Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of July 12, 2006, by and between
Transgenomic, Inc., a Delaware corporation (the "Company"), and Craig Tuttle
("Employee").
The Company and Employee desire to enter into an Employment Agreement
(this "Agreement"). Accordingly, the Company and Employee agree as follows:
Section 1. EFFECTIVE DATE; POSITION; TERM. This Agreement shall become
effective on July 12, 2006 (the "Effective Date"). The Company shall employ
Employee as its President and Chief Executive Officer. The initial term of the
Agreement will be two (2) years from the Effective Date, but shall be
automatically extended for additional terms of one (1) year unless either the
Company or the Employee provides written notice to the other that it does not
intend to extend this Agreement not later than 60 days prior to the end of the
then current term..
Section 2. POSITION AND DUTIES. During the term of this Agreement:
(a) Employee shall have the normal responsibilities, duties and
authorities of President and Chief Executive Officer of the Company
described in its bylaws and such other reasonable duties as may be assigned
to him by the Board of Directors of the Company (the "Board") from time to
time.
(b) Employee shall report to the Board, Employee shall perform
faithfully the executive duties assigned to him to the best of his ability
in a diligent, trustworthy, businesslike and efficient manner and will
devote his full business time and attention to the business and affairs of
the Company and its subsidiaries and affiliates; provided, however, that
Employee may serve as a director of or a consultant to nonprofit
corporations, civic organizations, professional groups and similar
entities.
Section 3. BASIC COMPENSATION. As compensation for his services hereunder,
the Company shall pay to Employee a base salary of $250,000 per year for the
initial two year term of this Agreement. Employee's base salary may be increased
with respect to subsequent terms of this Agreement as determined by the
compensation committee of the Board (the "Compensation Committee").
Base Salary shall be payable in equal installments in arrears on a biweekly
basis or as otherwise may be mutually agreed upon.
Section 4. BONUS. In addition to the Base Salary, Employee shall be
eligible to receive an annual bonus of up to 20% of base salary (pro-rated for
2006) based on Employee's performance in conjunction with specific mutually
agreed goals and objectives and formulas determined by the Compensation
Committee in its sole discretion prior to each calendar year. Bonuses, if any,
will be payable at such time or times during or following each calendar year as
shall be determined by the Compensation Committee in its sole discretion. Any
bonus for 2006 will be based upon a plan prepared by Employee and approved by
the Compensation Committee within sixty (60) days of the Effective Date of this
Agreement.
Section 5. PARTICIPATION IN EMPLOYEE BENEFIT PLANS. Employee will be
entitled to participate in all Company salaried employee benefit plans and
programs, subject to the terms and conditions of each such employee benefit plan
or program and to the extent commensurate with his position as President and
Chief Executive Officer.
Section 6. OTHER BENEFITS.
(a) Vacation. Employee shall participate in the vacation benefit
provided to all employees.
(b) Insurance. The Company shall make available to Employee health
insurance (including dependent coverage), and other employee
benefit plans provided to employees.
(c) Leased Vehicle. The Company shall provide Employee a mutually
agreeable vehicle in Omaha, Nebraska. Generally, the value of a
leased vehicle will be subject to withholding and W-2 reporting.
(d) Relocation Assistance. The Company will reimburse Employee for
reasonable qualified moving expenses not to exceed $20,000
incurred within twelve (12) months from the Effective Date in
connection with relocation to Omaha, Nebraska. Qualified moving
expenses are defined as those allowed by the Internal Revenue
Service as an adjustment to gross income.
(e) Temporary Living Expenses. Until Employee establishes permanent
residence in Omaha, Nebraska but for no longer than twelve (12)
months from the Effective Date of this Agreement, the Company
shall provide the following temporary living expenses that are
generally subject to withholding and W-2 reporting:
a. Housing Allowance. The Company shall pay up to $1,500 a
month for a furnished apartment in Omaha, Nebraska.
b. Commuting. The Company shall provide for airfare
associated with commutes to Employee's permanent home
every other week.
