EXHIBIT 10.13
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of [Exhibit A] 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], 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 [Exhibit A] (the "Commencement Date") and continue until [Exhibit A]
unless earlier terminated pursuant to Section 6 or Section 10; provided,
however, that commencing on [Exhibit A] 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
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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.
(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, including, but not
limited to, reasonable out-of-pocket expenditures incurred by Executive in
relocating his household to the Austin, Texas metropolitan area.
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 Payments 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;
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(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 as Executive's sole remedy in connection with such
termination. 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.
The payments described in this Section 6(b)(ii) are referred to herein
collectively as the "Separation Payments." 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 Payments 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
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(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 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
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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. Noncompetition.
(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 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 Payments 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
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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 noncompetition 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;
(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
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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.
(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
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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.
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(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, 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,
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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 sue 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 sue
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 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) 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.
(h) 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.
10
(i) 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.
(j) Coordination With Other Payments.
(i) After the termination of Executive's employment
hereunder:
(1) if Executive is entitled to receive
Separation Payments; 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 all unpaid Separation
Payments shall be accelerated to the payment date of the
Termination Payment and such Separation Payments shall be
made (in this event, Employer waives any requirement that
Executive reduce the Separation Payments by the amount of
any income earned by Executive thereafter); and
(2) the Termination Payment shall be reduced by
the amount of the Separation Payments so accelerated and
made.
(k) 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(k) 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
11
such additional amount, shall be equal to the reimbursement payment. All
amounts under this Section 10(k) shall be paid by Employer within 15
days after Executive's presentation to Employer of any statements of
such amounts 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.
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
12212 Technology Blvd.
Austin, Texas 78727
Attention: General Counsel
Facsimile Number: (512) 219-6325
If to Executive, to:
12212 Technology Blvd.
Austin, Texas 78727
(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 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
12
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 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:
13
(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
14
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.
(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 Payments" 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).
15
(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:
---------------------------------------
Mark B. Chandler, Ph.D.
President and Chief Executive Officer
16
EXHIBIT A
Termination Base
Executive Office Commencement Date Date Renewal Date Salary
- --------- ------ ----------------- ---- ------------ ------
Mark B. Chandler, Ph.D. President and March 10, 2000 March 9, 2003 March 9, 2002 275,000
Chief Executive
Officer
Gail S. Page* Executive Vice October 2, 2000 October 1, 2003 October 2, 2002 235,000
President and
Chief Operating
Officer
Van S. Chandler Vice President, March 10, 2000 March 9, 2003 March 9, 2002 190,000
Instruments and
Chief
Technology
Officer
Randel S. Marfin Vice President, March 10, 2000 March 9, 2003 March 9, 2002 160,000
Business
Development
Ralph L McDade, Ph.D. Vice President, March 10, 2000 March 9, 2003 March 9, 2002 190,000
Research &
Development and
Chief
Scientific
Officer
Oliver H. Meek Vice President, February 14, 2000 February 14, 2003 February 14, 2002 135,000
Manufacturing
Michael D. Spain, M.D. Vice President, March 10, 2000 March 9, 2003 March 9, 2002 190,000
Clinical
Affairs and
Chief Medical
Officer
James E. Schepp Vice President, April 2, 2001 March 31, 2004 March 31, 2003 235,000
Sales and
Marketing
James W. Jacobson, Ph.D. Vice President, November 9, 2001 November 8, 2004 November 9, 2003 130,000
Technical
Operations
* Under the Company's Employment Agreement with Ms. Page, Ms. Page receives
an annual bonus equal to the difference between her base salary and
$250,000. In addition, in the event that the Company transfers the assets
and business relating to the "Luminex Project" to a subsidiary, the Company
may assign Ms. Page's employment agreement to the subsidiary and Ms. Page
will become executive vice president and chief operating officer of the
subsidiary.
17