Document:

Exhibit 10.2

 

CHANGE IN CONTROL AGREEMENT

 

This Change in Control Agreement (“Agreement”) is made
and entered as of June 15, 2008 (the “Agreement Date”) between Angeion
Corporation (the “Company”) and Mr. William J. Kullback (“you”).

 

RECITALS

 

WHEREAS, the Board
considers the establishment and maintenance of a sound and vital management to
be essential to protecting and enhancing the best interests of the Company and
its shareholders.  In this connection,
the Board recognizes that the possibility of a Change in Control may arise and
that this possibility and the uncertainty and questions that it may raise among
management may result in the departure or distraction of management personnel
to the detriment of the Company and its shareholders.

 

WHEREAS, the Board has
determined that appropriate steps should be taken to minimize the risk that
Company management will depart prior to a Change in Control, thereby leaving
the Company without adequate management personnel during such a critical
period, and to reinforce and encourage the continued attention and dedication
of members of the Company’s management to their assigned duties without
distraction in circumstances arising from the possibility of a Change in
Control.  In particular, the Board
believes it important, should the Company or its shareholders receive a
proposal for transfer of control, that you be able to continue your management
responsibilities without being influenced by the uncertainties of your own
personal situation.

 

WHEREAS, the Board recognizes
that continuance of your position with the Company involves a substantial
commitment to the Company in terms of your personal life and professional
career and the possibility of foregoing present and future career
opportunities, for which the Company receives substantial benefits.  Therefore, to induce you to remain an
employee of the Company, this Agreement, which has been approved by the Board,
sets forth the benefits that the Company agrees will be provided to you in the
event your employment with the Company is terminated in connection with a
Change in Control under the circumstances described below.

 

AGREEMENT

 

NOW, THEREFORE, for
good and valuable consideration, the sufficiency of which is hereby
acknowledged, you and the Company hereby agree as follows:

 

1.                                       Definitions.  The following terms will have the meaning set
forth below unless the context clearly requires otherwise.  Terms defined elsewhere in this Agreement
will have the same meaning throughout this Agreement.

 

(a)                                  “Affiliate”
means (i) any corporation at least a majority of whose outstanding
securities ordinarily having the right to vote at elections of directors is
owned directly or indirectly by the Parent Corporation or (ii) any other
form of business entity in that the Parent Corporation, by virtue of a direct
or indirect ownership interest, has the right to elect a majority of the
members of such entity’s governing body.

 

(b)                                 “Agreement”
means this agreement as amended, extended or renewed from time to time in
accordance with its terms.

 

 

(c)                                  “Base Salary”
means your annual base salary from the Company at the rate in effect
immediately prior to a Change in Control or at the time Notice of Termination
is given, whichever is greater.  Base
Salary includes only regular cash salary and is determined before any reduction
for deferrals pursuant to any nonqualified deferred compensation plan or
arrangement, qualified cash or deferred arrangement or cafeteria plan.

 

(d)                                 “Benefit Plan”
means any

 

(i)            employee
benefit plan as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended;

 

(ii)           cafeteria
plan described in Code Section 125;

 

(iii)          plan,
policy or practice providing for paid vacation, other paid time off or short-
or long-term profit sharing, bonus or incentive payments; or

 

(iv)          stock
option, stock purchase, restricted stock, phantom stock, stock appreciation
right or other equity-based compensation plan that is sponsored, maintained or
contributed to by the Company for the benefit of employees (or their families
and dependents) generally or you (or your family and dependents) in particular.

 

(e)                                  “Board” means
the board of directors of the Parent Corporation duly qualified and acting at
the time in question.  On and after the
date of a Change in Control, any duty of the Board in connection with this
Agreement is nondelegable and any attempt by the Board to delegate any such
duty is ineffective.

 

(f)                                    “Cause”
means:

 

(i)                                     your gross
misconduct;

 

(ii)                                  your willful and
continued failure to perform substantially your duties with the Company (other
than a failure resulting from your Incapacity as defined in your Employment
Agreement) after a written demand for substantial performance is delivered to
you by the Chief Executive Officer that specifically identifies the manner in
which you have not substantially performed your duties and provides for a
reasonable period of time within which you may take corrective measures; or

 

(iii)                               your conviction
(including a plea of nolo contendere) of willfully engaging in illegal conduct
constituting a felony or gross misdemeanor under federal or state law that is
materially and demonstrably injurious to the Company or that impairs your
ability to perform substantially your duties for the Company.

 

An act or failure to act will be considered “gross” or “willful” for
this purpose only if done, or omitted to be done, by you in bad faith and
without reasonable belief that it 

 

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was in, or not opposed to, the best interests of the Company.  Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Company’s board of
directors (or a committee thereof) or based upon the advice of counsel for the
Company will be conclusively presumed to be done, or omitted to be done, by you
in good faith and in the best interests of the Company.  Notwithstanding the foregoing, you may not be
terminated for Cause unless and until there has been delivered to you a copy of
a resolution duly adopted by the affirmative vote of not less than a majority
of the entire membership of the Board at a meeting of the Board called and held
for the purpose (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of the conduct set forth above
in clauses (i), (ii) or (iii) of this definition and specifying
the particulars thereof in detail.

 

(g)                                 “Change in Control”
means any of the following:

 

(i)                                     the sale, lease,
exchange or other transfer, directly or indirectly, of all or substantially all
of the assets of the Parent Corporation, in one transaction or in a series of
related transactions, to any Person;

 

(ii)                                  any Person, other
than a “bona fide underwriter,” is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
30 percent or more of the combined voting power of the Parent Corporation’s
outstanding securities ordinarily having the right to vote at elections of
directors (regardless of any approval by the continuity directors);

 

(iii)                               a merger or
consolidation to which the Parent Corporation is a party if the shareholders of
the Parent Corporation immediately prior to the effective date of such merger
or consolidation have, solely on account of ownership of securities of the
Parent Corporation at such time, “beneficial ownership” (as defined in Rule 13d-3
under the Exchange Act) immediately following the effective date of such merger
or consolidation of securities of the surviving company representing less that
50% of the combined voting power of the surviving corporation’s then
outstanding securities ordinarily having the right to vote at elections of
directors (regardless of any approval by the continuity directors);

 

(iv)                              the continuity directors
cease for any reason to constitute at least a majority the Board; or

 

(v)                                 a change in control of
a nature that is determined by outside legal counsel to the Parent Corporation,
in a written opinion specifically referencing this provision of the Agreement,
to be required to be reported (assuming such event has not been “previously
reported”) pursuant to Section 13 or 15(d) of the Exchange Act,
whether or not the Parent Corporation is then subject to such reporting
requirement.

 

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For purposes of this Section 1(g), a “continuity
director” means any individual who is a member of the Board at the date hereof,
while he or she is a member of the Board, and any individual who subsequently
becomes a member of the Board whose election or nomination for election by the
Parent Corporation’s shareholders was approved by a vote of at least a majority
of the directors who are continuity directors (either by a specific vote or by
approval of the proxy statement of the Parent Corporation in which such
individual is named as a nominee for director without objection to such
nomination).  For purposes of this Section 1(g),
a “bona fide underwriter” means a Person engaged in business as an underwriter
of securities that acquires securities of the Parent Corporation through such
Person’s participation in good faith in a firm commitment underwriting until
the expiration of 40 days after the date of such acquisition.

 

(h)                                 “Code” means the
Internal Revenue Code of 1986, as amended. 
Any reference to a specific provision of the Code includes a reference
to such provision as it may be amended from time to time and to any successor
provision.

 

(i)                                     “Company”
means the Parent Corporation, any Successor and any Affiliate.

