Exhibit
10.29


 




	
  

  	
  June 13, 2003

  






 


Kenneth D. Bauer, Ph.D.


c/o ChromaVision Medical Systems, Inc.


33171 Paseo Cerveza


San Juan Capistrano, CA 92675-4824


 


Dear Dr. Bauer:


 


ChromaVision Medical Systems, Inc. (the “Company”)
is pleased to enter into this Letter Agreement with you (the “Executive”) which
will address the terms of Executive’s employment with the Company. The Company
considers it essential to the best interests of its stockholders to attract and
foster the continuous employment of key management personnel of the Company and
the arrangements described in this letter are intended to address that goal.


 


1.                                       Duties. Executive will
continue to serve as Vice President and Chief Science Officer and will report
directly to the President & Chief Executive Officer.


 


2.                                       Term. Executive’s
employment relationship with the Company is employment “at will”. As a result,
Executive’s employment may be terminated by the President, Chief Executive
Officer, the Board of Directors or by Executive at any time (subject to the
notice provision below), in each case without any liability or obligation,
except as set forth in this letter. If Executive terminates his employment, he
shall give the Company written notice of such termination not less than sixty
(60) days prior to the effective date of such termination. In light of the
severance benefits provided for in Section 6, the Company will have no
obligation to give Executive prior notice of any such termination by the
Company (whether or not such termination is without cause).


 


3.                                       Compensation.


 


(a)                                  Base Salary. During the term
of Executive’s employment, Executive will receive a base salary of $178,200 per
annum payable in bi-weekly increments, subject to annual salary and performance
review and potential salary increase at the sole discretion of the Company.


 


(b)                                 Bonus. Executive
will be eligible for a performance-based bonus as a participant in the Company’s
Management Incentive Plan (“MIP”) with an annual target payment of 40% of base
salary. Potential exists under the MIP to receive as much as twice this figure based
on achievement of Company and personal objectives. Establishment and revision
of the MIP performance requirements and determination of any bonuses payable
under the MIP will be made at the sole discretion of the Compensation
Committee. Any MIP payment determined by the Compensation Committee to be
payable for 2003 will be prorated based on the number of days of service in
2003.


 


	
  ChromaVision
  Medical Systems, Inc.

  	
  33171
  Paseo Cerveza

  	
  San
  Juan Capistrano, CA 92675-4824

  	
  Telephone
  949.443.3355

  	
  Fax  949.443.3366

  



 





















 


4.                                       Option Grants. Executive will
be eligible for additional option grants as may be awarded commencing in 2003
by action of the Board of Directors or a duly authorized committee of the
Board.


 


5.                                       Fringe Benefits.


 


(a)                                  Executive is
eligible for group life and accidental death and dismemberment insurance in an
amount equal to twice the Executive’s annual base salary not to exceed $600,000
(assuming that Executive meets normal insurability requirements.) If insurability
requirements cannot be met, the maximum amount of group life insurance benefit
is $225,000. Executive will be offered the opportunity to purchase voluntary
life insurance for himself and his spouse and children, if applicable; and
otherwise be eligible to participate in all other benefits programs offered
generally by the Company to its other Executives, including medical, dental,
and vision insurance, short and long term disability insurance, 401k Plan,
flexible spending account (Section 125) plan, and employee assistance
program.


 


(b)                                 Executive will
also be entitled to twenty-two (22) days of vacation which will continue to
accrue at the rate of 6.77 hours for each biweekly pay period. Executive may
not accrue more than forty (40) hours above his eligible vacation allowance per
year. All vacation accrued will carry over year to year; however, the point at
which the total number of vacation hours accrued exceeds the maximum allowable,
no additional accruals will be earned until the amount is reduced below the
maximum.


 


6.                                       Severance Payments. Subject to the
provisions of (d) below and the other terms and conditions of this letter, in
the event (i) the Company terminates Executive’s employment without cause, or
(ii) within twelve months after a Change of Control Executive terminates his employment
with good reason (any of the foregoing being a “Severance Termination”), the Company
will provide Executive the following benefits, which shall be the only
severance benefits or other payments with respect to Executive’s employment
with the Company to which Executive shall be entitled. Without limiting the
generality of the foregoing, these benefits are in lieu of all salary (except
for salary for periods ending on the date of termination), accrued vacation and
other rights which Executive may have against the Company or its affiliates.


 


(a)                                  After a Severance
Termination, Executive will receive payment of an amount equal to his annual
base salary in effect at the time of the Severance Termination.


 


(b)                                 Upon a Severance
Termination, Executive will be able to exercise any options which have become
exercisable on or before the termination date until the earlier of (a) the
first anniversary of the date of termination or (b) the expiration date of the
option.


