Exhibit 10.1
FORM OF
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of March 10, 2000 and as
amended and restated effective May 23, 2002, is between Luminex Corporation, a
Delaware corporation, and [Exhibit A] ("Executive").
R E C I T A L S
A. Executive has been employed by Employer, and Employer and Executive desire to
enter into a written agreement to specify the terms and conditions of
Executive's continued employment with Employer.
B. Employer considers the maintenance of a sound management team, including
Executive, essential to protecting and enhancing its best interests and those of
its stockholders.
C. Employer recognizes that the possibility of a change in control of Employer
may result in the departure or distraction of management to the detriment of
Employer and its stockholders.
D. Executive is an executive officer of Employer and an integral member of its
management team.
E. Employer has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of selected members of
Employer's management team to their assigned duties without the distraction
arising from the possibility of a change in control of Employer.
In consideration of Executive's past and future employment with Employer and
other good and valuable consideration the parties agree as follows:
SECTION 1. Employment. Employer hereby employs Executive, and Executive hereby
accepts employment, upon the terms and subject to the conditions hereinafter set
forth.
SECTION 2. Duties. Executive shall be employed as [Exhibit A] of the Company, or
such other position of comparable or greater responsibilities and that are
within Executive's area of expertise to which he may be appointed by the Board
of Directors. Executive agrees to devote his full time and best efforts to the
performance of the duties attendant to his executive position with Employer.
SECTION 3. Term. The term of employment of Executive hereunder shall commence on
the date of [Exhibit A] (the "Commencement Date") and continue until March 9,
2003 unless earlier terminated pursuant to Section 6 or Section 10; provided,
however, that commencing on March 9, 2002 the term shall automatically be
extended on each day from that date for an additional year.
SECTION 4. Compensation and Benefits. In consideration for the services of
Executive hereunder, Employer shall compensate Executive as follows:
(a) Base Salary. Until the termination of Executive's employment
hereunder, Employer shall pay Executive a base salary at an annual rate
of not less than $[Exhibit A] (as may be increased from time to time,
the "Base Salary") payable in accordance with the then current payroll
policies of Employer. Any increase in the Base Salary shall be in the
sole discretion of the Board of Directors of the Company or the
appropriate committee thereof.
(b) Management Incentive Bonus. Executive shall be eligible to receive
from Employer such annual management incentive bonuses as may be
provided in management incentive bonus plans adopted from time to time
by Employer.
(c) Vacation. Executive shall be entitled to three weeks of paid
vacation per year at the reasonable and mutual convenience of Employer
and Executive. Unless otherwise approved by the Board of Directors of
the Company or the appropriate committee thereof, accrued vacation not
taken in any applicable period shall not be carried forward or used in
any subsequent period.
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(d) Group Benefits. Executive shall be entitled to participate in all
group benefit plans of Employer in accordance with Employer's regular
practices for its employees. Employer shall provide accident, health,
dental, disability and life insurance for Executive under the group
accident, health, dental, disability and life insurance plans
maintained by Employer for its full-time, salaried employees.
SECTION 5. Expenses. Executive shall be entitled to reimbursement from Employer
for reasonable out-of-pocket expenditures incurred by Executive in the course of
performing Executive's duties hereunder.
SECTION 6. Termination.
(a) General. Executive's employment hereunder shall commence on the
Commencement Date and continue until the end of the term specified in
Section 3, except that the employment of Executive hereunder shall
terminate prior to such time in accordance with the following:
(i) Death or Disability. Upon the death of Executive during
the term of his employment hereunder or, at the option of
Employer, in the event of Executive's Disability, upon 30
days' notice to Executive.
(ii) For Cause. For "Cause" immediately upon written notice by
Employer to Executive. A termination shall be for Cause if:
(1) Executive commits a criminal act involving moral
turpitude; or
(2) Executive commits a material breach of any of the
covenants, terms and provisions hereof or fails to obey lawful
and proper written directions delivered to Executive by
Employer's Chairman of the Board, President, Chief Executive
Officer or its Board of Directors.
(iii) Without Cause. Without Cause upon notice by Employer to
Executive. Without limiting the foregoing, the termination of
Executive's employment hereunder upon the expiration of the
term of his employment specified in Section 3 shall be treated
as a termination by Employer without Cause pursuant to this
Section 6(a)(iii).
(b) Severance Pay and Bonuses.
(i) Termination Upon Death or Disability. Executive shall not
be entitled to any Separation Payment or any other severance
pay or other compensation upon termination of his employment
hereunder pursuant to Section 6(a)(i) except for the following
(which shall be paid promptly after termination, except as
specified in subsection (4) below):
(1) his Base Salary accrued but unpaid as of the date of
termination;
(2) unpaid expense reimbursements under Section 5 for expenses
incurred in accordance with the terms hereof prior to
termination;
(3) compensation for accrued, unused vacation as of the date
of termination, determined in accordance with Employer's
policies and procedures then in effect; and
(4) any bonus to which Executive would have been entitled for
the Bonus Period if he were still employed hereunder on the
last day of the Bonus Period. Any such bonus shall be paid to
Executive at the same time bonuses are paid in respect of the
Bonus Period to other employees of Employer entitled to
receive bonuses for the Bonus Period. In the event the
determination of Executive's bonus in respect of the Bonus
Period involves any subjective assessment, such assessment
shall be made in a manner most favorable to Executive. For
purposes of this Agreement, the term "Bonus Period" means the
full fiscal year or other applicable bonus period during which
Executive's employment hereunder was terminated (or during
which Executive became Disabled, in the event of a termination
for Disability).