 

(j)                                     “Date of
Termination” following a Change in Control (or prior to a Change in Control
if your termination was either a condition of the Change in Control or was at
the request or insistence of any Person related to the Change in Control)
means:

 

(i)                                     if your employment
is to be terminated by you for Good Reason, the date specified in the Notice of
Termination which in no event may be a date more than 15 days after the date on
which Notice of Termination is given unless the Company agrees in writing to a
later date;

 

(ii)                                  if your employment is
to be terminated by the Company for Cause, the date specified in the Notice of
Termination;

 

(iii)                               if your employment is
terminated by reason of your death, the date of your death; or

 

(iv)                              if your employment is to
be terminated by the Company for any reason other than Cause or your death, the
date specified in the Notice of Termination, which in no event may be a date
earlier than 15 days after the date on which a Notice of Termination is given,
unless you expressly agree in writing to an earlier date.

 

In the case of termination by the Company of
your employment for Cause, if you have not previously expressly agreed in
writing to the termination, then within the 30-day period after your receipt of
the Notice of Termination, you may notify the Company that a dispute exists
concerning the termination, in which event the Date of Termination will be the
date set either by mutual written agreement of the parties or by the judge or
arbitrators in a proceeding as provided in Section 11 of this
Agreement.  During the pendency of any
such dispute, you will continue to make yourself available to provide 

 

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services to the Company and the Company will
continue to pay you your full compensation and benefits in effect immediately
prior to the date on which the Notice of Termination is given (without regard
to any changes to such compensation or benefits that constitute Good Reason)
and until the dispute is resolved in accordance with Section 11 of this
Agreement.  You will be entitled to
retain the full amount of any such compensation and benefits without regard to
the resolution of the dispute unless the judge or arbitrators decide(s) that
your claim of a dispute was frivolous or advanced by you in bad faith.

 

(k)                                  “Exchange Act”
means the Securities Exchange Act of 1934, as amended.  Any reference to a specific provision of the
Exchange Act or to any rule or regulation thereunder includes a reference
to such provision as it may be amended from time to time and to any successor
provision.

 

(l)                                     “Good Reason”
means:

 

(i)                                     the Company
effects a material diminution of your title or duties as in effect immediately
prior to the Change in Control (other than, if applicable, any such change
directly attributable to the fact that the Parent Corporation is no longer
publicly owned); provided, however, that Good Reason does not include a change
in your status, position(s), duties or responsibilities caused by an insubstantial
and inadvertent action that is remedied by the Company within 15 calendar days
after receipt of notice of such change is given by you;

 

(ii)                                  a reduction by the
Company in your Base Salary, or a failure to provide a reasonably comparable
bonus program, or an adverse change in the form or timing of the payment
thereof, as in effect immediately prior to the Change in Control or as
thereafter increased;

 

(iii)                               the failure by the
Company to cover you under Benefit Plans that, in the aggregate, provide substantially
similar benefits to you and your family and dependents at a substantially
similar total cost to you (e.g., premiums, deductibles, co-pays, out of pocket
maximums, required contributions and the like) relative to the benefits and
total costs under the Benefit Plans in which you were participating at any time
during the 90-day period immediately preceding the Change in Control;

 

(iv)                              the Company’s requiring
you to be based more than 30 miles from where your office is located
immediately prior to the Change in Control, except for required travel on the
Company’s business, and then only to the extent substantially consistent with
the business travel obligations that you undertook on behalf of the Company
during the 90-day period immediately preceding the Change in Control (without
regard to travel related to or in anticipation of the Change in Control);

 

(v)                                 the failure by the
Company to obtain from any Successor the assent to this Agreement contemplated
by Section 5 of this Agreement;

 

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(vi)                              any purported termination
by the Company of your employment that is not properly effected pursuant to a
Notice of Termination and pursuant to any other requirements of this Agreement,
and, for purposes of this Agreement, no such purported termination will be
effective; or

 

(vii)                           any refusal by the Company
to continue to allow you to attend to matters or engage in activities not
directly related to the business of the Company which, at any time prior to the
Change in Control, you were not expressly prohibited in writing by the Board
from attending to or engaging in.

 

Your continued employment does not constitute
consent to, or waiver of any rights arising in connection with, any
circumstances constituting Good Reason. 
Your termination of employment for Good Reason as defined in this Section 1(l) will
constitute Good Reason for all purposes of this Agreement notwithstanding that
you may also thereby be deemed to have retired under any applicable retirement
programs of the Company.

 

(m)                               “Notice of
Termination” means a written notice given on or after the date of a Change
in Control (unless your termination before the date of the Change in Control
was either a condition of the Change in Control or was at the request or insistence
of any Person related to the Change in Control) which indicates the specific
termination provision in this Agreement pursuant to which the notice is
given.  Any purported termination by the
Company or by you for Good Reason on or after the date of a Change in Control
(or before the date of a Change in Control if your termination was either a
condition of the Change in Control or was at the request or insistence of any
Person related to the Change in Control) must be communicated by written Notice
of Termination to be effective; provided, that your failure to provide Notice
of Termination will not limit any of your rights under this Agreement except to
the extent the Company demonstrates that it suffered material actual damages by
reason of such failure.

 

(n)                                 “Parent Corporation”
means Angeion Corporation and any Successor.

 

(o)                                 “Person” means
any individual, corporation, partnership, group, association or other “person,”
as such term is used in Section 14(d) of the Exchange Act, other than
the Parent Corporation, any Affiliate or any benefit plan(s) sponsored by
the Parent Corporation or an Affiliate.

 

(p)                                 “Successor”
means any Person that succeeds to, or has the practical ability to control
(either immediately or solely with the passage of time), the Parent Corporation’s
business directly, by merger, consolidation or other form of business
combination, or indirectly, by purchase of the Parent Corporation’s outstanding
securities ordinarily having the right to vote at the election of directors or
all or substantially all of its assets or otherwise.

 

2.                                       Term
of Agreement.  This Agreement is
effective immediately and will continue in effect for the duration of your
employment with the Company or, if a Change in Control has occurred 

 

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during the
term of this Agreement, for a period of 18 months following the month during
which the Change in Control occurs or, if later, until the date on which the
Company’s obligations to you arising under or in connection with this Agreement
have been satisfied in full.

 

3.                                       Benefits
upon a Change in Control Termination. 
You will become entitled to the benefits described in this Section 3
if and only if:  (a) (i) the
Company terminates your employment for 
any reason, other than your death, Incapacity (as defined in your
Employment Agreement) or Cause (upon termination for death, Incapacity or
Cause, you will receive the benefits outlined in your Employment Agreement), or
(ii) you terminate your employment with the Company for Good Reason; (b) the
termination occurs either within the period beginning on the date of a Change
in Control and ending on the last day of the 18th month that begins after the
month during which the Change in Control occurs or prior to a Change in Control
if your termination was either a condition of the Change in Control or was at
the request or insistence of a Person related to the Change in Control; and (c) you
sign a release of claims in favor of the Company, in substantially the form as
attached as Exhibit A to your Employment Agreement, and you do not revoke
or rescind your release of claims within the time period specified
therein.  The Company will not be
required to begin making any payments to you under this Agreement until the
expiration of the rescission and revocation periods set forth in the release of
claims, except that benefits previously vested prior to termination, including
those under paragraph 3(a)(ii), will be paid within 30 days of your termination
whether or not you sign a release.  Nothing
in this Change in Control Agreement affects the vesting, exercisability or
other terms of any stock option or other equity grant, or other benefits vested
as of the date of termination, and all stock options and other grants and
benefits are covered by the terms of the grants and the plans under they were
issued.

 

(a)                                  Cash Payment.  Within 20 days of your execution of a release
of claims in favor of the Company, in substantially the form attached as Exhibit A,
provided that you do not revoke or rescind your release as specified therein,
the Company will make a lump-sum cash payment to you in an amount equal to

 

(i)                                     1.5 times your
annual Base Salary, and

 

(ii)                                  the
unpaid portion, if any, of any bonus and incentive amounts earned by you for
the fiscal year ending prior to the termination of your employment that you are
eligible to receive under the terms of the applicable bonus and incentive plan.

