EXIHIBIT 10.2
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT (the "AGREEMENT") is made effective as of the 12th day
of August, 2002 (the "Effective Date"), between Luminex Corporation a Delaware
corporation (the "COMPANY") and Thomas W. Erickson ("ERICKSON").
INTRODUCTION
The Company and Erickson desire to enter into an agreement pursuant to
which Erickson will provide his services to the Company.
NOW, THEREFORE, the parties agree as follows:
1. Definitions
(a) "Affiliate" means any person, firm, corporation,
partnership, association or entity that, directly or indirectly or
through one or more intermediaries, controls, is controlled by or is
under common control with the Company.
(b) "Cause" the occurrence of any of the following events:
(i) willful refusal by Erickson to follow a lawful
direction of the Board of Directors of the Company, provided the
direction is not materially inconsistent with the duties or
responsibilities of Erickson's position as interim President and
Chief Executive Officer of the Company, which refusal continues
after the Board of Directors has again given the direction;
(ii) willful misconduct or reckless disregard of
Erickson's duties or of the interest or property of the Company;
(iii) intentional disclosure by Erickson to an
unauthorized person of Confidential Information or Trade Secrets
(as such terms are defined in Section 5(b) below), which causes
material harm to the Company;
(iv) any act by Erickson of fraud, material
misappropriation, significant dishonesty, or act involving moral
turpitude;
(v) conviction by Erickson of a felony; or
(vi) a material breach of this Agreement by Erickson
shall occur, and Erickson fails to cure the breach within ten
(10) days following the Company's giving prompt written notice
of the breach specifying in detail the facts and circumstances
constituting the breach.
(c) "Disability" means the inability of Erickson to perform the
material duties of his position as interim President and Chief Executive
Officer hereunder due to a physical, mental, or emotional impairment,
for a ninety (90) consecutive day period or for aggregate of one hundred
eighty (180) days during any three hundred sixty-five (365) day period.
(d) "Good Reason" means the occurrence of all of the following:
(i) the Company materially breaches this Agreement or
the Company demotes Erickson or assigns him to perform other
duties other than those of the interim President and Chief
Executive Officer, except as specifically set out in paragraph
2(a) below;
(ii) Erickson gives written notice to the Company of the
facts and circumstances constituting the breach within ten (10)
days following the occurrence of the breach;
(iii) the Company fails to remedy the breach within ten
(10) days following Erickson's written notice of the breach; and
(iv) Erickson terminates the engagement and this
Agreement within ten (10) days following the Company's failure
to remedy the breach.
2. Terms and Conditions of Engagement.
(a) Engagement. Erickson shall be deemed an employee of the
Company as of August 12, 2002. Beginning on the date that the Company
receives the resignation of Mark B. Chandler, Ph.D., Erickson shall be
the interim President and Chief Executive Officer of the Company,
subject to the terms and conditions hereof, and shall perform the duties
of that position. Notwithstanding any other provision hereof, in the
event the Company appoints another person as President and Chief
Executive Officer during the Term (defined in Section 4 hereof), and
removes Erickson as interim President and Chief Executive Officer, the
Board of Directors of the Company may cause Erickson to perform other
management or management advisory duties to the Company which the Board
of Directors may reasonably request for the remainder of the Term; and
in the event the Company appoints another person as interim President
and Chief Executive Officer during the Term, then (i) the Company shall
be obligated to perform all of its obligations to Erickson under this
Agreement unless the Company has terminated Erickson for cause; and (ii)
Erickson may immediately cease rendering any services for the Company.
(b) Benefits. Erickson shall receive substantially the same
benefits as other executives of the Company, except that Erickson
intends to opt out of the group medical plan the Company offers to its
executives.
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3. Compensation.
(a) Cash Compensation. For the month of August 2002, the Company
shall pay to Erickson $35,984.85 for Erickson's services to the Company.
Thereafter, the Company shall pay to Erickson $41,667 per month for
Erickson's services hereunder. The Company shall pay the monthly cash
compensation in substantially equal installments after the services are
performed in accordance with the payroll policies of the Company. For
any partial month during the term hereof, the Company shall pay Erickson
after the services are performed cash compensation on a pro rata basis
as set forth above.
(i) The Company will also pay Erickson $414.12 per month
so that Erickson can continue to pay for coverage under his
current medical plan.
