EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of June 1, 1999, 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
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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
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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. 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
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following compensation and benefits for services rendered to the Company:
(a) Compensation. Employee shall receive an annual base salary of
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$125,000 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).
(b) Bonus Plan. Employee shall be eligible to receive a bonus
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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
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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
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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
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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
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insurance coverage under the Company's group plan on a premium-sharing basis
then in effect.
(g) Disability Insurance. Employee shall be entitled to
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participate in the Company's group life insurance and disability insurance in
effect from time to time.
(h) Severance Pay.
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(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 Employee has completed three (3) months of employment
by the Company after the occurrence of a Change in Control (as hereinafter
defined), Employee shall be entitled to receive severance benefits for a period
of 12 months after the date of termination or until Employee secures new
employment, whichever is shorter, 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. Continuation of use of the company car or an
equivalent car allowance,
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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 12
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 the continuation
of Employee's Company life insurance or equivalent coverage,
C. Continuation of use of the company car or an
equivalent car allowance,
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 30 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 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.
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
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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 his control.
4. Options.
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(i) Employee shall be entitled to receive stock options
exercisable for up to 200,000 shares of common stock of the Company according to
a vesting schedule based upon the achievement of certain benchmarks to be agreed
upon between Employee and the Company's Board of Directors.
(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 exchange of assets or stock anticipated to
constitute a Change in 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
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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.
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(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 distribution network for its
Products in the Protected Territory and their goodwill
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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 the period of 3 months after Employee's voluntary termination
of employment or for the period of 12 months after the Company's termination of
Employee's employment without Cause (the running of said 3 or 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 sold any of its
Products within the 18 months immediately preceding his termination for the
primary purpose of soliciting such customer with respect to purchasing or
leasing Products in competition with Products manufactured and sold by Company,
and
(ii) Employee will not directly or indirectly solicit or
communicate with persons who are Employees of the Company who were so employed
at the time Employee's employment is terminated or who were employed 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 persons to represent
any other person, firm, partnership, corporation, association or other entity to
the sale, lease or servicing of Products in competition with Products
manufactured and sold by the Company, and
(iii) Employee will not enter into the employment of,
represent in any manner, or be in any manner connected with any person, firm,
corporation, entity, association or other entity primarily engaged in a business
relating to the development, servicing, sale, marketing and/or distribution of
Products and which, directly or indirectly, transacts or solicits any business
primarily related to the Company's Products in the Protected Territory.
(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
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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
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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 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
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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) 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:
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
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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
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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.
10. Other Agreements. This Agreement contains the entire agreement
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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
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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 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
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illegal, invalid or otherwise unenforceable under controlling law, the remaining
provisions of this Agreement shall not be affected thereby but shall continue in
effect.
13. Governing Law. This Agreement shall be governed by and construed
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and enforced in accordance with the laws of the State of Wisconsin.
CRITICARE SYSTEMS, INC.
BY /s/ Xxxxxxx Xxxx
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Its
EMPLOYEE:
/s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
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