EMPLOYMENT AGREEMENT
Exhibit
99.1
This
EMPLOYMENT AGREEMENT (the “Agreement”) is made as of June
26, 2001,
as
amended on September
1, 2005,
by and
between CRITICARE SYSTEMS, INC., a Delaware corporation (the “Company”), and
Xxxx X Xxxxx (‘Employee”).
RECITALS
A.
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Employee
is currently employed by the Company as its President and
CEO.
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B.
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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.
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C.
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The
parties desire to evidence their agreement as to the terms of the
Company’s employment of Employee.
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AGREEMENT
In
consideration of the foregoing recitals and mutual covenants contained herein,
the parties hereby agree as follows:
1.
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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.
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2.
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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. However, it is understood that Employee
shall
not be required to devote more than the usual and customary hours
per
calendar week to such employment as are generally expected of similarly
situated employees of publicly held companies. At all times, Employee
shall be subject to the direction of the Company’s Board of
Directors.
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3.
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Compensation
and Benefits.
Employee shall be entitled to the following compensation and benefits
for
services rendered to the Company:
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(a)
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Compensation.
Employee shall receive an annual base salary payable in equal installments
not less frequently than monthly. Employee’s base salary shall be reviewed
annually within 30 days prior to the end of each fiscal
year.
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(b)
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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.
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(c)
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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.
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(d)
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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.
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(e)
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Vacations.
Employee
shall be entitled to paid vacations of not more than four weeks each
calendar year, which may be taken at 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 form one year to the
next.
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(f)
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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.
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(g)
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Life
and Disability Insurance.
Employee shall be entitled to participate in the Company’s group life
insurance and disability insurance in effect from time to
time.
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(h)
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Severance
Pay.
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(i)
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This
Agreement may be terminated by the Company at any time for Cause
(as
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.
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(ii)
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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 30
months
after the date of termination, consisting of the following:
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2
A.
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Employee’s
base salary,
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B.
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The
amount which the Company pays for group heath insurance benefits
with
respect to such employee and Employee’s family and the continuation of
Employee’s company provided group term life insurance and disability
insurance or equivalent coverage,
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C.
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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.
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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.
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(iii)
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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 30 months after
the date
of termination as severance benefits consisting of the
following;
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A.
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Employee’s
base salary,
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B.
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The
amount which the Company pays for group heath insurance benefits
with
respect to such Employee and Employee’s family and the continuation of
Employee’s company provided group term life insurance and disability
insurance or equivalent coverage,
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C.
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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.
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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 the 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.
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3
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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 30 miles from Employee’s
current place of employment.
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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 in
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.
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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 date of termination,
all obligations of the Company to pay Employee compensation shall terminate
and
the Company shall have no further obligation to Employee after the date
of
termination.
Upon
termination of employment for any reason, Employee will deliver to the Company
all data, records and information, including without limitation, all documents,
correspondence, files, notebooks, reports, computer programs, software, manuals,
customer information, samples and all other materials and copies thereof
relating to the Company’s business which Employee may possess or which are under
Employee’s control.
4.
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Options.
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(i)
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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.
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(ii)
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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.
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4
5.
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Confidentiality.
Employee covenants that Employee 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 Employee’s duties for the
Company, (b) disclosure is required by applicable law, or (c) the
Company’s Board of Directors authorizes
disclosure.
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6.
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Restrictive
Covenant.
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(a)
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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)
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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
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(ii)
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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)
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Selling
and servicing the Company’s Products in the Protected Territory requires
special skills and knowledge which are valuable assets of the
Company.
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(b)
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Employee
expressly agrees that during the term of this Agreement and for a
period
of 12 months after Employee’s termination of
employment:
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(i)
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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.
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(ii)
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Employee
will not solicit Employees of the Company for the purpose of encouraging
such persons to leave or terminate their relationship with the
company.
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(c)
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Employee
further expressly agrees that at no time during the term of this
agreement
will he engage in or have 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.
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(d)
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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.
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7.
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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 independent arbitrator. Each
of the
parties reserves the 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 ineffective in
the
absence of such relief. The arbitration award shall be in writing,
and
shall specify the factual and legal basis for the award. The losing
party
shall pay all costs and expenses of the
arbitrator.
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8.
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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 writing signed by the party giving same and shall
be
deemed to have been sent, given and received only either (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
to the
Employee:
Xxxx
X.
Xxxxx
0000
Xxxx
Xxxxx Xxxxx
Xxxxxxxxx,
XX 00000
If
to the
Company:
Criticare
Systems, Inc.
00000
Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx,
XX 00000-0000
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.
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9.
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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 hereunder
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.
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10.
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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.
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11.
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Amendments
and Waivers.
No amendments to this Agreement or any waiver of any of its provisions
shall be effective unless expressly stated in 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 this 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 this Agreement or of any subsequent breach of
the same
or any other provision of this
Agreement.
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12.
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Severability.
If any provision of the 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.
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Governing
Law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of
Wisconsin.
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CRITICARE
SYSTEMS, INC.
By:
/s/
Xxxxxxx D. Bailey______________
Chairman
of the Board
EMPLOYEE:
/s/
Xxxx
X. Soika___________
_________
Xxxx
X.
Xxxxx
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