Employment Agreement
Change in Control Agreement
 
 
 
 
 

EX-10.1 2 ex10_1.htm EXHIBIT 10.1


EXHIBIT 10.1

 

ABAXIS, INC.

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

for

CLINTON H. SEVERSON

 

This Amended and Restated Executive Employment Agreement (“Agreement”) is entered into as of the 27th day of October, 2010 (the “Effective Date”), by and between Clinton H. Severson (“Executive”) and Abaxis, Inc., a California corporation (“Company”).  As of the Effective Date, this Agreement amends, restates and supersedes in its entirety the Employment Agreement by and between the Executive and the Company dated July 11, 2005 (“Prior Agreement”).

 

Whereas, the Company desires continue to employ Executive to provide personal services to the Company, and wishes to continue to provide Executive with certain compensation and benefits in return for his services in accordance with the terms of this Agreement from and after the Effective Date; and

 

Whereas, Executive wishes to be employed by the Company and provide personal services to the Company in return for certain compensation and benefits in accordance with the terms of this Agreement from and after the Effective Date;

 

Now, Therefore, in consideration of the mutual promises and covenants contained herein, it is hereby agreed by and between the parties hereto as follows:

 

 

1.

Employment by the Company.

 

1.1           Position.  Subject to terms set forth herein, the Company agrees to continue to employ Executive in the position of President and Chief Executive Officer.  During the term of his employment with the Company, Executive will devote his best efforts and substantially all of his business time and attention to the business of the Company, except for vacation periods as set forth herein and reasonable periods of illness or other incapacities permitted by the Company’s general employment policies.

 

1.2           Duties and Location.  Executive shall serve in an executive capacity and shall perform such duties as are assigned to Executive from time to time, consistent with the Bylaws of the Company and as required by the Company’s Board of Directors (“Board”).  Executive’s primary office location shall be the Company’s headquarters located in Union City, California.  The Company reserves the right to reasonably require Executive to perform his duties at places other than its corporate headquarters from time to time, and to require reasonable business travel.

 

1.3           Policies and Procedures.  The employment relationship between the parties shall also be governed by the general employment policies and practices of the Company, including those relating to protection of confidential information and assignment of inventions, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement shall control.

 

 

1.


 

 

1.4           Board of Directors.  Executive has been previously appointed to the Company’s Board of Directors and as Chairman of the Board and Executive shall continue to serve in such capacities following the Effective Date.  Executive agrees that in the event Executive’s employment with the Company is terminated for any reason, either voluntarily or involuntarily, with or without Cause, Executive shall resign from all of Executive’s employment and board positions with the Company and any Company affiliates, including but not limited to Executive’s position as a member of the Company’s Board of Directors, simultaneously with the termination of Executive’s employment, unless otherwise requested by the remaining Board members.

 

 

2.

Compensation.

 

2.1           Base Salary. Executive shall receive for services to be rendered hereunder an annualized base salary of $375,000, subject to payroll withholding and deductions and payable in accordance with the Company’s regular payroll schedule (“Base Salary”).  The Base Salary shall be reviewed annually and may be adjusted as approved by the Compensation Committee.

 

2.2           Annual Target Bonus.   Each fiscal year Executive will be eligible to earn a bonus in accordance with the terms of the Company’s annual management incentive bonus program with a target bonus amount chosen by the Compensation Committee.  Such bonus will be based on the Company meeting or exceeding its targeted corporate objectives for the bonus year.  If earned, such bonus amounts will be paid in accordance with the terms of the Company’s annual management incentive bonus program.

 

2.3           Standard Company Benefits.  Executive shall be entitled to all rights and benefits for which he is eligible under the terms and conditions of the standard Company benefits and compensation practices which may be in effect from time to time and provided by the Company to its employees generally, including medical, dental, vision, disability, and other group health and welfare benefits.

 

2.4           Vacation.  Executive shall be entitled to up to six (6) weeks paid vacation annually.

 

2.5           Expense Reimbursement. Executive shall be entitled to the benefits afforded to other senior members of Company management under the Company’s business expense reimbursement policies.  To the extent applicable, any reimbursement benefits shall comply with the requirements of Treasury Regulations Section 1.409A-3(i)(1)(iv).

 

3.           Proprietary Information Obligations. As a condition of continued employment, Executive agrees to continue to abide by the terms of the confidentiality and proprietary rights agreement previously executed by Executive on May 10, 2010 (the “Proprietary Information and Inventions Agreement”).

 

 

4.

Outside Activities During Employment.

 

4.1           Exclusive Employment.  Except with the prior written consent of the Board, Executive will not during the term of this Agreement undertake or engage in any other employment, occupation or business enterprise, other than ones in which Executive is a passive investor.  Executive may engage in civic and not-for-profit activities so long as such activities do not materially interfere with the performance of his duties hereunder.

 

 

2.


 

 

4.2           No Adverse Interests.  Except as permitted by Section 4.3, Executive agrees not to acquire, assume or participate in, directly or indirectly, any position, investment or interest known by him to be adverse or antagonistic to the Company, its business or prospects, financial or otherwise.

 

4.3           Noncompetition.  During the term of his employment by the Company, except on behalf of the Company, Executive will not directly or indirectly, whether as an officer, director, stockholder, partner, proprietor, associate, representative, consultant, or in any capacity whatsoever engage in, become financially interested in, be employed by or have any business connection with any other person, corporation, firm, partnership or other entity whatsoever which were known by him to compete directly with the Company, throughout the world, in any line of business engaged in (or planned to be engaged in) by the Company; provided, however, that anything above to the contrary notwithstanding, he may own, as a passive investor, securities of any competitor corporation, so long as his direct holdings in any one such corporation shall not in the aggregate constitute more than one percent (1%) of the voting stock of such corporation.

 

 

5.

Noninterference.

