EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and entered into
as of January 1, 2001 (the "EFFECTIVE DATE"), by and between QUIDEL CORPORATION,
a Delaware corporation (the "COMPANY"), and S. ▇▇▇▇▇ ▇▇▇, an individual ("▇▇▇").
1. EMPLOYMENT. The Company hereby engages ▇▇▇ as its President
and Chief Operating Officer and ▇▇▇ accepts such employment upon the terms and
subject to the conditions set forth in this Agreement.
2. DUTIES AND RESPONSIBILITIES. ▇▇▇ will report directly to the
Vice Chairman and Chief Executive Officer. ▇▇▇ shall be responsible for
operational leadership to include direct responsibility for Commercial
Operations and Product Development and Supply Operations. In this capacity, the
Sr. Vice President, Commercial Operations and Sr. Vice President, Product
Development and Supply will report directly to ▇▇▇. In addition, ▇▇▇ shall
perform such other duties and functions consistent with his role and position as
may from time to time be assigned to him by the Chief Executive Officer. ▇▇▇
agrees that during the course of his employment, he will devote substantially
all of his business time, attention and efforts to the performance of his duties
and obligations hereunder. In addition, ▇▇▇ will be nominated for election to
join the Board of Directors of the Company at the May 2001 Annual Shareholders
meeting. In addition ▇▇▇ will be considered for promotion to the President/CEO
position with the Company within six to twelve months after his initial
employment date. The promotion will be decided at the sole discretion of the
Board of Directors. ▇▇▇ shall not, without the prior written approval of the
Chief Executive Officer, and obtained in each instance, directly or indirectly
(i) accept employment or receive any compensation for the performance of
services from any business enterprise other than the Company or (ii) enter into
or be concerned or interested in any trade or business or public or private work
(whether for profit or otherwise and whether as partner, principal, shareholder
or otherwise), which may, in the reasonable discretion of the Board, hinder or
otherwise interfere with the performance by ▇▇▇ of his duties and obligations
hereunder; PROVIDED, HOWEVER, that ▇▇▇ may serve on the board of directors of up
to three organizations of his choice, and he may participate in and hold
positions of responsibility with industry associations and organizations so long
as such commitments do not unreasonably interfere with Kay's duties and
responsibilities to the Company and the Board of Directors does not object to
Kay's directorship based upon reasonable concerns relating to the nature of the
company in question or its business. Notwithstanding the foregoing, nothing in
this Agreement shall prohibit ▇▇▇ from becoming involved or engaged in
charitable and civic activities, or from acting as an officer, director or
manager of family trusts and partnerships.
3. COMPENSATION.
(a) SALARY. For all services to be rendered by ▇▇▇ under
this Agreement, the Company agrees to pay ▇▇▇, beginning on a date to be
mutually agreed upon (but no later than the commencement of performance of his
duties under this Agreement), a salary (the "Base Salary") equal to Three
Hundred and Twenty-Five Thousand Dollars ($325,000) per year, payable in the
Company's normal payroll cycle, less all amounts required by law to be withheld
or deducted. The Compensation Committee of the Board of Directors shall review
Kay's Base Salary on or before the earliest of his promotion to Chief Executive
Officer or May 2001 and yearly thereafter. The Compensation Committee, in its
sole and absolute discretion from time to time, may increase (but not decrease
without Kay's prior written consent) Kay's Base Salary.
(i) ▇▇▇ is eligible to receive a cash
performance bonus, to be paid each year at
the same time bonuses are generally paid to
other senior executives of the Company for
the relevant fiscal year (but not later than
April 30) of up to 35% of Kay's Base Salary,
as may be determined by the Compensation
Committee of the Board of Directors.
Calculation and payment of the bonus is
subject to the terms of any bonus plan and
achievement of the goals set from year to
year by the CEO and Board of Directors for
the relevant fiscal year. The initial goals
for Kay's first year of employment are set
forth in Exhibit A attached to this
Agreement.
(ii) ▇▇▇ will be reimbursed for attorneys' fees
and costs incurred in connection with the
review and negotiation of this employment
and related agreements between ▇▇▇ and the
Company, not to exceed $10,000.
(b) STOCK OPTIONS.
