reduced to practice by the Executive (whether alone or with others,whether or not during normal business hours or on or off Company premises) inthe course of the Executive’s employment and during the period of twelve (12)months immediately following termination of his employment that, in any case,relate to either the Products or any prospective activity of the Company or anyof its Affiliates or that make use of Confidential Information or any of theequipment or facilities of the Company or any of its Affiliates.

 

(e)                                  “Person”means an individual, a corporation, a limited liability company, anassociation, a partnership, an estate, a trust and any other entity ororganization (including a group within the meaning of Sections 13(d) or14(d)(2) of the Securities Exchange Act of 1934, as amended), other than theCompany or any of its Affiliates.

 

(f)                                    “Products”mean all products actively planned, researched, developed, tested,manufactured, sold, licensed, leased or otherwise distributed or put into useby the Company or any of its Affiliates, together with all services provided oractively planned by the Company or any of its Affiliates, during the Executive’semployment.

 

16.                       Withholding.All payments made by the Company under this Agreement shall be reduced by anytax or other amounts required to be withheld by the Company under applicablelaw.

 

17.                       Assignment.Neither the Company nor the Executive may make any assignment of this Agreementor any interest herein, by operation of law or otherwise, without the priorwritten consent of the other; provided, however, that the Company may assignits rights and obligations under this Agreement without the consent of theExecutive in the event that the Company shall hereafter effect areorganization, consolidate with, or merge into, any Person or transfer all orsubstantially all of its properties or assets to any Person. This Agreementshall inure to the benefit of and be binding upon the Company and theExecutive, their respective successors, executors, administrators, heirs andpermitted assigns.

 

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18.                            Severability.If any portion or provision of this Agreement shall to any extent be declaredillegal or unenforceable by a court of competent jurisdiction, then theremainder of this Agreement, or the application of such portion or provision incircumstances other than those as to which it is so declared illegal orunenforceable, shall not be affected thereby, and each portion and provision ofthis Agreement shall be valid and enforceable to the fullest extent permittedby law.

 

19.                            Waiver.No waiver of any provision hereof shall be effective unless made in writing andsigned by the waiving party. The failure of either party to require theperformance of any term or obligation of this Agreement, or the waiver byeither party of any breach of this Agreement, shall not prevent any subsequentenforcement of such term or obligation or be deemed a waiver of any subsequentbreach.

 

20.                            Notices.Any and all notices, requests, demands and other communications provided for bythis Agreement shall be in writing and shall be effective when delivered inperson, two (2) business days after being consigned to a reputablenational courier service or three (3) business days after being depositedin the United States mail, postage prepaid, registered or certified, andaddressed to the Executive at his last known address on the books of theCompany or, in the case of the Company, at its principal place of business,attention of the Chair of the Board, or to such other address as either partymay specify by notice to the other actually received.

 

21.                            EntireAgreement. This Agreement constitutes the entire agreement between theparties with respect to the subject matter hereof and supersedes all priorcommunications, agreements and understandings, written or oral, with respect tothe subject matter hereof, including without limitation the Severance Benefitand Change of Control Agreement dated November 3, 2005 and the AS&EEmployee Representation, Rights in Data, and Non-Compete Agreement dated. September 12,2003, but excluding the Executive’s obligations with respect to the securities of the Company and anyoutstanding loans to the Executive from,or any other outstanding obligations of the Executive to, the Company or any ofits Affiliates or any of their Employee Benefit Plans, all of which shallremain in full force and effect in accordance with their terms; provided,however, that this Agreement shall not supersede any effective assignment ofany invention or other intellectual property to the Company or any of itsAffiliates in effect on the Effective Date and shall not constitute a waiver bythe Company or any of its Affiliates of any existing right any of them now hasor might now have, directly, by assignment or otherwise, under any agreementimposing obligations on the Executive with respect to confidentiality, non-competition, non-solicitation of employees, customers or suppliers or likeobligations.

 

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

 

23.                            Headings.The headings and captions in this Agreement are for convenience only and in noway define or describe the scope or content of any provision of this Agreement.

 

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24.                            Counterparts. This Agreement may be executed in two ormore counterparts, including by fax or pdf, each of which shall be an originaland all of which together shall constitute one and the same instrument.