 

While employed by the Company, and for one (1) year immediately following the termination date, Executive agrees not to interfere with the business of the Company by:

 

(a)           soliciting, attempting to solicit, inducing, or otherwise causing any employee of the Company to terminate employment in order to become an employee, consultant or independent contractor to or for any other person or entity;

 

(b)           directly or indirectly soliciting the business of any customer of the Company which at the time of Executive’s employment termination, or during the year immediately prior thereto, was listed on the Company’s customer list, if such direct or indirect solicitation would involve the use or disclosure by Executive of the Company’s trade secrets; or

 

(c)           making any critical or disparaging remarks about the Company or any of its employees, directors or products to any person or entity.

 

6.             Indemnification. Nothing in this Agreement shall limit Executive’s right to be indemnified by the Company pursuant to the Indemnity Agreement between the Company and Executive dated December 10, 1991.

 

 

7.

Termination Of Employment.

 

7.1           At-Will Relationship.  Executive’s employment relationship is at-will.  Either Executive or the Company may terminate the employment relationship at any time, with or without Cause or advance notice.

 

7.2           Termination Without Cause; Resignation for Good Reason.

 

(a)           The Company may terminate Executive’s employment with the Company at any time without Cause, upon notice to Executive.

 

(b)           In the event Executive’s employment is terminated without Cause or Executive resigns for Good Reason, and subject to the requirement that Executive provide the Company with an effective Release no later than the Release Deadline (as such terms are defined and as further specified in Section 8), the Company shall provide Executive with the following severance benefits (the “Severance Benefits”):

 

 

3.


 

 

(i)           A lump sum cash payment equivalent to two (2) times the annual rate of Base Salary, as in effect on the date of termination, but not giving any effect to any reduction in Base Salary that would give rise to Executive’s right to resign for Good Reason, payable within ten (10) days following the Release Deadline;

 

(ii)           A lump sum cash payment equivalent to two (2) times the greater of: (i) the target bonus amount in effect for the fiscal year that includes the termination, or (ii)  the target bonus amount in effect for the fiscal year that precedes the year of termination, payable within ten (10) days following the Release Deadline;

 

(iii)           Any unvested stock option, stock unit and any other equity awards for the Company common stock granted to Executive prior to the termination date shall immediately fully vest so that 100% of such equity awards are fully vested as of the date of termination, and Executive shall have until the earlier of the following dates to exercise any of Executive’s outstanding stock options: (i) the second anniversary of the employment termination date, or (ii) the expiration of the maximum term of the options.

 

(iv)           Assuming the Executive timely and accurately elects to continue his health insurance benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or any state equivalent, the Company shall reimburse the Executive for payment of the COBRA premiums for the Executive and his or her qualified beneficiaries until the earliest of (i) twenty-four (24) months following the termination date, or (ii) the expiration of the Executive’s continuation coverage under COBRA and any applicable state COBRA-like statute that provides mandated continuation coverage.   For purposes of this Section, references to COBRA premiums shall not include any amounts payable by the Executive under an Internal Revenue Code Section 125 health care reimbursement plan.  The monthly COBRA premium reimbursement amount will be paid to the Executive on the last day of each calendar month with respect to the premiums paid by the Executive in respect of such month; provided, however, that no such amounts will be paid prior to the Release Deadline, and within the ten (10) day period following the Release Deadline, the Company will pay in a lump sum the aggregate monthly amounts that would have been paid on or before such date had the payments not been delayed until the Release Deadline, with the balance paid thereafter in accordance with the original schedule.

 

(v)           Assuming the Executive timely and accurately elects to continue his life, disability, or other non-COBRA employee insurance benefits following termination and to the extent permitted by the terms of such insurance programs, the Company shall reimburse the Executive for payment of the applicable insurance premiums until the earliest of (i) twenty-four (24) months following the termination date, or (ii) the expiration of the Executive’s coverage under the terms of such insurance programs.  The monthly insurance premium reimbursement amount will be paid to the Executive on the last day of each calendar month with respect to the premiums paid by the Executive in respect of such month; provided, however, that no such amounts will be paid prior to the Release Deadline, and within the ten (10) day period following the Release Deadline, the Company will pay in a lump sum the aggregate monthly amounts that would have been paid on or before such date had the payments not been delayed until the Release Deadline, with the balance paid thereafter in accordance with the original schedule.

 

 

4.


 

 

All Severance Benefits payments are subject to any applicable payroll withholding and deduction, and notwithstanding any payment schedule indicated above, are subject to any delay in payment required by Section 7.6.

 

(c)           Notwithstanding anything to the contrary set forth herein, in no event shall Executive be entitled to Severance Benefits under this Agreement and severance benefits under the terms of the Executive Change of Control Severance Plan originally adopted by the Company on July 25, 2006, and as it may be amended from time to time (the “Executive Severance Plan”).  In the event that Executive becomes entitled to severance benefits under the terms of the Executive Severance Plan and such benefits are greater than the Severance Benefits provided under this Agreement, then Executive shall receive severance benefits under the Executive Severance Plan in lieu of, and not additional to, the Severance Benefits contemplated by this Agreement.  In the event that the severance benefits provided under the Executive Severance Plan are not greater than the Severance Benefits provided under this Agreement, then Executive shall only receive Severance Benefits under this Agreement and such benefits shall be in lieu of, and not additional to, any severance benefits under the Executive Severance Plan.

 

 

7.3

Termination for Cause.  

 

(a)           The Company may terminate Executive’s employment with the Company at any time for Cause, determined in the Board’s discretion, upon notice to Executive.

 

(b)           “Cause” for termination shall mean:

 

(i)          Executive’s theft, dishonesty, or falsification of any employment or Company records,

 

(ii)         Executive’s improper disclosure of the Company’s confidential or proprietary information,

 

(iii)       Any intentional act by Executive which has a material detrimental effect on the Company’s reputation or business;

 

(iv)        Executive’s failure or inability to perform any reasonable assigned duties after written notice from the Company of, and a reasonable opportunity to cure, such failure or inability; and

 

(v)          Any material breach of this Agreement by Executive, which breach is not cured within 10 days following written notice of such breach from the Company.

