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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
by HYCOR BIOMEDICAL INC., a Delaware corporation ("Company"), and XXXXXXX X.
XXXXXX ("Xxxxxx").
WHEREAS, the Company desires to employ Xxxxxx in an executive
capacity, Xxxxxx desires to accept such employment, and the parties desire to
memorialize the terms and conditions of their employment relationship,
NOW, THEREFORE, in consideration of the promises and covenants
set forth in this Agreement and for other valuable consideration, the parties
agree as follows:
1. Employment: Xxxxxx shall be employed as the President and
Chief Executive Officer of the Company, and shall faithfully and diligently
perform all duties and responsibilities required of such position or assigned by
the Board of Directors from time to time, including service on behalf of the
Company's subsidiary and affiliated companies and as a member of the Board of
Directors.
2. Term. This Agreement and Xxxxxx'x employment shall be for a
term of three (3) years commencing on June 20, 1997 and expiring on June 19,
2000, but shall be automatically renewed for successive one-year periods
thereafter unless either party gives written notice to the other party of
nonrenewal at least six (6) months in advance of the expiration date.
3. Compensation: In consideration for all services to be
performed under this Agreement, Xxxxxx shall receive the following compensation:
A. Salary: Xxxxxx shall be paid base salary at the
rate of Two Hundred Fifty Thousand Dollars ($250,000) per year.
Annually, the Board of Directors shall review Xxxxxx'x performance with
a view toward increasing his salary.
B. Bonus: Xxxxxx shall be entitled to participate in
the Company's Annual Executive Incentive Plan and the Long Term
Executive Incentive Plan, subject to all of the terms and conditions set
forth in said plans, as amended from time to time, as long as such plans
remain in effect, and to participate in any successor or similar
incentive plan available to management personnel of comparable status
with the Company or its affiliates. Nothing herein or in said plans
shall constitute a guarantee of Xxxxxx'x employment by the Company, or a
limitation on the Company's rights under this Agreement, or limitation
on the Company's rights to amend or terminate any plan.
C. Employee Benefit Plans: Xxxxxx shall be
entitled to participate in all employee benefit plans, including group
medical, dental, visual, and life insurance, pension, profit sharing,
group and individual disability income, stock option, vacation, and
other benefit plans, on terms commensurate with the benefits awarded
management personnel of comparable status with the Company or any
affiliate of the Company, but subject, on any termination, to Section
4.E below.
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D. Expense Reimbursement: The Company shall reimburse
Xxxxxx for all reasonable expenses that he necessarily incurs in
connection with his employment and for which he presents adequate
documentation in accordance with Company policies in effect from time to
time.
E. Life Insurance: In addition to any other insurance
benefit, the Company shall maintain a term life insurance policy on
Xxxxxx'x life in the amount of $700,000, with Xxxxxx having the right to
designate the beneficiary of such insurance.
F. Disability Supplement: In the event Xxxxxx is
disabled from performing his assigned duties for any period in excess of
thirty (30) days, then in addition to all disability benefits provided
by any other insurance policy or plan and without diminishing the amount
of such benefits, the Company shall pay Xxxxxx for up to twelve (12)
months during the period in which he is disabled an additional amount
equal to the difference between his base salary and other disability
benefits Xxxxxx is eligible to receive.
G. Automobile: The Company shall provide Xxxxxx with
a new full-sized automobile, together with all related maintenance and
operating expenses, such automobile to be replaced with a new like-kind
automobile every two years.
4. Termination: This Agreement and Xxxxxx'x employment are
subject to immediate termination at any time as follows:
A. Death: This Agreement shall terminate immediately
upon Xxxxxx'x death, in which event the Company's only obligations shall
be (i) to pay all compensation owing for services rendered by Xxxxxx
prior to the date of his death; (ii) to continue paying Xxxxxx'x base
salary to his estate for a period of thirty (30) days after his death;
and (iii) to make periodic recoverable advances to Xxxxxx'x estate
equivalent to Xxxxxx'x base salary for ninety (90) days after said
thirty (30) day period has lapsed, or until the proceeds from the life
insurance policy on Xxxxxx'x life referred to in this Agreement become
available, whichever occurs first, with such advances to be repaid when
said insurance proceeds become available.
