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EXHIBIT 10.33
EMPLOYMENT AGREEMENT
AGREEMENT made this 21st day of August, 1997, between SPACELABS MEDICAL,
INC., a California corporation (the "Company"), and XXXXXX X. XXXXXXX, an
individual who resides at the address appearing below ("Executive").
W I T N E S S E T H:
WHEREAS, the Executive is an employee and shareholder of Xxxxxxx, Inc., a
Delaware corporation ("Xxxxxxx");
WHEREAS, pursuant to the Agreement and Plan of Merger dated July 11, 1997,
by and between the Company, SLMD Acquisition Corp. and Xxxxxxx, the Company is
to acquire Xxxxxxx, Inc. through the merger of SLMD Acquisition Corp. into
Xxxxxxx whereby Xxxxxxx will become a wholly-owned subsidiary of the Company
(the "Merger");
WHEREAS, pursuant to the Merger, the Executive and the other Xxxxxxx
shareholders are to sell all of the outstanding shares of common and preferred
stock of Xxxxxxx to the Company;
WHEREAS, the Executive wishes to be employed by the Company and the
Company desires to continue to employ the Executive following the Merger; and
WHEREAS, in connection with the Merger, the Company wishes to enter into
an agreement with the Executive governing the terms and conditions of his
employment, and the Executive is willing to be employed on the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereby agree as follows:
1. EMPLOYMENT. Contingent upon and effective the date of the closing of
the Merger (the "Effective Date"), the Company shall employ the Executive, and
the Executive shall be in the full-time employ of the Company, on the terms and
subject to the conditions set forth in this Agreement. The Executive shall serve
in the position of Senior Vice President of the Company with the duties and
responsibilities customary for that position plus any additional duties and
responsibilities upon which the Company and the Executive may agree from time to
time. In addition, the Executive shall serve in the position of President and
Chief Executive Officer of Xxxxxxx with the duties and responsibilities
customary for that position plus any additional duties and responsibilities upon
which the Company and the Executive may agree from time to time. The Executive
shall devote his best efforts and all of business time and attention to the
business of the Company. The Executive shall perform his duties and
responsibilities under the direction and supervision of, and shall report
directly to, the President and Chief Executive Officer of the Company.
2. TERM. The term of this Agreement shall be continuous from and after
the Effective Date for a period of three (3) years, provided that the employment
of the Executive may be terminated at any time by mutual agreement of the
Company and the Executive or in accordance with paragraph 4. Unless sooner
terminated, this Agreement shall terminate on the third (3rd) anniversary of the
Effective Date and thereafter the Executive shall be employed on an "at will"
basis in accordance with the Company's normal operating policies as from time to
time in effect.
3. COMPENSATION. During the term of this Agreement, the Executive shall
be compensated by the Company as follows:
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(a) Annual Base Salary. The Executive shall be paid an annual base
salary for the Executive's actual period of employment at a rate computed on the
basis of Three Hundred Four Thousand Two Hundred Dollars ($304,200) per year
commencing from and after the Effective Date. The Executive's base salary shall
be paid in accordance with the Company's normal payroll policies as from time to
time in effect.
(b) Benefits. During the term of this Agreement, the Executive
shall be entitled to participate in those employee benefit plans which are from
time to time maintained by the Company for its executive-level employees, in
accordance with the provisions of such plans or programs as from time to time in
effect. The Executive shall also be entitled to the benefits, if any, set forth
in Schedule A.
(c) Business Expenses. The Executive shall be reimbursed, in a
manner consistent with the policies of the Company, for all reasonable business
expenses incurred in the performance of his duties pursuant to this Agreement,
to the extent such expenses are substantiated in writing, are approved by the
President and Chief Executive Officer of the Company, and are consistent with
the general policies of the Company relating to the reimbursement of expenses of
executive-level employees of the Company. Expenses for items that are reasonably
deemed to be personal by the Company shall not be reimbursed by the Company and
are the sole responsibility of the Executive.
(d) Deduction and Withholding. All compensation and other benefits
to or on behalf of the Executive pursuant to this Agreement shall be subject to
such deductions and withholding as may be required by applicable law.
