Exhibit 10.11

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made effective as of July 31, 2004, by and between
Transgenomic, Inc., a Delaware corporation (the “Company”), and Michael A.
Summers (“Employee”).

 

The Company and Employee desire to enter into an Employment Agreement (this
”Agreement”). Accordingly, the Company and Employee agree as follows:

 

Section 1. Effective Date; Position; Term. This Agreement shall become effective
on July 31, 2004 (the “Effective Date”). The Company shall employ Employee as
Chief Financial Officer. The initial term of the Agreement will be for a minimum
of three (3) years from the Effective Date, and the Agreement may be extended
upon mutual consent of the parties.

 

Section 2. Position and Duties. During the Employment Period:

 

(a) Employee shall have the normal responsibilities, duties and authorities of
Chief Financial Officer to be defined prior to the Effective Date.

 

(b) Employee shall report to the Chief Executive Officer of the Company, and
Employee shall perform faithfully the executive duties assigned to him to the
best of his ability in a diligent, trustworthy, businesslike and efficient
manner and will devote his full business time and attention to the business and
affairs of the Company and its Subsidiaries and Affiliates; provided, however,
that Employee may serve as a director of or a consultant to other corporations
which do not compete with the Company, nonprofit corporations, civic
organizations, professional groups and similar entities.

 

(c) For purposes of this Agreement, “Subsidiary” shall mean any corporation or
other entity of which securities having a majority of the voting power in
electing directors or comparable management are, at the time of determination,
owned by the Company, directly or through one or more Subsidiaries.

 

(d) For purposes of this Agreement, “Affiliate” of any particular person means
any other person controlling, controlled by or under common control with such
particular person.

 

Section 3. Basic Compensation. As compensation for his services hereunder, the
Company shall pay to Employee during the Employment Period an initial base
salary of $140,000 per year.

 

Base Salary shall be payable in equal installments in arrears on a biweekly
basis or as otherwise may be mutually agreed upon.

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The Base Salary may be increased from time to time as mutually agreed to. In
addition, Base Salary shall be increased based on the following criteria:

 

(a) Base Salary shall be increased to $175,000 starting with the first quarter
after which the Company’s quarterly consolidated financial statements, fairly
presented in conformance with accounting principles generally accepted in the
United States of America, reflect positive cash flow from operations

 

(b) Base Salary shall be increased to $200,000 starting with the first quarter
after which the Company’s quarterly consolidated financial statements, fairly
presented in conformance with accounting principles generally accepted in the
United States of America, reflect positive net earnings

 

Section 4. Bonus. In addition to the Base Salary, Employee shall receive a
$25,000 bonus paid with the first regular payroll in January 2005. Additionally,
Employee shall be eligible to receive an annual bonus based on Employee’s
performance in conjunction with specific mutually agreed goals and objectives
defined prior to such calendar year payable at such time or times during or
following each calendar year as shall be determined by the Chief Executive
Officer and the Board of Directors (the “Board”) or a committee thereof in its
sole discretion and based on formulas to be determined each year by the Board or
such committee in its sole discretion for the Company’s management bonus plan.

 

Section 5. Participation in Employee Benefit Plans. Employee will be entitled to
participate in all Company salaried employee benefit plans and programs, subject
to the terms and conditions of each such employee benefit plan or program and to
the extent commensurate with his position as Chief Financial Officer.

 

Section 6. Other Benefits.

 

(a) Vacation. Employee shall participate in the vacation benefit provided to all
employees, except that his participation during the period in which he has less
than ten (10) years of service will be equivalent to a participant with ten (10)
to twenty-four (24) years of service.

 

(b) Insurance. The Company shall make available to Employee health insurance
(including dependent coverage), and other employee benefit plans provided to
employees.

 

Section 7. Business Expenses. The Company shall reimburse Employee for all
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent with the Company’s policies in effect from
time to time with respect to travel, entertainment and other business expenses,
subject to the Company’s requirements with respect to reporting and
documentation of such expenses.