 

(b)                                 Group Health Plans.  You will be eligible to elect continued group
health and life coverage, including medical and dental coverage, as otherwise
required under applicable state continuation law and the Consolidated Omnibus
Budget Reconciliation Act of 1986, 29 U.S.C. §§ 1161-1168; 26 U.S.C. §
4980B(f), as amended, and all applicable regulations (referred to collectively
as “COBRA”) from the Date of Termination. 
For the first 12 months of the 18-month period, the Company will
continue to pay its share of the healthcare and life insurance premiums for
your family coverage and you will be obligated to pay your share of the cost
associated with the coverage as if you were still actively employed by the
Company (without regard to any reduction in these benefit that constitutes Good
Reason).  If, during this 12-month 

 

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period, you become employed by a third party
and eligible for any health care or life insurance coverage provided by that
third party, the Company will not, thereafter, be obligated to continue to pay
this amount.  You will be responsible for
the full cost of any health care or life insurance coverage after the end of
the 12 months.

 

(c)                                  Out Placement
Assistance.  The Company will pay up
to ten percent of your Base Salary for out placement counseling to you.  Such payments will be made either directly to
the counselor or to you within 30 days after presentation of an invoice for
services rendered or to be rendered.  No
payment shall be made for services to be rendered more than two years after the
Date of Termination.

 

If, on or after the date of a Change in Control, an Affiliate is sold,
merged, transferred or in any other manner or for any other reason ceases to be
an Affiliate or all or any portion of the business or assets of an Affiliate
are sold, transferred or otherwise disposed of and the acquiror is not the
Parent Corporation or an Affiliate (a “Disposition”), and you remain or become
employed by the acquiror or an affiliate of the acquiror (as defined in this
Agreement but substituting “acquiror” for “Parent Corporation”) in connection
with the Disposition, you will be deemed to have terminated employment on the
effective date of the Disposition for purposes of this Section 3 unless (x) the
acquiror and its affiliates jointly and severally expressly assume and agree,
in a manner that is enforceable by you, to perform the obligations of this
Agreement to the same extent that the Company would be required to perform if
the Disposition had not occurred and (y) the Successor guarantees, in a
manner that is enforceable by you, payment and performance by the acquiror.

 

4.                                       Indemnification.  Following a Change in Control, the Company
will indemnify and advance expenses to you to the full extent permitted by law
for damages, costs and expenses (including, without limitation, judgments,
fines, penalties, settlements and reasonable fees and expenses of your counsel)
incurred in connection with all matters, events and transactions relating to
your service to or status with the Company or any other corporation, employee
benefit plan or other entity with whom you served at the request of the
Company.  The Company’s obligation to
indemnify you will not, however, extend to or cover any damages, penalties,
fines, judgments, costs or expenses resulting from your own intentional
misconduct or resulting from any violation by you of any criminal statute where
you had reasonable cause to believe the conduct was unlawful.  The Company agrees to obtain or maintain
directors and officers’ liability insurance, covering you following a Change in
Control with substantially the same limits and coverages that are in place
immediately prior to the Change in Control.

 

5.                                       Successors.  The Parent Corporation will seek to have any
Successor, by agreement in form and substance satisfactory to you, assent to
the fulfillment by the Company of the Company’s obligations under this
Agreement.  Failure of the Parent
Corporation to obtain such assent at least three business days prior to the
time a Person becomes a Successor (or where the Parent Corporation does not
have at least three business days’ advance notice that a Person may become a
Successor, within one business day after having notice that such Person may
become or has become a Successor) will constitute Good Reason for termination
by you of your employment.  The date on
which any such succession becomes effective will be deemed the Date of
Termination, and Notice of Termination will be deemed to have been given on
that date.  A 

 

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Successor has
no rights, authority or power with respect to this Agreement prior to a Change
in Control.

 

6.                                       Binding
Agreement.  This Agreement inures to
the benefit of, and is enforceable by, you, your personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.  If you die while
any amount would be still payable to you under this Agreement if you had
continued to live, all such amounts, unless otherwise provided in this
Agreement, will be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there be no such designee, to your
estate.

 

7.                                       No
Mitigation.  You will not be required
to mitigate the amount of any benefits the Company becomes obligated to provide
to you in connection with this Agreement by seeking other employment or
otherwise.  The benefits to be provided
to you in connection with this Agreement may not be reduced, offset or subject
to recovery by the Company by any benefits you may receive from other employment
or otherwise.

 

8.                                       No
Setoff.  The Company has no right to
setoff benefits owed to you under this Agreement against amounts owed or
claimed to be owed by you to the Company under this Agreement or otherwise.

 

9.                                       Taxes
and Withholding.  All benefits to be
provided to you in connection with this Agreement will be subject to required
withholding of federal, state and local income, excise and employment-related
taxes.  If payment or provision of any
amount or other benefit that is in the reasonable good faith determination of
the Company “deferred compensation” subject to Section 409A of the
Internal Revenue Code (the “Code”) at the time otherwise specified in this
Agreement or elsewhere would in the reasonable good faith determination of  the Company subject such amount or benefit to
additional tax pursuant to Section 409A(a)(1)(B) of the Code, and if
payment or provision thereof at a later date would avoid any such additional
tax, then you agree that the payment or provision thereof will be postponed to
the earliest date on which the amount or benefit can be paid or provided in the
reasonable good faith determination of 
the Company without incurring any such additional tax, but in no event
later than six months and one day following the date of your termination
date.  In the event of any such delay of
any payment or benefit, the Company agrees that the payment or benefit will be
accumulated and paid in a single lump sum on such earliest date, together with
interest for the period of delay, compounded annually, equal to 120% of the
federal short term rate under Section 1274(d) of the Code in effect
on the date the payment should otherwise have been provided.  Withholding by Company.  You authorize the Company to withhold, report
and transmit to each tax authority all income, employment and excise tax
required to be withheld from any amounts payable under this Agreement.  You, and not the Company, will be solely
responsible for any and all taxes, including but not limited to, excise taxes
under Sections 280G and 409A of the Code, in excess of any required tax
withholding under the preceding sentence.

 

10.                                 Notices.  For the purposes of this Agreement, notices
and all other communications provided for in, or required under, this Agreement
must be in writing and will be deemed to have been duly given when personally
delivered or when mailed by United States registered or certified mail, return
receipt requested, postage prepaid and addressed to each party’s respective
address set forth on the first page of this Agreement (provided that all
notices to the Company 

 

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must be
directed to the attention of the chair of the Board), or to such other address
as either party may have furnished to the other in writing in accordance with
these provisions, except that notice of change of address will be effective
only upon receipt.

 

11.                                 Disputes/Arbitration.  Any disputes arising under or in connection
with this Agreement (including without limitation the making of this Agreement)
will be settled by final and binding arbitration to be held in Minneapolis,
Minnesota in accordance with the rules and procedures of the American
Arbitration Association.  If any dispute
is settled by arbitration, the parties will select a mutually agreeable single
arbitrator to resolve the dispute or if they fail or are unable to do so, each
side will within the following 10 business days select a single arbitrator and
the two so selected will select a third arbitrator within the following 10
business days.  The arbitration award or
other resolution may be entered as a judgment at the request of the prevailing
party by any court of competent jurisdiction in Minnesota or elsewhere.  The arbitrator may construe or interpret, but
may not ignore or vary the terms of this Agreement, and may be bound by
controlling law.  Each party will bear
its own costs and attorneys’ fees in connection with the arbitration; provided,
however, that the Company will pay 75%, and you will pay 25%, of the costs and
expenses of the arbitrator(s) and any administrative or other fees
associated with such arbitration.

 

12.                                 Related
Agreements.  To the extent that any
provision of any other Benefit Plan or agreement between the Company and you
limits, qualifies or is inconsistent with any provision of this Agreement, then
for purposes of this Agreement, while such other Benefit Plan or agreement
remains in force, the provision of this Agreement will control and such
provision of such other Benefit Plan or agreement will be deemed to have been
superseded, and to be of no force or effect, as if such other agreement had
been formally amended to the extent necessary to accomplish such purpose.  Nothing in this Agreement prevents or limits
your continuing or future participation in any Benefit Plan provided by the
Company and for which you may qualify, and nothing in this Agreement limits or
otherwise affects the rights you may have under any Benefit Plans or other
agreements with the Company.  Amounts
which are vested benefits or which you are otherwise entitled to receive under
any Benefit Plan or other agreement with the Company at or subsequent to the
Date of Termination will be payable in accordance with such Benefit Plan or
other agreement.