 

 

7.4

Resignation for Good Reason.

 

(a)           Executive may voluntarily terminate his employment for “Good Reason” by notifying the Board in writing, no later than ninety (90) days after the occurrence of one of the following events:

 

(i)          A diminution of Executive’s compensation, unless such diminution is consistent with and generally applicable to all the Company’s executive officers and is agreed to in writing by Executive;

 

 

5.


 

 

(ii)         A diminution of the Executive’s position, job responsibilities, duties, and/or status with the Company; or

 

(iii)        A Change of Control of the Company (as such term is defined in the Executive Severance Plan);

 

provided, however, that Executive’s termination shall only be for Good Reason if: (i) Executive’s notice to the Board indicates that Executive intends to terminate his employment for Good Reason no earlier than sixty (60) days from the date of such notice, and (ii) the Board has a period of not less than thirty (30) days to cure the Good Reason resignation triggering condition, (iii) the Good Reason resignation triggering condition is not cured within such applicable cure period, and (iv) Executive resigns within the thirty (30) day period following the expiration of the applicable cure period.

 

 

7.5

Voluntary or Mutual Termination; Death or Disability.

 

(a)           Executive may voluntarily terminate his employment with the Company at any time, after which no further compensation will be paid to Executive.

 

(b)           In the event Executive voluntarily terminates his employment other than for “Good Reason”, he will not be entitled to Severance Benefits, pay in lieu of notice or any other such compensation.

 

(c)           In the event Executive’s employment is terminated at any time with Cause, or due to the Executive’s death or disability, he will not be entitled to the Severance Benefits, pay in lieu of notice or any other such compensation, except as required by law.

 

7.6           409A Compliance.  Notwithstanding anything to the contrary set forth herein, any Severance Benefits that constitute “deferred compensation” within the meaning of Section 409A shall not commence in connection with Executive’s termination of employment unless and until Executive has also incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h) (“Separation From Service”), unless the Company reasonably determines that such amounts may be provided to Executive without causing Executive to incur the additional 20% tax under Section 409A.

 

If the Company (or, if applicable, the successor entity thereto) determines that the Severance Benefits constitute “deferred compensation” under Section 409A and Executive is, on the termination of service, a “specified employee” of the Company or any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the timing of the Severance Benefit payments shall be delayed until the earlier to occur of: (i) the date that is six months and one day after Executive’s Separation From Service, or (ii) the date of Executive’s death (such applicable date, the “Specified Employee Initial Payment Date”), the Company (or the successor entity thereto, as applicable) shall pay to Executive a lump sum amount equal to the sum of the Severance Benefit payments that Executive would otherwise have received through the Specified Employee Initial Payment Date if the commencement of the payment of the Severance Benefits had not been so delayed pursuant to this Section.

 

Notwithstanding any other payment schedule set forth in this Agreement, none of the Severance Benefits will be paid or otherwise delivered prior to the Release Deadline.  Except to the extent that payments may be delayed until the Specified Employee Initial Payment Date pursuant to the preceding paragraph, on the first regular payroll pay day following the Release Deadline, the Company will pay Executive the Severance Benefits Executive would otherwise have received under the Agreement on or prior to such date.

 

 

6.


 

 

The foregoing provisions are intended to comply with the requirements of Section 409A so that none of the Severance Benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply.

 

8.           Release.  As a condition of receipt of any Severance Benefits under Section 7.2 of this Agreement, Executive must provide the Company with an executed and effective general release substantially in the form attached hereto as Exhibit A (the “Release”), within the applicable time period set forth therein, but in no event later than forty-five (45) days following termination of employment, and permit such Release to become effective in accordance with its terms (such latest permitted date for effectiveness of the Release is the “Release Deadline”).  After such Release becomes fully effective within the applicable time period, the Company will promptly execute the Release and provide a copy of such fully executed Release to Executive.

 

 

9.

Cooperation with Company.

 

9.1           Cooperation Obligation.  During and after the term of Executive’s employment, Executive will cooperate with the Company in responding to the reasonable requests of the Company’s Chairman of the Board, CEO or General Counsel, in connection with any and all existing or future litigation, arbitrations, mediations or investigations brought by or against the Company, or its or their respective affiliates, agents, officers, directors or employees, whether administrative, civil or criminal in nature, in which the Company reasonably deems Executive’s cooperation necessary or desirable.  In such matters, Executive agrees to provide the Company with reasonable advice, assistance and information, including offering and explaining evidence, providing sworn statements, and participating in discovery and trial preparation and testimony.  Executive also agrees to promptly send the Company copies of all correspondence (for example, but not limited to, subpoenas) received by Executive in connection with any such legal proceedings, unless Executive is expressly prohibited by law from so doing. The failure by Executive to cooperate fully with the Company in accordance with this Section 9 will be a material breach of the terms of this Agreement which will result in all commitments of the Company to make additional payments to Executive under Section 7 becoming null and void.

 

9.2           Expenses and Fees.  The Company will reimburse Executive for reasonable out-of-pocket expenses (including attorneys’ fees) incurred by Executive as a result of his cooperation with the obligations described in Section 9.1, within ten (10) days of the presentation of appropriate documentation thereof, in accordance with the Company’s standard reimbursement policies and procedures. After termination of Executive’s employment, the Company will also pay Executive a reasonable fee in the amount to be mutually agreed upon between the Company and Executive for the time Executive devotes to matters as requested by the Company under Section 9.1 (“the Fees”).  The Company will not deduct or withhold any amount from the Fees for taxes, social security, or other payroll deductions, but will instead issue an IRS Form 1099 with respect to the Fees.  Executive acknowledges that in cooperating in the manner described in Section 9.1, he will be serving as an independent contractor, not a Company employee, and he will be entirely responsible for the payment of all income taxes and any other taxes due and owing as a result of the payment of Fees.  Executive hereby indemnifies the Company and its officers, directors, agents, attorneys, employees, shareholders, subsidiaries, and affiliates and holds them harmless from any liability for any taxes, penalties, and interest that may be assessed by any taxing authority with respect to the Fees, with the exception of the employer’s share of employment taxes subsequently determined to be applicable, if any.

