EXHIBIT 10.3
October 18, 2002
Xxxxx X'Xxxxx
c/o ChromaVision Medical Systems, Inc.
00000 Xxxxx Xxxxxxx
Xxx Xxxx Xxxxxxxxxx, XX 00000
Dear Xxxxx,
The purpose of this letter is consolidate into one document our
agreement as to the terms of your employment by ChromaVision Medical Systems,
Inc. (the "Company") and to modify those terms as set forth below. This letter
completely supersedes the letters dated November 6, 1996 (including Attachment A
thereto), January 10, 2001 and February 1, 2001 from the Company to you relating
to the terms of your employment.
1. Position. Subject to Section 10, you will continue to be employed as
the Chief Operating Officer and Chief Financial Officer of the Company.
2. Compensation and Benefits. You will continue to paid at your present
salary, including vacation accrual, and you will continue to participate in the
same medical, dental, life insurance and 401(k) programs, except that if the
Company changes any of those programs for its senior executives generally, the
Company will have the right to make the same changes for you.
3. Continuation of Salary and Benefits in the Event of Termination
Without Cause. In the event your employment is terminated by the Company without
cause (including as a result of a change in control), or you terminate your
employment for good reason, the Company will do each of the following, subject
to the provisions of Section 7:
(a) continue to pay your salary for a period of one year from
the date of termination of your employment at the rate in effect
immediately prior to such termination, with payment to be made to you on
the dates such salary would have been paid if your employment had not
been terminated, but you shall cease to be entitled to such payments if
you compete with the Company, as defined below, or if you solicit for
employment or hire any employee of the Company;
(b) pay you your pro rata share of any bonus that would have
been paid to you for 2002 if bonuses are paid to other senior executives
of the Company, such pro rata share to be determined by dividing the
number of days in 2002 that you were employed by 365.
(c) continue to pay the premium for your existing health
insurance for you and your family and, to the extent the Company can do
so under its existing and any replacement group insurance policies,
continue your existing vision and dental coverage for you and your
family, in each case for 12 months after the termination of your
employment (including any period as may be required by law), except
that:
(i) such health insurance and any such vision and dental
coverage will be discontinued if you become re-employed and are
eligible for comparable or better health insurance benefits from
your new employer or if you cease to be eligible for COBRA
benefits, and
(ii) subject to the condition that you sign the General
Release and Assignment, you deliver it to the Company within the
21 day period referred to below and that you do not rescind it,
the Company will continue such health insurance and, to the
extent it can do so under its existing and any replacement group
insurance policies, your vision and dental coverage in each case
for up to an additional six months (after the expiration of the
initial 12 months referred to above) if you have not become
re-employed, are not eligible for health insurance as described
in (i) above, are still eligible for COBRA benefits and have not
competed with the Company or solicited or hired any employee of
the Company;
If you cease to be eligible for COBRA benefits because the Company does
not pay the premiums for its existing or any replacement group insurance
policy or the Company ceases to have a group healthcare plan, the
Company will pay to you for the periods set forth above the amount of
premium it would otherwise have had to pay for your coverage under the
current healthcare insurance policy provided that the conditions in (i)
and (ii) above (other than loss of eligibility for COBRA for the
foregoing reasons) are satisfied.
(d) allow your options which are vested on the date of
termination of your employment (excluding those terminated pursuant to
Section 8 below) to continue to be vested and be exercisable in
accordance with their terms for 12 months after the date of termination
of your employment, accelerate 50% of your options which are unvested
and unexercisable on the date of termination of your employment
(excluding those terminated pursuant to Section 8 below) so that they
become vested and exercisable as of the date of termination of your
employment and allow those options to remain vested and exercisable for
12 months after the date of termination of your employment, and allow
your other stock options (excluding those terminated pursuant to Section
8 below) to continue to vest and become exercisable in accordance with
their terms for the 12 months after the date of termination of your
employment, except (for all such options referred to in this clause (d))
to the extent that any such options terminate in accordance with their
terms (or the terms of the plan under which they were issued) because of
a change in control or other event which causes all options outstanding
under that plan to terminate;
(e) subject to the same exception set forth at the end of (d)
above and subject to the condition that you sign the General Release and
Agreement referred to below, you deliver it to the Company within the 21
day period referred to below and you do not rescind it, allow all of
your options which are vested on the date of termination of your
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employment, those options which are accelerated pursuant to (d) above
and those options which are not accelerated but become vested during the
12 month period referred to in (d) above to continue to be vested and be
exercisable for an additional 12 months after the expiration of the 12
month period referred to in (d) above, but all such options shall cease
to be vested and exercisable if you compete with the Company or if you
solicit or hire any employee of the Company;
(f) subject to the condition that you sign the General Release
and Agreement referred to below, you deliver it to the Company within
the 21 day period referred to below and you do not rescind it and
subject to the further condition that you elect to continue your
existing life insurance policy after the termination of your employment,
reimburse you for the premiums for the life insurance payable for the
one year period after termination of your employment or such shorter
period until you become re-employed, but you shall cease to be entitled
to such reimbursement if you compete with the Company or if you solicit
or hire any employee of the Company; and
(g) pay up to $20,000 for executive outplacement services to be
rendered on your behalf by a firm to be selected by the Company to be
paid to the firm when the services commence.