 


(c)                                  Upon a Severance
Termination, Executive will receive continued coverage under the Company’s
medical and health plans for 12 months following the termination date (including
any period as may be required by law), provided that coverage will end if
Executive obtains comparable coverage from a subsequent employer or otherwise
ceases to be eligible for COBRA benefits. In addition, the Company will
reimburse Executive for the premiums for a 12-month period after a Severance
Termination for continuation of any life insurance policy issued for Executive’s
benefit under the Company’s then existing life insurance plan if Executive
elects


 


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to continue the policy, provided that such
reimbursement will end if Executive obtains comparable life insurance from a
subsequent employer. If Executive ceases to be eligible for COBRA because the
Company does not pay the premiums for its existing or group insurance policy or
the Company ceases to have a group healthcare plan, the Company will pay
Executive, for any portion of the 12 month period referred to above during
which Executive’s COBRA eligibility ceases for such reasons, the amount of the
premium it would have had to pay for Executive’s coverage under the then
existing, or if none, the most recently existing, health care insurance policy.
Executive should consult with the Company’s Manager of Human Resources
concerning the process for assuming ownership of and continued premium payments
for any life policy. Executive will be reimbursed in accordance with Company
policies promptly for all of Executive’s reasonable and necessary business
expenses incurred on behalf of the Company prior to Executive’s termination
date.


 


(d)                                 All compensation
and benefits described above in (a) through (c) of this Section 6 will be
contingent upon (i) Executive’s execution of a release of all claims against
the Company substantially in the form of Exhibit A and expiration of the
seven-day revocation period referred to in the release, (ii) Executive’s not
engaging in any Competition (as defined in Section 7 of this Agreement)
with the Company during the period of his employment by the Company or the 12
month period following termination and (iii) Executive’s not engaging in any Solicitation
(as defined in Section 7 of this Agreement) during the period of his
employment by the Company or the 12 month period following termination.


 


(e)                                  The Company will
pay Executive the amount described in (a) above in 12 equal monthly
installments with the first payment being payable on the date when the
seven-day revocation period referred to below with respect to the release
expires. The Company will prepare the final release (which will be
substantially in the form attached as Exhibit A to this letter) and deliver it
to Executive within five business days of Executive’s termination of employment.
Executive will have twenty-one (21) days in which to consider the release although
Executive may execute it sooner. Please note that the release has a revocation
period of seven days.


 


(f)                                    Subject to the
provisions of paragraph (d) above, the Company will pay interest on payments
that are more than ten days past due at the prime rate at the Company’s principal
bank (or, if none, Citibank N.A.) plus two percentage points compounded
monthly. In addition, the Company will pay all reasonable costs and expenses
(including reasonable attorney’s fees and all costs of arbitration or court
proceedings) incurred by Executive to enforce this agreement or any obligation
hereunder but only if Executive is the prevailing party in any such proceeding.
If the Company is the prevailing party, Executive will pay all of the Company’s
reasonable costs and expenses (including reasonable attorneys’ fees and all
costs of arbitration or court proceedings) incurred in connection with any such
proceeding.


 


(g)                                 In this letter,
the term “cause”
means
(a) Executive’s failure to adhere to any written policy of the Company if
Executive has been given a reasonable opportunity to comply with such policy
and cure Executive’s failure to comply (which reasonable opportunity to cure
must be granted for a period of ten days); (b) Executive’s appropriation (or
attempted appropriation) of a business opportunity of the Company, including
attempting to secure or securing any personal profit in connection with any
transaction entered into on behalf of the


 


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Company; (c) Executive’s misappropriation (or
attempted misappropriation) of any of the Company’s funds or property (including
without limitation trade secrets and other intellectual property); or (d)
Executive’s conviction of, or Executive’s entering of a guilty plea or plea of
no contest with respect to, a felony or the equivalent thereof.


 


(h)                                 In this letter,
the term “Change of Control” means (a) the issuance, sale, transfer or
acquisition by the Company of shares of capital stock of the Company (including
a transfer as a result of death, disability, operation of law, or otherwise) in
a single transaction or a group of related transactions, as a result of which
any entity, person, or group (other than Safeguard Scientifics, Inc. and/or its
affiliates) acquires the beneficial ownership of newly issued, outstanding or
treasury shares of the capital stock of the Company having 50% or more of the
combined voting power of the Company’s then outstanding securities entitled to
vote for at least a majority of the authorized number of directors of the
Company or (b) any merger, consolidation, sale of all or substantially all the assets
or other comparable transaction as a result of which all or substantially all
of the assets and business of the Company are acquired directly or indirectly
by another entity (except Safeguard Scientifics, Inc. and/or any of its
affiliates). An “affiliate” of an entity is an entity controlling, controlled
by or under common control with the entity specified, directly or indirectly
through one or more intermediaries. “Group” shall have the same meaning as in section 13(d)
of the Securities Exchange Act of 1934, and “beneficial ownership” shall have
the meaning set forth in Rule 13d-3 of the Securities and Exchange Commission
adopted under the Securities Exchange Act of 1934.