(b) Stock Options. Erickson shall be granted options to purchase
an aggregate of 40,000 shares of the Company's Common Stock. The options
shall vest and become immediately exercisable in accordance with the
following schedule:
DATE NUMBER OF SHARES
---- ----------------
September 30, 2002 6,666
October 31, 2002 6,666
November 29, 2002 6,667
December 31, 2002 6,667
January 31, 2002 6,667
February 28, 2003 6,667
The exercise price for each option will be the closing price of the
Company's Common Stock on August 12, 2002. The option grants will be
subject to the terms and conditions applicable to options granted under
the Company's 2000 Long-Term Incentive Plan (the "Plan") and shall
remain exercisable for a period of ten (10) years following the date of
grant. Upon termination of Erickson's employment (i) by the Company for
Cause, or by Employee, without Good Reason, no further options shall
vest after the date of termination, but all options vested prior to the
date of termination shall remain vested and exercisable for a period of
ten (10) years following the date of grant, and (ii) for any other
reason by the Company or Erickson, all options shall automatically vest
as of the date of termination and be exercisable for a period of ten
(10) years following the date of grant. Erickson will be mailed a
statement detailing his vested options by the 15th day following the
close of each monthly vesting period. Erickson and the Company shall
enter into a Stock Option Award Agreement that, notwithstanding the
terms of the Plan, contains terms consistent with those set forth above.
(c) Expenses. Erickson shall be entitled to be reimbursed in
accordance with the policies of the Company, as adopted and amended from
time to time, for all reasonable and necessary expenses incurred by
Erickson in connection with the performance of Erickson's duties of
employment hereunder. Such expense
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reimbursement to Erickson will include, without limitation:
(i) Erickson's reasonable business travel expenses
between Dallas, Texas and Austin, Texas incurred in connection
with the performance of his duties hereunder, including airfare,
automobile expenses, lodging, and meals while he is performing
services hereunder in Austin; and
(ii) Erickson's cell phone charges, fees and expenses
incurred in connection with his employment hereunder.
4. Term, Termination and Termination Payments.
(a) Term. Unless sooner terminated pursuant to Section 4(b)
hereof or extended by written agreement of the parties, the term of this
Agreement shall commence as of August 12, 2002 and will end February 28,
2003 (the "Term").
(b) Termination. This Agreement and the engagement of Erickson
by the Company hereunder may only be terminated: (i) by expiration of
the term set forth in Section 4(a) hereof; (ii) by mutual agreement of
the parties; (ii) by the Company without Cause; (iii) by Erickson for
Good Reason; (iv) by the Company or Erickson due to the Disability of
Erickson; or (v) by the Company for Cause. This Agreement shall also
terminate immediately upon the death of Erickson. Notice of termination
by any party shall be given prior to termination in writing and shall
specify the basis for termination and the effective date of termination.
Notice of termination for Cause by the Company shall specify the basis
for termination for Cause. Except as provided in Section 4(c) and except
as provided under the terms of the stock option agreements referred to
in Section 3(b), Erickson shall not be entitled to any payments on
benefits after termination of this Agreement, except for cash
compensation pursuant to Section 3(a) accrued up to the date of
termination and expenses required to be reimbursed pursuant to Section
3(c) hereof.
(c) Termination by the Company without Cause or by Erickson for
Good Reason. In the event that Erickson is terminated by the Company
without Cause or by Erickson for Good Reason, the Company will continue
to pay Erickson the remainder of the cash compensation pursuant to
Section 3(a) hereof for the remainder of the Term (determined without
regard to the Company's premature termination thereof) on the same
schedule as if Erickson had continued to perform services for such
period and the stock options described in Section 3(b) shall be granted,
vest and remain exercisable pursuant to the terms of the Agreement.
(d) Survival. The covenants of Erickson in Section 5 hereof
shall survive the termination of this Agreement and shall not be
extinguished thereby.
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5. Covenant Not to Compete; Confidentiality and Trade Secrets; Ownership
of Intellectual Property.
(a) Covenant Not to Compete. Erickson shall not, during the Term
of this Agreement and for a period of one (1) year immediately following
the termination of this Agreement, or any extension thereof, for any
reason, either directly or indirectly: (a) call on, solicit, or take
away any of the Company's customers or potential customers about whom
Erickson became aware as a result of Erickson's services to the Company,
either for Erickson or for any other person or entity; or (b) solicit or
take away or attempt to solicit or take away any of the Company's
employees or contractors for Erickson or for any other person or entity.
