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Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
as of this 13th day of April, 2007, by and between Masimo
Corporation, a Delaware corporation ("Company"), and Joe E. Kiani
("Executive").
RECITALS
A. Executive is a founder of the Company and has been its
Chairman and Chief Executive Officer ("CEO") since its inception.
The Board of Directors of the Company (the "Board") recognizes that
the Executive’s contributions as Chairman and CEO have been
instrumental to the success of the Company. Executive and Company
entered into an employment contract dated May 4, 1996, which
was amended by an amendment dated April 2, 1998. The Board and
Executive desire to amend and restate such prior agreement pursuant
to the terms hereof to assure the Company of the Executive’s
continued employment in an executive capacity and to compensate him
therefor.
B. Company considers the establishment and maintenance of a
sound management to be essential to protecting and enhancing the
best interests of the Company and its shareholders.
C. Company’s Board of Directors has determined that
appropriate steps should be taken to retain Executive and to
reinforce and encourage his continued attention and dedication to
his assigned duties.
D. The Company desires to retain the services of the Executive,
and the Executive desires to be employed by the Company pursuant to
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
promises and the mutual covenants and agreements hereinafter set
forth, the Company and the Executive hereby agree as follows:
1. EMPLOYMENT. During the Employment Period (as hereinafter
defined), Company hereby agrees to continue to employ Executive and
Executive hereby agrees to continue to serve the Company, on the
terms and conditions contained in this Agreement.
2. POSITION AND DUTIES. Executive shall serve the Company as its
Chairman of the Board and Chief Executive Officer and shall report
to the Board of Directors. Executive shall be assigned the
responsibilities of such office as they may be modified from time
to time by the Board of Directors of the Company provided that such
duties are consistent with Executive’s present duties and
with Executive’s position. Executive hereby accepts such
employment and agrees to devote substantially all of his full
business and professional time and energy to the business and
affairs of the Company. Notwithstanding the foregoing, the
Executive shall be permitted to serve (i) as an employee,
consultant, officer and/or director of, and provide services to,
Masimo Laboratories, Inc., a Delaware corporation ("Masimo Labs"),
and (ii) on the board of directors of any other company or
entity.
3. EMPLOYMENT PERIOD. The "Employment Period"
shall mean the period commencing on the date hereof, and ending on
the later of (i) the third (3rd) anniversary date of this
Agreement or (ii) three years following the date on which
notice of non-renewal of this Agreement is given to the other by
either the Executive or the Company. This Agreement shall be
renewed automatically on a daily basis so that the outstanding term
is always three (3) years following any effective notice of
nonrenewal or of termination given by this Company or the
Executive.
4. PLACE OF PERFORMANCE. In connection with his employment by
the Company, the Executive shall be based at the Company’s
office or facility where, on the date hereof, the Executive is
regularly rendering services on behalf of the Company and shall not
be required to be absent therefrom on travel status or otherwise
more than a reasonable number of days in any calendar year. For
purposes of the preceding sentence, the parties hereto agree that a
"reasonable number of days" shall mean such number of days which is
not in excess of one hundred twenty-five percent (125%) of the
number of days on which the Executive was on travel status or
otherwise required by the Company to be absent from this principal
place of performance during the calendar year immediately prior to
the year of computation.
5. COMPENSATION.
5.1 BASE SALARY. In consideration for services performed
pursuant to this Agreement, Company will pay or cause to be paid to
the Executive, and Executive will be entitled to receive and hereby
agrees to accept, an initial annual base salary of Four Hundred
Eleven Thousand and Four Hundred Twelve Dollars ($411,412), subject
to increases in the discretion of the Board or its annual review
Compensation Committee ("Base Salary"), payable in accordance with
the Company’s normal payroll payment policy. All Base Salary
provided by this Agreement shall be reduced by the annual base
salary paid to Executive by Masimo Labs, if applicable.
5.2 BONUS. Executive shall be eligible to receive an annual
bonus equal to 50% of his Base Salary based on the Company’s
attaining certain financial goals established by the Board (or
designated committee). In addition, Executive may be entitled to
receive such additional bonus amounts as the Board (or such
Committee as may be designated by the Board) shall determine in its
discretion. In determining such additional amounts, if any, the
Board (or Committee) shall consider among other things
Executive’s contribution to the accomplishment of the
Company’s long-range business goals, the success of various
corporate strategies in which Executive participated, and
Executive’s unique services in connection with the
maintenance or increase in shareholder values in the Company.
5.3 STOCK OPTIONS AND RELATED INCENTIVE PLANS. Executive shall
be eligible to participate in the Company’s existing
incentive programs and any additional or successor incentive plan
or plans. Any option grants made to Executive pursuant to such
plans shall provide for an expiration date consistent with the
provisions of such plans, without regard to termination of
employment; provided, however, in no event shall any option remain
exercisable beyond its stated expiration date.
5.4 EXPENSES. Company shall reimburse Executive for all
reasonable expenses incurred and paid by Executive in the course of
the performance of his duties pursuant to this
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Agreement. In addition, Company shall reimburse
Executive for all reasonable travel and lodging expenses for
Executive’s immediate family, if Executive elects to have his
immediate family accompany him during his business travel.
Notwithstanding anything to the contrary set forth in
Company’s Business Travel and Expense Policy, dated
October 22, 2003, as may be amended or restated from time to
time (the "Travel and Expense Policy") or Company’s 2006
Employee Handbook, as may be amended or restated from time to time
(the "Employee Handbook"), for purposes of this Agreement,
"reasonable" expenses shall be deemed to include travel and
hospitality expenses for first class airplane travel and
accommodations and expenses for travel using private or chartered
aircraft. In addition, the following Company reimbursement policies
and provisions shall not apply to Executive: (i) the Travel
and Expense Policy; and (ii) the section entitled "Expense
Reimbursements" in the Employee Handbook.