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Section 8. Stock Options and Option Shares. Employee will be granted 100,000
shares under the terms described below, subject to the approval of the
Compensation Committee of the Board of Directors. The price of the options will
be the fair market value on the date the options are granted. Fifty percent
(50%) of the options will vest immediately on the date of the grant. The
remaining options will vest equally on or about the next three anniversary dates
of the grant. All unvested options will vest upon the Company being acquired or
merged into another entity.

 

Section 9. Termination of Employment.

 

(a) Events of Termination and Severance Payment. In the event that, during the
term of this Agreement, Employee is discharged for any reason other than for
Just Cause (as defined below), Employee shall be entitled to receive certain
payment (the “Severance Payment”) following termination of employment. Severance
Payment will be made at the greater of Employee’s then current annual base
salary or $250,000. Additionally, upon the Company being acquired or merged into
another entity, Transgenomic, Inc. will honor the Severance Payment in the event
that the Employee’s position was eliminated as a result of the merger or
acquisition.

 

(b) “Just Cause” being defined as any criminal act (felony) being committed by
employee, if employee commits fraud or dishonesty toward the Company, other
significant activities materially harmful to the reputation of the Company as
reasonably defined by the Company, willful refusal to perform or substantial
disregard of the duties properly assigned, significant violation of any
statutory or common law or a material violation of Sections 11 or 12 below, not
reasonably performing assigned tasks to meet minimum expectations of the
position, or intentionally takes any other action materially inimical to the
best interests of the Company

 

(c) Effect of Breach of Noncompetition Provisions. In the event Employee
breaches or otherwise fails to comply with the provisions of Section 11 or 12
below, then, in addition to any other remedies provided herein or at law or in
equity, the Company shall have the right to require return of any severance
payment made to the Employee. Return of such Severance Payment pursuant to the
preceding sentence shall not relieve Employee’s obligations pursuant to Sections
11 and 12 below.

 

Section 10. Assignment and Succession.

 

(a) The rights and obligations of the Company under this Agreement shall inure
to the benefit of and be binding upon its respective successors and assigns, and
Employee’s rights and obligations hereunder shall inure to the benefit of and be
binding upon his successors and permitted assigns, whether so expressed or not.

 

(b) Employee acknowledges that the services to be rendered by him hereunder are
unique and personal. Accordingly, Employee may not pledge or assign any of his
rights or delegate any of his duties or obligations under this Agreement without
the express prior written consent of the Company.

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(c) The Company may not assign its interest in or obligations under this
Agreement without the prior written consent of Employee.

 

Section 11. Confidential Information.

 

(a) Company Information. Employee agrees at all times during the term of his
Relationship with the Company and thereafter, to hold in strictest confidence,
and not to use, except for the benefit of the Company, or to disclose to any
person, firm, corporation or other entity without written authorization of the
Board of Directors of the Company, any Confidential Information of the Company
which Employee obtains or creates, by whatever means. Employee further agrees
not to make copies of such Confidential Information except as authorized by the
Company. Employee understands that “Confidential Information” means any Company
proprietary information, technical data, trade secrets or know-how, including,
but not limited to, research, product plans, products, services, suppliers,
customer lists and customers (including, but not limited to, customers of the
Company on whom Employee called or with whom Employee became acquainted during
the Relationship), prices and costs, markets, software, developments,
inventions, laboratory notebooks, processes, formulas, technology, designs,
drawings, engineering, hardware configuration information, marketing, licenses,
finances, budgets or other business information disclosed to Employee by the
Company either directly or indirectly in writing, orally or by drawings or
observation of parts or equipment or created by Employee during the period of
the Relationship, whether or not during working hours. Employee understands that
“Confidential Information” includes, but is not limited to, information
pertaining to any aspects of the Company’s business which is either information
not known by actual or potential competitors of the Company or is proprietary
information of the Company or its customers or suppliers, whether of a technical
nature or otherwise. Employee further understands that “Confidential
Information” does not include any of the foregoing items which have become
publicly and widely known and made generally available through no wrongful act
of Employee’s or of others who were under confidentiality obligations as to the
item or items involved.

