EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (THE "Agreement") is made as of June 26, 2001, by
and between CRITICARE SYSTEMS, INC., a Delaware corporation (the "Company"), and
XXXX X. XXXXX ("Employee").
RECITALS
A. Employee is currently employed by the Company as its President and
CEO.
B. The Company desires to make certain agreements with Employee in order
to induce Employee to remain in such employ and in exchange for
Employee's covenants herein.
C. The parties desire to evidence their agreement as to the terms of the
Company's employment of Employee.
AGREEMENT
In consideration of the foregoing recitals and mutual covenants contained
herein, the parties hereby agree as follows:
1. Employment. The Company hereby continues its employment of Employee as
the Company's President and CEO, and Employee hereby accepts such
employment. Subject to the provisions of this agreement.
2. Duties and authority. Employee shall be employed as the Company's
President and CEO. Employee shall have such duties and authority as
are customary for the President and CEO of a publicly-held corporation
with similar authority as the Company's Board of Directors may from
time to time reasonably assign Employee consistent with the foregoing
and the other provisions of this Agreement. Employee agrees to devote
his entire business time, energy and skills to such employment.
3. Compensation and Benefits. Employee shall be entitled to the following
compensation and benefits for services rendered to the Company:
(a) Compensation. Employee shall receive an annual base salary of
$180,000 payable in equal installments twice a month. Employee's
base salary shall be reviewed annually within 30 days prior to
the end of each fiscal year.
(b) Bonus Plan. Employee shall be eligible to receive a bonus
annually, based on Employee's and the Company's financial
performance, in the discretion of the Board of Directors.
(c) Expense Reimbursements. The Company shall reimburse Employee for
actual out-of-pocket-costs incurred for reasonable business
expenses, other than automobile expenses (which are covered in
Section 3(d) in accordance with the policies and procedures of
the Company in effect from time to time).
(d) Automobile Allowance. Employee shall receive a Company car or car
allowance subject to Company policies in effect from time to time
with respect to reimbursement for personal use.
(e) Vacations. Employee shall be entitled to paid vacations of not
more than four weeks each calendar year, which may be taken in
Employee's discretion; provided, however, that such vacation
shall not unreasonably interfere with the Company's needs at such
time. Unused vacation time for a calendar year shall not be
carried over from one year to the next.
(f) Health Insurance. Employee shall be entitled to family health
insurance coverage under the Company's group plan on a
premium-sharing basis then in effect.
(g) Disability Insurance. Employee shall be entitled to participate
in the Company's group life insurance and disability insurance in
effect from time to time.
(h) Severance Pay.
(i) This agreement may be terminated by the Company at any time
for Cause (hereinafter defined), and in such event Employee
shall not be entitled to receive any further compensation.
For purposes of this Agreement, the term "Cause" shall mean
acts of fraud, repeated material misconduct or intentional
dishonesty by Employee in the course of Employee's
employment with the Company, or the commission of a felony.
(ii) In the event that Employee voluntarily terminates Employee's
employment by the Company, Employee shall not be entitled to
receive any further compensation; provided, however, that if
such voluntary termination occurs at any time after a change
of control (as hereinafter defined), Employee shall be
entitled to receive severance benefits for a period of
thirty months after the date of termination, consisting of
the following:
A. Employee's base salary,
B. The amount which the Company pays for group health
insurance benefits with respect to such Employee and
his family and the continuation of Employee's Company
provided life insurance or equivalent coverage,
C. Transfer ownership of the company car free and clear to
the Employee at the end of the lease period and the
company paying the residual.
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D. The payment of Employee's real estate broker's
commissions (not to exceed 6% of the sales price)
arising from the sale of Employee's Wisconsin residence
and of Employee's professional packing and moving van
expenses associated with Employee's moving from his
Wisconsin residence to any location within the
continental United States of America.