 

 

 

7.


 

 

9.3           Returning Company Property.  In the event of any termination of Executive’s employment hereunder, Executive shall, prior to or on such termination deliver to the Company (and will not maintain possession of or deliver to anyone else) any and all devices, records, data, data bases software, software documentation, laboratory notebooks, notes, reports, proposals, lists, customer lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any of the above aforementioned items belonging to the Company, its parent, subsidiary, successors or assigns (collectively, “Company Property”).  In the event that the Executive refuses to return such Company Property, he shall forfeit any and all right to any severance benefits that otherwise may be provided by this Agreement.

 

10.           Arbitration. To ensure the rapid and economical resolution of disputes that may arise in connection with the Executive’s employment with the Company, the Executive and the Company agree that any and all disputes, claims, or causes of action, in law or equity, arising from or relating to Executive’s employment, or the termination of that employment, will be resolved, to the fullest extent permitted by law, by final, binding and confidential arbitration pursuant to the Federal Arbitration Act in Palo Alto, California conducted by the American Arbitration Association (“AAA”), or its successors, under the then current rules of AAA for employment disputes; provided that the arbitrator shall:  (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (b) issue a written arbitration decision including the arbitrator’s essential findings and conclusions and a statement of the award.  Accordingly, the Executive and the Company hereby waive any right to a jury trial.  Both the Executive and the Company shall be entitled to all rights and remedies that either the Executive or the Company would be entitled to pursue in a court of law.  The Company shall pay any AAA filing fee and shall pay the arbitrator’s fee.  Nothing in this Agreement is intended to prevent either the Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.

 

Notwithstanding the foregoing, the Executive and the Company each have the right to resolve any issue or dispute involving confidential, proprietary or trade secret information, or intellectual property rights, by Court action instead of arbitration.  In such action, the prevailing party shall be entitled to recover attorney’s fees and costs from the losing party.

 

 

11.

General Provisions.

 

11.1           Notices.  Any notices provided hereunder must be in writing and shall be deemed effective upon the earlier of personal delivery (including personal delivery by fax) or the next day after sending by overnight courier, to the Company at its primary office location and to Executive at his address as listed on the Company payroll.

 

11.2           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 to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the parties.

 

 

8.


 

 

11.3           Waiver.  If either party should waive any breach of any provisions of this Agreement, he or it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.  Any waiver must be in writing to be enforceable.

 

11.4           Complete Agreement.  This Agreement and its Exhibits, the Proprietary Information and Inventions Agreement, the Indemnity Agreement, the Executive Severance Plan, and Executive’s stock option, stock unit, and other equity award agreements and the Company’s equity incentive plan constitute the entire agreement between Executive and the Company and it is the complete, final, and exclusive embodiment of their agreement with regard to this subject matter, and supersedes all prior and contemporaneous oral and written employment agreements or arrangements between the Company and Executive, including but not limited to the Prior Agreement.  This Agreement is entered into without reliance on any promise or representation other than those expressly contained herein, and it cannot be modified or amended except in a writing signed by an officer of the Company.

 

11.5           Counterparts.  This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

 

11.6           Headings.  The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

 

11.7           Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective successors, assigns, heirs, executors and administrators, except that Executive may not assign any of his duties hereunder and he may not assign any of his rights hereunder without the prior written consent of the Company.

 

11.8           Survival. Executive’s duties under the Proprietary Information and Inventions Agreement, and Sections 3, 5 and 9, shall survive termination of his employment with the Company.

 

11.9           Remedies.  Executive acknowledges that a remedy at law for any breach or threatened breach by him of the provisions of the Proprietary Information and Inventions Agreement, and Sections 3, 5 and 9 would be inadequate, and he therefore agrees that the Company shall be entitled to injunctive relief in case of any such breach or threatened breach, in addition to any other remedies available to the Company.

 

11.10           Attorneys’ Fees.  If either party hereto brings any action to enforce his or its rights hereunder, the party successful in enforcing this Agreement shall be entitled to recover his or its reasonable attorneys’ fees and costs incurred in connection with such action.

 

 

9.


 

 

11.11           Choice of Law.  All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of California, without giving effect to choice of law principles.

 

In Witness Whereof, the parties have executed this Agreement on the day and year first written above.

 

 

ABAXIS, INC.

 

 

 

 

 

 

 

By:

/s/ Alberto R. Santa Ines

 

 

Alberto R. Santa Ines

 

 

Chief Financial Officer

 

 

Date: 

October 28, 2010

 

Accepted and agreed this

28th day of October, 2010.

 

Clinton H. Severson, an Individual

 

/c/ Clinton H. Severson

 

 

 

10.


 

 

Exhibit A

 

RELEASE AGREEMENT

 

1.           General Release.  I, Clinton H. Severson, hereby generally and completely release Abaxis, Inc. (the “Company”) and its present and former directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers, affiliates, and assigns from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to my signing this release.  This general release includes, but is not limited to:  (a) all claims arising out of or in any way related to my employment with the Company or the termination of that employment; (b) all claims related to my compensation or benefits from the Company; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) (“ADEA”), and the California Fair Employment and Housing Act (as amended).

 

2.           Exceptions.  I understand that I am not releasing any claim that cannot be waived under applicable state or federal law, nor am I releasing any rights I may have as an owner and/or holder of the Company’s common stock and stock options. I am not releasing any rights that I have to be indemnified (including any right to reimbursement of expenses) arising under applicable law, the certificate of incorporation or by-laws (or similar constituent documents of the Company), any indemnification agreement between me and the Company, or any directors’ and officers’ liability insurance policy of the Company.