 

13.                                 No
Employment or Service Contract. 
Nothing in this Agreement is intended to provide you with any right to
continue in the employ of the Company for any period of specific duration or
interfere with or otherwise restrict in any way your rights or the rights of
the Company, which rights are hereby expressly reserved by each, to terminate your
employment at any time for any reason or no reason whatsoever, with or without
cause.

 

14.                                 Change
of Affiliate Status.  This Agreement
will become null and void if, prior to a Change in Control:  (a) an Affiliate is sold, merged,
transferred or in any other manner or for any other reason ceases to be an
Affiliate or all or any portion of the business or assets of an Affiliate are
sold, transferred or otherwise disposed of and no Change in Control occurs in
connection therewith; (b) your primary employment duties are with the
Affiliate at the time of the occurrence of such event; and (c) you do not,
in conjunction therewith, transfer employment directly

 

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15.                                 Joint
and Several Liability.  The Company
with whom you were employed immediately before your Date of Termination has
responsibility for benefits to which you or any other person are entitled
pursuant to this Agreement but to the extent such Company is unable or
unwilling to provide such benefits, Medical Graphics Corporation will be
jointly and severally responsible therefor to the extent permitted by
applicable law.

 

16.                                 General
Provisions.

 

(a)                                  This Agreement may
not be amended or modified except by a written agreement signed by both of us.

 

(b)                                 In the event that any
provision or portion of this agreement is determined to be invalid or
unenforceable for any reason, the remaining provisions of this Agreement will
remain in full force and effect to the fullest extent permitted by law.

 

(c)                                  This Agreement will
bind and benefit the parties hereto and their respective successors and
assigns, but none of your rights or obligations hereunder may be assigned by
either party hereto without the written consent of the other, except by
operation of law upon your death.

 

(d)                                 This Agreement has
been made in and will be governed and construed in accordance with the laws of
the State of Minnesota without giving effect to the principles of conflict of
laws of any jurisdiction.

 

(e)                                  No failure on the
part of either party to exercise, and no delay in exercising, any right or
remedy under this Agreement will operate as a waiver; nor will any single or
partial exercise of any right or remedy preclude any other or further exercise
of any right or remedy.

 

(f)                                    Any notice or other
communication under this Agreement must be in writing and will be deemed given
when delivered in person, by overnight courier (with receipt confirmed), by
facsimile transmission (with receipt confirmed by telephone or by automatic
transmission report), or upon receipt if sent by certified mail, return receipt
requested, as follows (or to such other persons and addresses as may be
specified by written notice to the other party):

 

If to Angeion Corporation:

Angeion Corporation

Attention: 
Chief Executive Officer

350 Oak Grove Parkway

Saint Paul, Minnesota 55127

 

If to you:

Mr. William J. Kullback

18020 33rd Place South

Plymouth, Minnesota 55447

 

11

 

(g)                                 This Agreement and the
Employment Agreement, contains our entire understanding and agreement with
respect to these matters and supersedes and replaces the Original Change in
Control Agreement and all other previous agreements, discussions, or
understandings, whether written or oral, between or on the same subjects.

 

(h)                                 In the event any
provision of this Agreement is held unenforceable, that provision will be
severed and will not affect the validity or enforceability of the remaining
provisions.  In the event any provision
is held to be overbroad, that provision will be deemed amended to narrow its
application to the extent necessary to render the provision enforceable
according to applicable law.

 

(i)                                     All terms of this
Agreement intended to be observed and performed after the termination of this
Agreement will survive such termination and will continue in full force and
effect thereafter.

 

(j)                                     The headings
contained in this Agreement are for convenience only and in no way restrict or
otherwise affect the construction of the provisions hereof.  Unless otherwise specified herein, references
in this Agreement to Sections or Exhibits are to the sections or exhibits to
this Agreement.  This Agreement may be
executed in multiple counterparts, each of which is an original and all of
which together will constitute one and the same instrument.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  William J. Kullback

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  ANGEION
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  As to
  Section 15 of this Agreement only:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  MEDICAL
  GRAPHICS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its

  	
   

  

 

12Exhibit 10.(c)(xxxix)

 

Execution Copy

 

AGREEMENT

 

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

 

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

 

WHEREAS,
the Company wishes to retain the services of the Executive, and the Executive
wishes to continue in the employ of the Company, from and after the Effective
Date, under the terms and subject to the conditions set forth in this
Agreement;

 

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

 

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

 

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

 

3.                                       Capacity and
Performance.

 

(a)                                  During the term
hereof, the Executive shall serve the Company as its President and Chief
Executive Officer. The Executive shall report directly and solely to the Board
of Directors of the Company (the “Board”). The Company agrees to propose to the
shareholders of the Company at each appropriate annual meeting during the term
hereof the election of the Executive as a member of the Board, provided that
the failure of the shareholders to so elect the Executive shall not constitute
Good Reason for termination by the Executive hereunder, and provided further
that the Executive shall resign from the Board effective immediately upon
termination of his employment for any reason. In addition, and without further
compensation, the Executive shall serve as a director and/or officer of one or
more of the Company’s Affiliates if so elected or appointed from time to time.

 

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

 

1

 

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

 

(c)                                  During the term
hereof, the Executive shall devote all of his business time and his best
efforts, business judgment, skill and knowledge exclusively to the advancement
of the business and interests of the Company and its Affiliates and to the
discharge of his duties and responsibilities hereunder. The Executive agrees
that, during his employment with the Company, he will not undertake any outside
activity, whether or not violative of the provisions of Section 7, 8 or 9
hereof, that could reasonably give rise to a conflict of interest or otherwise
interfere with his duties and obligations to the Company or any of its
Affiliates. The Executive shall devote all of his working time and attention to
the performance of his duties and responsibilities hereunder; provided, the
Executive may make passive personal investments and otherwise manage his
personal affairs, serve as a member of the board of directors of one company
that is not competitive with the business of the Company or any of its
Affiliates, and serve on the board of directors for one civic, educational or
charitable organization, provided that such activities do not violate the
provisions of Sections 7, 8 or 9 hereof, or otherwise interfere, individually
or in the aggregate, with the performance of the Executive’s duties and
responsibilities.

 

4.                                       Compensation
and Benefits. As compensation for all services performed by the Executive
under and during the term hereof:

 

(a)                                  Base Salary. During the
term hereof, the Company shall pay the Executive a base salary at the rate of
Five-Hundred-Thousand Dollars ($500,000) per annum, payable in accordance with
the regular payroll practices of the Company for its executives and subject to
increase (but not decrease) from time to time by the Board, in its sole
discretion. Such base salary, as from time to time increased, is hereafter
referred to as the “Base Salary.”

 

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

 

2

 

or
geographical basis or in combinations thereof): sales; revenues; assets;
expenses; earnings before or after deduction for all or any portion of
interest, taxes, depreciation, or amortization, whether or not on a continuing
operations or an aggregate or per share basis; return on equity, investment,
capital or assets; one or more operating ratios; borrowing levels, leverage
ratios or credit rating; market share; capital expenditures; cash flow; stock
price; stockholder return; sales of particular products or services; customer
acquisition 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 of
debt or equity) or refinancings. Except as otherwise expressly provided under
the terms of this Agreement, the Executive shall not be entitled to earn any
Bonus or other incentive compensation pro-rata for any period of service less
than a full year. Any Bonus due to the Executive hereunder will be payable on
or before the 75th calendar day following the close of the fiscal year for
which the Bonus was earned (and in any event no later than March 15 of the
calendar year following the calendar year in which the Bonus was earned).