B. Disability: In the event that Xxxxxx is disabled
from performing his assigned duties under this Agreement due to illness
or injury for a period in excess of one hundred eighty (180) days, the
Company may place Xxxxxx on an unpaid leave of absence for a period not
to exceed six (6) months, in which case the Company's only obligation
shall be (i) to continue Xxxxxx'x group medical and life insurance for
the duration of the leave; (ii) to pay the bonus, if any, that Xxxxxx
would be entitled to under the terms of the bonus plans referred to in
Section 3B of this Agreement; (iii) to allow Xxxxxx to continue
receiving benefits under the disability insurance and other employee
benefit plans in effect at the time of his disability in accordance with
the terms and conditions of such plans; and (iv) to pay a disability
supplement in accordance with Section 3F of this Agreement. The granting
of a leave of absence does not guarantee that Xxxxxx will be returned to
employment, and the
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Company reserves the right to replace Xxxxxx or to take other action in
his absence due to business necessity. If Xxxxxx is certified to return
to work before his leave of absence expires, and desires to do so, the
following provisions shall apply: (i) the Company will attempt to return
Xxxxxx to his same or similar position, provided this does not result in
undue hardship to the Company; and (ii) if the Company is unable to
reinstate Xxxxxx because his position has been filled, then as a special
severance benefit, the Company shall pay a lump-sum severance payment
equal to twenty (20) months of Xxxxxx'x base salary as in effect
immediately prior to the commencement of Xxxxxx'x leave of absence. If
Xxxxxx is not certified to return to work before his leave of absence
expires, or does not desire to return, his employment and this Agreement
shall terminate upon the expiration of his leave of absence.
C. Termination For Cause: The Company may terminate
this Agreement for cause immediately upon written notice to Xxxxxx in
the event Xxxxxx (i) engages in any material misconduct, willful breach,
or habitual neglect of his duties as an officer or director of the
Company, or (ii) is finally convicted of a felony. In either event, the
Company's sole obligation to Xxxxxx in lieu of all claims for
compensation or damages shall be to pay all compensation owing for
services rendered by Xxxxxx prior to the date of termination under this
subsection.
D. Termination Without Cause: The Company in its sole
discretion may terminate this Agreement without cause or prior warning
immediately upon written notice to Xxxxxx. For purposes of this Section
4D, any failure to renew this Agreement and any resignation following a
substantial reduction in Xxxxxx'x salary, duties or responsibilities
shall constitute an involuntary termination without cause for the
convenience of the Company. In the event of a termination under this
Section 4D the Company shall pay all compensation owing for services
rendered by Xxxxxx prior to the date of termination, shall pay a
lump-sum severance benefit equal to twenty (20) months of Xxxxxx'x base
salary at the time of termination, and shall continue to provide Xxxxxx
at Company expense all medical, disability and insurance benefits
available to him at the time of termination for a period of twenty (20)
months after the termination or, if shorter, the maximum period allowed
under the Company's policies as then in effect or under applicable law.
As an additional severance payment, if the Company has in effect at the
time of any termination without cause under this Section 4D any bonus or
incentive plan which provides for awards in cash and is based on the
Company's revenues or results of operations for a fiscal year or other
period, Xxxxxx shall be entitled to an amount equal to a pro rata award
based on the portion of the fiscal year or other period for which he was
employed. Such severance shall be payable at the same time, and computed
on the same terms, as awards under the plan in question, except for
periods of service. In addition, any termination under this Section 4D
shall constitute a termination for the convenience of the Company and
shall extend the post-termination exercise period for all stock options
granted to Xxxxxx under the Company's stock option and other benefit
plans so that such options will be exercisable for the longer of three
months following the date of termination or any longer period provided
in such plan. Such payments and benefits shall not entitle Xxxxxx to any
other benefits or compensation program available to Company employees.