(ii) Termination Without Cause. In the event Executive's
employment hereunder is terminated pursuant to Section
6(a)(iii), Employer shall promptly pay Executive an amount
equal to one year's Base Salary at the then current rate plus
the amount of the most recent annual cash bonus amount in a
single lump sum payment (the
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"Separation Payment") as Executive's sole remedy in connection
with such termination. Receipt of the Separation Payment by
Executive will be contingent upon Executive executing a
release of any and all claims against the Company and its
parent and subsidiary companies, affiliate companies, and all
officers, directors, employees, agents, and shareholders of
all such entities, whether known or unknown, existing as of
the time of the receipt of the Separation Payment, with the
release to be in a form acceptable to the Company. Executive
acknowledges that he will not otherwise be entitled to the
Separation Payment without signing such a release. Employer
shall also promptly pay Executive the following:
(1) his Base Salary accrued but unpaid as of the date of
termination;
(2) unpaid expense reimbursements under Section 5 for expenses
incurred in accordance with the terms hereof prior to
termination; and
(3) compensation for accrued, unused vacation as of the date
of termination, determined in accordance with Employer's
policies and procedures then in effect.
This Section 6(b)(ii) is subject to the provisions of Section
10(j) dealing with the coordination of payments in the event
of a Change in Control.
(iii) Termination For Cause; Voluntary Termination. Executive
shall not be entitled to any Separation Payment or any other
severance pay or other compensation upon termination of his
employment hereunder pursuant to Section 6(a)(ii), or upon
Executive's voluntary termination of his employment hereunder,
except for the following (which shall be paid promptly after
termination):
(1) his Base Salary accrued but unpaid as of the date of
termination;
(2) unpaid expense reimbursements under Section 5 for expenses
incurred in accordance with the terms hereof prior to
termination; and
(3) compensation for accrued, unused vacation as of the date
of termination, determined in accordance with Employer's
policies and procedures then in effect.
(c) Transfers of Employment. Executive's employment hereunder shall
continue until the earlier of the following:
(i) Executive's employment with all Employers terminates; or
(ii) the last Employer (other than the Company) by which
Executive is employed under this Agreement ceases to be a
subsidiary or affiliate of the Company. For purposes of
Section 6(b)(ii), the termination of Executive's employment
hereunder pursuant to this Section 6(c)(ii) shall be treated
as a termination by Employer without Cause pursuant to Section
6(a)(iii).
SECTION 7. Inventions; Assignment.
(a) Inventions Defined. All rights to discoveries, inventions,
improvements, designs, work product and innovations (including without
limitation all data and records pertaining thereto) that relate to the
business of Employer, whether or not specifically within Executive's
duties or responsibilities and whether or not patentable, copyrightable
or reduced to writing, that Executive may discover, invent, create or
originate during the term of his employment hereunder or otherwise, and
for a period of six months thereafter, either alone or with others and
whether or not during working hours or by the use of the facilities of
Employer ("Inventions"), shall be the exclusive property of Employer.
Executive shall promptly disclose all Inventions to Employer, shall
execute at the request of Employer any assignments or other documents
Employer may deem necessary to protect or perfect its rights therein,
and shall assist Employer, at Employer's expense, in obtaining,
defending and enforcing Employer's rights therein. Executive hereby
appoints Employer as his attorney-in-fact to execute on his behalf any
assignments or other documents deemed necessary by Employer to protect
or perfect its rights to any Inventions.
(b) Covenant to Assign and Cooperate. Without limiting the generality
of the foregoing, Executive shall assign and transfer, and does hereby
assign and transfer, to Employer the world-wide right, title and
interest of Executive in the
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Inventions. Executive agrees that Employer may file copyright
registrations and apply for and receive patents (including without
limitation Letters Patent in the United States) for the Inventions in
Employer's name in such countries as may be determined solely by
Employer. Executive shall communicate to Employer all facts known to
Executive relating to the Inventions and shall cooperate with
Employer's reasonable requests in connection with vesting title to the
Inventions and related copyrights and patents exclusively in Employer
and in connection with obtaining, maintaining, protecting and enforcing
Employer's exclusive copyrights and patent rights in the Inventions.
(c) Successors and Assigns. Executive's obligations under this Section
7 shall inure to the benefit of Employer and its successors and assigns
and shall survive the expiration of the term of this Agreement for such
time as may be necessary to protect the proprietary rights of Employer
in the Inventions.
(d) Consideration and Expenses . Executive shall perform his
obligations under this Section 7 at Employer's expense, but without any
additional or special compensation therefor.
SECTION 8. Confidential Information.
(a) Acknowledgment of Proprietary Interest. Executive acknowledges that
all Confidential Information is a valuable, special and unique asset of
Employer's business, access to and knowledge of which are essential to
the performance of Executive's duties hereunder. Executive acknowledges
the proprietary interest of Employer in all Confidential Information.
Executive agrees that all Confidential Information learned by Executive
during his employment with Employer or otherwise, whether developed by
Executive alone or in conjunction with others or otherwise, is and
shall remain the exclusive property of Employer. Executive further
acknowledges and agrees that his disclosure of any Confidential
Information will result in irreparable injury and damage to Employer.