 

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

 

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

 

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

 

3

 

annually,
and (2) shall (i) maintain the Executive’s current coverage under the
Company’s long-term disability insurance plan or, in its discretion, reimburse
the Executive for the premium cost of obtaining long-term disability coverage
which provides at least $6,000 of monthly benefits, and (ii) shall
promptly (and in any event within thirty (30) days of the submission by the
Executive of documentation as may be reasonably specified by the Company from
time to time which substantiates the Executive’s expenditures) reimburse the
Executive for the premium cost of obtaining supplemental long-term disability
insurance coverage, which premium cost shall not exceed Six-Thousand Dollars
($6,000) annually. The Company may alter, modify, add to or delete its Employee
Benefit Plans at any time as it, in its sole judgment, determines to be
appropriate, 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) of
ERISA, as amended from time to time.

 

(f)                                    Business
Expenses. The Company shall pay or reimburse the
Executive for all reasonable and necessary business expenses incurred or paid
by the Executive in the performance of his duties and responsibilities
hereunder, subject to any maximum annual limit and other restrictions on such
expenses set by the Board and communicated in writing to the Executive and to
such reasonable substantiation and documentation as may be specified by the
Company from time to time. All expenses eligible for reimbursement hereunder
shall be paid to the Executive promptly in accordance with the Company’s
customary business expense reimbursement practices but in no event later than
sixty (60) days following the close of the calendar year in which such expenses
were incurred. The expenses incurred by the Executive in any calendar year that
are eligible for reimbursement hereunder shall not affect the expenses incurred
by the Executive in any other calendar year that are eligible for reimbursement
hereunder. The Executive’s right to reimbursement hereunder shall not be
subject to liquidation or exchange for any other benefit.

 

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

 

(h)                                 Perquisites. During the
term hereof, the Executive shall be provided perquisites on a basis no less
favorable than provided to other similarly situated senior-level executives of
the Company. In addition, the Executive shall be provided the following
perquisites:

 

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

 

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

 

4

 

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

 

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

 

all
subject to such reasonable substantiation and documentation as may be specified
by the Company from time to time.

 

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

 

5.                                       Termination of
Employment and Severance Benefits. Notwithstanding the provisions
of Section 2 hereof, the Executive’s employment hereunder shall terminate
prior to the expiration of the term hereof under the following circumstances:

 

(a)                             Death. In the event
of the Executive’s death during the term hereof, the Executive’s employment
hereunder shall immediately and automatically terminate.

 

(i)                                     In such event,
the Company shall, as applicable, pay or provide to the Executive’s designated
beneficiary or, if no beneficiary has been designated by the Executive in
writing, to his estate (A) (i) any Base Salary earned but not paid
during the final payroll period of the Executive’s employment through the date
of termination in accordance with normal payroll procedures, (ii) pay for
any vacation time earned but not used through the date of termination, (iii) any
bonus and other incentive compensation awarded for the fiscal year preceding
that in which termination occurs, but unpaid on the date of termination payable
in accordance with the applicable bonus or other incentive compensation award, (iv) any
business expenses incurred by the Executive but unreimbursed on the date of termination,
provided that such expenses and required substantiation and documentation are
submitted within sixty (60) days after termination and that such expenses are
reimbursable under Company policy; and (v) other vested benefits, if any,
that Executive has accrued under and in accordance with the terms and
conditions of the Company’s Employee Benefit Plans as of the date of
termination of his employment (all of the foregoing, “Final Compensation”) and (B) a
lump sum amount equal to two (2) times the average of each of the last
three (3) years of Base Salary.

 

(ii)                                  In addition,
the Company shall provide the Executive’s designated beneficiary or, if no
beneficiary has been designated by the Executive in writing, his estate, with a
pro-rata Bonus award for the fiscal year in which termination occurs,
calculated based on the Target Bonus Amount for the fiscal year in which
termination occurs and the number of days in such year that the Executive was
employed, to be paid in a single lump sum payment within ninety (90) days
following the date of termination

 

5

 

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

 

(iii)                               Any outstanding option, stock
appreciation right, restricted stock, restricted stock unit or other
equity-based award granted by the Company to the Executive pursuant to the
Company’s 2005 Equity and Incentive Plan, any successor plan or agreement or
any other equity compensation plan or agreement previously adopted by the Board
in which Executive participated (the “Stock-Based Awards”), including but not
limited 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 to
by the parties from time to time as “LTIP #1”), the award of stock options and
restricted stock granted on June 20, 2006 pursuant to the 2005 Equity and
Incentive 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 to
by the parties from time to time as “LTIP #3”), shall be governed by the terms
of the applicable plans and agreements.

 

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

 

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

 

(b)                                 Disability.

 

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

 

(A)                         the Company
shall, as applicable, pay or provide the Executive with the Final Compensation
and the Pro Rata Bonus;

 

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

 

6

 

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

 

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

 

(D)                          any outstanding
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 plans and
agreements, except that for purposes of the LTIP #1, LTIP #2 and LTIP #3
Awards, termination by reason of Disability pursuant to this Section 5(b) shall
be treated in the same manner as termination by reason of the Executive’s death
pursuant to Section 5(a) hereof; and

 

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

 

(F)                            Any obligation
of the Company to provide the compensation and benefits described in this Section 5(b)(i) is
conditioned on (y) the Executive’s signing and return of a timely and
effective release of claims in the form attached to this Agreement as Exhibit A (the “Employee
Release”) and delivering it to the Company within thirty (30) calendar days of
the date his employment terminates, and (z) the Executive refraining from
making any oral or

 

7

 

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

 

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

 

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

 

(iv)                                   If any question
shall arise as to whether during any period the Executive is unable, through
any illness, injury, accident or condition of either a physical or
psychological nature, to perform substantially all of his duties and
responsibilities hereunder, notwithstanding the provision of any reasonable
accommodation, the Executive may, and at the request of the Company shall,
submit to a medical examination by a physician selected by the Company to whom
the Executive or his duly appointed guardian, if any, has no reasonable
objection to determine whether the Executive is so disabled (within the meaning
of subsection (b)(i)) and such determination shall for the purposes of this
Agreement be conclusive of the issue. If such question shall arise and the
Executive shall fail to submit to such medical examination, the Company’s
determination of the issue shall be binding on the Executive.

 

(c)                                  By the Company
for Cause. The Company may terminate the Executive’s employment
hereunder for Cause at any time upon written notice to the Executive setting
forth in reasonable detail the nature of such Cause. The following, as
determined by the Board in its reasonable judgment, shall constitute Cause for
termination:

 

(i)                                     The Executive’s
breach of fiduciary duty;

 

8

 

(ii)                                       The Executive’s
failure to perform (other than by reason of Disability), or gross neglect in
the performance of, his duties and responsibilities to the Company or any of
its Affiliates, which failure or neglect, if susceptible of cure, remains
uncured or continues or recurs after fifteen (15) business days’ written notice
from the Company specifying in reasonable detail the nature of such failure or
neglect;

 

(iii)                                    Material,
breach by the Executive of any provision of this Agreement or any other
agreement with the Company or any of its Affiliates, which breach, if
susceptible to cure, remains uncured or continues or recurs after fifteen (15)
business days’ written notice from the Company specifying in reasonable detail
the 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 or
embezzlement or other dishonesty with respect to the Company or any of its
Affiliates; or

 

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

 

Upon
the giving of written notice of termination of the Executive’s employment
hereunder for Cause setting forth in reasonable detail the nature of such Cause
and following any applicable cure period, the Company shall have no further
obligation to the Executive for (A) compensation or (B) benefits
pursuant to Employee Benefit Plans or otherwise described in Section 4
hereof, 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 be
governed by the terms of the applicable plans and agreements.