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E. Termination Following Change In Control: If either the
Company elects to terminate Xxxxxx without cause pursuant to Section
4(D) within ninety (90) days before or twenty four (24) months after a
change in control or Xxxxxx elects to resign with good reason within
twenty four (24) months after a change in control of the Company, then
as a severance benefit and in lieu of all compensation or damages the
Company shall (i) pay Xxxxxx a lump sum equal to 299% of the average of
the annual base salary plus bonuses paid to Xxxxxx during each of the
three years prior to the time of such termination or resignation, (ii)
continue to provide Xxxxxx at Company expense all medical, disability
and insurance benefits available to him at the time of such termination
or resignation for a period of twenty four (24) months after such
termination or resignation, or, if shorter, the maximum period allowed
under the Company's policies as then in effect or under applicable law,
(iii) accelerate the vesting of all unvested stock options granted to
Xxxxxx under the Company's stock option or other benefit plans so that
all such stock options will vest and be fully exercisable on the date of
such termination or resignation, and (iv) extend the post-termination
exercise period for all stock options granted to Xxxxxx under the
Company's stock option and other benefit plans so that all such stock
options will be exercisable for the longer of three months after the
date of such termination or resignation or any longer post-termination
exercise period provided in such plan.
For purposes of this subsection, the term "change in
control" shall mean any change in control that the Company would be
required to report in response to Item 5(f) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Without limiting the foregoing, a change
in control shall also be deemed to have occurred if (i) any "person" as
defined in Section 13(d) and 14(d) of the Exchange Act is or becomes,
directly or indirectly, the "beneficial owner" as defined in Rule 13
(d-3) under the Exchange Act of securities of the Company which
represent 25% or more of the combined voting power of the Company's then
outstanding securities; or (ii) during any period of two consecutive
years, individuals who at the beginning of said two year period
constituted the Board of Directors of the Company cease for any reason
to constitute at least a majority of the Board unless the election or
nomination of each new director was approved by a vote of at least
two-thirds of the directors who were in office at the beginning of said
two year period.
For purposes of this subsection, Xxxxxx shall be deemed
to have resigned "with good reason" if he does so following a change in
control as a result of the Company having done any or all of the
following without Xxxxxx'x express written consent: (i) assigned Xxxxxx
different duties or made changes in his reporting responsibilities,
title, or office that are substantially inconsistent with Xxxxxx'x
duties, responsibilities, titles, or offices immediately prior to the
change in control; (ii) reduced Xxxxxx'x base salary from that in effect
at the time of the change in control; (iii) failed to continue any bonus
plan in substantially the same form as it existed prior to the change in
control; (iv) required Xxxxxx to be based more than fifty (50) miles
from his present office location, except for required travel consistent
with Xxxxxx'x present business travel obligations; (v) failed to
continue any plan or program for compensation, employee benefits, stock
purchase or ownership, life insurance, group medical, disability, or
vacation in substantially the same form as immediately prior to the
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change in control, or otherwise made any material reduction in Xxxxxx'x
fringe benefits, or (vi) failed to obtain the assumption of this
Agreement by any successor to the Company.
Xxxxxx shall not be entitled to the benefits of this
Section 4(E) if this Agreement and his employment are terminated
pursuant to Section 4(A), (B) or (C). If Xxxxxx institutes legal
proceedings to enforce any provision of this Section 4E or any other
provision of this Agreement providing rights or benefits after a change
of control, he shall be entitled to recover from the Company all costs,
fees and expenses of such proceeding if he is the prevailing party.