 

(b) Former Employer Information. Employee represents that as an employee of the
Company, he has not breached and will not breach any agreement to keep in
confidence proprietary information, knowledge or data acquired by Employee in
confidence or trust prior or subsequent to the commencement of Employee’s
Relationship with the Company, and Employee will not disclose to the Company, or
induce the Company to use, any inventions, confidential or proprietary
information or material belonging to any previous employer or any other party.

 

(c) Third Party Information. Employee recognizes that the Company has received
and in the future will receive confidential or proprietary information from
third parties subject to a duty on the Company’s part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. Employee agrees to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any person,
firm or corporation or to use it except as necessary in carrying out Employee’s
work for the Company consistent with the Company’s agreement with such third
party.

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Section 12. Return of Company Documents. Employee agrees that, at the time of
termination of his Relationship with the Company, he will deliver to the Company
(and will not keep in his possession, recreate or deliver to anyone else) any
and all devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, laboratory
notebooks, materials, flow charts; equipment, other documents or property, or
reproductions of any aforementioned items developed by Employee pursuant to the
Relationship or otherwise belonging to the Company, its successors or assigns.
Employee further agrees that any property situated on the Company’s premises and
owned by the Company, including disks and other storage media, filing cabinets
or other work areas, is subject to inspection by Company personnel at any time
with or without notice.

 

Section 13. Noncompetition. Independent of any obligation under any other
contract or agreement between Employee and the Company, for a period of one (1)
year following the termination of Employee’s employment relationship with the
Company, Employee shall not, directly or indirectly, whether as an individual
for his own account, or for or with any other person, firm, corporation,
partnership, joint venture, association, or other entity whatsoever, which is or
intends to be engaged in biotechnology business and, more particularly, that
provides technologies for DNA/RNA analysis and purification utilizing DHPLC
technologies (provided, however, that the restrictions set forth in this clause
shall not apply to involvement that consists solely of “beneficially owning,” as
such term is used in Rule 13d-3 promulgated under the Exchange Act 2% or less of
the outstanding securities of any class of securities issued by a
publicly-traded entity):

 

(a) Solicit, interfere with, or endeavor to entice away from the Company, any
person, firm, corporation, partnership, or entity of any kind whatsoever, which
was or is a client or licensor of the Company, for which the Company performed
services, with respect to any business, product or service that is competitive
to the products or services offered by the Company, or under development by the
Company, as of the date of the termination of Employee’s relationship with the
Company. This restriction shall apply only to such clients or licensors of the
Company as were serviced or solicited by Employee at any time during the one (1)
year prior to the separation of Employee’s relationship with the Company, either
as an independent contractor or as an employee of the Company;

 

(b) Solicit or endeavor to induce any of the Company’s employees or consultants
to terminate their relationship with the Company, or take away such employees or
consultants, or attempt to solicit, induce, recruit, encourage or take away
employees or consultants of the Company, either for Employee or for any other
person or entity;

 

(c ) Induce or attempt to induce any supplier, licensee or other business
relation of the Company to cease doing business with the Company, or in any way
interfere with the relationship between any such supplier, licensee or business
relation and the Company.

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Section 14. Business Opportunity. Employee represents and acknowledges that the
foregoing restrictions will not prevent him from obtaining gainful employment in
his field of expertise or cause him undue hardship; and that there are numerous
other employment opportunities available to him that are not affected by the
foregoing restrictions. Employee further acknowledges that the foregoing
restrictions are reasonable and necessary, in order to protect the Company’s
legitimate interests, and that any violation thereof would result in irreparable
injury to the Company.

 

Section 15. Conflicts of Interest Policies. Employee shall diligently adhere to
the Company’s Conflict of Interest Policy as adopted by the Board and in effect
from time to time.

 

Section 16. Arbitration and Equitable Remedies.

