Employment Agreement - ABAXIS Inc. and Clint Severson
3240 Whipple Road, Union City, CA 94587
Phone 510 . 675 . 6500 Fax 510 . 441 . 6150
www.abaxis.com
July 11, 2005
Clint Severson
Abaxis, Inc.
3240 Whipple Road
Union City, CA 94587
Re: Employment Agreement
Dear Clint:
Pursuant to our board resolution, this letter sets forth the terms of your
continued employment by Abaxis, Inc. ("Abaxis"). Abaxis believes that your
contributions will be important to its future success, and thus enters into this
Agreement in order to retain your services. The terms and conditions of our
future employment relationship are set forth below.
1. Position and Duties: You shall be employed by Abaxis as its Chairman,
President and Chief Executive Officer, reporting to Abaxis' Board of
Directors (the "Board"); provided that, if requested by the Board, you will
immediately resign as an officer of Abaxis. You accept continued employment
with Abaxis on the terms and conditions set forth in this Agreement, and
you agree to devote your full business time, energy and skill to the duties
assigned to you by the Board.
2. At-Will Employment: Your employment with Abaxis is at-will employment and
may be terminated by you or Abaxis at any time, with or without cause. Upon
the termination of your employment with Abaxis for any reason, and subject
to paragraphs 4 and 5 below, neither you nor Abaxis shall have any further
obligation or liability to the other.
3. Compensation: You shall be compensated by Abaxis for your services as
follows:
(a) Salary: Commencing April 1, 2005, you shall be paid a monthly salary
of $ 26,000.00 ($ 312,000.00 per year), and a bonus of $ 385,000.00
based on meeting company goals, subject to applicable withholding, in
accordance with Abaxis' normal payroll procedures. Such salary shall
be subject to periodic review and adjustment in accordance with
Abaxis' salary review policies/practices then in effect for its senior
management.
(b) Benefits: You shall have the right, on the same basis as other
executive staff employees of Abaxis, to participate in and to receive
benefits under any Abaxis employee benefit plan, including medical,
disability or other group insurance plans. In addition, you shall be
entitled to the benefits afforded to other senior management under
Abaxis' business expense reimbursement policies. Finally, you shall
receive six (6) weeks vacation annually.
<PAGE>
4. Benefits Upon Other Termination: You agree that your employment may be
terminated by Abaxis at any time, with or without cause. In the event of
the termination of your employment by Abaxis for the reasons set forth
below, you shall be entitled to the following:
(a) Termination for Cause: If your employment is terminated by Abaxis for
cause as defined below, you shall be entitled to no compensation or
benefits from Abaxis other than those earned under paragraph 3 through
the date of your termination.
For purposes of this Agreement, a termination "for cause" occurs if
you are terminated for any of the following reasons:
(i) theft, dishonesty, or falsification of any employment or
company records;
(ii) improper disclosure of Abaxis confidential or proprietary
information;
(iii) any intentional act by you which has a material detrimental
effect on Abaxis' reputation or business;
(iv) your failure or inability to perform any reasonable assigned
duties after written notice from Abaxis of, and a reasonable
opportunity to cure, such failure or inability; and
(v) any material breach of this Agreement, which breach is not
cured within 10 days following written notice of such breach
from Abaxis.
(b) Termination for Other Than Cause: If your employment is terminated by
Abaxis for any reason other than cause, or you resign for a good
reason then, subject to paragraph 6 below, you shall be entitled to
the following compensation and benefits:
(i) Within ten (10) days of the date of the termination of your
employment with Abaxis, you shall receive a lump sum payment,
subject to applicable withholding, of two (2) years' salary
and bonus
(ii) For a period of two (2) years after termination of your
employment with Abaxis, Abaxis shall reimburse your premium
payments for any medical or other employee insurance coverage
which you elect to continue in accordance with federal law;
and
(iii) Any of your unvested options to purchase Abaxis Common Stock
shall become fully vested on the date of your termination and
you will have two years to exercise all stock options.