Section 7. BUSINESS EXPENSES. The Company shall reimburse Employee for all
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent with the Company's policies in effect from
time to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses.
Section 8. STOCK OPTIONS AND OPTION SHARES. Employee will be granted
options to purchase shares of the Company's common stock under its stock option
plan on the terms described below, subject to final approval of the Compensation
Committee. The price of the options will be the fair market value on the date
the options are granted. The options will vest equally on the next three
anniversary dates of the grant. Granted and unvested options will vest upon the
Company being acquired or merged into another entity.
(a) 200,000 on or about the Effective Date of the Agreement;
(b) 200,000 on or about January 12, 2007; and
(c) 200,000 on or about July 12, 2007.
Section 9. TERMINATION OF EMPLOYMENT.
(a) Events of Termination and Severance Payment. In the event that, during
the term of this Agreement, Employee is involuntarily discharged for any reason
other than for Just Cause (as defined below), Employee shall be entitled to
receive a severance payment (the "Severance Payment") equal to the amount of the
Employee's then current annual base salary. The Severance Payment will be paid
to Employee over a period of twelve months in the manner described in Section 3
and will be subject to applicable income tax withholding consistent with the
Company's normal payroll practices. Additionally, upon the Company being
acquired or merged into another entity, Transgenomic, Inc. will honor the
Severance Payment in the event that the Employee's position was eliminated as a
result of the merger or acquisition.
(b) "Just Cause" being defined as any criminal act (felony) being committed
by employee, if employee commits fraud or dishonesty toward the Company, other
significant activities materially harmful to the reputation of the Company as
reasonably defined by the Company, willful refusal to perform or substantial
disregard of the duties properly assigned, significant violation of any
statutory or common law or a material violation of Sections 11 or 12 below, not
reasonably performing assigned tasks to meet minimum expectations of the
position, or intentionally takes any other action materially detrimental to the
best interests of the Company
(c) Effect of Breach of Noncompetition Provisions. In the event Employee
breaches or otherwise fails to comply with the provisions of Section 11 or 12
below, then, in addition to any other remedies provided herein or at law or in
equity, the Company shall have the right to require return of any severance
payment made to the Employee. Return of such Severance Payment pursuant to the
preceding sentence shall not relieve Employee's obligations pursuant to Sections
11 and 12 below.
Section 10. ASSIGNMENT AND SUCCESSION.
(a) The rights and obligations of the Company under this Agreement shall
inure to the benefit of and be binding upon its respective successors and
assigns, and Employee's rights and obligations hereunder shall inure to the
benefit of and be binding upon his successors and permitted assigns, whether so
expressed or not.
(b) Employee acknowledges that the services to be rendered by him hereunder
are unique and personal. Accordingly, Employee may not pledge or assign any of
his rights or delegate any of his duties or obligations under this Agreement
without the express prior written consent of the Board.
(c) The Company may not assign its interest in or obligations under this
Agreement without the prior written consent of Employee.
Section 11. CONFIDENTIAL INFORMATION.
(a) Company Information. Employee agrees at all times during the term of
his relationship with the Company and thereafter, to hold in strictest
confidence, and not to use, except for the benefit of the Company, or to
disclose to any person, firm, corporation or other entity without written
authorization of the Board of Directors of the Company, any Confidential
Information of the Company which Employee obtains or creates, by whatever means.
Employee further agrees not to make copies of such Confidential Information
except as authorized by the Company. Employee understands that "Confidential
Information" means any Company proprietary information, technical data, trade
secrets or know-how, including, but not limited to, research, product plans,
products, services, suppliers, customer lists and customers (including, but not
limited to, customers of the Company on whom Employee called or with whom
Employee became acquainted during the relationship), prices and costs, markets,
software, developments, inventions, laboratory notebooks, processes, formulas,
technology, designs, drawings, engineering, hardware configuration information,
marketing, licenses, finances, budgets or other business information disclosed
to Employee by the Company either directly or indirectly in writing, orally or
by drawings or observation of parts or equipment or created by Employee during
the period of the relationship, whether or not during working hours. Employee
understands that "Confidential Information" includes, but is not limited to,
information pertaining to any aspects of the Company's business which is either
information not known by actual or potential competitors of the Company or is
proprietary information of the Company or its customers or suppliers, whether of
a technical nature or otherwise. Employee further understands that "Confidential
Information" does not include any of the foregoing items which have become
publicly and widely known and made generally available through no wrongful act
of Employee's or of others who were under confidentiality obligations as to the
item or items involved.