 


(i)                                     Executive will not
be required to mitigate the amount of any payment provided for in this letter
by seeking other employment or otherwise.


 


(j)                                     Executive
acknowledges that the arrangements described in this letter will be the only
obligations of the Company or its affiliates in connection with any
determination by the Company to terminate Executive’s employment with the
Company. This letter does not terminate, alter, or affect Executive’s rights
under any plan or program of the Company in which Executive may participate,
except as explicitly set forth herein. Executive’s participation in such plans
or programs will be governed by the terms of such plans and programs.


 


7.                                       Definitions of
Competition and Solicitation. (a) For purposes of Section 6(d) of this
Agreement, Executive shall be deemed to have engaged in “Competition” with the
Company if, without prior written approval of the Board of Directors of the
Company, Executive directly or indirectly through any other person, firm or
corporation, whether individually or in conjunction with any other person, or
as an employee, agent, consultant, representative, partner or holder of any
interest in any other person, firm, corporation or other association during any
portion of the term of this Agreement or any renewals or extensions hereof or
the period of salary continuation referred to in Section 6(a), competes
with, or encourages or assists others to compete with, or solicit orders or
otherwise participate in business transactions or provide services in
competition with, the business engaged in by the Company at any time during the
term of Executive’s employment (unless such business shall have been abandoned
by the Company). Executive acknowledges that the Company’s products are
marketed throughout the United States, that therefore the Company is engaged in
business in every county and state of the United States and that the foregoing
definition of “competition” includes competition in every county and state of
the United States as well as in foreign countries.


 


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(b)                                 For purposes of Section 6(d)
of this Agreement “Solicitation” shall mean (A) soliciting, enticing or
inducing any Customer (as defined below) to become a client, customer, OEM,
distributor or reseller of any other person, firm or corporation with respect
to, or provide, products or services which are competitive with products or
services then sold or under development by the Company or to cease doing
business with the Company or authorizing or knowingly approving the taking of
such actions by any other person or (B) soliciting, enticing or inducing
directly or indirectly, or hiring any person who presently is or at any time
during the term hereof shall be an employee of the Company to become employed
by any other person, firm or corporation or to leave his or her employment with
the Company or authorizing or approving any such action by any other person or
entity. Providing a reference for an employee of the Company will not, however,
constitute Solicitation if the employee has decided to leave the employ of the
Company, is seeking other employment and requests the reference.


 


(c)                                  For purposes of
this Section 7, “Customer” means any person or entity which at the time of
determination, if made prior to termination of employment, or, after termination
of employment, at the time of such termination, shall be, or shall have been
within two years prior to such time, a client, customer, OEM, distributor or
reseller of the Company or a bona fide prospect to become any of the foregoing.


 


(d)                                 Competition shall
not include investing in the securities of any corporation having securities
listed on a national securities exchange, the Nasdaq National Market or the Nasdaq
SmallCap Market, provided that such investment does not exceed 5% of any class
of securities of any corporation engaged in business in competition with the
Company, and provided that such ownership represents a passive investment and
that neither Executive nor any group of persons including him, in any way,
either directly or indirectly, manages or exercises control of any such corporation,
guarantees any of its financial obligations, otherwise takes any part in its
business, other than exercising his rights as a shareholder, or seeks to do any
of the foregoing.


 


(e)                                  Executive
acknowledges (i) that his experience and capabilities are such that the
conditions in Section 6(d) to his receiving the severance benefits
referred to in Section 6 will not prevent him from obtaining employment or
otherwise earning a living at the same general economic benefit as reasonably
required by him without losing the severance benefits and (ii) that he has,
prior to the execution of this Agreement, reviewed this Agreement with his legal
counsel. Executive acknowledges that the provisions contained in this Section 7
and in Section 6(d) are reasonable and necessary to protect the legitimate
business interests of the Company and that the Company would not have entered
into this Agreement in the absence of such provisions.