4. TERMINATION.
(a) Termination for Cause. The Company may terminate the
Executive's employment for "cause" (as defined below in this paragraph 4(a))
immediately upon written notice to the Executive. Such notice shall specify in
reasonable detail the nature of the cause. For purposes of this Agreement,
"cause" shall include, without limitation: (1) material breach of this
Agreement, (2) violation of any material law or regulation relating to
employment or the Company, including its affiliates, (3) repeated violations of
any Company policy, (4) willful refusal to follow an instruction of the
President of the Company or other conduct constituting insubordination or (5)
fraud, dishonesty, or self-dealing relating to or arising out of his employment.
In the event of the involuntary termination of his employment for cause, the
Executive shall not be entitled to receive any compensation hereunder other than
his base salary and employee benefits as accrued through the effective date of
such termination
(b) Termination Other Than for Cause. The Company shall have the
right to terminate the Executive's employment for any reason, upon thirty (30)
days' prior written notice to the Executive, whereupon the Executive's
employment pursuant to this Agreement shall terminate as of the effective date
of termination. In the event of the involuntary termination of his employment
other than for cause, the Executive shall be entitled to receive: (1) his base
salary and employee benefits as accrued through the effective date of such
termination and (2) an amount equal to the Executive's then current base salary
for a period equal to the remaining term of this Agreement or twelve (12)
months, whichever is longer. The provision for the payment of an amount equal to
the Executive's then current base salary for a period equal to twelve (12)
months upon the involuntary termination of his employment other than for cause
shall survive the termination of this Agreement upon the third (3d)
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anniversary of the Effective Date.
(c) Voluntary Termination. The Executive may voluntarily terminate
his employment under this Agreement at any time upon thirty (30) days' prior
written notice to the Company, whereupon the Company's employment of the
Executive shall terminate at the end of the thirty (30) day notice period. In
the event of the Executive's voluntary termination of employment, he shall not
be entitled to receive any compensation hereunder other than his base salary and
employee benefits as accrued through the effective date of such termination.
(d) Death or Disability. The Executive's employment pursuant to
this Agreement shall terminate automatically on the date of the Executive's
death or disability. No compensation shall be payable after the Executive's
death or disability other than his base salary and employee benefits as accrued
through the date of his death or disability, whichever is applicable, including
any employee benefits payable in the event of the Executive's death or
disability, whichever is applicable.
For purposes of this Agreement, the Executive shall be deemed to be
disabled (as medically determined by an independent physician), if for a period
of at least six (6) consecutive months he is unable to perform the essential
functions of his position with the Company with or without reasonable
accommodation.
For purposes of this Agreement, if the Executive's employment
terminates by reason of his disability, his employment termination date shall be
deemed to be the last day of the six (6) month period described in the
immediately preceding paragraph.
5. CONFIDENTIALITY OF INFORMATION.
(a) Scope. During (i) the term of his employment with the Company
and for a period of thirty-six (36) months thereafter or (ii) the fifth (5th)
anniversary of the Effective Date, whichever is longer (the "Restrictive
Period"), the Executive shall not at any time, whether during or after his
employment by the Company, take or use, or otherwise disclose to anyone, any
Confidential Information, except as necessary to perform his duties hereunder,
as permitted by the President and Chief Executive Officer of the Company on the
basis of facts actually known to the President and Chief Executive Officer, or
as required by any court or governmental agency; provided, however, that this
covenant prohibits only the use and disclosure of Confidential Information and
shall not be construed as limiting the Executive's right to undertake any other
employment or business activity. The Executive shall be prohibited from
competing with the Company only as provided in subparagraph 7(a).
(b) Definition. "Confidential Information" shall mean any and all
ideas, suggestions, innovations, conceptions, discoveries, inventions,
improvements, technological developments, methods, processes, specifications,
formulae, compositions, techniques, systems, machines, devices, computer
software and programs, notes, memoranda, work sheets, lists of actual or
potential customers and suppliers, works of authorship, products, data, and
information in any form, which concern or relate to any aspect of the actual or
contemplated business of the Company and which are stamped "confidential" or are
otherwise treated as confidential by the Company, except for trade secrets (as
defined in Section 134.90, Wisconsin Statutes) and such items as the Executive
can prove through clear and convincing evidence were in the public domain, being
publicly and openly known, prior to the date of commencement of the Executive's
employment by the Company or, subsequent to such date, became part of the public
domain, being publicly and openly known, through lawful and proper
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means.