(b) Confidentiality and Trade Secrets. Erickson acknowledges and
agrees that he has and/or will, during the Term of this Agreement,
become privy to important proprietary, confidential business information
and trade secrets that are the exclusive property of the Company. This
information includes, without limitation, the methodology and processes
of the chemical, hardware, software and firmware components of Luminex's
xMAP(TM) technology that combines single- or variably-sized microspheres
with differential fluorescent labeling to generate information useful
for a variety of applications, business plans, marketing concepts,
designs, proposals, product information, financial information,
technology and costs, pricing information, customer lists, and key
accounts, including their credit information and product wants and needs
(the "Confidential Information"). This Confidential Information derives
independent economic value, both actual and potential, from not being
generally known to the public or to other persons who can obtain
economic value from its disclosure and use. As the Company has always
held the Confidential Information as proprietary, confidential trade
secret information and has taken steps to insure that the Confidential
Information is not disclosed outside of the Company, the Confidential
Information constitutes "trade secrets" under the Uniform Trade Secrets
Act and Texas state law. In light of the foregoing, Erickson therefore
agrees that he will not at any time, now or in the future, share,
disseminate, disclose, discuss or use the Confidential Information or
Trade Secrets in any way.
(c) Return of Company Property. Upon termination of this
Agreement for any reason, as a prior condition to receiving any final
compensation hereunder (including any payments pursuant to Section 4
hereof), Erickson will promptly deliver to the Company all property
belonging to the Company, including, without limitation, all
Confidential Information and Trade Secrets (and all embodiments thereof)
then in Erickson's custody, control or possession.
(d) Survival. The covenants set forth herein will apply on and
after the Effective Date hereof to any Confidential Information and
Trade Secrets disclosed by the Company or developed by Erickson prior to
or after the Effective Date hereof. The covenants restricting the use of
Confidential Information will continue and be maintained by Erickson for
a period of two years following the termination of this Agreement. The
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covenants restricting the use of Trade Secrets will continue and be
maintained by Erickson following termination of this Agreement for so
long as permitted by Texas law.
(e) Ownership of Intellectual Property. Erickson hereby
acknowledges and agrees that any and all copyrightable works authored by
him in connection with the performance of services, alone or with
others, during the Term of this Agreement, shall be deemed to have been
specially ordered or commissioned for use as either a contribution to a
collective work, as a translation, as a supplementary work, as a
compilation, or as an instructional text and, as such, shall be deemed
to be "works for hire" under the United States copyright laws from the
inception of creation or such works. In the event that any such works
shall be deemed by a court of competent jurisdiction not to be a "work
made for hire," this Agreement shall operate as an irrevocable
assignment by Erickson to the Company of all right, title and interest
in and to such works, including without limitation, all worldwide
copyright interests therein, in perpetuity. The fact that such
copyrightable works are created by Erickson outside of the Company's
facilities or other than during Erickson's working hours with the
Company, shall not diminish the Company's rights with respect to such
works which otherwise fall within this subsection. Erickson agrees to
execute and deliver to the Company such further instruments or documents
as may be requested by the Company in order to effectuate the purposes
of this subsection.
(f) Indemnification and Director and Officer Liability
Insurance. The Company shall indemnify Erickson and Erickson's actions
as interim President and Chief Executive Officer or in any other
capacity in which he may render services to the Company to the maximum
extent permitted by the laws of the state of incorporation of the
Company. The Company will not, during the Term of this Agreement, amend
its certificate of incorporation or by-laws so as to limit in any way
the Company's indemnification or expense advancement obligations
contained therein on the Effective Date. At all times during the term of
this Agreement, the Company will cover Erickson, and name him as an
insured to the extent necessary as a condition of coverage, under any
director and officer liability policy it may maintain, in his capacity
as the interim President and Chief Executive Officer or in any other
capacity in which he may render services to the company.