(iii) Notwithstanding anything to the contrary herein, Employee's
employment hereunder may be terminated by the Company
without Cause at any time either prior to or after a "Change
in Control" (as hereinafter defined), however, in such
event, Company shall pay Employee for a period of thirty
months after the date of termination as severance benefits
consisting of the following:
A. Employee's base salary,
B. The amount which the Company pays for group health
insurance benefits with respect to such Employee and
his family and the continuation of Employee's Company
provided life insurance or equivalent coverage,
C. Transfer ownership of the company car free and clear to
the Employee at the end of the lease period and the
company paying the residual.
D. The payment of Employee's real estate broker's
commissions (not to exceed 6% of the sales price)
arising from the sale of Employee's Wisconsin residence
and of Employee's professional packing and moving van
expenses associated with Employee's moving from his
Wisconsin residence to any location within the
continental United States of America.
A termination without cause shall be deemed to have occurred if Company, without
Employee's consent, materially reduces Employee's responsibilities, reduces
Employee's salary or requires Employee to relocate or transfer to a site further
than thirty miles from Employee's current place of employment.
The term "Change in Control" shall mean a sale, assignment or exchange of
more than 51% of the voting stock outstanding immediately after such sale or the
sale, assignment or exchange of substantially all of the assets of the company.
The date of the Change of Control shall mean the date upon which a sale is
closed, or in a series of transactions, the date upon which beneficial ownership
of the voting stock or assets is transferred.
All amounts payable to Employee under this Section 3 shall be paid in
normal payroll installments on normal payroll dates less all-applicable
withholding. Except as otherwise provided in this Section 3, as of the
effective dare of termination, all obligations of the Company to pay Employee
compensation shall terminate and the Company shall have no further obligation to
Employee after date of termination.
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4. Options.
(i) Employee shall be entitled to receive stock options exercisable
for four hundred thousand shares of common stock of the company
according to a vesting schedule consistent with the companies
stock option program.
(ii) In the event employee is terminated without Cause or in the event
of a Change in Control of the Company as those terms are defined
in the Agreement, stock options held by Employee shall become
immediately exercisable without regard to vesting and/or
applicable benchmarks unless the agreement governing the exercise
of such options contains provisions expressly to the contrary. In
the event of a sale or an exchange of assets or stock anticipated
to constitute a Change of Control, the Company agrees that it
shall make provisions for the conversion or exchange of shares to
be received upon the exercise of such options for the
consideration to be received by stockholders of the Company
generally; provided, however, that Employee may be required to
provide to the Company an irrevocable notice of exercise a
reasonable period of time prior to the actual closing date to
facilitate such exchange.
5. Confidentiality. Employee covenants that he shall at all times keep
confidential the Company's financial statements and other financial
information, except to the extent (a) disclosure of financial
information (but not financial statements) is incidental to the
performance of his duties for the Company, (b) disclosure is required
by applicable law, or (c) the Company's Board of Directors authorizes
disclosure.
6. Restrictive Covenant.
(a) As used in this Section 6, the following definitions apply:
"Products" mean xxxxx xxxxx medical monitoring equipment primarily
marketed for use in hospital and alternate care medical facilities.
"Protected territory" means the United States of America.
(i) Important and essential assets of the Company's business are
the identity of the Company's customers for its Products in
the Protected Territory and the identity of relationships in
its distributor network for its Products in the Protected
Territory and their goodwill toward the Company relating to
the marketing and distribution of the Company's Products in
the Protected Territory, and
(ii) The company through Employee has expended substantial time,
money and effort in acquiring its customers and distribution
network for its Products in the Protected Territory, and the
business and goodwill which the Company enjoys are dependent
to a high degree upon their personal relationships with
Employee;
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(iii) Selling and servicing the Company's Products in the
Protected Territory Requires special skills and Knowledge
which are valuable assets of the Company.
(b) Employee expressly agrees that during the term of this Agreement
and for a period of twelve months after Employee's termination of
employment:
(i) The Employee will not disclose information deemed
proprietary to the company, not in the public domain, which
includes, but not limited to, product development, marketing
programs, sales data, sales organizations and financial
information.