To determine which options referred to in (d) above will be accelerated,
the options terminated pursuant to Section 8 will first be eliminated from
consideration and the remaining options that are not vested and not exercisable
on the date of termination of your employment will be accelerated and become
vested and exercisable in the order they were granted until options have been
accelerated and become vested and exercisable for that number of shares equal to
50% of the total number of shares as to which the options were unvested and
unexercisable before acceleration. The continuation of the exercisability of
your options pursuant to (d) above and the continuation of the exercisability
and vesting of your options pursuant to (e) above shall be effective even though
the stated term of any such option would have expired without giving effect to
this Agreement.
For purposes of (a), (c)(ii), (e) and (f) above, you will be deemed to
be competing with the Company if you become a director, officer, employee,
partner, member, consultant, advisor, independent contractor stockholder or
other equity owner of a business engaged in providing equipment or systems used
for cell-based imaging for laboratory diagnostic purposes, except that being the
holder of less than 1% of the outstanding shares of stock of any class of a such
a company that is publicly owned (i.e. a company with a class of securities
registered under Section 12(b) or (g) of the Securities Exchange Act of 1934 or
required to file periodic reports under Section 15(d) of that Act) shall not by
itself be deemed to constitute competing with the Company.
The benefits referred to in (c)(ii), (e) and (f) above are contingent on
your execution and delivery to the Company of a General Release and Agreement in
the form of Exhibit A to this letter and your not rescinding the General Release
and Agreement. You will have 21 days following your termination of employment in
which to consider the General Release and Agreement, although you may execute it
sooner after termination of your employment. Please note that the General
Release and Agreement has a rescission period of seven days.
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Nothing in (c) above is intended to or shall limit your rights under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). Subparagraph (c)
addresses only the period for and the terms upon which the Company will pay the
cost of the health insurance referred to therein.
4. Termination for Good Reason. You will be considered to have
terminated your employment "for good reason" only if any of the following events
occur:
(a) you terminate your employment within 12 months after the
Company materially reduces your responsibilities, compensation or
employee benefits, provided that you have given the Company written
notice of any such reduction and the Company has failed to eliminate the
good reason within 15 days after receipt of the notice or
(b) the location of the Company's principal executive office is
changed to a location that is more than 50 miles from its current
location.
5. Voluntarily Termination Without Good Reason. If you terminate your
employment without good reason, you will still be entitled to the benefits set
forth in Section 3 above, but only if you do each of the following:
(i) give the Company 30 days prior written notice of such
termination of your employment except but in not event can the notice be
given before November 17, 2002, and
(ii) prior to the expiration of the 30-day notice period referred
to in (i) above, assist with the transition of your responsibilities to
your replacement while you continue to be employed by the Company.
No compensation in addition to that set forth in Section 3 will be
payable to you during the period that you provide the assistance referred to in
(ii).
If you terminate your employment without good reason and do not perform
the obligations set forth in (i) and (ii) above, you will only be entitled to
receive your accrued salary (including accrued vacation) and you will have the
rights with respect to your stock options as are set forth in the stock option
agreements and plan, in each case through the date of your termination of
employment.
6. Definition of Termination for Cause. Your employment shall be deemed
to have been terminated "for cause" only if it is terminated, or the timing of
the termination, is due to conviction of a felony resulting in material harm to
the Company. Nothing in this Section 6 shall limit the right of the Company to
terminate your employment other than for cause and without any warning or
notice.
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7. Termination for Death or Disability. If your employment terminates as
a result of your death or disability, the Company will pay to the legal
representative of your estate, in the case of death, or to you or any legal
representative appointed to act on you behalf, in the case of disability, your
accrued salary (including accrued vacation) and any accrued bonuses to the date
of such termination and you or your legal representative will have the rights
with respect to your stock options as are set forth in the applicable stock
option agreements and plan. If you become disabled during the salary
continuation period referred to in Section 3(a), you or your legal
representative will have the right continue to receive the salary continuation
payments contemplated by Section 3(a) but the Company will have no obligation to
continue the salary continuation payments if you die during that period.
Likewise, if you become disabled during the period that the Company is obligated
to pay the premiums for your existing health insurance for you and your family
pursuant to Section 1(c), the Company will continue to pay the premiums for the
remaining portion of the period specified in Section 1(c), but the Company will
have no obligation to pay the premiums if you die during that period. Also, if
you become disabled during the period that the Company is obligated to pay your
life insurance premiums pursuant to Section 1(f), the Company will continue to
pay the premiums for the remaining portion of the period specified in Section
1(f). Disability is defined as inability to work on a full time basis for a
continuous period of six months or more or any six months in a twelve month
period as a result of any emotional or mental disorders, physical diseases or
injuries.
8. Termination of Options. Concurrently with your execution and delivery
of this Agreement all outstanding stock options held by you having an exercise
price of $8 per share or more are being terminated. Your execution of this
letter constitutes your agreement to the termination of those options.
9. Employment Taxes. By signing this letter you acknowledge that the
Company will continue to treat you as an employee for purposes of paying the
benefits under this letter. All such payments are subject to such taxes and
withholding requirements as may be imposed by applicable law.
10. At-Will Employment. Nothing is this letter changes the "at will"
nature of your employment relationship with the Company. Your employment is not
for a specified time and may be terminated at will subject to the terms and
provisions of this Agreement.
11. Entire Agreement. If executed by you, this letter will constitute
the entire agreement between you and the Company with respect to your employment
and may not be amended or supplemented except in a written document signed by
you and the Company.
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If this letter correctly sets forth the agreement between you and the
Company, please execute this letter in the place indicated below.
Yours very truly,
CHROMAVISION MEDICAL SYSTEMS, INC.
By
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Xxxx X. Xxxxxxxxx,
President and Chief Executive Officer
AGREED:
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XXXXX X. X'XXXXX
Dated: October __, 2002
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