6. Contracts or Other Agreements with Former Employer or Business.
Erickson hereby represents and warrants that he is not subject
to any employment or consulting agreement or similar document, except as
previously disclosed and delivered to the Company, with a former
employer or with any business as to which Erickson's engagement by the
Company and provision of services in the capacity contemplated would be
a breach. For that reason, Erickson hereby represents and warrants that
he is not subject to any agreement which prohibits him during a period
of time which extends through the Term from any of the following: (i)
providing services for the Company in the capacity contemplated by this
Agreement; (ii) competing with, or in any way participating in a
business which includes the Company's business; (iii) soliciting
personnel of such former employer or other business to leave such former
employer's
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employment or to leave such other business; or (iv) soliciting customers
of such former employer or other business on behalf of another business.
7. Remedies and Enforceability.
Erickson agrees that the covenants and agreements contained in
Section 5 hereof are of the essence of this Agreement; that each of such
covenants is reasonable and necessary to protect and preserve the
interests and properties of the Company; that irreparable loss and
damage will be suffered by the Company should Erickson breach any of
such covenants and agreements; that each of such covenants and
agreements is separate, distinct and severable not only from the other
of such covenants and agreements but also from the other and remaining
provisions of this Agreement; that the unenforceability of any such
covenant or agreement shall not affect the validity or enforceability of
any other such covenant or agreements or any other provision or
provisions of this Agreement; and that, in addition to other remedies
available to it, the Company shall be entitled to seek specific
performance of this Agreement and to seek both temporary and permanent
injunctions to prevent a breach or contemplated breach by Erickson of
any of such covenants or agreements.
8. Notice.
All notices, requests, demands and other communications required
hereunder shall be in writing and shall be deemed to have been duly
given if delivered or if mailed, by United States certified or
registered mail, prepaid to the party to which the same is directed at
the following addresses (or at such other addresses as shall be given in
writing by the parties to one another):
If to the Company: Luminex Corporation
12212 Technology Blvd.
Austin, TX 78727
Attn: General Counsel
If to Erickson: Thomas Erickson
3106 Greenbrier Drive
Dallas, TX 75225
Notices delivered in person shall be effective on the date of delivery.
Notices delivered by mail as aforesaid shall be effective upon the
third calendar day subsequent to the postmark date hereof.
9. Miscellaneous.
(a) Assignment. The rights and obligations of the Company under
this Agreement shall inure to the benefit of the Company's successors
and assigns. This Agreement may be assigned by the Company to any legal
successor to the Company's business or to an entity which purchases all
or substantially all of the assets of the
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Company, but not otherwise without the prior written consent of
Erickson. In the event the Company assigns this Agreement as permitted
by this Agreement and Erickson remains engaged by the assignee, the
"Company" as defined herein will refer to the assignee and Erickson will
not be deemed to have terminated the engagement hereunder until Erickson
terminates the engagement from the assignee. Erickson may not assign
this Agreement.
(b) Waiver. The waiver by the Company of any breach of this
Agreement by any party shall not be effective unless in writing, and no
such waiver shall constitute the waiver of the same or another breach on
a subsequent occasion.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Texas.
The parties agree that any appropriate state or federal court located in
Austin, Texas shall have jurisdiction of any case or controversy arising
under or in connection with this Agreement and shall be a proper forum
in which to adjudicate such case or controversy. The parties consent to
the jurisdiction of such courts.
(d) Entire Agreement. This Agreement embodies the entire
agreement of the parties hereto relating to the subject matter hereof
and supersedes all oral agreements, and to the extent inconsistent with
the terms hereof, all other written agreements.
(e) Amendment. This Agreement may not be modified, amended,
supplemented or terminated except by a written instrument executed by
the parties hereto.
(f) Severability. Each of the covenants and agreements
hereinabove contained shall be deemed separate, severable and
independent covenants, and in the event that any covenant shall be
declared invalid by any court of competent jurisdiction, such invalidity
shall not in any manner affect or impair the validity or enforceability
of any other part or provision of such covenant or of any other covenant
contained herein.
(g) Captions and Section Headings. Except as set forth in
Section 1 hereof, captions and section headings used herein are for
convenience only and are not a part of this Agreement and shall not be
used in construing it.
[Remainder of page intentionally left blank; signature page follows]
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IN WITNESS WHEREOF, the Company and Erickson have each executed and delivered
this Agreement as of the date first shown above.
COMPANY:
LUMINEX CORPORATION
By: /s/ Harriss T. Currie
-----------------------------------
Acting Chief Financial Officer
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ERICKSON:
/s/ Thomas W. Erickson
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Thomas W. Erickson
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