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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
by HYCOR BIOMEDICAL INC., a Delaware corporation ("Company"), and NELSON F.
THUNE ("Thune").
WHEREAS, the Company desires to employ Thune in an executive
capacity, Thune 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: Thune 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.
2. Term. This Agreement and Thune's 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, Thune shall receive the following compensation:
A. Salary: Thune shall be paid base salary at the rate of One
Hundred Sixty-One Thousand Seven Hundred Dollars ($161,700) per year.
Annually, the Board of Directors, upon the recommendation of the
President, shall review Thune's performance with a view toward
increasing his salary.
B. Bonus: Thune 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 Thune's 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: Thune 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 Thune
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 Thune's employment are subject
to immediate termination at any time as follows:
A. Death: This Agreement shall terminate immediately upon
Thune's death, in which event the Company's only obligations shall be
(i) to pay all compensation owing for services rendered by Thune prior
to the date of his death; (ii) to continue paying Thune's base salary to
his estate for a period of thirty (30) days after his death; and (iii)
to make periodic recoverable advances to Thune's estate equivalent to
Thune's base salary for ninety (90) days after said thirty (30) day
period has lapsed, or until the proceeds from the life insurance policy
on Thune's 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 Thune 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 Thune 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 Thune's group medical and life insurance for
the duration of the leave; (ii) to pay the bonus, if any, that Thune
would be entitled to under the terms of the bonus plans referred to in
Section 3B of this Agreement; and (iii) to allow Thune 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 Thune will be returned to employment,
and the Company reserves the right to replace Thune or to take other
action in his absence due to business necessity. If Thune 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 Thune 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 Thune 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 Thune's base salary as in effect
immediately prior to the commencement of Thune's leave of absence. If
Thune 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 Thune in the
event Thune (i) engages in any material misconduct, willful breach, or
habitual neglect of his duties as an officer of the Company, or (ii) is
finally convicted of a felony. In either event, the Company's sole
obligation to Thune in lieu of all claims for compensation or damages
shall be to pay all compensation owing for services rendered by Thune
prior to the date of termination under this subsection.
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D. Termination Without Cause: The Company in its sole
discretion may terminate this Agreement without cause or prior warning
immediately upon written notice to Thune. For purposes of this Section
4D, any failure to renew this Agreement and any resignation following a
substantial reduction in Thune's salary, duties or responsibilities
shall constitute an involuntary termination without cause. In the event
of a termination under this Section 4D, the Company shall pay all
compensation owing for services rendered by Thune prior to the date of
termination, shall pay a lump-sum severance benefit equal to twelve (12)
months of Thune's base salary at the time of termination, and shall
continue to provide Thune 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, Thune shall be entitled to an amount equal to a pro rata
award based on the period of the fiscal year for which he was employed
if a termination under this Section 4D occurs after the completion of
three fiscal quarters. 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. Such payments and benefits shall not
entitle Thune to any other benefits or compensation program available to
Company employees.
E. Termination Following Change In Control: If either the
Company elects to terminate Thune without cause pursuant to Section 4(D)
within ninety (90) days before or twenty four (24) months after a change
in control or Thune 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 Thune a lump sum equal to 200% of the average of the
annual base salary plus bonuses paid to Thune during each of the three
years prior to the time of such termination or resignation, (ii)
continue to provide Thune 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
Thune 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 Thune under the
Company's stock option and other benefit plans so that all such stock
options will be exercisable for a period of three months after the date
of such termination or resignation (except that with respect to any
stock options having a post-termination exercise period in excess of
three months, such longer post-termination exercise period shall remain
in effect).
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
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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, Thune 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 Thune's express written consent: (i) assigned Thune different
duties or made changes in his reporting responsibilities, title, or
office that are substantially inconsistent with Thune's duties,
responsibilities, titles, or offices immediately prior to the change in
control; (ii) reduced Thune's 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 Thune to be based more than fifty (50) miles from
his present office location, except for required travel consistent with
Thune's 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 Thune's fringe
benefits, or (vi) failed to obtain the assumption of this Agreement by
any successor to the Company.
Thune 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).
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 Thune upon a termination and are in lieu of any damages or
other compensation that Thune 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. Thune
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: In the event of any termination
pursuant to this Section 4, Thune shall be deemed to have resigned as an
officer of the Company if he was serving in such capacity at the time of
termination.
5. Confidentiality: Thune acknowledges and agrees that he has
been and will continue to be entrusted with trade and proprietary information
regarding the
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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, Thune 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, Thune 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, Thune 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. Thune 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. Thune 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 Thune during or as the result of his employment with the Company shall
constitute the sole and exclusive property of the Company. Thune 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, Thune
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
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or which involves actual or potential competition with the business of the
Company, except with the express written consent of the President.
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 Thune and the Company, and is not intended to create an
employee benefit plan or to modify the term of existing plans.
9. Parachute Limitation: The payments and benefits Thune is
entitled to under this Agreement and all other contracts, arrangements, or
programs shall not, in the aggregate, exceed the maximum amount that may be paid
to Thune 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. If Thune's benefits must be cut back to
avoid triggering such penalties, Thune's benefits shall be cut back in the
priority order designated by Thune or, if Thune fails promptly to designate an
order, in the priority order designated by the Company. If an amount in excess
of the limit set forth in this Section is paid to Thune, Thune must repay the
excess amount to the Company upon demand, with interest at the rate provided for
in Internal Revenue Code Section 1274(b)(2)(B). Thune 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 Thune receives.
10. Assignment: This Agreement may not be assigned by Thune, 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 Thune's
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.
18800 Von Karman Avenue
Irvine, California 92715
To Thune: Nelson F. Thune
14 Brentano
Coto de Caza, California 92679
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.
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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 Thune's previous
employment contracts, which shall have no further force and effect.
NELSON F. THUNE
Dated:___________
HYCOR BIOMEDICAL INC.
By:_____________________________ Dated:___________
Name:________________________
Title:_______________________
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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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