(c) Trade Secrets. Nothing in this Agreement shall be construed as
waiving or limiting in any way the obligations of the Executive or the rights of
the Company under Section 134.90, Wisconsin Statutes, with respect to any trade
secrets of the Company.
6. INVENTIONS AND COPYRIGHT WORKS.
(a) Scope. All Inventions or copyright works relating to the
Company's business which the Executive has conceived or made, or conceives or
makes, while employed by the Company shall be the Company's property. Any
Invention relating to the Company's business which is disclosed by the Executive
within one year following the termination of employment shall also be the
Company's property, unless it is proved through clear and convincing evidence to
have been conceived following the termination of the Executive's employment. Any
copyright works relating to the Company's business created by the Executive
during the term of employment shall be considered works made for hire and the
initial ownership therein shall be in the Company. When requested by the
Company, whether during or after employment, the Executive will execute patent
applications and other instruments as considered necessary by the Company to
apply for and obtain patents in the United States and foreign countries which
cover such Inventions. The Executive will make assignments and execute any other
instruments necessary to convey to the Company the ownership and exclusive
rights in such Inventions, copyright works, patent applications and patents. The
Company shall bear all out-of-pocket expenses connected with such patents,
patent applications, copyright applications and maintenance of patent
protection. If Inventions are made by the Executive during the course of
employment which are brought to the attention of the Company, and if the Company
shall in writing waive its rights to obtain ownership of such Inventions, the
Executive shall then have the right to file patent applications to protect such
Inventions, and to dispose of such patent rights as the Executive deems
desirable, subject to a perpetual shop right in the Company to use such
Inventions in its business without royalty.
This Agreement does not apply to, and shall not require the
assignment to the Company of, any invention for which no equipment, supplies,
facilities or trade secret information of the Company were used and which does
not (1) relate to the business of the Company or to the Company's actual or
demonstrably anticipated research or development or (2) result from any work
performed by the Executive for the Company.
(b) Definition. "Invention" means any inventions, improvements,
discoveries, computer programs, know-how or ideas (whether or not patentable or
subject to copyright protection) of the Executive which are included in any of
the following classes: those for which any equipment, supplies, facilities or
trade secret information of the Company were used; those which were developed in
any part on the Company's time; or those which (1) relate to the reasonably
foreseeable business interest of the Company or the Company's actual or
reasonable anticipated research or development, and (2) result from work
performed by the Executive for the Company.
7. COVENANT NOT TO COMPETE.
(a) Scope. For a period of one (1) year from the date of
termination of Executive's employment, the Executive shall not, directly or
indirectly:
(1) for or on behalf of any person or business enterprise
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that is in any respect "competitive with the business of the Company",
solicit any entity or person that was a customer or known prospective
customer of the Company during the twelve (12) month period immediately
prior to the termination of the Executive's employment with the Company,
or
(2) undertake any employment or activity, in any capacity
which relates to the Executive's activities or job responsibilities while
employed by the Company, in connection with any business "competitive with
the business of the Company" within any state, territory or possession of
the United States, or any substantially comparable political subdivision
of any other country, wherein the Company conducted any business during
the twelve (12) month period immediately prior to the termination of the
Executive's employment with the Company, irrespective of where the
Executive renders such services.
For purposes of this Agreement, "competitive with the business of the Company"
means competitive with commercial or development activities undertaken by the
Company at the employment termination date of the Executive.
(b) Reform. If a court of competent jurisdiction should declare
any or all of this Agreement unenforceable because of any unreasonable
restriction of duration and/or geographical area in subparagraph 7(a), then such
court shall have the express authority to reform subparagraph 7(a) to provide
for reasonable restrictions and/or to grant the Company such other relief, at
law or in equity, as are reasonably necessary to protect the interests of the
Company.