 

3.           ADEA Waiver.  I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA (“ADEA Waiver”).  I also acknowledge that the consideration given for the ADEA Waiver is in addition to anything of value to which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that:  (a) my ADEA Waiver does not apply to any rights or claims that arise after the date I sign this Release; (b) I should consult with an attorney prior to signing this Release; (c) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily sign it sooner); (d) I have seven (7) days following the date I sign this Release to revoke the ADEA Waiver; and (e) the ADEA Waiver will not be effective until the date upon which the revocation period has expired unexercised, which will be the eighth day after I sign this Release (“Effective Date”).

 

4.           Company’s Release.   The Company hereby generally and completely releases Mr. Severson and his heirs, beneficiaries, executors, agents, and assigns of and from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to the Company signing this release; provided, however, that this Company release of Mr. Severson will not apply to any acts constituting criminal conduct, fraud, violation of the securities laws, breach of Mr. Severson’s Amended and Restated Executive Employment Agreement, breach of Mr. Severson’s Proprietary Information and Inventions Agreement or other claims that cannot be waived under applicable state or federal law.

 

 

1


 

 

5.           Section 1542 Waiver.  In giving the releases herein, which include claims which may be unknown at present, the undersigned acknowledge that they have read and understand Section 1542 of the California Civil Code, which reads as follows:

 

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

 

6.           The undersigned hereby expressly waive and relinquish all rights and benefits under that section and any law of any other jurisdiction of similar effect with respect to their releases of any unknown or unsuspected claims herein.

 

Agreed:

 

ABAXIS, INC.

 

 

Clinton H. Severson, an Individual

By:

 

 

 

 

 

[Name]

 

 

 

 

[Title]

 

 

 

 

Date:

 

 

Date:

 


 

2


 
 
 
 
 
 

EX-10.2 2 c80583exv10w2.htm EXHIBIT 10.2

Exhibit 10.2

ABAXIS, INC.
EXECUTIVE CHANGE OF CONTROL SEVERANCE PLAN

INTRODUCTION

The Board of Directors of Abaxis, Inc. recognizes that, as is the case with many publicly held corporations, there exists the possibility of a Change of Control of the Company. This possibility and the potential uncertainty it creates may result in the loss or distraction of executives of the Company to the detriment of the Company and its shareholders.

The Board considers the avoidance of such loss and distraction to be essential to protecting and enhancing the best interests of the Company and its shareholders. The Board also believes that when a Change of Control is perceived as imminent, or is occurring, the Board should be free from concern that executives might be distracted by the personal uncertainties and risks created by the perception of an imminent or occurring Change of Control.

Further, the Board believes that it is consistent with the employment practices and policies of the Company and in the best interests of the Company and its shareholders to treat its executives whose employment terminates in connection with or following a Change of Control fairly.

Accordingly, the Board has determined that appropriate steps should be taken to assure the Company of the continued employment and dedication to duty of its executives and to seek to ensure the availability of their continued service, notwithstanding the possibility, threat or occurrence of a Change of Control.

Therefore, in order to fulfill the above purposes, the following plan is hereby adopted.

ARTICLE I

ESTABLISHMENT OF PLAN

As of the Effective Date, the Company hereby establishes a separation compensation plan known as the Abaxis, Inc. Executive Change of Control Severance Plan, as set forth in this document.

 

 


 

ARTICLE II

DEFINITIONS

As used herein the following words and phrases shall have the following respective meanings unless the context clearly indicates otherwise.

2.1 Affiliate. Any entity which controls, is controlled by or is under common control with the Company.

2.2 Annual Salary. The Participant’s regular annual base salary immediately prior to his or her termination of employment, including compensation converted to other benefits under a flexible pay arrangement maintained by the Company or any Affiliate or deferred pursuant to a written plan or agreement with the Company or any Affiliate, but excluding overtime pay, allowances, premium pay, compensation paid or payable under any bonus or incentive plan of the Company or any Affiliate or any similar payment.

2.3 Board. The Board of Directors of Abaxis, Inc.

2.4 Cause. With respect to any Participant, (i) the willful engaging in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise or (ii) the conviction of any felony or conviction of a misdemeanor which impairs the Participant’s ability substantially to perform the Participant’s duties with the Company. For purposes of this subsection, no act, or failure to act, on the Participant’s part shall be deemed “willful” unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that Participant’s action or omission was in the best interest of the Company.

2.5 Change of Control. The occurrence of any of the following events:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (x) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of paragraph (iii) below; or

(b) Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board; or

 

2.


 

(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or an acquisition of assets of another corporation (a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(d) Approval by the shareholders of the Company of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

Notwithstanding the foregoing, to the extent necessary to satisfy the requirements of Section 409A(a)(2)(A)(v) of the Code, any Change of Control that does constitute a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A shall not constitute a Change of Control.

2.6 Code. The Internal Revenue Code of 1986, as amended from time to time, and all applicable guidance promulgated thereunder.

2.7 Committee. The Compensation Committee of the Board.

2.8 Company. Abaxis, Inc. and any successor thereto.

2.9 Date of Termination. The date that is both (i) the date on which a Participant’s employment with the Company or an Affiliate terminates and (ii) a separation from service for the Participant.

2.10 Disability. A condition such that the Employee has terminated employment with the Company or an Affiliate with a qualifying disability and has immediately began receiving benefits from a long-term disability plan of the Company or any participating Employer.

2.11 Effective Date. July 25, 2006.

2.12 Employee. Any full-time, regular-benefit, non-bargaining employee of an Employer.

 

3.


 

2.13 Employer. The Company or any Subsidiary which participates in the Plan pursuant to Article VI hereof or, under the circumstances set forth in the third sentence of Section 3.1 hereof, any Subsidiary or Affiliate described in such sentence.