F. Company's Obligations Under This Agreement
Exclusive: The benefits set forth in subsections A through E above
(which benefits, in the event of termination pursuant to subsections A,
C, D or E, include payment for services rendered prior to termination as
provided in such subsection), as applicable, constitute the sole
obligations of the Company to Xxxxxx upon a termination and are in lieu
of any damages or other compensation that Xxxxxx may claim under other
Company policies in connection with this Agreement. The benefits on
termination in this Agreement are in substitution for any severance or
termination benefits otherwise available under Company policies of
general application. Xxxxxx expressly acknowledges that certain Company
benefit or incentive plans provide for vesting in, or award of, benefits
based on employment on or through particular dates and that nothing in
this Agreement entitles him to partial vesting or partial awards under
such plans. Any payments under Section 4D relating to any incentive or
bonus plan are expressly acknowledged to be benefits under this
Agreement and not an interpretation or modification of any such plan.
G. Resignation As Officer and Director: In the event
of any termination pursuant to this Section 4, Xxxxxx shall be deemed to
have resigned as an officer and director of the Company if he was
serving in such capacity at the time of termination.
5. Confidentiality: Xxxxxx acknowledges and agrees that he has
been and will continue to be entrusted with trade and proprietary information
regarding the products, processes, methods of manufacture and delivery,
know-how, designs, formula, work in progress, research and development, computer
software and data bases, copyrights, trademarks, patents, marketing techniques,
and future business plans, as well as customer lists and information concerning
the identity, needs, and desires of actual and potential customers of the
Company and its subsidiaries, joint venturers, partners, and other affiliated
persons and entities ("Confidential Information"), all of which derive
significant economic value from not being generally known to others outside the
Company.
A. During the entire term of his employment with the
Company and for two years thereafter, Xxxxxx shall not disclose or
exploit any Confidential Information except for the sole benefit of the
Company or with its express written consent.
B. During the entire term of his employment by the
Company and for one year thereafter, Xxxxxx shall not directly or
indirectly solicit
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any actual or potential customer of the Company or its subsidiary and
affiliated companies for any business that competes directly or
indirectly with the Company, except for the sole benefit of the Company
or with its express written consent.
C. During the entire term of his employment by the
Company and for one year thereafter, Xxxxxx shall not induce or attempt
to induce any employee of the Company to leave the Company's employ
except for the sole benefit of the Company or with its express written
consent.
D. In the event any provision in this Section 5 is
more restrictive than allowed by the law of any jurisdiction in which
the Company seeks enforcement, such provision shall be deemed amended
and shall then be fully enforceable to the extent permitted by such law.
X. Xxxxxx acknowledges and agrees that any violation
of this Section 5 would cause immediate irreparable damage to the
Company, and that it would be extremely difficult or impossible to
determine the amount of damage caused to the Company. Xxxxxx therefore
agrees that the Company's remedies at law are inadequate, and hereby
consents to issuance of a temporary restraining order, preliminary and
permanent injunction, and other appropriate relief to restrain any
actual or threatened violation of this Section, without limiting any
remedies the Company may have at law or in equity.
6. Inventions: Any and all patents, copyrights, trademarks,
inventions, discoveries, developments, or trade secrets developed or perfected
by Xxxxxx during or as the result of his employment with the Company shall
constitute the sole and exclusive property of the Company. Xxxxxx shall disclose
all such matters to the Company, assign all right, title and interest he may
have in them, and cooperate with the Company in obtaining and perfecting any
patent, copyright, trademark, or other legal protection. This Section 6 shall
not apply to any invention which qualifies fully under California Labor Code
Section 2870, a true copy of which is attached to this Agreement as Exhibit A.
7. Conflict Of Interest: During the term of this Agreement,
Xxxxxx shall devote his time, ability, and attention to the business of the
Company, and shall not accept other employment or engage in any other outside
business activity which interferes with the performance of his duties and
responsibilities under this Agreement or which involves actual or potential
competition with the business of the Company, except with the express written
consent of the Board of Directors.