(b) Confidential Information Defined. "Confidential Information" means
all confidential and proprietary information of Employer, written, oral
or computerized, as it may exist from time to time, including without
limitation (i) information derived from reports, investigations,
experiments, research and work in progress, (ii) methods of operation,
(iii) market data, (iv) proprietary computer programs and codes, (v)
drawings, designs, plans and proposals, (vi) marketing and sales
programs, (vii) client and supplier lists and any other information
about Employer's relationships with others, (viii) historical financial
information and financial projections, (ix) network and system
architecture, (x) all other concepts, ideas, materials and information
prepared or performed for or by Employer and (xi) all information
related to the business plan, business, products, purchases or sales of
Employer or any of its suppliers and customers, other than information
that is publicly available.
(c) Covenant Not To Divulge Confidential Information. Employer is
entitled to prevent the disclosure of Confidential Information. As a
portion of the consideration for the employment of Executive and for
the compensation being paid to Executive by Employer, Executive agrees
at all times during the term of his employment hereunder and thereafter
to hold in strict confidence and not to disclose or allow to be
disclosed to any person, firm or corporation, other than to persons
engaged by Employer to further the business of Employer, and not to use
except in the pursuit of the business of Employer, the Confidential
Information, without the prior written consent of Employer. This
Section 8 shall survive and continue in full force and effect in
accordance with its terms after, and will not be deemed to be
terminated by, any termination of this Agreement or of Executive's
employment with Employer for any reason.
(d) Return of Materials at Termination. In the event of any termination
or cessation of his employment with Employer for any reason, Executive
shall promptly deliver to Employer all property of Employer, including
without limitation all documents, data and other information
containing, derived from or otherwise pertaining to Confidential
Information. Executive shall not take or retain any property of
Employer, including without limitation any documents, data or other
information, or any reproduction or excerpt thereof, containing,
derived from or pertaining to any Confidential Information. The
obligation of confidentiality set forth in this Section 8 shall
continue notwithstanding Executive's delivery of such documents, data
and information to Employer.
SECTION 9. Non-competition.
(a) Covenant Not to Compete. Executive acknowledges that during the
term of his employment Employer has agreed to provide to him, and he
shall receive from Employer, special training and knowledge, including
without limitation the Confidential Information. Executive acknowledges
that the Confidential Information is valuable to Employer and,
therefore, its protection and maintenance constitutes a legitimate
interest to be protected by Employer by the
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enforcement of the covenant not to compete contained in this Section 9.
Executive also acknowledges that such covenant not to compete is
ancillary to other enforceable agreements of the parties, including
without limitation the agreements regarding Confidential Information in
Section 8 and the agreements regarding the payment of the Separation
Payment and other severance pay and of the Termination Payment in
Section 6 and Section 10, respectively. Therefore, following the
termination of Employee's employment hereunder, Executive shall not
directly or indirectly:
(i) for a period of one year following the date of the
termination (unless extended pursuant to the terms of this
Section 9) engage, alone or as a shareholder, partner, member,
manager, director, officer, employee of or consultant to, any
entity other than Employer that is in existence on the date of
the termination and is at that time engaged directly, or
indirectly through any subsidiary, division or other business
unit (individually, an "Entity") that engages, anywhere in
North America or in any other geographic area in or with
respect to which Executive has any duties or responsibilities
during the term of his employment with Employer, in any
business activities that were conducted by Employer prior to
the date of such termination (the "Designated Industry"); or
(ii) for a period of one year following the date of the
termination (unless extended pursuant to the terms of this
Section 9) solicit or encourage any director, officer,
employee of or consultant to Employer to end his relationship
with Employer and commence any such relationship with any
competitor of Employer in the Designated Industry.
(b) Exclusion. Notwithstanding the provisions of this Section 9,
Employee's non-competition obligations hereunder shall not preclude
Employee from owning less than one percent of the voting power or
economic interest in any publicly traded corporation conducting
business activities in the Designated Industry.
(c) No Offset. The representations and covenants contained in this
Section 9 on the part of Executive shall be construed as ancillary to
and independent of any other provision of this Agreement, and the
existence of any claim (monetary or otherwise) or cause of action of
Executive against Employer or any officer, director or shareholder of
Employer, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of the covenants of
Executive contained in this Section 9.
(d) Extension and Survival. If Executive violates any covenant
contained in this Section 9, Employer shall not, as a result of such
violation or the time involved in obtaining legal or equitable relief
therefor, be deprived of the benefit of the full period of any such
covenant. Accordingly, the covenants of Executive contained in this
Section 9 shall be deemed to have durations as specified in Section
9(a), which periods shall be extended by a number of days equal to the
sum of (i) the total number of days Executive is in violation of any of
the covenants contained in this Section 9 prior to the commencement of
any litigation relating thereto and (ii) the total number of days the
parties are involved in such litigation, through the date of entry by a
court of competent jurisdiction of a final judgment enforcing the
covenants of Executive in this Section 9. This Section 9 shall survive
and continue in full force and effect in accordance with its terms
after, and will not be deemed to be terminated by, any termination of
this Agreement.