2.14 ERISA. The Employee Retirement Income Security Act of 1974, as amended from time to time.

2.15 Good Reason. With respect to any Participant, without such Participant’s written consent, (i) the assignment to the Participant of any duties inconsistent in any respect with the Participant’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities immediately before the Change of Control, or any other action by the Company which results in a significant diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company or the Employer promptly after receipt of notice thereof given by the Participant; (ii) any reduction in the Participant’s Annual Salary, or annual target bonus opportunity, or any material reduction in other compensation or employee benefits, as in effect during the 120-day period immediately preceding the Change of Control (or as such amounts may be increased from time to time), other than as a result of an isolated and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Participant; or (iii) the Company or the Employer requiring the Participant to relocate his or her principal place of business to a location which is more than fifty (50) miles from his or her previous principal place of business. For purposes of the Plan, any good faith determination of “Good Reason” made by the Participant shall be conclusive.

2.16 Participant. An individual who is designated as such by the Board pursuant to Section 3.1.

2.17 Plan. The Abaxis, Inc. Executive Change of Control Severance Plan.

2.18 Section 409A. Section 409A of the Internal Revenue Code of 1986, as amended, and all applicable guidance promulgated thereunder.

2.19 Separation Benefits. The benefits described in Section 5.2 that are provided to qualifying Participants under the Plan.

2.20 Separation From Service. A “separation from service” has the meaning set forth in Treasury Regulation Section 1.409A-1(h).

2.21 Specified Employee. This term shall have the same meaning as is ascribed to such term under Section 409A.

2.22 Subsidiary. Any corporation in which the Company, directly or indirectly, holds a majority of the voting power of such corporation’s outstanding shares of capital stock.

2.23 Target Annual Bonus Amount. The annual bonus that the Participant would have received for the year in which his or her Date of Termination occurs, if the target goals had been achieved at 100%.

 

4.


 

ARTICLE III

ELIGIBILITY

3.1 Participation. Each of the individuals listed on Appendix A hereto shall be a Participant in the Plan. Appendix A may be amended by a majority vote of the Board from time to time to add or delete individuals as Participants. If a Participant’s employment is transferred from an Employer to an Affiliate of the Company (including a Subsidiary) which is not a participating Employer under the Plan, the provisions of the Plan will continue to apply to such Participant while employed by such Affiliate.

3.2 Duration of Participation. A Participant shall only cease to be a Participant in the Plan as a result of an amendment or termination of the Plan complying with Article VII of the Plan, or when he ceases to be an Employee of any Employer, unless, at the time he ceases to be an Employee, such Participant is entitled to payment of a Separation Benefit as provided in the Plan or there has been an event or occurrence constituting Good Reason that would enable the Participant to terminate his employment and receive a Separation Benefit. A Participant entitled to payment of a Separation Benefit or any other amounts under the Plan shall remain a Participant in the Plan until the full amount of the Separation Benefit and any other amounts payable under the Plan have been paid to the Participant.

ARTICLE IV

CHANGE OF CONTROL BENEFITS

Upon the occurrence of a Change of Control, the vesting and exercisability of one hundred percent (100%) of any unvested options and other unvested equity-based instruments granted to the Participant by the Company under the Abaxis, Inc. 2005 Equity Incentive Plan and any other equity programs sponsored by the Company or any Affiliate shall immediately become vested and exercisable. The terms of this Article IV shall amend and supersede the terms of any other agreement or instrument relating to the treatment of such outstanding options and other unvested equity-based instruments upon or following a Change of Control.

ARTICLE V

SEPARATION BENEFITS

5.1 Terminations of Employment Which Give Rise to Separation Benefits Under This Plan. A Participant shall be entitled to Separation Benefits as set forth in Section 5.2 below if, at any time following a Change of Control and prior to eighteen months following the Change of Control, the Participant’s Employment is terminated and such termination (a) constitutes a separation from service and (b) is either (i) by the Company for any reason other than Cause, death, or Disability or (ii) by the Participant within 90 days after the Participant has knowledge of the occurrence of Good Reason. Payment of any benefit contained in this Article V shall not be made unless the Participant executes a release as described in Section 5.5.

 

5.


 

5.2 Separation Benefits. If a Participant’s employment is terminated in circumstances entitling such Participant to Separation Benefits pursuant to Section 5.1, and subject to the effectiveness of the release described in Section 5.5, the Company shall provide to such Participant the following Separation Benefits:

(a) On the 60th day after the Date of Termination, the Company will make a lump sum cash payment to the Participant equal to the product of two (2) times the sum of (a) the Participant’s Annual Salary and (b) the Participant’s Target Annual Bonus Amount. If the termination of the Participant’s employment is for Good Reason based upon a reduction of the Participant’s Annual Salary or Target Annual Bonus Amount, such reduction shall be ignored in calculating these benefits.

(b) If the Participant makes a timely and accurate election for continuation coverage pursuant to COBRA (or any state law of similar effect) under the Company’s group health, dental, or vision plans, the Company shall pay the applicable premiums (inclusive of premiums for the Participant’s covered dependents) for such continued health, dental, or vision plan coverage (as in effect immediately prior to the Date of Termination) for up to twenty-four (24) months or such earlier date the Participant and his dependents cease to be eligible for COBRA coverage. The Participant must notify the Company immediately if the Participant becomes covered under a health, dental, or vision insurance plan of a subsequent employer.

(c) If the Participant elects to convert his or her disability and/or life insurance benefits under the Company’s plans into individual policies following termination of employment, the Company will (i) reimburse the Participant on a monthly basis for up to the first twenty-four (24) months following the Date of Termination for the premiums for such continued coverage, less an amount each month equal to the monthly co-pay that the Participant was paying immediately prior to the termination of employment (such Company contribution, the “Insurance Reimbursement”), and (ii) pay an additional amount each month equal to the ordinary income and employment taxes owed by the Participant on such monthly Insurance Reimbursement, so that the full amount of the monthly Insurance Reimbursement, net of all ordinary income and employment taxes, is paid to the Participant. This aggregate monthly amount will be paid to the Participant on the 30th day of each month with respect to the premiums paid by the Participant in respect of such month; provided, however, that no such amounts will be paid prior to the 60th day following the Date of Termination, and on such 60th day, the Company will pay in a lump sum the aggregate monthly amounts that would have been paid on or before such date had the payments not been delayed until such 60thday, with the balance paid thereafter in accordance with the original schedule.