8. Employee Benefit Plans: All of the employee benefit plans
referred to or contemplated by this Agreement shall be governed solely by the
terms of the underlying plan documents and by applicable law. Nothing in this
Agreement shall impair the Company's right to amend, modify, replace and
terminate any and all such plans in its sole discretion as provided by law, or
to terminate this Agreement in accordance with its terms. This Agreement is for
the sole benefit of Xxxxxx and the Company, and is not intended to create an
employee benefit plan or to modify the term of existing plans.
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9. Parachute Limitation:
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A. If the payments and benefits Xxxxxx is entitled to
under this Agreement and all other contracts, arrangements, or programs upon a
change in control shall, in the aggregate, exceed the maximum amount that may be
paid to Xxxxxx without triggering golden parachute penalties under Section 280G
and related provisions of the Internal Revenue Code, as determined in good faith
by the Company's independent auditors (the "280G Ceiling"), then the cash
amounts paid to Xxxxxx shall be increased to the extent necessary to compensate
Xxxxxx for all excise taxes resulting from exceeding the 280G Ceiling, and all
income and other taxes due on such increased amounts, until Xxxxxx has received
all amounts he would have received if no excise taxes were due under the 280G
Ceiling.
B. Although the Company does not believe it possible
under the terms of this Agreement, if the payments and benefits Xxxxxx would be
entitled to receive upon a termination would exceed the 280G Ceiling and there
has been no change in control, Xxxxxx'x benefits shall be cut back in the
priority order designated by Xxxxxx or, if Xxxxxx fails promptly to designate an
order, in the priority order designated by the Company, to an amount $1 less
than the 280G Ceiling. If an amount in excess of the limit set forth in this
Section is paid to Xxxxxx and there has been no change in control, Xxxxxx must
repay the excess amount to the Company upon demand. Xxxxxx and the Company agree
reasonably to cooperate with each other in connection with any administrative or
judicial proceedings concerning the existence or amount of golden parachute
penalties with respect to payments or benefits Xxxxxx receives.
10. Assignment: This Agreement may not be assigned by Xxxxxx,
but may be assigned by the Company to any successor in interest to its business.
In the event the Company does not survive any merger, acquisition, or other
reorganization, it shall make a reasonable effort to obtain an assumption of
this Agreement by the surviving entity in such merger, acquisition, or other
reorganization, but the failure to obtain such assumption shall not prevent or
delay such merger, acquisition, or other reorganization or relieve the Company
of its other obligations under this Agreement. This Agreement shall bind and
inure to the benefit of the Company's successors and assigns, as well as
Xxxxxx'x heirs, executors, administrators, and legal representatives.
11. Notices: All notices required by this Agreement may be
delivered by first class mail at the following addresses:
To the Company: Hycor Biomedical Inc.
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
To Xxxxxx: Xxxxxxx X. Xxxxxx
00000 Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
12. Amendment. This Agreement may be modified only by written
agreement signed by the party against whom any amendment is to be enforced.
13. Choice Of Law: This Agreement shall be governed by the
laws of the State of California.
14. Partial Invalidity: In the event any provision of this
Agreement is void or unenforceable, the remaining provisions shall continue in
full force and effect.
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15. Waiver: No waiver of any breach of this Agreement shall
constitute a waiver of any subsequent breach.
16. Complete Agreement: This Agreement contains the entire
agreement between the parties, and supersedes any and all prior and
contemporaneous oral and written agreements, including Xxxxxx'x previous
employment contracts, which shall have no further force and effect.
"Xxxxxx" "Company"
XXXXXXX X. XXXXXX HYCOR BIOMEDICAL INC.
______________________________ By:______________________________
Name:___________________________
Dated:________________________ Dated:___________________________
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EXHIBIT A
CALIFORNIA LABOR CODE SECTION 2870
EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RENTS
(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or
demonstrably anticipated research or development of the employer;
or
(2) Result from any work performed by the employee for the
employer.
(b) To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.
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