5.5 FRINGE BENEFITS. The Executive shall be entitled to continue
to participate in or receive benefits under all of the
Company’s employee benefits plans and arrangements in effect
on the date hereof or plans or arrangements providing the Executive
with at least equivalent benefits thereunder. The Company agrees
that, without the Executive’s consent, it will not make any
changes in such plans or arrangements which would adversely affect
the Executive’s rights or benefits thereunder. The Executive
shall be entitled to participate in or receive benefits under any
pension plan, profit-sharing plan, savings plan, stock option plan,
life insurance, health-and-accident plan or arrangement made
available by the Company in the future to its executives and key
management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and
arrangements. Nothing paid to the Executive under any plan or
arrangement presently in effect or made available in the future
shall be deemed to be in lieu of compensation to the Executive
hereunder.
5.6 VACATIONS. The Executive shall be entitled to the number of
paid vacation days in each calendar year determined by the
Company’s Board from time to time for its senior executive
officers (prorated in any calendar year during which the Executive
is employed by the Company for less than the entire such year in
accordance with the number of days in such calendar year during
which he is so employed). The Executive shall also be entitled to
all paid holidays given by the Company to its senior executive
officers.
5.7 PERQUISITES. The Executive shall be entitled to continue to
receive the fringe benefits appertaining to the office of Chairman
and CEO of the Company in accordance with present practice.
6. CONFIDENTIAL INFORMATION. Executive has entered into and
agrees to be bound by the terms and conditions of the
Company’s Employee Confidentiality Agreement (the
"Confidentiality Agreement"). Executive agrees to execute such
other documents (including, but not limited to, new versions of the
Confidentiality Agreement) as may be necessary in order to protect
the Company’s confidential information.
7. TERMINATION.
7.1 DEATH. The Executive’s employment hereunder shall
terminate upon his death.
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7.2 DISABILITY. If, as a result of the
Executive’s incapacity due to physical or mental illness, the
Executive shall have been absent from his duties hereunder on a
full time basis for one hundred twenty (120) consecutive
business days, and within thirty (30) days after written
notice of termination is given shall not have returned to the
performance of his duties hereunder on a full time basis, the
Company may terminate the Executive’s employment
hereunder.
7.3 CAUSE. The Company may terminate the Executive’s
employment hereunder for Cause. For the purposes of this Agreement,
the Company shall have "Cause" to terminate the Executive’s
employment hereunder upon (i) the willful and continued
failure by the Executive to substantially perform his duties
hereunder, other than any such failure resulting from the
Executive’s incapacity due to physical or mental illness, or
(ii) the willful engaging by the Executive in gross misconduct
materially injurious to the Company, or (iii) the willful
violation by the Executive of the provisions of Confidentiality
Agreement hereof provided that such violation results in
demonstrably material injury to the Company. For purposes of this
paragraph, no act, or failure to act, on the Executive’s part
shall be considered "willful" unless done, or omitted to be done,
by him not in good faith and without reasonable belief that his
action or omission was in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution, duly
adopted by the affirmative vote of not less than three-quarters of
the entire membership of the Board at a meeting of the Board called
and held for the purpose (after reasonable notice to the Executive
and an opportunity for him, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the
Board the Executive was guilty of conduct set forth above in clause
(i), (ii), or (iii), and specifying the particulars thereof in
detail.
7.4 TERMINATION BY THE EXECUTIVE. The Executive may terminate
his employment hereunder (i) for Good Reason, (ii) if his
health should become impaired to an extent that makes the continued
performance of his duties hereunder hazardous to his physical or
mental health or his life, or (iii) at any time by giving six
months’ written notice to the Company of his intention to
terminate. For purposes of this Agreement, "Good Reason" shall mean
(A) any assignment to the Executive of any duties other than
those contemplated by, or any limitation of the powers of the
Executive in any respect not contemplated by Section 2 hereof,
except in connection with termination of the Executive’s
employment for Cause, (B) a reduction in the Executive’s
rate of compensation, or a reduction in the Executive’s
fringe benefits or any other failure by the Company to comply with
Section 5 hereof, (C) failure by the Company to comply
with Section 4 hereof or (D) a "Change in Control" as
that term is defined in Section 9 below.
7.5 NOTICE OF TERMINATION. Any termination by the Company
pursuant to subsection 7.3 or by the Executive pursuant to
subsection 7.4 above shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated.
7.6 DATE OF TERMINATION. "Date of Termination" shall mean
(i) if the Executive’s
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employment is terminated by his death, the date
of his death, (ii) if the Executive’s employment is
terminated pursuant to subsection 7.2 above, thirty (30) days
after Notice of Termination is given (provided that the Executive
shall not have returned to the performance of his duties on a
full-time basis during such thirty (30) day period),
(iii) if the Executive’s employment is terminated
pursuant to subsection 7.3 or clause (iii) of subsection 7.4
above, the date specified in the Notice of Termination, or
(iv) if the Executive’s employment is terminated for any
other reason, the date on which a Notice of Termination is given;
provided that if within sixty (60) days after a Notice of
Termination is given the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the
dispute is finally determined, either by mutual written agreement
of the parties, by a binding and final arbitration award or by a
final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected).
8. COMPENSATION UPON TERMINATION, DEATH OR DURING
DISABILITY.
8.1 DEATH. If the Executive’s employment shall be
terminated by reason of his death, the Company shall pay to such
person as he shall designate
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