The Compensation Committee of the Board of Directors of the Company has
granted ▇▇▇ Nonqualified Stock Options to purchase up to 375,000 shares of
Common Stock of the Company under the terms and conditions set forth in that
certain Stock Option Agreement (Exhibit B) executed by the Company and ▇▇▇
concurrently with this Agreement. If and at such time as the Company elects ▇▇▇
as Chief Executive Officer of the Company, the Company will ▇▇▇▇▇ ▇▇▇
Nonqualified Stock Options to purchase up to an additional 125,000 shares of
Common Stock of the Company under substantially the same terms as the Stock
Option Agreement executed concurrently with this Agreement, and otherwise in
accordance with the Employee Stock Option Plan in effect at the time of the
promotion. The exercise price of the Options shall be the fair market value of
such shares at the time of the promotion.
(c) BENEFITS.
During the Term of Kay's employment hereunder:
2
(i) ▇▇▇ shall be entitled to four weeks paid
annual vacation leave consistent with the
Company's policies for other senior
executives of the Company.
(ii) ▇▇▇ will be eligible to participate in the
Company's 401(k) benefit program which
provides for matching of 25% of the first 6%
contributed by the employee. All applicable
401(k) rules and regulations apply for
contributions made by employees.
(iii) The Company shall pay or reimburse ▇▇▇ for
all reasonable and necessary travel and
other business expenses incurred or paid by
▇▇▇ in connection with the performance of
his services under this Agreement consistent
with the Company's policies for other senior
executives of the Company as approved by the
Compensation Committee.
(iv) Upon the commencement of Kay's employment,
the Company shall provide and pay for the
annual cost of premiums for health, dental
and medical insurance coverage for ▇▇▇ and
Kay's dependents consistent with the
coverage generally made available by the
Company to senior executives of the Company.
The Company agrees to pay directly or
reimburse ▇▇▇ for continuation coverage
under COBRA for ▇▇▇ and his covered
dependents under Kay's current health plan
from his former employer during the
relocation of his household, not to exceed
four (4) months.
(v) In addition to the benefits set forth above,
▇▇▇ shall be entitled to participate in any
other policies, programs and benefits which
the Compensation Committee may, in its sole
and absolute discretion, make generally
available to its other senior executives
from time to time including, but not limited
to, life insurance, disability insurance,
pension and retirement plans, stock plans,
cash and/or other bonus programs, and other
similar programs. The Company will provide
▇▇▇ with a laptop computer and cell phone
for Kay's business use
4. RELOCATION: ▇▇▇ will be reimbursed for all relocation expenses
and receive certain additional benefits in connection with his relocation
pursuant to the Company Relocation Policy (attached to this Agreement as Exhibit
C and incorporated in this Agreement by reference).
5. AT WILL EMPLOYMENT. The Company and ▇▇▇ acknowledge and agree
that Kay's employment by the Company is expressly "at will" and not for a
specified term. This means that either party may terminate Kay's employment at
any time for any
3
reason, with or without cause. Any termination of Kay's employment is, however,
subject to the terms and provisions of this Agreement.
6. SEVERANCE.
(a) DEATH OR DISABILITY OF ▇▇▇. This Agreement and Kay's
employment hereunder shall automatically terminate upon Kay's death or, at the
option of the Company by written notice to ▇▇▇, upon ▇▇▇'▇ Disability.
"Disability" shall mean the disability of ▇▇▇, within the meaning of subsection
22(e)(3) of the Internal Revenue Code of 1986, as amended, and where ▇▇▇ is
unable to work and remains continuously so totally disabled for a period of one
hundred and eighty (180) days. Such termination shall take effect the last day
of the month following the date of death or the date such notice of termination
for Kay's Disability is given. Kay's compensation and other benefits shall
continue during the term of the disability through the effective date of
termination as set forth above.
(b) TERMINATION BY COMPANY FOR CAUSE.
(i) DEFINITION OF CAUSE. For purposes of this
Agreement "Cause" shall be limited to the
following: (1) fraud; (2) personal
dishonesty involving money or property of
the Company or that results in material harm
to the Company; (3) Kay's willful
misconduct; (4) a serious breach of a
fiduciary duty to the Company involving
personal profit; (5) Kay's conviction for a
felony (including via a guilty or NOLO
CONTENDERE plea), excluding traffic
offenses; (6) Kay's willful and continued
neglect of duties (other than any such
failure resulting from his incapacity
because of physical or mental illness); or
(7) Kay's material breach of the provisions
of Sections 2, 7, 8, 9 or 10 of this
Agreement; provided, however, that
unsatisfactory job performance shall not be
considered Cause for termination of Kay's
employment by the Company. ▇▇▇ shall be
afforded a reasonable opportunity to cure
any willful neglect of his duties and any
other alleged material breach of this
Agreement according to the following terms.