8. NONSOLICITATION OF EMPLOYEES. For a period of one (1) year from the
date of termination of Executive's employment (except in the normal course of
the Company's business), the Executive shall not, directly or indirectly, induce
or attempt to influence any employee of the Company or any affiliate of the
Company to terminate his or her employment with the Company or any affiliate of
the Company or to work for the Executive or any other person or entity.
9. RESPONSIBILITIES UPON TERMINATION. Upon the termination of his
employment by the Company for whatever reason and irrespective of whether or not
such termination is voluntary on his part:
(a) the Executive shall promptly deliver to the Company all of its
data, designs, drawings, plans, manuals, notes, memoranda, work sheets,
specifications, customer lists, supplier lists, computer programs, and all other
materials which are or have become the property of the Company and all copies or
reproductions of any such; and
(b) the Executive shall advise the Company of the identity of any
new competitive employer within ten (10) days after accepting new employment.
10. SEPARATE AGREEMENTS.
(a) Enforcement. The covenants of the Executive contained in
paragraphs 5, 6, 7, 8 and 9 of this Agreement shall be construed as separate
agreements independent of any other agreement, claim or cause of action of the
Executive against the Company, whether predicated on this Agreement or
otherwise, and no other agreement, claim or cause of action asserted by the
Executive shall constitute a defense to the enforcement by the Company of
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these covenants. The covenants contained in this Agreement are necessary to
protect the legitimate business interests of the Company. Damages for the
violation of any such covenants will not give full and sufficient relief to the
Company. In the event of any violation of any such covenants, the Company shall
be entitled (i) to injunctive relief against the continued violation thereof,
and (ii) to its actual damages. In any dispute concerning whether or not the
Executive has violated any of such covenants, the prevailing party shall be
entitled to payment from the other party for any and all expenses, including
attorneys' fees and expenses, incurred by the prevailing party in connection
with such dispute.
(b) Scope. For purposes of the covenants in paragraphs 5, 6, 7, 8
and 9 of this Agreement, the term "Company" shall be deemed to include Xxxxxxx,
such that the nondisclosure, invention, noncompetiton and nonsolicitation
provisions shall extend to Xxxxxxx as well as the Company.
11. GENERAL.
(a) Survival. The covenants of the Executive contained in
paragraphs 5, 6, 7, 8, and 9 shall survive the term of the Executive's
employment under this Agreement after the expiration or termination of such
term.
(b) Notices. All notices, demands and other communications
provided for by this Agreement shall be in writing and shall be deemed to have
been given at the time the same is delivered in person or is mailed by
registered or certified mail addressed as follows:
To the Company: Spacelabs Medical, Inc.
00000 X.X. 00xx Xxxxxx
X.X. Xxx 00000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. XxXxxxxx
Vice President and General
Counsel
To the Executive: Xxxxxx X. Xxxxxxx
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Either party wishing to change the address to which notices, requests, demands
and other communications under this Agreement shall be sent shall give written
notice of such change to the other party.
(c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Company, its successors and assigns, and the
Executive, his heirs, personal representatives and legal representatives. the
Executive shall not have the right to transfer, assign or delegate this
Agreement or any of his rights or obligations hereunder without the prior
written consent of the Company.
(d) Governing Law. This Agreement shall be governed by the laws of
the State of Wisconsin.
(e) Waiver. The waiver or failure of either party to insist in any
one or more instances upon performance of any term, covenant or condition of
this Agreement shall
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not be construed as a waiver of future performance of any such term, covenant or
condition, but the obligations of either party with respect to such term,
covenant or condition shall continue in full force and effect. No course of
dealing shall be implied or arise from any waiver or series of waivers of any
right or remedy hereunder.
(f) Severability. Each provision of this Agreement shall be
interpreted where possible in a manner necessary to sustain its legality and
enforceability. If any provision of this Agreement shall be unenforceable or
invalid under applicable law, such provision shall be limited to the minimum
extent necessary to render the same enforceable or valid. The unenforceability
of any provision of this Agreement in a specific situation, or the
unenforceability of any portion of any provision of this Agreement in a specific
situation, shall not affect the enforceability of (i) that provision or portion
of provision in another situation or (ii) the other provisions or portions of
provisions of this Agreement if such other provisions or the remaining portions
could then continue to conform with the purposes of this Agreement and the terms
and requirements of applicable law.