 

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

 

(i)                                          the Pro Rata
Bonus;

 

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

 

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

 

9

 

substantially
equivalent (as to the extent of coverage and the cost to the Executive)
coverage through a new employer, the Company will contribute 100% of the
premium cost of his coverage and that of his eligible dependents under those
plans, provided the Executive and his dependents remain eligible for such
coverage under applicable law and plan terms; and

 

(iv)                                   the Company
will continue to maintain the life insurance coverage that was in effect for
the Executive on the date of termination of his employment, and will continue
to reimburse the Executive for the premium cost of obtaining supplemental term
life insurance coverage which premium cost shall not exceed Five Thousand
Dollars ($5,000) annually, all in accordance with Section 4(e) hereof,
for the period of eighteen (18) months following the termination of the
Executive’s employment or, if earlier, until the Executive becomes eligible for
substantially equivalent (as to the extent of coverage and the cost to the
Executive) life insurance coverage through a new employer, provided such
continued coverage is permitted by applicable law and plan terms. In the event
any 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 the
Executive monthly payments in an amount equal to the premium payments that the
Company would have made in respect of the Executive’s current term life
insurance coverage and the premium cost for supplemental term life insurance
coverage, had the Executive remained eligible for such coverage, for the period
of eighteen (18) months following the termination of the Executive’s employment
or, if earlier, until the Executive becomes eligible for substantially
equivalent life insurance coverage through a new employer.

 

Any
outstanding 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 plans
and agreements. Any obligation of the Company to provide the Severance Payments
and Benefits is conditioned on (y) the Executive’s signing and return of a
timely and effective Employee Release and delivering it to the Company within
thirty (30) calendar days of the date his employment terminates, and (z) complying
with the Non-Disparagement Obligation. The Pro Rata Bonus and the Lump Sum
Payment to which the Executive is entitled hereunder shall be payable in a
single lump sum within (60) days after the date the Executive’s employment
terminates. The Employee Release required for separation benefits in accordance
with Sections 5(d), 5(e) or 5(g) creates legally binding obligations
on the part of the Executive and the Company and its Affiliates therefore
advise the Executive to seek the advice of an attorney before signing it.

 

(e)                                  By the
Executive for Good Reason. The Executive may terminate
his employment hereunder for Good Reason, but must first provide written notice
to the Company of the condition giving rise to the Good Reason no
later than sixty (60) days following the date on which the Executive obtains
knowledge of the occurrence of the condition and give the Company thirty (30)
days to remedy the condition. The following conditions arising without the
Executive’s prior written consent shall constitute Good Reason for termination
by the Executive:

 

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

 

10

 

reporting
relationship, authority, duties or responsibilities; 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 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 diminution in Executive’s authority, duties or
responsibilities has occurred;

 

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

 

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

 

(iv)                              any other
action or inaction that constitutes a material breach by the Company of this
Agreement.

 

In
the event of termination in accordance with this Section 5(e), and
provided that no benefits are payable to the Executive under a separate
severance agreement as a result of such termination, then the Executive will be
entitled to the same payments and benefits, and at the same time(s), he would
have been entitled to receive had the Executive been terminated by the Company
other than for Cause in accordance with Section 5(d) above; provided
that the Executive signs and delivers to the Company a timely and effective
Employee Release and complies with the Non-Disparagement Obligation.

 

(f)                                    By the Executive
Other than for Good Reason. The Executive may
terminate his employment hereunder at any time for other than Good Reason upon
sixty (60) days’ written notice to the Company. In the event of termination of
the Executive pursuant to this Section 5(f), the Board may elect to waive
the period of notice, or any portion thereof, without additional compensation
to the Executive. In such circumstances, the Company shall have no further
obligation to the Executive for (A) compensation or (B) benefits pursuant
to Employee Benefit Plans or otherwise described in Section 4 hereof,
other than for any Final Compensation due to him. Any outstanding 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 plans and agreements.

 

(g)                                 Upon a Change
of Control.

 

(i)                                     If a Change of
Control occurs and, within two years following such Change of Control, the
Company terminates the Executive’s employment other than for Cause, or the
Executive terminates his employment for Good Reason, then, in lieu of any
payments 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 and
effective Employee

 

11

 

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

 

(A)                              the Pro Rata
Bonus;

 

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

 

(C)                                if the
Executive is enrolled in the Company’s medical and dental plans on the date of
termination of his employment, and if he elects to continue his participation
and that of his eligible dependents in those plans under the federal law known
as “COBRA,” then for thirty six (36) months following the date of termination
of the Executive’s employment or, if earlier, until the Executive becomes
eligible for substantially equivalent (as to the extent of coverage and the
cost to the Executive) coverage through a new employer (the “Continuation
Period”), the Company will contribute 100% of the premium cost of his coverage
and that of his eligible dependents under those plans, provided the Executive
and his dependents remain eligible under applicable law and plan terms. In the
event that such continued coverage is not permitted under applicable law or
plan terms, 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
payments that the Company would have made had the Executive remained eligible
for such coverage, for the remainder of the Continuation Period;

 

(D)                               the Company
will continue to maintain the life insurance coverage that was in effect for
the Executive on the date of termination of his employment, and will continue
to reimburse the Executive for the premium cost of obtaining supplemental term
life insurance coverage which premium cost shall not exceed Five Thousand
Dollars ($5,000) annually, all in accordance with Section 4(e) hereof,
for the Continuation Period or, if earlier, until the Executive becomes
eligible for substantially equivalent (as to the extent of coverage and the
cost to the Executive) life insurance coverage through a new employer, provided
such continued coverage is permitted by applicable law and plan terms. In the
event any 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 the Executive monthly payments in an amount equal to the premium payments
that the Company would have made in respect of the Executive’s current term
life insurance coverage, the premium cost for supplemental term life insurance
coverage, had the Executive remained eligible for such coverage, for the
remainder of the Continuation Period;

 

12

 

(E)                                 notwithstanding
anything to the contrary in the applicable plans and agreements, any and all
outstanding and unvested Stock-Based Awards shall immediately become vested and
fully exercisable on the date of termination of the Executive’s employment
hereunder. Except as otherwise expressly provided herein, all Stock-Based
Awards shall be governed by the terms of the applicable plans and agreements.

 

The
Pro Rata Bonus and the Change of Control Severance Payment shall be payable in
one lump sum on the date which is sixty (60) calendar days from the date the
Executive’s employment terminates.

 

(ii)                                  Notwithstanding
anything to the contrary contained herein or in any plan or agreement, if a
Stock-Based Award held by Executive is not assumed or replaced, or to be
assumed or replaced, upon a Change of Control, each unvested Stock-Based Award
held by the Executive, whether or not his employment has been terminated
hereunder, shall become fully vested and exercisable effective immediately
prior to the Change of Control, and in the event the Executive holds a
Stock-Based Award requiring exercise, the Company shall give the Executive
adequate notice and opportunity to exercise the Stock-Based Award.

 

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

 

(A)                              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 Securities
Exchange Act of 1934, as amended), 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;

 

(B)                                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;

 

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

 

(D)                               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

 

13

 

office
as a result of an actual or threatened election contest with respect to the
election or removal of directors; or

 

(E)                                 a complete
liquidation or dissolution of the Company.

 

(h)                                      Limitation on
Payments. If any payments pursuant to this Agreement
would be subject to tax under Section 4999 of the Internal Revenue Code
(the “Payments”), then the Executive shall receive either (i) the
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 the 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 the Executive must provide to the Company in writing his/her 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 the Executive. The
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 the 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
the 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 5(h) 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
determination of this accounting firm made hereunder shall be final, binding
and conclusive upon the Company and the Executive.

 

(i)                                          Timing of Payments
and other 409A Issues. All payments by the Company
to the Executive under this Section 5 shall, except as otherwise expressly
provided in this Section 5, be made on or before the sixtieth (60th) day
after the date on which the Executive’s employment terminates hereunder.
Notwithstanding the foregoing or anything to the contrary contained in any
other provision of this Agreement, if the Executive is a “specified employee”
within the meaning of the Section 409A Rules (as defined below) at
the time of the Executive’s “separation from service” within the meaning of the
Section 409A Rules, then any payment otherwise required to be made to the
Executive under this Agreement on account of the Executive’s separation from
service, to the extent such payment (after taking in to account all exclusions
applicable to such payment under the Section 409A Rules) is properly
treated as deferred compensation subject to the Section 409A Rules, shall
not be made until the first business day after (i) the expiration of six (6) months
from the date of the Executive’s separation from service or (ii) if
earlier, the date of the Executive’s death (the “Delayed Payment Date”). On the
Delayed Payment Date, there shall be paid to the Executive or, if the Executive
has died,

 

14

 

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

 

(j)                                     Mitigation, Etc. The Executive
shall not be obligated to seek other employment or take other action by way of
mitigation of the amounts payable to the Executive under any of the provisions
of this Agreement and, except as otherwise expressly provided herein, in no
event shall the amount of any payment hereunder be reduced by any compensation
earned by, or any benefit provided to, the Executive as a result of employment
by another employer.