(e) Severability. If at any time the provisions of this Section 9 are
determined to be invalid or unenforceable by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 9
shall be considered divisible and shall be immediately amended to only
such area, duration or scope of activity as shall be determined to be
reasonable and enforceable by the court or other body having
jurisdiction over the matter; and Executive agrees that this Section 9
as so amended shall be valid and binding as though any invalid or
unenforceable provision had not been included herein.
SECTION 10. Termination of Employment in Connection With a Change In Control.
(a) Applicability. The provisions of this Section 10 shall apply in
lieu of all conflicting provisions in this Agreement in the event
Executive's employment with Employer is terminated in a Triggering
Termination. Each of the following events constitutes a "Triggering
Termination" when Executive's employment with Employer is:
(i) actually terminated by Employer during an Applicable
Period for any reason other than for Good Reason;
(ii) Constructively Terminated by Employer during an
Applicable Period;
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(iii) terminated by Executive for any reason other than death,
or for no reason, within the 180 day period commencing on the
date of the Change in Control; or
(iv) terminated pursuant to Section 6(c)(ii) during an
Applicable Period.
(b) Termination Payment. Upon the occurrence of a Triggering
Termination, Employer shall pay Executive a lump sum payment in cash
(the "Termination Payment") equal to 2.99 times Executive's average
annual base salary plus cash bonus amount for the most recent five
calendar years ending prior to the occurrence of the Triggering Event.
Employer shall pay the Termination Payment to Executive concurrently
with the Triggering Termination or, if the Triggering Termination
occurs before the Change in Control, concurrently with the Change in
Control.
(c) Change in Control. A Change in Control means the occurrence during
the term of this Agreement of any of the following events:
(i) Employer is merged, consolidated or reorganized into or
with another corporation or other legal person, and as a
result of such merger, consolidation or reorganization less
than 50% of the combined voting power of the then-outstanding
securities entitled to vote generally in the election of
directors ("Voting Stock") of such corporation or person
immediately after such transaction are held in the aggregate
by the holders of Voting Stock of Employer immediately prior
to such transaction;
(ii) Employer sells or otherwise transfers all or
substantially all of its assets to another corporation or
other legal person, and less than 50% of the combined voting
power of the then-outstanding Voting Stock of such corporation
or person is held in the aggregate by the holders of Voting
Stock of Employer immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as
promulgated pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), disclosing that any person
(as the term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act), other than a Director of
Employer on the date hereof (or any group of such Directors),
has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities
representing 50% or more of the combined voting power of the
then-outstanding Voting Stock of Employer;
(iv) Employer files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange
Act disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) that a
change in control of Employer has occurred or will occur in
the future pursuant to any then-existing contract or
transaction; or
(v) If, in connection with a proxy solicitation initiated by a
person or group other than the Board of Directors of Employer,
individuals who at the beginning of such proxy solicitation
constitute the Directors of Employer cease for any reason to
constitute at least a majority thereof within the one year
period following the initiation of such proxy solicitation.
Notwithstanding the foregoing provisions of Sections
10(c)(iii) or 10(c)(iv), unless otherwise determined in a
specific case by majority vote of the Board, a "Change in
Control" shall not be deemed to have occurred for purposes of
Section 10(c)(iii) or 10(c)(iv) solely because (A) Employer,
(B) an entity in which Employer directly or indirectly
beneficially owns 50% or more of the outstanding Voting Stock
(a "Subsidiary"), or (C) any Employer-sponsored employee stock
ownership plan or any other employee benefit plan of Employer
either files or becomes obligated to file a report or a proxy
statement under or in response to Schedule 13D, Schedule
14D-1, Form 8-K or Schedule 14A (or any successor schedule,
form or report or item therein) under the Exchange Act
disclosing beneficial ownership by it of shares of Voting
Stock of Employer, whether in excess of 50% or otherwise, or
because Employer reports that a change in control of Employer
has occurred or will occur in the future by reason of such
beneficial ownership or any increase or decrease thereof.
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(d) Gross Up Payment.
(i) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined (as
hereafter provided) that all or any portion of any payment or
distribution by Employer or any of its affiliates to or for
the benefit of Executive pursuant to the terms of this Section
10 or otherwise, including under any stock option or other
agreement, plan, policy, program or arrangement (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of
the Code (or any successor provision thereto), by reason of
being considered "contingent on a change in ownership or
control" of Employer, within the meaning of Section 280G of
the Code (or any successor provision thereto), or to any
similar tax imposed by state or local law, or any interest or
penalties with respect to such tax (such tax or taxes,
together with any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then Executive
shall be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"); provided, however, that
no Gross-Up Payment shall be made with respect to the Excise
Tax, if any, attributable to (i) any incentive stock option,
as defined by Section 422 of the Code ("ISO") granted prior to
the execution of this Agreement, or (ii) any stock
appreciation or similar right, whether or not limited, granted
in tandem with an ISO described in clause (i). The Gross-Up
Payment shall be in an amount such that, after payment by
Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payment.
