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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
by HYCOR BIOMEDICAL INC., a Delaware corporation ("Company"), and REGINALD P.
JONES ("Jones).
WHEREAS, the Company desires to employ Jones in an executive
capacity, Jones 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: Jones shall be employed as a Vice President of the
Company reporting to the President, and shall faithfully and diligently perform
all duties and responsibilities required of such position or assigned by the
President 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 Jones' 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 three (3) months in advance of the expiration date.
3. Compensation: In consideration for all services to be
performed under this Agreement, Jones shall receive the following compensation:
A. Salary: Jones shall be paid base salary at the rate of One
Hundred Eighty-Four Thousand Thousand One Hundred Dollars ($184,100) per year.
Annually, the Board of Directors, upon the recommendation of the President,
shall review Jones' performance with a view toward increasing his salary.
B. Bonus: Jones 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 Jones' 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: Jones 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 Jones
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.
4. Termination: This Agreement and Jones' employment are subject
to immediate termination at any time as follows:
A. Death: This Agreement shall terminate immediately upon
Jones' death, in which event the Company's only obligations shall be (i) to pay
all compensation owing for services rendered by Jones prior to the date of his
death; (ii) to continue paying Jones' base salary to his estate for a period of
thirty (30) days after his death; and (iii) to make periodic recoverable
advances to Jones' estate equivalent to Jones' base salary for ninety (90) days
after said thirty (30) day period has lapsed, or until the proceeds from the
life insurance policy on Jones' 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 Jones 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 Jones
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 Jones' group
medical and life insurance for the duration of the leave; (ii) to pay the bonus,
if any, that Jones would be entitled to under the terms of the bonus plans
referred to in Section 3B of this Agreement; and (iii) to allow Jones 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. The granting of a leave of absence does not
guarantee that Jones will be returned to employment, and the Company reserves
the right to replace Jones or to take other action in his absence due to
business necessity. If Jones 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 Jones 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 Jones because his position has been filled, then
as a special severance benefit, the Company shall pay a lump-sum severance
payment equal to twelve (12) months of Jones' base salary as in effect
immediately prior to the commencement of Jones' leave of absence. If Jones 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 Jones in the event Jones
(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 Jones
in lieu of all claims for compensation or damages shall be to pay all
compensation owing for services rendered by Jones 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 Jones. For purposes of this Section 4D, any
failure to renew this Agreement and any resignation following a substantial
reduction in Jones' 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
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the Company shall pay all compensation owing for services rendered by Jones
prior to the date of termination, shall pay a lump-sum severance benefit equal
to twelve (12) months of Jones' base salary at the time of termination, and
shall continue to provide Jones at Company expense all medical, disability and
insurance benefits available to him at the time of termination for a period of
twelve (12) 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, Jones 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 if a termination under this Section 4D
occurs after the completion of three fiscal quarters or an equivalent portion of
such other period. 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 Jones under
Company's stock option and other benefit plans so that all 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 Jones to any other benefits or compensation program available to Company
employees.
E. Termination Following Change In Control: If either the
Company elects to terminate Jones without cause pursuant to Section 4(D) within
ninety (90) days before or twenty four (24) months after a change in control or
Jones 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 Jones a lump sum equal to 200%
of the average of the annual base salary plus bonuses paid to Jones during each
of the three years prior to the time of such termination or resignation, (ii)
continue to provide Jones 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 Jones 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 Jones 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
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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, Jones 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 Jones'
express written consent: (i) assigned Jones different duties or made changes in
his reporting responsibilities, title, or office that are substantially
inconsistent with Jones' duties, responsibilities, titles, or offices
immediately prior to the change in control; (ii) reduced Jones' 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 Jones to be based more than fifty (50) miles from his
present office location, except for required travel consistent with Jones'
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 change in control, or otherwise made any material
reduction in Jones' fringe benefits, or (vi) failed to obtain the assumption of
this Agreement by any successor to the Company.
Jones 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 Jones 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 subsections), as
applicable, constitute the sole obligations of the Company to Jones upon a
termination and are in lieu of any damages or other compensation that Jones 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. Jones 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, Jones 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: Jones 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
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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, Jones 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, Jones shall not directly or
indirectly solicit 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, Jones 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.
E. Jones 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. Jones 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 Jones during or as the result of his employment with the Company shall
constitute the sole and exclusive property of the Company. Jones 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,
Jones 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 President.
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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 Jones and the Company, and is not intended to create an
employee benefit plan or to modify the term of existing plans.
9. Parachute Limitation:
A. If the payments and benefits Jones 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 Jones 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 Jones shall be increased
to the extent necessary to compensate Jones for all excise taxes
resulting from exceeding the 280G Ceiling, and all income and other
taxes due on such increased amounts, until Jones has received all
amounts he would have received if no excise taxes were due under Section
280G.
B. Although the Company does not believe it possible under the
terms of this Agreement, if the payments and benefits Jones would be
entitled to receive upon a termination would exceed the 280G Ceiling and
there has been no change in control, Jones' benefits shall be cut back
in the priority order designated by Jones or, if Jones 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 Jones and there has been no
change in control, Jones must repay the excess amount to the Company
upon demand. Jones 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 Jones receives.
10. Assignment: This Agreement may not be assigned by Jones, 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 Jones'
heirs, executors, administrators, and legal representatives.
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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.
18800 Von Karman Avenue
Irvine, California 92715
To Jones: Reginald P. Jones
26891 Venado
Mission Viejo, California 92691
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.
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 Jones' previous
employment contracts, which shall have no further force and effect.
"Jones" "Company"
REGINALD P. JONES 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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