 

a) Except as provide in Section 16 (b) hereof, the parties agree that any
dispute or controversy arising out of, relating to, or concerning the
interpretation, construction, performance or breach of this Agreement, shall be
settled by arbitration to be held in Nebraska, in accordance with the Employment
Dispute Resolution rules of the American Arbitration Association then in effect.
The arbitrator may grant injunctions or other relief in such dispute or
controversy and the decision of the arbitrator shall be final, conclusive and
binding on the parties to the arbitration. Judgment may be entered on the
arbitrator’s decision in any court having jurisdiction. The Company and Employee
shall each pay one-half of the costs and expenses of such arbitration, and each
shall separately pay the fees and expenses of their respective legal counsel.

 

THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL
AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EMPLOYEE RELATIONSHIP.

 

(b) Notwithstanding paragraph (a) of this Section 16, the parties agree that, in
the event of the breach or threatened breach of Sections 11, 13 or 14 of this
Agreement by Employee, monetary damages alone would not be an adequate remedy to
the Company and its Subsidiaries for the injury that would result from such
breach, and that the Company and its Subsidiaries shall be entitled to apply to
any court of competent jurisdiction for specific performance and/or injunctive
relief (without posting bond or other security) in order to enforce or prevent
any violation of such provisions of this Agreement. Employee further agrees that
any such injunctive relief obtained by the Company or any of its Subsidiaries
shall be in addition to monetary damages.

 

Section 17. Indemnification. The Company agrees to indemnify and hold harmless
Employee for any and all actions taken by Employee in carrying out his duties
under this Agreement.

 

Section 18. Entire Agreement. This Agreement represents the entire agreement
between the parties relating to the subject matters covered hereby and shall
supersede any prior understandings, agreements or representations by or between
the parties, written or oral, which may have related to the subject matter
hereof in any way and shall not be amended or waived except in a writing signed
by the parties hereto.

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Section 19. Notices. Any notice or request required or permitted to be given
hereunder shall be in writing and will be deemed to have been given (i) when
delivered personally, sent by telecopy (with hard copy to follow) or overnight
express courier or (ii) five days following mailing by certified or registered
mail, postage prepaid and return receipt requested, to the addresses below
unless another address is specified by such party in writing:

 

To the Company:    Transgenomic, Inc.      12325 Emmet Street      Omaha, NE
68164      Attention: Chief Executive Officer      Telephone: (402) 452-5400  
   Telecopy: (402) 452-5447 To the Employee:    Michael A. Summers      201
Longwood Drive      Papillion, NE 68133

 

Section 20. Headings. The article and section headings herein are for
convenience of reference only and shall not define or limit the provisions
hereof.

 

Section 21. Applicable Law. The corporate law of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the internal laws of the
State of Nebraska.

 

Section 22. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held prohibited by, invalid or
unenforceable in any respect under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

 

Section 23. Amendments and Waivers. Any provision of this Agreement may be
amended or waived only with the prior written consent of the Company and
Employee.

 

Section 24. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party
hereto.

 

Section 25. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

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Section 26. Employee Representations. Employee hereby represents and warrants to
the Company that (i) the execution, delivery and performance of this Agreement
by Employee does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Employee is a party or by which he is bound, (ii) Employee is not a party
to or bound by any employment agreement, noncompete agreement or confidentiality
agreement with any other person or entity and (iii) upon the execution and
delivery of this Agreement by the Company, this Agreement shall be the valid and
binding obligation of Employee, enforceable in accordance with its terms.

 

Section 27. Survival. Sections 8, 11, 12 and 13 shall survive and continue in
full force in accordance with their terms notwithstanding any termination of the
Employment Period.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its
duly authorized officer and Employee has signed this Agreement.

 

TRANSGENOMIC, INC. By  

/s/ Collin J. D’Silva

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Name:   Collin J. D’Silva Title:   CEO EMPLOYEE

/s/ Michael A. Summers

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Name:  

Michael A. Summers