(ii) Subject to the provisions of Section 10(d)(vi), all
determinations required to be made under this Section 10(d),
including whether an Excise Tax is payable by Executive and
the amount of such Excise Tax and whether a Gross-Up Payment
is required to be paid by Employer to Executive and the amount
of such Gross-Up Payment, if any, shall be made by a
nationally recognized accounting firm (the "Accounting Firm")
selected by Executive in his sole discretion. Executive shall
direct the Accounting Firm to submit its determination and
detailed supporting calculations to both Employer and
Executive within 30 calendar days after the Termination Date,
if applicable, and any such other time or times as may be
requested by Employer or Executive. If the Accounting Firm
determines that any Excise Tax is payable by Executive,
Employer shall pay the required Gross- Up Payment to Executive
within five business days after receipt of such determination
and calculations with respect to any Gross-Up Payment to
Executive. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it shall, at the same time as it
makes such determination, furnish Employer and Executive a
written opinion to the effect that Executive has substantial
authority not to report any Excise Tax on his federal, state
or local income or other tax return. As a result of the
uncertainty in the application of Section 4999 of the Code (or
any successor provision thereto) and the possibility of
similar uncertainty regarding applicable state or local tax
law at the time of any determination by the Accounting Firm
hereunder, it is possible that Gross- Up Payments which will
not have been made by Employer should have been made (an
"Underpayment"), consistent with the calculations required to
be made hereunder. In the event that the Company exhausts or
fails to pursue its remedies pursuant to Section 10(d)(vi) and
Executive thereafter is required to make a payment of any
Excise Tax, Executive shall direct the Accounting Firm to
determine the amount of the Underpayment that has occurred and
to submit its determination and detailed supporting
calculations to both Employer and Executive as promptly as
possible. Any such Underpayment shall be promptly paid by
Employer to, or for the benefit of, Executive within five
business days after receipt of such determination and
calculations.
(iii) Employer and Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents
in the possession of Employer or Executive, as the case may
be, reasonably requested by the Accounting Firm, and otherwise
cooperate with the Accounting Firm in connection with the
preparation and issuance of the determinations and
calculations contemplated by this Section 10(d). Any
determination by the Accounting Firm as to the amount of any
Gross-Up Payment or Underpayment shall be binding upon
Employer and Executive.
(iv) The federal, state and local income or other tax returns
filed by Executive shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with
respect to the Excise Tax payable by Executive. Executive
shall make proper payment of the amount of any Excise Tax, and
at the request of Employer, provide to Employer true and
correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and
corresponding state and local tax returns,
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if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by Employer,
evidencing such payment. If prior to the filing of Executive's
federal income tax return, or corresponding state or local tax
return, if relevant, the Accounting Firm determines that the
amount of the Gross-Up Payment should be reduced, Executive
shall within five business days pay to Employer the amount of
such reduction.
(v) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and
calculations contemplated by this Section 10(d) shall be borne
by Employer. If such fees and expenses are initially paid by
Executive, Employer shall reimburse Executive the full amount
of such fees and expenses within five business days after
receipt from Executive of a statement therefor and reasonable
evidence of his payment thereof.
(vi) Executive shall notify Employer in writing of any claim
by the Internal Revenue Service or any other taxing authority
that, if successful, would require the payment by Employer of
a Gross-Up Payment. Such notification shall be given as
promptly as practicable but no later than 10 business days
after Executive actually receives notice of such claim and
Executive shall further apprize Employer of the nature of such
claim and the date on which such claim is requested to be paid
(in each case, to the extent known by Executive). Executive
shall not pay such claim prior to the earlier of (A) the
expiration of the 30-calendar-day period following the date on
which he gives such notice to Employer and (B) the date that
any payment of amount with respect to such claim is due. If
Employer notifies Executive in writing prior to the expiration
of such period that it desires to contest such claim,
Executive, subject to the provisions of Section 10(d) of this
Agreement, shall:
(1) provide Employer with any written records or documents in
his possession relating to such claim reasonably requested by
Employer;
(2) take such action in connection with contesting such claim
as Employer shall reasonably request in writing from time to
time, including without limitation accepting legal
representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably
selected by Employer;
(3) cooperate with Employer in good faith in order effectively
to contest such claim; and
(4) permit Employer to participate in any proceedings relating
to such claim;
provided, however, that Employer shall bear and pay directly
all costs and expenses (including interest and penalties)
incurred in connection with such contest and shall indemnify
and hold harmless Executive, on an after-tax basis, for and
against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without
limiting the foregoing provisions of this Section 10(d),
Employer shall control all proceedings taken in connection
with the contest of any claim contemplated by this Section
10(d) and, at its sole option, may pursue or forego any and
all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim
(provided, however, that Executive may participate therein at
his own cost and expense) and may, at its option, either
direct Executive to pay the tax claimed and xxx for a refund
or contest the claim in any permissible manner, and Executive
agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as Employer shall
determine; provided, however, that if Employer directs
Executive to pay the tax claimed and xxx for a refund,
Employer shall advance the amount of such payment to Executive
on an interest-free basis and shall indemnify and hold
Executive harmless, on an after-tax basis, from any Excise Tax
or income or other tax, including interest or penalties with
respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute
of limitations relating to payment of taxes for the taxable
year of Executive with respect to which the contested amount
is claimed to be due is limited solely to such contested
amount. Furthermore, Employer's control of any such contested
claim shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Executive
shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any
other taxing authority.
(vii) If, after the receipt by Executive of an amount advanced
by Employer pursuant to Section 10(d), Executive receives any
refund with respect to such claim, Executive shall (subject to
Employer's complying with the requirements of Section 10(d))
promptly pay to Employer the amount of such refund (together
with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by Executive of an
amount advanced by Employer pursuant to Section 10(d)(vi), a
determination is made that Executive shall not be entitled to
any refund with respect to such claim and Employer does not
notify Executive in writing of its intent to
Page 8 of 14
contest such denial or refund prior to the expiration of 30
calendar days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and
the amount of any such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid by
Employer to Executive pursuant to this Section 10(d).