(b) Former Employer Information. Employee represents that as an employee of
the Company, he has not breached and will not breach any agreement to keep in
confidence proprietary information, knowledge or data acquired by Employee in
confidence or trust prior or subsequent to the commencement of Employee's
relationship with the Company, and Employee will not disclose to the Company, or
induce the Company to use, any inventions, confidential or proprietary
information or material belonging to any previous employer or any other party.
(c) Third Party Information. Employee recognizes that the Company has
received and in the future will receive confidential or proprietary information
from third parties subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. Employee agrees to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any person,
firm or corporation or to use it except as necessary in carrying out Employee's
work for the Company consistent with the Company's agreement with such third
party.
Section 12. RETURN OF COMPANY DOCUMENTS. Employee agrees that, at the time
of termination of his relationship with the Company, he will deliver to the
Company (and will not keep in his possession, recreate or deliver to anyone
else) any and all devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, laboratory
notebooks, materials, flow charts; equipment, other documents or property, or
reproductions of any aforementioned items developed by Employee pursuant to the
relationship or otherwise belonging to the Company, its successors or assigns.
Employee further agrees that any property situated on the Company's premises and
owned by the Company, including disks and other storage media, filing cabinets
or other work areas, is subject to inspection by Company personnel at any time
with or without notice.
Section 13. NONCOMPETITION. Independent of any obligation under any other
contract or agreement between Employee and the Company, for a period of one (1)
year following the termination of Employee's employment relationship with the
Company, Employee shall not, directly or indirectly, whether as an individual
for his own account, or for or with any other person, firm, corporation,
partnership, joint venture, association, or other entity whatsoever, which is or
intends to be engaged in biotechnology business and, more particularly, that
provides technologies for DNA/RNA analysis and purification utilizing DHPLC
technologies (provided, however, that the restrictions set forth in this clause
shall not apply to involvement that consists solely of "beneficially owning," as
such term is used in Rule 13d-3 promulgated under the Exchange Act 2% or less of
the outstanding securities of any class of securities issued by a
publicly-traded entity):
(a) Solicit, interfere with, or endeavor to entice away from the
Company, any person, firm, corporation, partnership, or entity of any kind
whatsoever, which was or is a client or licensor of the Company, for which
the Company performed services, with respect to any business, product or
service that is competitive to the products or services offered by the
Company, or under development by the Company, as of the date of the
termination of Employee's relationship with the Company. This restriction
shall apply only to such clients or licensors of the Company as were
serviced or solicited by Employee at any time during the one (1) year prior
to the separation of Employee's relationship with the Company, either as an
independent contractor or as an employee of the Company;
(b) Solicit or endeavor to induce any of the Company's employees or
consultants to terminate their relationship with the Company, or take away
such employees or consultants, or attempt to solicit, induce, recruit,
encourage or take away employees or consultants of the Company, either for
Employee or for any other person or entity;
(c) Induce or attempt to induce any supplier, licensee or other
business relation of the Company to cease doing business with the Company,
or in any way interfere with the relationship between any such supplier,
licensee or business relation and the Company.
Section 14. BUSINESS OPPORTUNITY. Employee represents and acknowledges that
the foregoing restrictions will not prevent him from obtaining gainful
employment in his field of expertise or cause him undue hardship; and that there
are numerous other employment opportunities available to him that are not
affected by the foregoing restrictions. Employee further acknowledges that the
foregoing restrictions are reasonable and necessary, in order to protect the
Company's legitimate interests, and that any violation thereof would result in
irreparable injury to the Company.