(iv) The term "good reason" shall mean:
a) a diminution of your compensation, unless such diminution is
consistent with other employees at your level or is agreed to;
b) a diminution of your position, job responsibilities, duties
and/or status within the company;
c) a change in control of the company.
You will not be eligible for compensation and benefits payment
unless you provide the Board of Directors with a 60 day written
notice of your intent to resign for a good reason and allow the
Board of Directors to take action to correct the good reason
within 30 days. If not corrected your good reason resignation
shall become effective.
<PAGE>
5. Covenants: You agree with Abaxis that both prior to and after termination
of your employment with Abaxis, as follows:
(a) For a period of one (1) year after termination of your employment with
Abaxis, you shall refrain from, directly or indirectly, soliciting the
services of or in any manner persuading employees or customers of
Abaxis from discontinuing that person's or entity's relationships with
Abaxis as an employee or customer; and
(b) You shall not make any critical or disparaging statements about Abaxis
or any of its employees, directors or products to any other person or
entity.
6. Exclusive Remedy: Subject to paragraphs 4 and 5 above, you shall be
entitled to no compensation for any damage or injury arising out of the
termination of your employment by Abaxis. Provided, however, that nothing
contained in this Agreement shall limit your right to be indemnified by
Abaxis for your actions as its officer or employee, pursuant to the
Indemnity Agreement dated December 10, 1991, between Abaxis and you.
7. Proprietary Rights Agreement: You agree to abide by the terms and
conditions of Abaxis' standard confidentiality and/or proprietary rights
agreements previously executed by you.
8. Dispute Resolution: In the event of any dispute or claim relating to or
arising out of our employment relationship or this Agreement, we agree that
all such disputes shall be fully and finally resolved by binding
arbitration conducted by the American Arbitration Association in Palo Alto,
California; provided, however, that this arbitration provision shall not
apply to any disputes or claims relating to or arising out of the misuse or
misappropriation of Abaxis' trade secrets or proprietary information.
9. Attorneys' Fees: The prevailing party shall be entitled to recover from the
losing party its attorneys' fees and costs incurred in any action required
to enforce any right arising out of this Agreement.
10. Interpretation: We agree that this Agreement shall be interpreted in
accordance with and governed by the laws of the State of California.
11. Successors and Assigns: This Agreement shall inure to the benefit of and be
binding upon Abaxis and its successors and assigns. In view of the personal
nature of the services to be performed under this Agreement by you, you
shall not have the right to assign or transfer any of your rights,
obligations or benefits under this Agreement, except as otherwise noted
herein.
<PAGE>
12. Entire Agreement: This Agreement constitutes the entire employment
agreement between you and Abaxis regarding the terms and conditions of your
employment, with the exception of (i) any stock option and/or stock
purchase agreements between you and Abaxis (which shall be deemed amended
in the manner set forth in subparagraph 4(b)(iii) and (ii) the
confidentiality and/or proprietary rights agreements described in paragraph
8. This Agreement supersedes all prior negotiations, representations or
agreements between you and Abaxis, whether written or oral, concerning your
employment by Abaxis.
13. No Representations: You acknowledge that you are not relying, and have not
relied, on any promise, representation or statement made by or on behalf of
Abaxis which is not set forth in this Agreement.
14. Modification: This Agreement may only be modified or amended by a
supplemental written agreement signed by you and Abaxis.
Please sign this letter in the space provided below to acknowledge your
acceptance of the terms of this Agreement.
Sincerely,
ABAXIS, Inc.
By: /s/ Richard Bastiani
--------------------------------
Richard Bastiani
Chairman, Compensation Committee
I agree to and accept employment with Abaxis, Inc. on the terms and conditions
set forth in this Agreement.
Dated: 8/2/05
/s/ Clint Severson
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Clint Severson