EMPLOYMENT AGREEMENT
EXHIBIT
10.9
This
EMPLOYMENT AGREEMENT (the “Agreement”) is made as of June
1,1999,
as
amended on September
28, 2006 by
and
between CRITICARE SYSTEMS, INC., a Delaware corporation (the “Company”), and
Xxxx Xxxx (‘Employee”).
RECITALS
|
A.
|
Employee
is currently employed by the Company as its Senior Vice President
|
of
Worldwide Sales.
|
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
Senior Vice President of Worldwide Sales, 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 Senior Vice President of
Worldwide Sales. Employee shall have such duties and authority as
are
customary for the Senior Vice President of Worldwide Sales of a publicly
held corporation but focusing on the development, management and
supervision of a distribution network for all markets worldwide excluding
OEM, China and Taiwan. 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 and its President.
|
|
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 plus commissions 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. (but such annual base salary shall not be reduced to
less
than the prior year’s annual base salary without Employee’s written
consent).
|
1
|
(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 and/or
President.
|
|
(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 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.
|
|
(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)
|
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.
|
|
(h)
|
Severance
Pay.
|
|
(i)
|
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.
|
|
(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 24 months
after the date of termination consisting of the following:
|
2
|
A.
|
Payment
equal to the most recent 24 months
total compensation.
|
|
B.
|
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,
|
|
C.
|
Continuation
of use of the company car or an equivalent car
allowance.
|
|
(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 24 months after
the date
of termination as severance benefits consisting of the
following;
|
|
A.
|
Payment
equal to the most recent 24 months total
compensation.
|
|
B.
|
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,
|
|
C.
|
Continuation
of use of the company car or an equivalent car
allowance.
|
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 commission structure or requires Employee to relocate or
transfer to a site further than 30 miles from Employee’s current place of
employment.
The
term
“Change in Control” shall mean
(a) The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of
Rule 13d 3 promulgated under the Exchange Act) of 50% or more of either (I)
the
then outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in
the
election of directors (the "Outstanding Company Voting Securities");
3
provided,
however, that the following acquisitions shall not constitute a Change in
Control: (I) any acquisition directly from the Company, (ii) any acquisition
by
the Company, or (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any entity controlled by the
Company; or
(b) Individuals
who, as of the date hereof, constitute the Board of Directors of the Company
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board of Directors of the Company; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company's stockholders, was approved by a vote of at least
a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the
Board of Directors; or
(c) The
consummation of a reorganization, merger or consolidation (a "Business
Combination"), in each case, unless, following such Business Combination, (i)
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock or Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than a majority of, respectively,
the then outstanding shares of common stock (or equivalent thereof) or the
combined voting power of the then outstanding voting securities entitled to
vote
generally in the election of directors (or equivalent thereof), as the case
may
be, of the entity resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction owns the Company
through one or more subsidiaries) in substantially the same proportions as
their
ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock or Outstanding Company Voting Securities, as the case
may
be, (ii) no Person (excluding any employee benefit plan (or related trust)
of
the Company or such entity resulting from such Business Combination)
beneficially owns, directly or indirectly, 50% or more of, respectively, the
then outstanding shares of common stock (or equivalent thereof) of the entity
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such entity except to the extent that
such
ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors (or equivalent thereof) of
the
entity resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the action
of
the Board, providing for such Business Combination; or
4
(d) The
consummation of a sale or other disposition of all or substantially all of
the
assets of the Company, other than to an entity, with respect to which following
such sale or other disposition, (i) more than a majority of, respectively,
the
then outstanding shares of common stock (or equivalent thereof) of such entity
or the combined voting power of the then outstanding voting securities of such
entity entitled to vote generally in the election of directors (or equivalent
thereof) is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and outstanding
Company Voting Securities immediately prior to such sale or other disposition
in
substantially the same proportion as their ownership, immediately prior to
such
sale or other disposition, of the Outstanding Company Common Stock or
Outstanding Company Voting Securities, as the case may be, (ii) less than 50%
of, respectively, the then outstanding shares of common stock (or equivalent
thereof) of such entity and the combined voting power of the then outstanding
voting securities of such entity entitled to vote generally in the election
of
directors (or equivalent thereof) is then beneficially owned, directly or
indirectly, by any Person (excluding any employee benefit plan (or related
trust) of the Company or such entity), except to the extent that such Person
owned 50% or more of the Outstanding Company Common Stock or Outstanding Company
Voting Securities prior to the sale or disposition, as the case may be, and
(iii) at least a majority of the members of the board of directors (or
equivalent thereof) of such entity were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of the Board,
providing for such sale or other disposition of assets of the Company or were
elected, appointed or nominated by the Board.
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.
|
Options.
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
|
5
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 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.
|
|
6.
|
Other
Company Employees.
For a period of one year from the date Employee’s employment by the
Company terminates, Employee shall not (a) solicit another Company
employee to leave the Company’s employ and work for the Employee or
another person or entity, or (b) participate in the hiring of another
Company employee by another person or entity away from the
Company.
|
|
7.
|
Restrictive
Covenant.
|
|
(a)
|
As
used in this Section 7, 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;
|
|
(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 12 months after Employee’s voluntary termination of employment or
|
6
for
a
period of 12 months after the Company’s termination of Employee’s employment
with or without Cause (the running of said 12 month periods being tolled
during any breach of the provisions of this section):
|
(i)
|
The
Employee will not, either directly or indirectly, for himself or
on behalf
of or in conjunction with any other person, firm, partnership,
corporation, association or other entity, contact in the Protected
Territory any customer of the Company to whom the Company has sold
any of
its Products within 12 months immediately preceding Employee’s termination
or to whom the Company or any member of its distribution network
has made
a proposal in the Protected Territory for the sale of the Company’s
Products within the six months preceding Employee’s termination or to whom
Employee or Company’s distribution network called upon in the Protected
Territory during the periods described above for the primary purpose
of
soliciting such customer in the Protected Territory with respect
to
purchasing or obtaining services with respect to Products for use
in the
Protected Territory which compete with Products manufactured and
sold by
the Company, and
|
|
(ii)
|
Employee
will not directly or indirectly solicit or communicate with members
of the
Company’s distribution network in the Protected Territory at the time
Employee’s employment is terminated or who were members of such
distribution network in the Protected Territory within 12 months
immediately preceding such termination date (y). for the purpose
of
encouraging such persons to leave or terminate their relationship
with the
company, or (z) for the primary purpose of encouraging such members
to
represent any other person, firm, partnership, corporation, association
or
other entity with respect to the sale, lease or servicing of Products
in
the Protected Territory which compete with Products manufactured
and sold
by the Company.
|
|
(c)
|
Employee
further expressly agrees that at no time during the term of this
agreement
will Employee 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.
|
|
(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.
|
|
8.
|
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
|
7
|
|
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.
|
|
9.
|
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) three days after depositing in the United States
Mail,
registered or certified mail, return receipt requested, with first-class
postage prepaid, addressed as
follows:
|
If
to the
Employee:
Xxxx
Xxxx
0000
Xxx
Xxx Xxxxx X
Xxxxxxxxxxx,
Xxxxx, 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.
|
10.
|
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.
|
8
|
11.
|
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.
|
|
12.
|
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.
|
|
13.
|
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.
|
|
14.
|
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/ Xxxx X.
Xxxxx
Xxxx
X.
Xxxxx, President and CEO
EMPLOYEE:
/s/ Xxxx
Xxxx
Xxxx
Xxxx
9