5.3 Other Benefits Payable. To the extent not theretofore paid or provided, the Company shall timely pay or provide (or cause to be paid or provided) to a Participant entitled to the Separation Benefits, any other amounts or benefits required to be paid or provided to the Participant or which the Participant is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its Affiliates, such as accrued but as yet unpaid base salary or vacation, but excluding any severance pay or pay in lieu of notice required to be paid to such Participant under applicable law or any other severance pay plan or policy of the Company or any Employer.

 

6.


 

5.4 Certain Additional Payments by the Company.

(a) If any payment or benefit that a Participant would be entitled to receive pursuant to this Plan or otherwise in connection with a change of control from the Company or otherwise (collectively, the “Acquisition Payments”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Company shall cause to be paid to the Participant payment in full of the entire amount of the Acquisition Payments (a “Full Payment”), plus an additional payment from the Company (such additional amount, a “Gross-Up Payment”) in an amount equal to (A) the Excise Tax on the Acquisition Payments, (B) any interest or penalties imposed on the Participant with respect to the Excise Tax on the Acquisition Payments, (C) an additional amount sufficient to pay the Excise Tax and the federal and state income and employment taxes arising from the payments made by the Company to the Participant pursuant to (A) and (B), and (D) an additional amount sufficient to pay the Excise Tax and the federal and state income and employment taxes arising from the payment under (C) (i.e., this is not an unlimited gross-up, but rather a gross-up of the initial Excise Tax and related penalties, and then a gross-up of that gross-up), in all events capped at $1,000,000 per Participant.

(b) For purposes of determining the amount of the Gross-Up Payment, the Participant shall be deemed to have: (A) paid federal income taxes at the highest marginal rate of federal income and employment taxation for the calendar year in which the Gross-Up Payment is to be made, and (B) paid applicable state and local income taxes at the highest rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

(c) The independent professional firm engaged by the Company for general tax audit purposes as of the day prior to the effective date of the Change of Control shall make all determinations required to be made under this Section 5.4. If the independent professional firm so engaged by the Company is serving as an advisor, accountant or auditor for the individual, entity or group affecting the Change of Control, the Company shall appoint a nationally recognized professional firm to make the determinations required hereunder. The Company shall bear all expenses with respect to the determinations by such firm required to be made hereunder.

(d) The firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and the Participant not later than thirty (30) calendar days after the date on which the Participant’s right to the Acquisition Payments is triggered (if requested at that time by the Company or the Participant) or such other time as reasonably requested by the Company or the Participant. Any good faith determinations of the firm made hereunder shall be final, binding and conclusive upon the Company and the Participant.

 

7.


 

(e) If the firm determines that no Excise Tax is payable with respect to the Acquisition Payments, it shall furnish the Company and the Participant with a copy of its calculations to the Participant showing that no Excise Tax will be imposed with respect to the Acquisition Payments.

(f) If the firm determines that an Excise Tax is payable with respect to the Acquisition Payments and that a Gross-Up Payment is due to the Participant, the Company shall pay the Gross-Up Payment not later than thirty (30) days after the date on which the Participant remits the Excise Tax to the appropriate taxing authorities.

5.5 Release. The Participant, to be eligible to receive any benefit under Article V, must execute and allow to become effective within 60 days after the Date of Termination a complete and general release of any and all of his potential claims against the Company, any of its affiliated companies, and their respective successors and any officers, employees, agents, directors, attorneys, insurers, underwriters, and assigns of the Company, its affiliates and/or successors. The Participant shall be required to execute a Waiver and Release Agreement which documents the release required under this Section 5.5, the form of which shall be provided to the Participant by the Company.

5.6 Timing of Payments. Notwithstanding the payment schedules set forth above, if the Company (or, if applicable, the successor entity thereto) determines that the Severance Benefits and/or any other termination payments and benefits provided under this Agreement or otherwise on a separation from service (the “Payments”) constitute “deferred compensation” under Code Section 409A (together, with any state law of similar effect, “Section 409A”) and the Participant is a “specified employee” (as such term is defined in Section 409A(a)(2)(B)(i)) of the Company or any successor entity thereto upon his separation from service, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A as a result of the payment of compensation upon his separation from service, the timing of the Payments shall be delayed as follows: on the earlier to occur of (i) the date that is six months and one day after the date of the separation from service or (ii) the date of the Participant’s death (such earlier date, the “Delayed Initial Payment Date”), the Company (or the successor entity thereto, as applicable) shall (A) pay to the Participant a lump sum amount equal to the sum of the Payments that the Participant would otherwise have received through the Delayed Initial Payment Date if the commencement of the payment of the Payments had not been delayed pursuant to this Section 5.6 and (B) commence paying the balance of the Payments in accordance with the applicable payment schedules set forth above. It is intended that each installment of the severance payments and benefits provided under this Agreement is a separate “payment” for purposes Section 1.409A-2(b)(2)(i) of the Treasury Regulations. In addition, to the extent that any reimbursements payable pursuant to this Agreement are subject to the provisions of Section 409A of the Code, any such reimbursements payable pursuant to this Agreement shall be paid no later than December 31 of the year following the year in which the expense was incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and the right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.

 

8.


 

ARTICLE VI

PARTICIPATING EMPLOYERS

Any Subsidiary of the Company may become a participating Employer in the Plan following approval by the Company. The provisions of the Plan shall be fully applicable to the Employees of any such Subsidiary who are Participants pursuant to Section 3.1.