(viii) Any information provided by Executive to Employer under
this Section 10(d) shall be treated confidentially by Employer
and will not be provided by Employer to any other person than
Employer's professional advisors without Executive's prior
written consent except as required by law.
(e) Term. Notwithstanding the provisions of Section 3, if a Change in
Control occurs prior to the termination of this Agreement, Sections 10,
11 and 12 shall continue in effect for a period of 24 months after the
date of the Change in Control.
(f) No Duty to Mitigate Damages. Executive's rights and privileges
under this Section 10 shall be considered severance pay in
consideration of his past service and his continued service to Employer
from the Commencement Date, and his entitlement thereto shall neither
be governed by any duty to mitigate his damages by seeking further
employment nor offset by any compensation that he may receive from
future employment.
(g) Release of All Claims. Executive acknowledges that the Separation
Payment and the Termination Payment, if applicable, are intended to be
Executive's sole remedy with respect to the termination of his
employment. Therefore, Executive's receipt of the Separation Payment or
Termination Payment (as applicable hereunder) will be contingent upon
Executive's executing a release of any and all claims against the
Company and its parent and subsidiary companies, affiliate companies
and all officers, directors, employees, agents, and shareholders of all
such entities, whether known or unknown, existing as of the time of the
receipt of the Separation Payment or Termination Payment, with the
release to be in a form acceptable to the Company. Executive
acknowledges that he will not otherwise be entitled to the Separation
Payment of Termination Payment without signing such a release.
(h) Arbitration. Any controversy or claim arising out of or relating to
this Section 10, or the breach thereof, shall be settled exclusively by
arbitration in Austin, Texas, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in
effect. Judgment upon the award rendered by the arbitrator may be
entered in, and enforced by, any court having jurisdiction thereof.
(i) No Right To Continued Employment. This Section 10 shall not give
Executive any right of continued employment or any right to
compensation or benefits from Employer except the rights specifically
stated herein.
(j) Restricted Stock and Exercise of Stock Options. Executive may hold
options ("Options") issued under the Incentive Plan and such Options
shall become immediately exercisable upon a Change in Control. In
addition, Executive may hold restricted stock ("Restricted Stock")
issued under the Incentive Plan, and all applicable restrictions shall
lapse upon a Change in Control. Employer shall take no action to
facilitate a transaction involving a Change in Control, including
without limitation redemption of any rights issued pursuant to any
rights agreement, unless it has taken such action as may be necessary
to ensure that Executive has the opportunity to exercise all Options he
may then hold, and obtain certificates containing no restrictive
legends in respect of any Restricted Stock he may then hold, at a time
and in a manner that shall give Executive the opportunity to sell or
exchange the securities of Employer acquired upon exercise of his
Options and upon receipt of unrestricted certificates for shares of
Common Stock in respect of his Restricted Stock, if any (collectively,
the "Acquired Securities"), at the earliest time and in the most
advantageous manner any holder of the same class of securities as the
Acquired Securities is able to sell or exchange such securities in
connection with such Change in Control. Employer acknowledges that its
covenants in the preceding sentence (the "Covenants") are reasonable
and necessary in order to protect the legitimate interests of Employer
in maintaining Executive as one of its employees and that any violation
of the Covenants by Employer would result in irreparable injuries to
Executive, and Employer therefore acknowledges that in the event of any
violation of the Covenants by Employer or its directors, officers or
employees, or any of their respective agents, Executive shall be
entitled to obtain from any court of competent jurisdiction temporary,
preliminary and permanent injunctive relief in order to (i) obtain
specific performance of the Covenants, (ii) obtain specific performance
of the exercise of his Options, delivery of certificates containing no
restrictive legends in respect of his Restricted Stock and the sale or
exchange of the Acquired Securities in the advantageous manner
contemplated above or (iii) prevent violation of the Covenants;
provided nothing in this Agreement shall be deemed to prejudice
Executive's rights to damages for violation of the Covenants.
Page 9 of 14
(k) Coordination With Other Payments.
(i) After the termination of Executive's employment hereunder:
(1) if Executive is entitled to receive a Separation
Payment; and
(2) Executive subsequently becomes entitled to
receive a Termination Payment, Gross Up Payment or
both, then,
(ii) prior to the disbursement of the Termination Payment and
Gross Up Payment:
(1) the payment date of any unpaid Separation Payment
shall be accelerated to the payment date of the
Termination Payment and such Separation Payment shall
be made (in this event, Employer waives any
requirement that Executive reduce the Separation
Payment by the amount of any income earned by
Executive thereafter); and
(2) the Termination Payment shall be reduced by the
amount of the Separation Payment so accelerated and
made.