The Company's Board of Directors shall give
▇▇▇ written notice stating with reasonable
specificity the nature of the circumstances
determined by the Board of Directors in good
faith to constitute willful neglect or other
material breach, and that failure to cure or
correct such circumstances or breach will
result in termination of employment for
"Cause" under this Agreement. ▇▇▇ shall have
thirty (30) days from his receipt of such
notice to cure such circumstances or such
breach if such breach is reasonably
susceptible of cure. If, in the reasonable
good faith judgment of the Board of
Directors, the alleged breach is not
reasonably susceptible of cure, or such
circumstances
4
or material breach has not been
satisfactorily cured within such thirty (30)
day period, such neglect of duties or
material breach shall thereupon constitute
"Cause."
(ii) PROCEDURE UPON TERMINATION BY COMPANY FOR
CAUSE. Notwithstanding the foregoing,
termination by the Company for Cause shall
not be effective until and unless (1) notice
of intention to terminate for Cause has been
given by the Company within 90 days after
the Company learns of the act, failure or
event constituting "Cause" under this
Section (which is not cured by ▇▇▇ within
any time period permitted for such cure
above), and (2) the Board of Directors has
voted by a majority vote to terminate ▇▇▇
for Cause.
(c) TERMINATION BY EMPLOYEE FOR GOOD REASON.
(i) DEFINITION OF GOOD REASON. ▇▇▇ shall have
the right to immediately terminate his
employment for Good Reason. For purposes of
this Section "Good Reason" shall mean the
following: (1) the failure to elect and
continue ▇▇▇ as Chief Operating Officer (or
Chief Executive Officer after he has been
elected to such office) of the Company, or
if the scope of Kay's duties and
responsibilities are in the aggregate
materially reduced; (2) a requirement by the
Company or the Board that ▇▇▇ be relocated
to a Company office more than fifty (50)
miles from the current executive offices of
the Company, or the Company requiring ▇▇▇ to
be based anywhere other than the principal
executive offices of the Company; (3) a
Change of Control as defined in this Section
6 occurs, unless following a Change of
Control the successor organization offers to
continue this Agreement for two (2) years
following such Change of Control or offers
▇▇▇ a two (2) year contract incorporating
substantially all of the terms of this
Agreement and maintaining, at least, his
then current salary and benefits; (4) a
material reduction in Kay's total benefit
package, provided that the Company does not
pay ▇▇▇ an appropriate cash amount to
reimburse him for the benefit reduction, or
(5) a material breach by the Company of any
of the terms of this Agreement if the breach
is not corrected within thirty (30) days
after written notice of such breach is given
to the Company.
(ii) PROCEDURE UPON TERMINATION BY EMPLOYEE FOR
GOOD REASON. Notwithstanding the foregoing,
termination by ▇▇▇ for Good Reason shall not
be effective until and unless notice of
intention to terminate for Good Reason has
been given by ▇▇▇ within 90 days after ▇▇▇
learns of the act,
5
failure or event constituting "Good Reason"
under this Section (which is not cured by
the Company within any time period permitted
for such cure above).
(d) SEVERANCE. If this Agreement is terminated by ▇▇▇ for
Good Reason or by the Company without cause, ▇▇▇ shall be entitled to receive
the following severance payments and benefits (the "Severance Benefit"):
(i) continuation of his base salary, less
applicable withholdings, at the salary rate
in effect at the time of the termination of
his employment, payable in the ordinary
course of the Company's business as if ▇▇▇
were remaining in the employ of the Company,
for a period (the "Severance Benefit
Period") of twelve (12) months from the date
of termination, except that in the event
that such termination occurs in connection
with or within one year following a Change
of Control, then ▇▇▇ shall be entitled to
receive (in lieu of payment of his base
salary for the Severance Benefit Period) a
lump sum payment equal to twelve months of
his base salary and bonus for the preceding
fiscal year, payable within ten (10) days
following the date of such termination, and
the Severance Benefit Period shall be deemed
to be a period of twelve (12) months;
(ii) payment of any cash performance bonus
payable with respect to the fiscal year
prior to the fiscal year in which
termination occurs (if not previously paid),
and, except in the case of a termination
following a Change of Control, payment of
any prorated bonus for the year in which
termination occurs, which payment shall be
calculated on the bonus payable or awarded
for the previous fiscal year;
(iii) consideration by the Board of Directors for
accelerated vesting of any stock options
granted to ▇▇▇;
(iv) payment during the Severance Benefit Period
(or until such earlier date that
substantially equivalent or better benefits
are provided by a successor employer) of the
cost of COBRA insurance premiums for all
health insurance, and the cost of life
insurance and disability insurance fringe
benefits on a monthly basis, in advance; and
(v) in the event of a termination by the Company
without cause in connection with or
following a Change of Control, forgiveness
of all outstanding principal and interest on
the Company's home loan to ▇▇▇ as referenced
in the Relocation Policy (Exhibit C).
