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
XXXXXX X. XXXXXXXXXX ("Employee").
RECITALS
A. Employee is currently employed by the Company as its Vice
President-Finance.
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
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Employee as the Company's Vice President-Finance, 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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Vice President-Finance. Employee shall have such duties and authority as are
customary for the Vice President-Finance 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 an average of 50 hours per
calendar week 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
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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
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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
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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
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health insurance coverage under the Company's group plan on a premium-sharing
basis then in effect.
(g) Life Insurance. Subject to Employee's insurability Employee
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shall be entitled to Company-paid split dollar life insurance with a death
benefit of not less than $250,000 less the Company's premium costs.
(h) 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.
(i) Club Membership. Company shall provide a health club
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membership to Employee or equivalent value toward membership in an alternative
club.
(j) 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:
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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
C. Continuation of use of the company car or an
equivalent car allowance and the continuation of Employee's Company provided
group term life insurance or equivalent coverage, and
D. Option to take ownership of any Company provided
split-dollar life insurance coverage on Employee's life subject to Employee's
reimbursement to Company of all past premiums paid for such coverage on
Employee's life; this option shall be exercised within 30 days following
Employee's termination of employment.
(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, and
C. Continuation of use of the company car or an
equivalent car allowance and the continuation of Employee's Company provided
group term life insurance or equivalent coverage, and
D. Option to take ownership of any Company provided
split-dollar life insurance coverage on Employee's life subject to Employee's
reimbursement to Company of all past premiums paid for such coverage on
Employee's life; this option shall be exercised within 30 days following
Employee's termination of employment.
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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.
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 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. In the event Employee is terminated without Cause or in
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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
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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. Other Company Employees. For a period of one year form the date
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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. 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
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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,
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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) 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:
Xxxxxx X. Xxxxxxxxxx
X000 X0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, 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 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
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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
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EMPLOYEE:
/s/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxx
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