 

25.                            GoverningLaw. This is a Massachusettscontract and shall be construed and enforced under and be governed in allrespects by the laws of the Commonwealth of Massachusetts, without regard tothe conflict of laws principles thereof.

 

26.                            Company’sSuccessors. The Company willrequire any successor to the business of the Company to expressly assume andagree to perform this Agreement in the same manner and to the same extent thatthe Company would be required to perform it if no such succession had takenplace.

 

 

[Signature page follows immediately.]

 

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IN WITNESS WHEREOF, this Agreement has been executed as a sealedinstrument by the Company, by its duly authorized representative, and by theExecutive, as of the date first above written.

 

 
| THE EXECUTIVE:         | AMERICAN SCIENCE AND ENGINEERING, INC. |
|------------------------|----------------------------------------|
|                   |                                   |
| /s/ Anthony R. Fabiano |                                   | By: | /s/  William E. Odom |
|                   |                                   |   |   |
|                   |                                   |   |   |
|                   | Title:                                 | Chairman of the Board |
|                        |                                        |  |  |  |

 

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EXHIBIT ARELEASE OF CLAIMS

 

FORAND IN CONSIDERATION OF the benefits to be provided me in connection with thetermination of my employment, as set forth in the agreement between me andAmerican Science and Engineering, Inc. (the “Company”) dated as ofFebruary    , 2008 (the “Agreement”), which are conditionedon my signing this Release of Claims and to which I am not otherwise entitled,I, Anthony Fabiano, on my own behalf and on behalf of my heirs, executors,administrators, beneficiaries, representatives and assigns, and all othersconnected with or claiming through me, hereby release and forever discharge theCompany, its subsidiaries and other affiliates and all of their respectivepast, present and future officers, directors, trustees, shareholders,employees, agents, general and limited partners, members, managers, jointventurers, representatives, successors and assigns, and all others connectedwith any of them, both individually and in their official capacities, from anyand all causes of action, rights or claims of any type or description, known orunknown, which I have had in the past, now have, or might now have, through thedate of my signing of this Release of Claims, in any way resulting from,arising out of or connected with my employment by the Company or any of itssubsidiaries or other affiliates or the termination of that employment orpursuant to any federal, state or local law, regulation or other requirement(including without limitation, pursuant to Title VII of the Civil Rights Act of1964, the Age Discrimination in Employment Act, the Americans with DisabilitiesAct, and the fair employment practices laws of the state or states in which Ihave been employed by the Company or any of its subsidiaries or otheraffiliates, each as amended from time to time).

 

Excludedfrom the scope of this Release of Claims is (i) any claim arising afterthe effective date of this Release of Claims, including without limitationunder the terms of the Agreement, and (ii) any right of indemnification orcontribution that I have pursuant to the Articles of Incorporation or By-Lawsof the Company or any of its subsidiaries or other affiliates, or underapplicable law, and any right under an applicable Directors’ and Officers’Insurance policy.

 

Insigning this Release of Claims, I acknowledge my understanding that I may notsign it prior to the termination of my employment, but that I may consider theterms of this Release of Claims for up to twenty-one (21) days (or such longerperiod as the Company may specify) from the later of the date my employmentwith the Company terminates or the date I receive this Release of Claims. Ialso acknowledge that I am advised by the Company and its subsidiaries andother affiliates to seek the advice of an attorney prior to signing thisRelease of Claims; that I have had sufficient time to consider this Release ofClaims and to consult with an attorney, if I wished to do so, or to consultwith any other person of my choosing before signing; and that I am signing thisRelease of Claims voluntarily and with a full understanding of its terms.

 

I further acknowledge that, in signing this Releaseof Claims, I have not relied on any promises or representations, express orimplied, that are not set forth expressly in the Agreement. I understand that Imay revoke this Release of Claims at any time within seven (7) days of thedate of my signing by written notice to the Vice President of Human Resourcesof the Company

 

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and that this Release of Claimswill take effect only upon the expiration of such seven-day revocation periodand only if I have not timely revoked it.

 

Intending to be legally bound, I have signed this Release of Claimsunder seal as of the Date written below.

 

 
| Signature:           | /s/ Anthony R. Fabiano |   |
|----------------------|------------------------|--------|
|                 |                   |   |
| Name (please print): | Anthony R. Fabiano     |   |
|                 |                   |   |
| Date Signed:         | February 6, 2008       |   |
|                      |                        |        |  |  |

 

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