6
(e) DEFINITION OF CHANGE OF CONTROL. A "Change of
Control" with respect to the Company shall be deemed to have occurred at the
time of the earliest to occur of the events listed in Section 6 (Change of
Control) of the Stock Option Agreement (Exhibit B hereto), executed concurrently
with this Agreement.
7. INVENTIONS.
(a) DISCLOSURE. ▇▇▇ will disclose promptly to the Company
each Invention (as defined below), whether or not reduced to practice, that is
conceived or learned by ▇▇▇ (either alone or jointly with others) during the
term of his employment by the Company. Further, ▇▇▇ will disclose in confidence
to the Company all patent applications filed by or on behalf of ▇▇▇ during the
term of his employment and for a period of one (1) year thereafter.
For purposes of this Agreement, the term "Invention" includes,
without limitation, any invention, discovery, know-how, idea, trade secret,
technique, formula, machine, method, process, use, apparatus, product, device,
composition, code, design, program, confidential information, proprietary
information, or configuration of any kind, that is discovered, conceived,
developed, improved on, made or produced by ▇▇▇ (alone or in conjunction with
others) during the duration of Kay's employment and for a period of one (1) year
thereafter, and which:
(i) relates at the time of conception or
reduction to practice of the invention, in
any manner, to the business of the Company,
including actual or demonstrably anticipated
research or development;
(ii) results from or is suggested by work
performed by ▇▇▇ for or on behalf of the
Company; or
(iii) results from the use of equipment, supplies,
facilities, information, time or resources
of the Company.
The term Invention will also include any improvements to an Invention, and will
not be limited to the definition of patentable or copyrightable invention as
contained in the United States patent or copyright laws.
(b) COMPANY PROPERTY; ASSIGNMENT. ▇▇▇ acknowledges and
agrees that all Inventions will be the sole property of the Company, including,
without limitation, all domestic and foreign patent rights, rights of
registration or other protection under the copyright laws, or other rights,
pertaining to the Inventions. ▇▇▇ hereby assigns all of his right, title and
interest in any such Inventions to the Company.
(c) EXCLUSION NOTICE. The assignment by ▇▇▇ of Inventions
under this Agreement does not apply to any Inventions that are expressly
excluded from coverage pursuant to Section 2870 of the California Labor Code.
Accordingly, ▇▇▇ is not required to assign an idea or invention for which ALL of
the following are applicable:
7
(i) No equipment, supplies, facility or trade
secret information of the Company was used
and the invention or idea was developed
entirely on Kay's own time;
(ii) The invention or idea does not relate to the
business of the Company;
(iii) The invention or idea does not relate to the
Company's actual or demonstrably anticipated
research or development; and
(iv) The invention or idea does not result from
any work performed by ▇▇▇ for the Company.
As used in this SECTION 7(c), "INVENTION" will have the same meaning as
"invention" as used in Section 2870 of the California Labor Code.
(d) PATENTS AND COPYRIGHTS; ATTORNEY-IN-FACT. ▇▇▇ agrees
to assist the Company (at the Company's expense) in any way the Company deems
necessary or appropriate from time to time to apply for, obtain and enforce
patents on, and to apply for, obtain and enforce copyright protection and
registration of, Inventions in any and all countries. To that end, ▇▇▇ will (at
the Company's expense), without limitation, testify in any suit or other
proceeding involving any Invention, execute all documents that the Company
reasonably determines to be necessary or convenient for use in applying for and
obtaining patents or copyright protection and registration thereon and enforcing
same, and execute all necessary assignments thereof to the Company or parties
designated by it. Kay's obligations to assist the Company in obtaining and
enforcing patents or copyright protection and registration for Inventions will
continue beyond termination of his employment, but the Company will compensate
▇▇▇ at a reasonable rate after such termination for the time actually spent by
▇▇▇ at the Company's request on such assistance. ▇▇▇ hereby irrevocably appoints
the Company, and its duly authorized officers and agents, as Kay's agent and
attorney-in-fact to act for and on behalf of ▇▇▇ in filing all patent
applications, applications for copyright protection and registration amendments,
renewals, and all other appropriate documents in any way related to Inventions.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Except in
the performance of his duties hereunder, ▇▇▇ will not disclose to any person or
entity or use for his own direct or indirect benefit any Confidential
Information (as defined below) pertaining to the Company obtained by ▇▇▇ in the
course of his employment with the Company. For purposes of this Agreement,
"CONFIDENTIAL INFORMATION" will include all of the Company's confidential or
proprietary information, including, without limitation, any information
encompassed in all strategic plans, insurance plans, Inventions, and any trade
secrets, reports, investigations, experiments, research or developmental work,
work in progress, drawings, designs, plans, proposals, codes, marketing and
sales programs, financial data and records financial projections, cost
summaries, pricing formula, and all concepts or ideas, materials or information
related to the business,
8
products or sales of the Company or the Company's customers; PROVIDED, HOWEVER,
that Confidential Information shall not include information, documents or data
that (i) is or subsequently becomes publicly available or generally known in the
industry without Kay's breach of any obligation of confidentiality owed to the
Company; (ii) was known to ▇▇▇ prior to his original employment by the Company;
(iii) becomes known to ▇▇▇ from a source other than the Company (which is not
breaching an obligation to the Company) and which ▇▇▇ learns of outside the
scope of his employment with the Company; or (iv) is required to be disclosed by
law or other governmental authority.