(g) Amendments. This Agreement shall not be amended orally, but
only by a written instrument executed by each party to this Agreement.
(h) Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings between the Company and
the Executive, or between Xxxxxxx and the Executive, with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
SPACELABS MEDICAL, INC.
By: /s/ Xxxxxx X. XxXxxxxx
-----------------------------------------
Vice President, General Counsel and
Secretary
EXECUTIVE
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxx
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SCHEDULE A
BENEFITS
The Executive shall continue to be eligible for a monthly automobile allowance
during the term of the Agreement, provided that the amount shall be reduced from
One Thousand One Hundred Dollars ($1,100) ratably, in equal installments on the
anniversaries of the Effective Date, to Seven Hundred Dollars ($700) during the
last full year of the term of the Agreement.
The Executive shall be eligible to participate in the Spacelabs Medical, Inc.
Management Incentive Compensation ("MIC") Plan commencing for the 1998 MIC Plan
year, on such terms and conditions as provided in the MIC Plan.
The Executive shall be granted options to acquire up to 30,000 shares of common
stock of Spacelabs Medical, Inc. under the Spacelabs Medical, Inc. 1992 Option,
Stock Appreciation Right, Restricted Stock, Stock Grant and Performance Unit
Plan (the "1992 Plan") on the terms and conditions set forth in the 1992 Plan
and the accompanying Schedule A-1.
The Executive shall be granted stock appreciation rights with respect to 64,094
shares of common stock of Spacelabs Medical, Inc. under the 1992 Plan on the
terms and conditions set forth in the 1992 Plan and the accompanying Schedule
A-2.
The Executive will be entitled to participate in the Supplemental Benefit Plan
with credit toward retirement benefit for years of service from October 5, 1987
until his termination from the Company.
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SCHEDULE A-1
TERMS OF OPTION GRANTS
UNDER THE
1992 OPTION, STOCK APPRECIATION RIGHT, RESTRICTED STOCK,
STOCK GRANT AND PERFORMANCE UNIT PLAN
DATE OF GRANT Effective date of consummation of acquisition of Xxxxxxx,
Inc.
EXERCISE PRICE $22.38 per share, the average of the high and low
market prices for the common stock of Spacelabs Medical,
Inc. on the date of grant.
TYPE Incentive Stock Options and/or Non-qualified Option*
TERM Ten years from date of grant unless sooner terminated.
VESTING The options shall vest and become exercisable at the rate
of 25% per year commencing with the first anniversary of
the date of grant.
EXERCISE The manner of exercise shall be in accordance with
procedures set forth in the 1992 Plan.
PAYMENT FOR SHARES The option may be exercised by the delivery of:
(a) Cash or check;
(b) Shares of the common stock of Spacelabs Medical, Inc.
held by optionee for a period of at least three
months having a fair market value at the time of
exercise equal to the aggregate option exercise
price.
* Maximum allowable Incentive Stock Option will be given.
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SCHEDULE A-2
TERMS OF STOCK APPRECIATION RIGHTS (SARS)
UNDER THE
1992 OPTION, STOCK APPRECIATION RIGHT, RESTRICTED STOCK,
STOCK GRANT AND PERFORMANCE UNIT PLAN
DATE OF GRANT Effective date of consummation of acquisition of
Xxxxxxx, Inc.
BASE PRICE $22.38 per share, the average of the high and low
market prices for the common stock of Spacelabs
Medical, Inc. on the date of grant.
TYPE General stock appreciation right to be paid in cash
upon exercise.
TERM Five years from date of grant unless sooner
terminated.
VESTING The SARs shall fully vest and become exercisable on
the third anniversary of the date of grant.
EXERCISE The manner of exercise shall be in accordance with
procedures set forth in the 1992 Plan.
PAYMENT FOR SHARES Taxes shall be paid in accordance with procedures
set forth in the 1992 Plan.