 

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

 

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

 

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

 

(b)                                 Except for any
right of the Executive to continue medical and dental plan participation and
life insurance participation in accordance with the applicable termination
provision of Section 5 and applicable law, benefits shall terminate
pursuant to the terms of the applicable benefit plans based on the date of
termination of the Executive’s employment without regard to any continuation of
Base Salary or other payment to the Executive following such date of
termination.

 

15

 

(c)                                  Provisions of this Agreement shall survive
any termination if so provided herein or if necessary or desirable to
accomplish the purposes of other surviving provisions, including without
limitation Sections 5(h), 5(i), 5(j) and 5(k), the obligations of the
Executive under Sections 7, 8 and 9 hereof and the obligations of both parties
under Sections 13 and 14. The obligation of the Company to make payments to or
on behalf of the Executive under Section 5 hereof is expressly conditioned
upon the Executive’s continued full performance of obligations under Sections
7, 8 and 9 hereof. The Executive recognizes that, except as expressly provided
in Section 5(a), 5(b), 5(d) or 5(e) or 5(g), no compensation is
earned after termination of employment.

 

7.                                       Confidential
Information.

 

(a)                                  The Executive acknowledges that the Company
and its Affiliates continually develop Confidential Information, that the
Executive may develop Confidential Information for the Company or its
Affiliates and that the Executive may learn of Confidential Information during
the course of employment. The Executive will comply with the policies and
procedures of the Company and its Affiliates disclosed to him for protecting
Confidential Information and shall not disclose to any Person or use, other
than for the proper performance of his duties and responsibilities to the
Company and its Affiliates, any Confidential Information obtained by the
Executive incident to his employment or other association with the Company or
any of its Affiliates. The Executive understands that this restriction shall
continue to apply after his employment terminates, regardless of the reason for
such termination. The confidentiality obligation under this Section 7
shall not apply to information (i) which is generally known or readily
available to the public or in the relevant trade or industry at the time of
disclosure or becomes so generally known through no wrongful act on the part of
the Executive, (ii) when disclosure is required by law or by any court,
arbitrator, mediator or administrative or legislative body (including any
committee thereof) with jurisdiction to order the Executive to disclose or make
accessible any information, or (iii) with respect to any litigation,
arbitration or mediation involving enforcement of this Agreement.

 

(b)                                 All documents, records, tapes and other media
of 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 sole
and exclusive property of the Company and its Affiliates. The Executive shall
safeguard all Documents in his possession or control and shall surrender to the
Company at the time his employment terminates, or at such earlier time or times
as the Board or its designee may specify, all Documents then in the Executive’s
possession or control. Anything to the contrary notwithstanding, the Executive
shall be entitled to retain (i) papers and other materials of a personal
nature, including, but not limited to, photographs and personal correspondence,
(ii) information showing his compensation or relating to
reimbursement of expenses, (iii) information that he reasonably believes
may be needed for tax purposes, and (iv) copies of plans, programs and
agreements relating to his employment, or termination thereof, with the
Company; provided, however, that the Executive may not retain any of the items
specified in (i) through (iv) hereof if the item contains
Confidential Information.

 

16

 

8.                                  Assignment
of Rights to Intellectual Property. The Executive shall promptly and fully
disclose all Intellectual Property to the Company. The Executive hereby assigns
and 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 Intellectual
Property. The Executive agrees to execute any and all applications for domestic
and foreign patents, copyrights or other proprietary rights and to do such
other acts (including without limitation the execution and delivery of
instruments of further assurance or confirmation) reasonably requested by the
Company to assign the Intellectual Property to the Company and to permit the
Company to enforce any patents, copyrights or other proprietary rights to the
Intellectual Property. The Executive will not charge the Company for time
reasonably requested to be spent in complying with these obligations. All
copyrightable works that the Executive creates shall be considered “work made
for hire” and shall, upon creation, be owned exclusively by the Company. The
Company will promptly reimburse the Executive’s out-of-pocket expenses incurred
in complying with Company requests hereunder. Prior to commencing any project
on behalf of the Company, the Executive shall disclose any information or
Intellectual Property that may be relevant to such project to which he may
claim a right or interest by reason of having invented, discovered, or originated
the same prior to the commencement of employment for the Company; the burden of
proving such prior right or interest shall be on the Executive, and the
Executive’s failure to notify the Company of such rights or interests will be
deemed a waiver of such rights and interests.

 

9.                                  Restricted
Activities. The Executive agrees that some restrictions on his activities
during and after his employment are necessary to protect the goodwill,
Confidential Information and other legitimate interests of the Company and its
Affiliates:

 

(a)                                  While
the Executive is employed by the Company and for a period of one (1) year
after his employment terminates (unless the Executive’s employment is terminated by the Company without
Cause or by the Executive for Good Reason within two (2) years following a
Change of Control pursuant to Section 5(g) hereof) (together, the “Non-Competition
Period”), 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 or
in any other geographic area in which the Company or any of its Affiliates is
then doing business. Specifically, but without limiting the foregoing, the
Executive agrees not to engage in any manner in any activity that is directly
or indirectly competitive with the business of the Company or any of its
Affiliates as conducted or under active consideration by the Company at the
time the Executive’s employment is terminated hereunder or at any time during
the two year period prior to the termination of the Executive’s employment, and
further agrees not to work or provide services, in any capacity, whether as an
employee, independent contractor or otherwise, whether with or without
compensation, to any Person who is engaged in any business that is competitive
with the business as conducted or under active consideration by the Company or
any of its Affiliates for which the Executive has provided services at the time
of termination of the Executive’s employment hereunder or at any time during
the two year period prior to the termination of the Executive’s employment. For
the purposes of this Section 9, the business of the Company and its
Affiliates shall include all Products and the Executive’s undertaking shall
encompass all items, products and services that may be used in substitution for

 

17

 

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

 

(b)                                 The Executive agrees that, during the
Non-Competition Period, the Executive will not directly or indirectly (a) solicit
or encourage any customer or vendor of the Company or any of its Affiliates to
terminate or diminish its relationship with them; or (b) seek to persuade
any such customer, vendor or prospective customer or vendor of the Company or
any of its Affiliates to conduct with anyone else any business or activity
which such customer, vendor or prospective customer or vendor conducts or could
reasonably conduct with the Company or any of its Affiliates.

