Exhibit 10.2

 

APPLIED IMAGING CORP.

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is made and entered into as of March
28, 2005 and effective as of March 1, 2005 (the “Effective Date”), by and
between Terence J. Griffin (the “Employee”) and Applied Imaging Corp., a
Delaware corporation (the “Company”). Certain capitalized terms used in this
Agreement are defined in Section 1 below.

 

R E C I T A L S

 

A. It is expected that the Company from time to time will consider the
possibility of a transaction involving the merger with or acquisition by another
company (a “Change of Control,” as defined below). The Board of Directors of the
Company (the “Board”) recognizes that such a transaction could be a distraction
to the Employee and could cause the Employee to consider alternative employment
opportunities.

 

B. The Board believes that it is in the best interests of the Company and its
stockholders to provide the Employee with an incentive to continue his
employment and to maximize the value of the Company upon a Change of Control for
the benefit of its stockholders.

 

C. In order to provide the Employee with enhanced financial security and
sufficient encouragement to remain with the Company notwithstanding the
possibility of a Change of Control, the Board believes that it is imperative to
provide the Employee with certain benefits upon the Employee’s termination of
employment following a Change of Control.

 

AGREEMENT

 

In consideration of the mutual covenants herein contained and the continued
employment of Employee by the Company, the parties agree as follows:

 

1. Definition of Terms. The following terms referred to in this Agreement shall
have the following meanings:

 

(a) Cause. “Cause” shall mean (i) any act of personal dishonesty taken by the
Employee in connection with his responsibilities as an employee which is
intended to result in personal enrichment of the Employee, (ii) Employee’s
conviction of a felony which the Board reasonably believes has had or will have
a material detrimental effect on the Company’s reputation or business, (iii) a
willful act by the Employee which constitutes misconduct and is injurious to the
Company, or (iv) continued willful violations by the Employee of the Employee’s
obligations to the Company after there has been delivered to the Employee a
written demand for performance from the Company which describes the basis for
the Company’s belief that the Employee has not substantially performed his
duties.

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(b) Change of Control. “Change of Control” shall mean the occurrence of any of
the following events:

 

(i) the approval by stockholders of the Company of a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the total voting power represented by
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation;

 

(ii) the approval by the stockholders 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;

 

(iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing 50% or more of the total voting power represented by
the Company’s then outstanding voting securities; or

 

(iv) a change in the composition of the Board, as a result of which fewer than a
majority of the directors are Incumbent Directors. “Incumbent Directors” shall
mean directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of those directors whose election or
nomination was not in connection with any transactions described in subsections
(i), (ii), or (iii) or in connection with an actual or threatened proxy contest
relating to the election of directors of the Company.

 

(c) Involuntary Termination. “Involuntary Termination” shall mean (i) without
the Employee’s express written consent, a significant reduction of the
Employee’s duties, position or responsibilities relative to the Employee’s
duties, position or responsibilities in effect immediately prior to such
reduction, or the removal of the Employee from such position, duties and
responsibilities, unless the Employee is provided with comparable duties,
position and responsibilities; (ii) without the Employee’s express written
consent, a substantial reduction, without good business reasons, of the
facilities and perquisites (including office space and location) available to
the Employee immediately prior to such reduction; (iii) without the Employee’s
express written consent, a reduction by the Company of the Employee’s base
salary as in effect immediately prior to such reduction; (iv) without the
Employee’s express written consent, a

 

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material reduction by the Company in the kind or level of employee benefits to
which the Employee is entitled immediately prior to such reduction with the
result that the Employee’s overall benefits package is significantly reduced;
(v) without the Employee’s express written consent, the relocation of the
Employee to a facility or a location more than thirty-five (35) miles from his
current location; (vi) any purported termination of the Employee by the Company
which is not effected for Cause or for which the grounds relied upon are not
valid; or (vii) the failure of the Company to obtain the assumption of this
Agreement by any successors contemplated in Section 7 below.

 

(d) Termination Date. “Termination Date” shall mean the effective date of any
notice of termination delivered by one party to the other hereunder.

 

2. Appointment, Responsibilities and Remuneration. Employee is confirmed as
Corporate Vice President and Chief Financial Officer of the Company with an
effective date of March 1, 2005. Employee agrees to perform all services
appropriate to that position and such other services as may reasonably be
assigned by the Company. Employee shall devote his best efforts and full-time
attention to the performance of his duties and shall not accept any other
employment or engage in any other business, commercial or professional activity
that is or may be competitive with the Company, that might create a conflict of
interest with the Company, or that may otherwise interfere with the business of
the Company or any affiliate. Employee may serve as a director or as a member of
the advisory board of any other company provided that he complies with the
restrictions contained herein or in any relevant non-disclosure agreement.