9. RETURN OF MATERIALS AT TERMINATION. In the event of any
termination of Kay's employment for any reason whatsoever, ▇▇▇ will promptly
deliver to the Company all documents, data, and other information pertaining to
Inventions and Confidential Information. ▇▇▇ will not take with him any
documents or other information, or any reproduction or excerpt thereof,
containing or pertaining to any Inventions or Confidential Information, other
than (i) documents relating to Kay's compensation or benefits provided by the
Company, and (ii) copies of personal notes or memoranda prepared or created by
▇▇▇ in his capacity as an officer and/or director of the Company and evidencing
his fulfillment of his fiduciary duties with respect to the Company.
10. NON-SOLICITATION. ▇▇▇ agrees that so long as he is employed by
the Company and for a period of one (1) year after termination of his employment
for any reason, he will not (a) directly or indirectly solicit, induce or
attempt to solicit or induce any Company employee to discontinue his or her
employment with the Company; (b) usurp any opportunity of the Company of which
▇▇▇ became aware during his tenure at the Company; or (c) directly or indirectly
solicit or induce or attempt to influence any person or business that is an
account, customer or client of the Company to restrict or cancel the business of
any such account, customer or client with the Company.
11. NO WAIVER. The waiver by either party of a breach of any
provision of this Agreement will not operate as or be construed as a waiver of
any subsequent breach thereof.
12. NOTICES. Any and all notices referred to herein will be
sufficiently furnished if in writing, and sent by registered or certified mail,
postage prepaid, to the respective parties at the following addresses or such
other address as either party may from time to time designate in writing:
To the Company: QUIDEL CORPORATION
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
To ▇▇▇: S. ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
9
13. ASSIGNMENT. This Agreement may not be assigned by ▇▇▇. This
Agreement will be binding upon the Company's successors and assigns, including
any entity that acquires all or substantially all of the assets or business of
the Company.
14. ENTIRE AGREEMENT. This Agreement, together with the Stock
Option Agreement attached hereto as Exhibit B and the Relocation Policy attached
hereto as Exhibit C, supersedes any and all prior written or oral agreements
between ▇▇▇ and the Company, and contains the entire understanding of the
parties hereto with respect to the terms and conditions of Kay's employment with
the Company.
15. GOVERNING LAW. This Agreement will be construed and enforced
in accordance with the internal laws and decisions of the State of California.
16. ARBITRATION. In the event of any controversy, dispute or claim
arising out of or related to this Agreement or Kay's employment by the Company,
the parties shall negotiate in good faith in an attempt to reach a mutually
acceptable settlement of such dispute. If negotiations in good faith do not
result in a settlement of any such controversy, dispute or claim, it shall be
finally settled by expedited binding arbitration, conducted in San Diego,
California, in accordance with the National Rules of the American Arbitration
Association governing employment disputes. With respect to discovery in any such
arbitration, the parties incorporate herein by reference Section 1283.05 of the
California Code of Civil Procedure.
17. AUTHORIZATION. The undersigned officer of the Company
represents that he is fully authorized and empowered to execute and deliver this
Agreement on behalf of the Company, and the Company represents and warrants that
all necessary corporate action has been taken to approve and authorize the
Company's entry into and performance of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, in counterparts, each of which will be deemed an original, as of the
Effective Date.
QUIDEL CORPORATION, a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Printed Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Title: President & CEO
------------------------------------
for the Compensation Committee
/s/ S. ▇▇▇▇▇ ▇▇▇
-------------------------------------------
S. ▇▇▇▇▇ ▇▇▇
10