ARTICLE VII

SUCCESSOR TO COMPANY

This Plan shall bind any successor of the Company, its assets or its businesses (whether direct or indirect, by purchase, merger, consolidation or otherwise), in the same manner and to the same extent that the Company would be obligated under this Plan if no succession had taken place. In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this Plan, the Company shall require such successor expressly and unconditionally to assume and agree to perform the Company’s obligations under this Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. The term “Company,” as used in this Plan, shall mean the Company as hereinbefore defined and any successor or assignee to the business or assets which by reason hereof becomes bound by this Plan.

ARTICLE VIII

DURATION, AMENDMENT AND TERMINATION

8.1 Duration. This Plan shall continue in full force and effect until the earlier of termination by the Board pursuant to Section 8.2, below or the time at which all Participants who become entitled to any payments hereunder shall have received such payments in full.

8.2 Amendment or Termination. The Board may amend or terminate this Plan at any time in any manner that it deems appropriate. Any amendment or termination of this Plan by the Board shall be made by action of the Board in accordance with the Company’s charter and by-laws and applicable law.

8.3 Section 409A Compliance. The Company intends for this Plan either to satisfy the requirements of Section 409A or to be exempt from the application of Section 409A, and this Plan shall be construed and interpreted accordingly. Notwithstanding any provision in this Plan to the contrary, if this Plan either fails to satisfy the requirements of Section 409A or is not exempt from the application of Section 409A, then the Board shall, in its sole discretion and without the consent of any Participant, either amend or clarify this Plan in any manner as the Board deems necessary or appropriate so that this Plan either satisfies the requirements of Section 409A or is exempt from the application of Section 409A.

 

9.


 

ARTICLE IX

MISCELLANEOUS

9.1 Full Settlement. The Company’s obligation to make the payments provided for under this Plan and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against a Participant or others. In no event shall a Participant be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Plan and such amounts shall not be reduced whether or not the Participant obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which a Participant may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Participant or others of the validity or enforceability of, or liability under, any provision of this Plan or any guarantee of performance thereof (including as a result of any contest by the Participant about the amount of any payment pursuant to this Plan), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.

9.2 Employment Status. This Plan does not constitute a contract of employment or impose on the Participant or the Participant’s Employer any obligation for the Participant to remain an Employee or change the status of the Participant’s employment or the policies of the Company and its affiliates regarding termination of employment.

9.3 Confidential Information. Each Participant shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Participant during the Participant’s employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Participant or representatives of the Participant in violation of this Plan). After termination of a Participant’s employment with the Company, the Participant shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 9.3 constitute a basis for deferring or withholding any amounts otherwise payable under this Plan.

9.4 Unfunded Plan Status. This Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, within the meaning of Section 401 of ERISA. All payments pursuant to the Plan shall be made from the general funds of the Company and no special or separate fund shall be established or other segregation of assets made to assure payment. No Participant or other person shall have under any circumstances any interest in any particular property or assets of the Company as a result of participating in the Plan. Notwithstanding the foregoing, the Company may (but shall not be obligated to) create one or more grantor trusts, the assets of which are subject to the claims of the Company’s creditors, to assist it in accumulating funds to pay its obligations under the Plan.

 

10.


 

9.5 Validity and Severability. The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision of the Plan, which shall remain in full force and effect, and any prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

9.6 Governing Law. The validity, interpretation, construction and performance of the Plan shall in all respects be governed by the laws of California, without reference to principles of conflict of law, except to the extent pre-empted by Federal law.

9.7 Notices. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of a Participant, mailed notices shall be addressed to him or her at the home address which he or she most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

9.8 Taxes. The Company shall make provision for the reporting and withholding of any federal, state and local taxes that may be required to be reported and withheld with respect to the payment of benefits pursuant to the terms of this agreement and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by the Company.

9.9 Participant’s Successors. Without the written consent of the Company, Participant shall not assign or transfer any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Plan and all rights of Participant hereunder shall inure to the benefit of, and be enforceable by, Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

9.10 Arbitration.

(a) Any dispute or controversy arising out of, relating to, or in connection with this Plan, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be settled by binding arbitration to be held in Alameda County, California, in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the “Rules”). The arbitrator may grant injunctions or other relief in such dispute or controversy. 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.

(b) The arbitrator(s) shall apply California law to the merits of any dispute or claim, without reference to conflicts of law rules. The arbitration proceedings shall be governed by federal arbitration law and by the Rules, without reference to state arbitration law. Participant hereby consents to the personal jurisdiction of the state and federal courts located in California for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties are participants.

 

11.


 

(c) The Company and Participant shall each pay one-half of the costs and expenses of such arbitration, and each shall separately pay its counsel fees and expenses.

(d) Participant understands that nothing in this Section modifies Participant’s at-will employment status. Either Participant or the Company can terminate the employment relationship at any time, with or without cause.

(e) PARTICIPANT HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION. PARTICIPANT UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, CONSTITUTES A WAIVER OF PARTICIPANT’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

(iANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.

(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et seq;

(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

 

12.


 

APPENDIX A

ABAXIS, INC
EXECUTIVE CHANGE OF CONTROL SEVERANCE PLAN

Participants
(As of December 23, 2008)

 

 

 

PARTICIPANT NAME

 

TITLE

 

 

 

Clinton H. Severson

 

Chairman, President and Chief Executive Officer

 

 

 

Alberto R. Santa Ines

 

Chief Financial Officer and Vice President of Finance

 

 

 

Donald P. Wood

 

Vice President of Operations

 

 

 

Vladimir E. Ostoich, Ph. D.

 

Vice President of Government Affairs and Vice President of Marketing for the Pacific Rim

 

 

 

Kenneth P. Aron, Ph. D.

 

Chief Technology Officer

 

 

 

Christopher Bernard

 

Vice President of Sales and Marketing for the Domestic Medical Market

 

 

 

Martin Mulroy

 

Vice President of Veterinary Sales and Marketing for North America