 

Employee’s salary shall be $195,000 per year, payable on the Company’s normal
payroll schedule. In addition to salary, Employee (i) will receive a sign-on
bonus of $50,000 payable upon acceptance of the offer of employment. The sign-on
bonus is granted on the understanding that it will be reimbursed to the Company
in the event that Employee elects to resign within a period of 12 months; (ii)
be eligible, at the sole discretion of the Board, to receive a cash bonus of up
to 30% of annual salary, based on achievement of mutually agreed objectives set
by the Company’s Chief Executive Officer; and, (iii) shall be entitled to
receive all benefits provided by the Company to its employees.

 

3. Term of Agreement. This Agreement shall terminate upon the date that all
obligations of the parties hereto under this Agreement have been satisfied or,
if earlier, on the date, prior to a Change of Control, Employee is no longer
employed by the Company.

 

4. At-Will Employment. The Company and the Employee acknowledge that the
Employee’s employment is and shall continue to be for no specified duration
(“at-will,” as defined under applicable law) and may be terminated at any time
by either party. If the Employee’s employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
established under the Company’s then existing employee benefit plans or policies
at the time of termination.

 

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5. Change of Control Benefits. Provided that Employee’s status as a full-time
employee of the Company continues immediately prior to a Change of Control,
Employee shall, immediately upon such Change of Control, be entitled to the
following benefits:

 

(a) Accelerated Vesting. All stock options granted by the Company to the
Employee prior to the Change of Control shall become fully vested and
exercisable to the extent such stock options are outstanding and unexercisable
at the time of such Change of Control;

 

6. Severance Benefits.

 

(a) Termination Following A Change of Control. If the Employee’s employment with
the Company terminates as a result of an Involuntary Termination at any time
within twelve (12) months after a Change of Control, Employee shall be entitled
to the following severance benefits:

 

(i) Six (6) months of Employee’s base salary as in effect as of the date of such
termination, less applicable withholding, payable in a lump sum within thirty
(30) days of the Involuntary Termination;

 

(ii) all stock options granted by the Company to the Employee following the
Change of Control shall become fully vested and exercisable as of the date of
the termination to the extent such stock options are outstanding and
unexercisable at the time of such termination;

 

(iii) the same level of health (i.e., medical, vision and dental) coverage and
benefits as in effect for the Employee on the day immediately preceding the day
of the Employee’s termination of employment; provided, however, that (i) the
Employee constitutes a qualified beneficiary, as defined in Section 4980B(g)(1)
of the Internal Revenue Code of 1986, as amended; and (ii) Employee elects
continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”), within the time period prescribed pursuant to
COBRA. The Company shall continue to provide Employee with health coverage until
the earlier of (i) the date Employee is no longer eligible to receive
continuation coverage pursuant to COBRA, or (ii) twelve (12) months from the
termination date.

 

(iv) in the event that the Employee’s employment with the Company terminates
other than as a result of an Involuntary Termination within the twelve (12)
months following a Change of Control, then the Employee shall not be entitled to
receive severance or other benefits hereunder, but may be eligible for those
benefits (if any) as may then be established under the Company’s then existing
severance and benefits plans and policies at the time of such termination which
had been extended to Employee and are applicable as a result of the nature of
Employee’s termination.

 

(b) Termination Apart from a Change of Control. In the event the Company
terminates Employee’s employment, except for Cause, and no Change of Control
event has occurred, the Company will continue to pay employee’s salary for a
period of 6 months following the termination date. Employee will also receive
health benefits (i.e., medical, vision and dental) as

 

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defined in Paragraph 6(a)(iii) above. If the Employee’s employment with the
Company terminates other than as a result of an InvoluntaryTermination then the
Employee shall not be entitled to receive severance or other benefits hereunder,
but may be eligible for those benefits (if any) as may then be established under
the Company’s then existing severance and benefits plans and policies at the
time of such termination which had been extended to Employee and are applicable
as a result of the nature of Employee’s termination.