(l) Outplacement Services. If Executive becomes entitled to receive a
Termination Payment under this Section 10, Employer agrees to reimburse
Executive for the amount of any outplacement consulting fees and
expenses incurred by Executive during any Applicable Period and during
the two-year period following the Change In Control; provided that the
aggregate amount reimbursed by Employer shall not exceed 15% of the
amount determined pursuant to Section 10(b)(i)(1). In addition and as
to each reimbursement payment, to the extent that any reimbursement
under this Section 10(l) is subject to federal, state or local income
taxes, Employer shall pay Executive an additional amount such that the
net amount retained by Executive, after deduction of any federal, state
and local income tax on the reimbursement and such additional amount,
shall be equal to the reimbursement payment. All amounts under this
Section 10(l) shall be paid by Employer within 15 days after
Executive's presentation to Employer of any statements of such amounts.
SECTION 11. General.
(a) Notices. All notices and other communications hereunder shall be in
writing or by written telecommunication, and shall be deemed to have
been duly given if delivered personally or if mailed by certified mail,
return receipt requested or by written telecommunication, to the
relevant address set forth below, or to such other address as the
recipient of such notice or communication shall have specified to the
other party in accordance with this Section 11(a):
If to Employer, to:
Luminex Corporation
00000 Xxxxxxxxxx Xxxx.
Xxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile Number: (000) 000-0000
If to Executive, to:
00000 Xxxxxxxxxx Xxxx.
Xxxxxx, Xxxxx 00000
(b) Withholding; No Offset. All payments required to be made to
Executive by Employer under this Agreement shall be subject to the
withholding of such amounts, if any, relating to federal, state and
local taxes as may be required by law. No payments under Section 10
shall be subject to offset or reduction attributable to any amount
Executive may owe to Employer or any other person.
(c) Legal and Accounting Costs. Employer shall pay all attorneys' and
accountants' fees and costs incurred by Executive as a result of any
breach by Employer of its obligations under this Agreement, including
without limitation
Page 10 of 14
all such costs incurred in contesting or disputing any determination
made by Employer under Section 10 or in connection with any tax audit
or proceeding to the extent attributable to the application of Section
4999 of the Code to any payment under Section 10. Reimbursements of
such costs shall be made by Employer within 15 days after Executive's
presentation to Employer of any statements of such costs and thereafter
shall bear interest at the rate of 18% per annum or, if different, the
maximum rate allowed by law until paid by Employer, and all accrued and
unpaid interest shall bear interest at the same rate, all of which
interest shall be compounded daily.
(d) Equitable Remedies. Each of the parties hereto acknowledges and
agrees that upon any breach by Executive of his obligations under any
of Sections 7, 8 and 9, Employer shall have no adequate remedy at law
and accordingly shall be entitled to specific performance and other
appropriate injunctive and equitable relief.
(e) Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully
severable, and this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision never comprised a part
hereof, and the remaining provisions hereof shall remain in full force
and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there shall
be added automatically as part of this Agreement a provision as similar
in its terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.
(f) Waivers. No delay or omission by either party in exercising any
right, power or privilege hereunder shall impair such right, power or
privilege, nor shall any single or partial exercise of any such right,
power or privilege preclude any further exercise thereof or the
exercise of any other right, power or privilege.
(g) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
(h) Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms
or provisions hereof.
(i) Reference to Agreement. Use of the words "herein," "hereof,"
"hereto," "hereunder" and the like in this Agreement refer to this
Agreement only as a whole and not to any particular section or
subsection of this Agreement, unless otherwise noted.
(j) Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties and shall be enforceable by the personal
representatives and heirs of Executive and the successors and assigns
of Employer. This Agreement may be assigned by the Company or any
Employer to any Employer; provided that in the event of any such
assignment, the Company shall remain liable for all of its obligations
hereunder and shall be liable for all obligations of all such assignees
hereunder. If Executive dies while any amounts would still be payable
to him hereunder, such amounts shall be paid to Executive's estate.
This Agreement is not otherwise assignable by Executive.
(k) Entire Agreement; Effect on Prior Agreement. This Agreement
contains the entire understanding of the parties, supersedes all prior
agreements and understandings relating to the subject matter hereof
(including without limitation the Prior Agreement, which is hereby
terminated) and may not be amended except by a written instrument
hereafter signed by each of the parties hereto. Executive and the
Company hereby agree that, if any other employment agreement between
Executive and the Company (or any other Employer) is in existence on
the Commencement Date, then this Agreement shall supersede such other
employment agreement in its entirety, and such other employment
agreement shall no longer be of any force and effect after the date
hereof.
(l) Governing Law. This Agreement and the performance hereof shall be
construed and governed in accordance with the laws of the State of
Texas, without regard to its choice of law principles.
(m) Gender and Number. The masculine gender shall be deemed to denote
the feminine or neuter genders, the singular to denote the plural, and
the plural to denote the singular, where the context so permits.
(n) Assistance in Litigation. During the term of this Agreement and for
a period of two years thereafter, Executive shall, upon reasonable
notice, furnish such information and proper assistance to Employer as
may reasonably be required by Employer in connection with any
litigation in which Employer is, or may become, a party and with
respect
Page 11 of 14
to which Executive's particular knowledge or experience would be
useful. Employer shall reimburse Executive for all reasonable
out-of-pocket expenses incurred by Executive in rendering such
assistance. The provisions of this Section 11(n) shall continue in
effect notwithstanding termination of Executive's employment hereunder
for any reason.
SECTION 12. Definitions. As used in this Agreement, the following terms will
have the following meanings:
(a) Accounting Firm has the meaning ascribed to it in Section
10(d)(ii).