 


8.                                       Other Payments in
the Event of Termination of Employment. In the event of termination of Executive’s
employment for any reason, Executive will be entitled to receive upon such
termination payment of all accrued, unpaid salary to the date of termination
and, when bonuses for the year of termination are paid generally to other
employees of the Company, a “pro rata portion” of his bonus for the year of
termination” (as those terms are defined below). “Pro rata portion” means the
number of days in the calendar year of termination up to and including the date
of termination divided by the total number of days in that full calendar year.
The “bonus for the year of termination” means the amount the Executive would
have been likely to earn if


 


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she had been employed for the full year, as determined
in good faith by the Board of Directors of the Company or a committee thereof
at the time that bonuses for the year of termination are paid generally to
other employees of the Company.


 


9.                                       Withholding;
Nature of Obligations. The Company will withhold applicable taxes and
other legally required deductions from all payments to be made hereunder. The Company’s
obligations to make payments under this letter are unfunded and unsecured and
will be paid out of the general assets of the Company.


 


10.                                 Miscellaneous. The agreement
will inure to the benefit of Executive’s personal representatives, executors,
and heirs. In the event Executive dies while any amount payable under this
agreement remains unpaid, all such amounts will be paid to the parties legally
entitled thereto in accordance with the terms and conditions of this letter. No
term or condition set forth in this letter may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Executive and an officer of the Company authorized to
sign such writing by the Board of Directors of the Company or an authorized committee
thereof. This agreement will be construed and enforced in accordance with the
laws of the State of California without regard to the conflicts of laws of any
state. Any controversy or claim arising out of or relating to this agreement,
or the breach thereof, will be settled by arbitration in Los Angeles or Orange
County, California in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association, using one arbitrator,
and judgment upon the award rendered by the arbitrator may be entered in any
court of competent jurisdiction.


 


This letter sets forth the entire agreement between
the Company and Executive relating to the terms of his employment and
supersedes all prior agreements, commitments and understandings with respect to
the terms of Executive’s employment and all such agreements, commitments and
understandings existing on the date hereof, except that this letter does not
supersede any agreement between the Company and Executive relating to
confidentiality or ownership or assignment of rights to intellectual property.


 


If this letter sets forth our agreement on the
subject matter hereof, kindly sign and return to us the enclosed copy of this
letter which will then constitute our legally binding agreement on this
subject.


 


	
   

  	
  Sincerely,

  
	
   

  	
  CHROMAVISION MEDICAL SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  /s/ Carl W. Apfelbach

  	
   

  
	
   

  	
  By: Carl W. Apfelbach

  
	
   

  	
  Title:  President,
  Chief Executive Officer

  



 


I agree to the terms and conditions of this letter


 


	
  /s/ Kenneth D. Bauer

  	
   

  
	
  KENNETH D. BAUER, PH.D.

  
	
   

  
	
  Dated: June 13, 2003

  



 


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EXHIBIT A


 


GENERAL RELEASE AND
AGREEMENT


 


NOTICE:


 


Various state and federal laws, including the Civil Rights
Act of 1964 and 1991 and the Age Discrimination in Employment Act, prohibit
employment discrimination based on age, sex, race, color, national origin,
religion, disability and veteran status. These laws are enforced through the
Equal Employment Opportunity Commission (EEOC), the Department of Labor and
state civil rights agencies.


 


If you sign this General Release and Agreement and accept
the agreed-upon special severance allowance and other termination benefits
described in the letter addressed to you which accompanies this release, you
are giving up your right to file a lawsuit pursuant to the aforementioned
federal, state and local laws in local, state or federal courts against
ChromaVision Medical Systems, Inc. and its affiliates, as defined in the
General Release and Agreement (the “Releasees,”) with respect to any claims
relating to your employment or termination therefrom which arise up to the date
this Agreement is executed.


 


By signing this General Release and Agreement you waive your
right to recover any damages or other relief in any claim or suit brought by or
though the Equal Employment Opportunity Commission or any other state or local
agency on your behalf under and federal or state discrimination law, except
where prohibited by law. You agree to release and discharge each Releasee not
only from any and all claims which you could make on your own behalf but also
specifically waive any right to become, and promise not to become, a member of
any class in any proceeding or case in which a claim or claims against a
Releasee may arise, in whole or in part, from any event which occurred as of
the date of this Agreement.  You agree to
pay for any legal fees or cost incurred by any Releasee as a result of any
breach of the promises in this paragraph. The parties agree that if you, by no
action of your own, become a mandatory member of any class from which you
cannot, by operation of law or order of court, opt out, you shall not be
required to pay for any legal fees or costs incurred by a Releasee as a result.


 


We encourage you to discuss the following release language
with an attorney prior to executing this Agreement. In any event, you should
thoroughly review and understand the effect of the release before acting on
it.  Therefore, please take this release
home and consider it for up to twenty-one (21) days before you decide to sign
it.