 

(c) Accrued Wages and Vacation; Expenses. Without regard to the reason for, or
the timing of, Employee’s termination of employment: (i) the Company shall pay
the Employee any unpaid base salary due for periods prior to the Termination
Date; (ii) the Company shall pay the Employee all of the Employee’s accrued and
unused vacation through the Termination Date; and (iii) following submission of
proper expense reports by the Employee, the Company shall reimburse the Employee
for all expenses reasonably and necessarily incurred by the Employee in
connection with the business of the Company prior to the Termination Date. These
payments shall be made promptly upon termination and within the period of time
mandated by law.

 

7. Limitation on Payments. In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to the Employee (i)
constitute “parachute payments” within the meaning of Section 280G of the Code,
and (ii) would be subject to the excise tax imposed by Section 4999 of the Code
(the “Excise Tax”), then Employee’s benefits under this Agreement shall be
either

 

(a) delivered in full, or

 

(b) delivered as to such lesser extent which would result in no portion of such
benefits being subject to the Excise Tax,

 

whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the Excise Tax, results in the receipt by
Employee on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code.

 

Unless the Company and the Employee otherwise agree in writing, any
determination required under this Section shall be made in writing by the
Company’s independent public accountants (the “Accountants”), whose
determination shall be conclusive and binding upon the Employee and the Company
for all purposes. For purposes of making the calculations required by this
Section, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Section 280G and 4999 of the Code.
The Company and the Employee shall furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a
determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section.

 

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8. Successors.

 

(a) Company’s Successor. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets
shall assume the Company’s obligations under this Agreement and agrees expressly
to perform the Company’s obligations under this Agreement in the same manner and
to the same extent as the Company would be required to perform such obligations
in the absence of a succession. For all purposes under this Agreement, the term
“Company” shall include any successor to the Company’s business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.

 

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

 

9. Notices.

 

(a) General. Notices and all other communications contemplated by this Agreement
shall be in writing and shall be deemed to have been duly given (i) when
personally delivered, (ii) five (5) days after mailing by U.S. registered or
certified mail, return receipt requested and postage prepaid, or (iii) one (1)
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. In the case of the
Employee, mailed notices shall be addressed to him at the home address which he
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 the Chief Executive Officer.

 

(b) Notice of Termination. Any termination by the Company for Cause or by the
Employee as a result of a voluntary resignation or an Involuntary Termination
shall be communicated by a notice of termination to the other party hereto given
in accordance with this Section 8. Such notice shall indicate the specific
termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the Termination
Date (which shall be not more than 30 days after the giving of such notice). The
failure by the Employee to include in the notice any fact or circumstance which
contributes to a showing of Involuntary Termination shall not waive any right of
the Employee hereunder or preclude the Employee from asserting such fact or
circumstance in enforcing his rights hereunder.

 

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10. Arbitration.

 

(a) Any dispute or controversy arising out of, relating to, or in connection
with this Agreement, or the interpretation, validity, construction, performance,
breach, or termination hereof, shall be settled by binding arbitration to be
held in Santa Clara 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 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. Employee 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.

 

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

 

(d) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION.
EMPLOYEE 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 HEREOF TO BINDING ARBITRATION,
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, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

 

(i) ANY 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;

 

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

 

11. Miscellaneous Provisions.

 

(a) No Duty to Mitigate. The Employee shall not be required to mitigate the
amount of any payment contemplated by this Agreement, nor shall any such payment
be reduced by any earnings that the Employee may receive from any other source.

 

(b) Waiver. No provision of this Agreement may be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in writing and signed
by the Employee and by the Chairman of the Compensation Committee of the
Company’s Board of Directors. No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.

 

(c) Integration. This Agreement and any outstanding stock option or stock
purchase agreements along with any non-disclosure agreement represent the entire
agreement and understanding between the parties as to the subject matter herein
and supersede all prior or contemporaneous agreements, whether written or oral,
with respect to this Agreement and any stock option or stock purchase agreement.
It is understand that the terms of any non-disclosure agreement between the
Company and Employee shall survive any termination, either voluntary or
involuntary.

 

(d) Choice of Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the internal substantive laws, but not the
conflicts of law rules, of the State of California.

 

(e) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.

 

(f) Employment Taxes. All payments made pursuant to this Agreement shall be
subject to withholding of applicable income and employment taxes.

 

(g) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together will constitute one and
the same instrument.

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.

 

COMPANY:       APPLIED IMAGING CORP.         By:  

/s/ Robin Stracey

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        Title:   Chief Executive Officer EMPLOYEE:          

/s/ Terence J. Griffin

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            Signature            

Terence J. Griffin

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            Printed Name