(b) Acquired Securities has the meaning ascribed to it in Section
10(i).
(c) Agreement has the meaning ascribed to it in the heading of this
document.
(d) Applicable Period means, with respect to any Change In Control, the
period of 27 months commencing 3 months before the Change In Control
and ending 24 months after the Change In Control.
(e) Base Salary has the meaning ascribed to it in Section 4(a).
(f) Cause has the meaning ascribed to it in Section 6(a)(ii).
(g) Change In Control has the meaning ascribed to it in Section 10(c).
(h) Code means the Internal Revenue Code of 1986, as amended.
(i) Commencement Date has the meaning ascribed to it in Section 3.
(j) Company means Luminex Corporation, a Delaware corporation.
(k) Confidential Information has the meaning ascribed to it in Section
8(b).
(l) Constructively Terminated with respect to an Executive's employment
with Employer will be deemed to have occurred if Employer:
(i) demotes Executive to a lesser position, either in title or
responsibility, than the highest position held by Executive
with Employer at any time during Executive's employment with
Employer;
(ii) decreases Executive's compensation below the highest
level in effect at any time during Executive's employment with
Employer or reduces Executive's benefits and perquisites below
the highest levels in effect at any time during Executive's
employment with Employer (other than as a result of any
amendment or termination of any employee or group or other
executive benefit plan, which amendment or termination is
applicable to all executives of Employer); or
(iii) requires Executive to relocate to a principal place of
business more than 30 miles from the principal place of
business occupied by Employer on the first day of an
Applicable Period.
(m) Covenants has the meaning ascribed to it in Section 10(i).
(n) Designated Industry has the meaning ascribed to it in Section
9(a)(i)(1).
(o) Determination has the meaning ascribed to such term in Section
1313(a) of the Code.
(p) Disability with respect to Executive shall be deemed to have
occurred whenever Executive is rendered unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death
or that has lasted or can be expected to last for a continuing period
of not less than 12 months. In the case of any dispute, the
determination of Disability will be made by a licensed physician
selected by Employer, which physician's decision will be final and
binding.
(q) Executive has the meaning ascribed to it in the heading of this
Agreement.
Page 12 of 14
(r) Employer refers collectively to the Company and its subsidiaries
and other affiliates. In Section 10, the term "Employer" shall be
deemed to refer to the Company, and for purposes of Section 10,
Executive shall be deemed to be employed by the Company and all
compensation and benefits paid or provided to Executive by any Employer
under this Agreement at any time shall be deemed to have been paid or
provided to Executive by the Company.
(s) Entity has the meaning ascribed to it in Section 10(l)(i)(1).
(t) Exchange Act has the meaning ascribed to it in Section 10(c)(iii).
(u) Excise Tax has the meaning ascribed to it in Section 10(d)(i).
(v) Good Reason means the termination of Executive's employment with
Employer as a result of Executive's commission of a felony or failure
to obey lawful and proper written directions delivered to Executive by
Employer's Chairman of the Board, President, Chief Executive Officer or
its Board of Directors.
(w) Gross Up Payment has the meaning ascribed to it in Section
10(d)(i).
(x) Incentive Plans means any stock option or equity incentive plan
adopted by Employer from time to time.
(y) Inventions has the meaning ascribed to it in Section 7(a).
(z) ISO has the meaning ascribed to it in Section 10(d)(i).
(aa) Options has the meaning ascribed to it in Section 10(i).
(bb) Parachute Payments has the meaning ascribed to such term in
Section 280G(b)(2) of the Code.
(cc) Payment has the meaning ascribed to it in Section 10(d)(i).
(dd) Restricted Stock has the meaning ascribed to it in Section 10(i).
(ee) Separation Payment Period has the meaning ascribed to it in
Section 6(b)(ii).
(ff) Separation Payment has the meaning ascribed to it in Section
6(b)(ii).
(gg) Target Bonus means, with respect to each Executive, the dollar
amount that is equal to the established percentage of such Executive's
Base Salary that would be paid to Executive under the management
incentive bonus plan of Employer assuming the measurement criteria
contained in such plan with respect to Executive were achieved for the
Bonus Period in which the Change In Control occurred.
(hh) Termination Payment has the meaning ascribed to it in Section
10(b)(i).
(ii) Triggering Termination has the meaning ascribed to it in Section
10(a).
(jj) Underpayment has the meaning as ascribed to it in Section
10(d)(ii).
EXECUTED as of the date and year first above written.
LUMINEX CORPORATION
By:
---------------------------------------
Xxxx Xxxxxxxx
President and Chief Executive Officer
Page 13 of 14
Executive Office Base Salary Date
--------- ------ ----------- ----
Xxxxx X. XxXxxx, M.D. Vice President, Scientific Affairs 190,000 00-00-00
Xxx X. Xxxxxxxx Xxxx President, Instruments 190,000 03-10-00
Xxxxxx X. Xxxxxx Vice President, Business Development 160,000 03-10-00
Xxxx X. Page Executive Vice President and Chief 235,000 10-20-00
Operating Officer
Xxxxx X. Xxxxxx Vice President, Sales and Marketing 235,000 03-29-01
Xxxxx X. Xxxxxxxx, Ph.D. Vice President, Technical Operations 130,000 11-9-01
Xxxxxx X. Xxxx Vice President, Manufacturing 135,000 02-14-00
Page 14 of 14