Section 15. CONFLICTS OF INTEREST POLICIES. Employee shall diligently
adhere to the Company's Conflict of Interest Policy as adopted by the Board and
in effect from time to time.
Section 16. ARBITRATION AND EQUITABLE REMEDIES.
(a) Except as provide in Section 16 (b) hereof, the parties agree that
any dispute or controversy arising out of, relating to, or concerning the
interpretation, construction, performance or breach of this Agreement,
shall be settled by arbitration to be held in Nebraska, in accordance with
the Employment Dispute Resolution rules of the American Arbitration
Association then in effect. The arbitrator may grant injunctions or other
relief in such dispute or controversy and the decision of the arbitrator
shall be final, conclusive and binding on the parties to the arbitration.
Judgment may be entered on the arbitrator's decision in any court having
jurisdiction. The Company and Employee shall each pay one-half of the costs
and expenses of such arbitration, and each shall separately pay the fees
and expenses of their respective legal counsel.
THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE'S RIGHT TO A
JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL
ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP.
(b) Notwithstanding paragraph (a) of this Section 16, the parties
agree that, in the event of the breach or threatened breach of Sections 11,
13 or 14 of this Agreement by Employee, monetary damages alone would not be
an adequate remedy to the Company and its Subsidiaries for the injury that
would result from such breach, and that the Company and its Subsidiaries
shall be entitled to apply to any court of competent jurisdiction for
specific performance and/or injunctive relief (without posting bond or
other security) in order to enforce or prevent any violation of such
provisions of this Agreement. Employee further agrees that any such
injunctive relief obtained by the Company or any of its Subsidiaries shall
be in addition to monetary damages.
Section 17. INDEMNIFICATION. The Company agrees to indemnify and hold
harmless Employee to the degree, and subject to the conditions, set forth in the
Company's Articles of Incorporation and Bylaws and Delaware law.
Section 18. ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties relating to the subject matters covered hereby and
shall supersede any prior understandings, agreements or representations by or
between the parties, written or oral, which may have related to the subject
matter hereof in any way and shall not be amended or waived except in a writing
signed by the parties hereto.
Section 19. NOTICES. Any notice or request required or permitted to be
given hereunder shall be in writing and will be deemed to have been given (i)
when delivered personally, sent by telecopy (with hard copy to follow) or
overnight express courier or (ii) five days following mailing by certified or
registered mail, postage prepaid and return receipt requested, to the addresses
below unless another address is specified by such party in writing:
To the Company: Transgenomic, Inc.
12325 Emmet Street
Omaha, NE 68164
Attention: Chairman
Telephone: (402) 452-5400
Telecopy: (402) 452-5447
To the Employee: Craig Tuttle
21870 Horse Butte Trail
Bend, OR 97702
Telephone: (541) 388-7439
Section 20. HEADINGS. The article and section headings herein are for
convenience of reference only and shall not define or limit the provisions
hereof.
Section 21. APPLICABLE LAW. The corporate law of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the internal laws of the
State of Nebraska.
Section 22. SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held prohibited by,
invalid or unenforceable in any respect under applicable law, such provision
will be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
Section 23. AMENDMENTS AND WAIVERS. Any provision of this Agreement may be
amended or waived only with the prior written consent of the Company and
Employee.
Section 24. NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto.
Section 25. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
Section 26. EMPLOYEE REPRESENTATIONS. Employee hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Employee does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Employee is a party or by which he is bound, (ii) Employee is
not a party to or bound by any employment agreement, non-compete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Employee, enforceable in accordance with its
terms.
Section 27. SURVIVAL. Sections 11, 12 and 13 shall survive and continue in
full force in accordance with their terms notwithstanding any termination of
this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its duly authorized officer and Employee has signed this Agreement.
TRANSGENOMIC, INC.
By /s/ Collin J. D'Silva
-------------------------------------
Name: Collin J. D'Silva
Title: Chairman of the Board
EMPLOYEE
By /s/ Craig Tuttle
-------------------------------------
Name: Craig Tuttle
Title: President and Chief Executive Officer