 

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

 

10.                            Reserved.

 

11.                            Enforcement
of Covenants. The Executive
acknowledges that he has carefully read and considered all the terms and
conditions of this Agreement, including the restraints imposed upon him
pursuant to Sections 7, 8 and 9 hereof. The Executive agrees without
reservation that each of the restraints contained herein is necessary for the
reasonable and proper protection of the goodwill, Confidential Information and
other legitimate interests of the Company and its Affiliates; that each and
every one of those restraints is reasonable in respect to subject matter,
length of time and geographic area; and that these restraints, individually or
in the aggregate, will not prevent him from obtaining other suitable employment
during the period in which the Executive is bound by these restraints. The
Executive further agrees that he will never assert, or permit to be asserted on
his behalf, in any forum, any position contrary to the foregoing. The Executive
further acknowledges that, were he to breach any of the covenants contained in
Sections 7, 8 or 9 hereof, the damage to the Company would be irreparable. The
Executive therefore agrees that the Company, in addition to any other remedies
available to it, shall be entitled to preliminary and permanent injunctive
relief against any breach or threatened breach by the Executive of any of said
covenants, without having to post bond. The parties further agree that, in the
event that any provision of Section 7, 8 or 9 hereof shall be determined
by any court of competent jurisdiction to be unenforceable by reason of its
being extended over too great a time, too large a geographic area or too great
a range of activities, such provision shall be deemed to be modified to permit
its enforcement to the maximum extent permitted by law. The Executive agrees
that the Non-Competition Period shall be tolled, and shall not run, during any
period of time in which he is in violation of the terms of Sections 7, 8 or 9
hereof, in order that the Company shall have the agreed upon temporal
protection set forth in this Agreement. No breach of any provision of this
Agreement or any other purported violation of

 

18

 

law
by the Company shall operate to excuse the Executive’s obligation to fulfill
the 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 the
Executive on the same basis as other senior executives of the Company, in
accordance with the terms of the applicable insurance policy. The Company shall
indemnify the Executive to the extent provided in its then-current Articles and
By-Laws (provided, however, that if the Company amends the indemnification
provisions in its Articles or By-Laws following the Effective Date, any such
amendment shall be applicable to directors and officers of the Company
generally and shall not apply exclusively to the Executive). The Executive
agrees to promptly notify the Company of any actual or threatened claim arising
out 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 any
dispute arises between the parties with respect to this Agreement, such dispute
shall be submitted to binding arbitration for resolution in Boston,
Massachusetts in accordance with the rules and procedures of the
Employment Dispute Resolution Rules of the American Arbitration
Association then in effect. The decision of the appointed arbitrator shall be
final and binding on both parties, and any court of competent jurisdiction may
enter judgment upon the award. In the event that an action is brought to
enforce a provision of this Agreement (pursuant to this Section 14 or
otherwise), the Company shall reimburse the Executive for the legal fees he
incurs in connection with such action to the extent that the Executive prevails
on any material issue raised in such action, otherwise, each party shall bear
its own costs and expenses, including legal fees, in connection with any such
action.

 

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

 

(a)                                  “Affiliates” 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.

 

(b)                                 “Confidential Information” means any and all
information of the Company and its Affiliates that is not generally known by
those 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 or
do business and any and all information, publicly known in whole or in part or
not, which, if disclosed by the Company or any of its Affiliates would assist in
competition against them. Confidential Information includes without limitation
such information relating to (i) the development, research, testing,
manufacturing, marketing and financial activities of the Company and its
Affiliates, (ii) the Products, (iii) the costs, sources of supply,
financial performance and strategic plans of the Company and its Affiliates, (iv) the
identity and

 

19

 

special needs of the customers of the Company and its Affiliates and (v) the
people and organizations with whom the Company and its Affiliates have business
relationships and the nature and substance of those relationships. Confidential
Information also includes any information that the Executive knows or should
know that the Company or any of its Affiliates has received, or may receive
hereafter, belonging to customers or others with respect to which there is any
understanding, express or implied, that the information would not be disclosed.

 

(c)                                  “Employee
Benefit Plan” shall have the meaning ascribed to such term in Section 3(3) of
ERISA, as amended from time to time.

 

(d)                                 “Incumbent
Directors” means individuals who, as of the Effective Date, constituted the
Board.

 

(e)                                  “Intellectual
Property” means inventions, discoveries, developments, methods, processes,
compositions, works, concepts and ideas (whether or not patentable or
copyrightable 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) in
the 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 any
of its Affiliates or that make use of Confidential Information or any of the
equipment or facilities of the Company or any of its Affiliates.

 

(e)                                  “Person”
means an individual, a corporation, a limited liability company, an
association, a partnership, an estate, a trust and any other entity or
organization (including a group within the meaning of Sections 13(d) or
14(d)(2) of the Securities Exchange Act of 1934, as amended), other than the
Company 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 use
by the Company or any of its Affiliates, together with all services provided or
actively planned by the Company or any of its Affiliates, during the Executive’s
employment.

 

16.                       Withholding.
All payments made by the Company under this Agreement shall be reduced by any
tax or other amounts required to be withheld by the Company under applicable
law.

 

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

 

20

 

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

 

19.                            Waiver.
No waiver of any provision hereof shall be effective unless made in writing and
signed by the waiving party. The failure of either party to require the
performance of any term or obligation of this Agreement, or the waiver by
either party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.

 

20.                            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, two (2) business days after being consigned to a reputable
national courier service or three (3) business days after being deposited
in the United States mail, postage prepaid, registered or certified, and
addressed to the 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 Chair of the Board, or to such other address as either party
may specify by notice to the other actually received.

 

21.                            Entire
Agreement. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
communications, agreements and understandings, written or oral, with respect to
the subject matter hereof, including without limitation the Severance Benefit
and Change of Control Agreement dated November 3, 2005 and the AS&E
Employee 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 any
outstanding loans to the Executive from,
or any other outstanding obligations of the Executive to, the Company or any of
its Affiliates or any of their Employee Benefit Plans, all of which shall
remain in full force and effect in accordance with their terms; provided,
however, that this Agreement shall not supersede any effective assignment of
any invention or other intellectual property to the Company or any of its
Affiliates in effect on the Effective Date and shall not constitute a waiver by
the Company or any of its Affiliates of any existing right any of them now has
or might now have, directly, by assignment or otherwise, under any agreement
imposing obligations on the Executive with respect to confidentiality, non-
competition, non-solicitation of employees, customers or suppliers or like
obligations.

 

22.                            Amendment.
This Agreement may be amended or modified only by a written instrument signed
by 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 no
way define or describe the scope or content of any provision of this Agreement.

 

21

 

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

 

25.                            Governing
Law. This is a Massachusetts
contract and shall be construed and enforced under and be governed in all
respects by the laws of the Commonwealth of Massachusetts, without regard to
the conflict of laws principles thereof.

 

26.                            Company’s
Successors. The Company will
require any successor to the business of the Company to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place.

 

 

[Signature page follows immediately.]

 

22

 

IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized representative, and by the
Executive, 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

  
					

 

23

 

EXHIBIT A

RELEASE OF CLAIMS

 

FOR
AND IN CONSIDERATION OF the benefits to be provided me in connection with the
termination of my employment, as set forth in the agreement between me and
American Science and Engineering, Inc. (the “Company”) dated as of
February    , 2008 (the “Agreement”), which are conditioned
on 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 others
connected with or claiming through me, hereby release and forever discharge the
Company, its subsidiaries and other affiliates and all of their respective
past, present and future officers, directors, trustees, shareholders,
employees, agents, general and limited partners, members, managers, joint
venturers, representatives, successors and assigns, and all others connected
with any of them, both individually and in their official capacities, from any
and all causes of action, rights or claims of any type or description, known or
unknown, which I have had in the past, now have, or might now have, through the
date 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 its
subsidiaries or other affiliates or the termination of that employment or
pursuant to any federal, state or local law, regulation or other requirement
(including without limitation, pursuant to Title VII of the Civil Rights Act of
1964, the Age Discrimination in Employment Act, the Americans with Disabilities
Act, and the fair employment practices laws of the state or states in which I
have been employed by the Company or any of its subsidiaries or other
affiliates, each as amended from time to time).

 

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

 

In
signing this Release of Claims, I acknowledge my understanding that I may not
sign it prior to the termination of my employment, but that I may consider the
terms of this Release of Claims for up to twenty-one (21) days (or such longer
period as the Company may specify) from the later of the date my employment
with the Company terminates or the date I receive this Release of Claims. I
also acknowledge that I am advised by the Company and its subsidiaries and
other affiliates to seek the advice of an attorney prior to signing this
Release of Claims; that I have had sufficient time to consider this Release of
Claims and to consult with an attorney, if I wished to do so, or to consult
with any other person of my choosing before signing; and that I am signing this
Release of Claims voluntarily and with a full understanding of its terms.

 

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

 

24

 

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

 

Intending to be legally bound, I have signed this Release of Claims
under 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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