(ii) Employee will not solicit Employees of the Company for the
purpose of encouraging such persons to leave or terminate
their relationship with the company.
(c) Employee further expressly agrees that at no time during the term
of this agreement will he engage in or have a financial interest
in any business which is offering, selling, supplying,
manufacturing, or servicing Products which are competitive with
any Products offered, sold or supplied by the Company to any
person, firm, partnership, corporation, or other entity.
(d) Employee further agrees that the remedy at law for any breach for
any of the provisions of this section will be inadequate and that
the Company, its successors or assigns shall be entitled to
injunctive relief in addition to any other rights or remedies
which the Company may have for any such breach.
7. Arbitration. Any controversy or claims arising out of or relating to
this Agreement shall be submitted to binding arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association in Waukesha County, Wisconsin, and judgment upon the award
rendered by the arbitrator may be entered in any court having
jurisdiction thereof. If the parties cannot agree on the choice of a
single arbitrator within 15 days after receipt of a notice of
arbitration, then the parties shall contact the chairperson of the
Alternative Dispute Resolution section of the Wisconsin Bar, who shall
select an independent arbitrator, and the arbitration shall be decided
by such an arbitrator. right to file with a court of competent
jurisdiction an application for temporary or preliminary injunctive
relief or a temporary protective order on the grounds that the
arbitration award to which the applicant may be entitled may be
rendered effective in the absence of such relief. The arbitration
award shall be in writing, and shall specify the factual and legal
bases for the award. The losing party shall pay all costs and expenses
of the arbitrator.
8. Notices. Any notice, request, approval, consent, demand, permission or
other communication required or permitted by this Agreement shall be
effective only if it is in a writing signed by the Party giving same
and shall be deemed to have been sent, given and received only either
a (a) when personally received by the intended recipient, or (b) three
days after depositing in the United States Mail, registered or
certified mail, return receipt requested, with first-class postage
prepaid, addressed as follows:
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If the Employee:
Xxxx X. Xxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
If to the Company:
Criticare Systems, Inc.
00000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: President
Or to such other address as the intended recipient may have
theretofore specified by notice given to the sender as provided in
this section.
9. Assignability. This agreement requires the personal services of
Employee, and Employee's rights or obligations hereunder may not be
assigned or delegated except as set forth in this agreement. In the
event of a sale of the stock of the Company, or consolidation or
merger of the Company with or into another company or entity, or the
sale of all or any substantial part of the assets of the Company to
another corporation, entity or individual, the Company may assign this
Agreement to any successor in interest and upon such assignment,
Company shall have no further liability and the successor in interest
shall be subject to all obligations and be entitled to enforce all
rights of the Company under this Agreement. Subject to the foregoing,
this Agreement shall bind and inure to the benefit of the parties and
their respective successors and assigns.
10. Other Agreements. This Agreement contains the entire agreement between
the Company and Employee with respect to the subject matter hereof,
and merges and supersedes all prior agreements, understandings or
negotiations whatsoever with respect to the subject matter hereof.
11. Amendments and Waivers. No amendment to this Agreement or any waiver
of any of its provisions shall be effective unless expressly stated in
a writing signed by both parties. No delay or omission in the exercise
of any right, power or remedy under or for this Agreement shall impair
such right, power or remedy or be construed as a waiver of any breach.
Any waiver of a breach of any provision of this Agreement shall not be
treated as a waiver of any other provision of breach of any provision
of this Agreement or of any subsequent breach of the same or any other
provision of this Agreement.
12. Severability. If any provision of this Agreement shall be held
illegal, invalid or otherwise unenforceable under controlling law, the
remaining provisions of this Agreement shall not be affected thereby
but shall continue in effect.
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13. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Wisconsin.
CRITICARE SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------
Its Chairman, Compensation Committee,
Board of Directors
EMPLOYEE
/s/ Xxxx X. Xxxxx
--------------------
Xxxx X. Xxxxx
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