EXHIBIT 10.17
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (the
“Agreement”) is made and entered into as of
September 14, 2009 (“Effective Date”) by and
between OSI Systems, Inc., a California corporation (the
“Company”), and Ajay Mehra
(“Executive”).
1. ENGAGEMENT AND
DUTIES .
1.1 Commencing upon the Effective
Date, and upon the terms and subject to the conditions set forth in
this Agreement, the Company hereby engages and employs Executive
with the title and designation of Executive Vice President of the
Company and President of the Company’s Rapiscan Systems
division. Executive shall report to the Company’s Chief
Executive Officer.
1.2 Executive agrees to devote his
primary business time, energies, skills, efforts and attention to
his duties hereunder and will not, without the prior consent of the
Company, which consent will not be unreasonably withheld, render
any material services to any other business concern. Reasonable
bases for the Company to withhold consent include, without
limitation, unreasonable interference with, or other
incompatibility with, Executive’s duties to the Company, so
long as such bases are stated in writing by the Company.
1.3 Except for routine travel
incident to the business of the Company or the performance of his
duties, Executive shall perform services hereunder primarily at the
Company’s offices in Torrance, California, or at such other
place as Executive and the Company may from time to time
agree.
2. TERM
. This Agreement shall commence as of the
Effective Date and, unless sooner terminated pursuant to
Section 4 of this Agreement, shall end upon the later of
(i) the third anniversary of the Effective Date or
(ii) one (1) year following the date that the
Company notifies Executive in writing that the Company elects to
end the term of Executive’s employment. The
“Term” of this Agreement shall be the period from the
Effective Date until the date on which this Agreement concludes,
whether by action of the parties as described in Section 4
herein, or by expiration of any renewal period in which notice of
non-renewal is provided by either party. For purposes of this
Agreement, the “Completion Date” shall be defined as
the final date of the Term.
3. COMPENSATION
.
3.1 Base Salary
. The Base Salary shall be payable at such
times and in such manner as the Company customarily pays other
similarly situated executives but in no event less frequently than
twice per month. Executive’s Base Salary shall be reviewed
annually, and shall be subject to upward adjustment on the basis of
such review but shall not in any event be reduced.
3.2 Equity
Participation .
3.2.1 To the extent that the Company
or its Affiliates maintain one or more equity participation plans,
Executive shall be eligible to participate in such plans; provided,
however, that Executive’s participation in such equity
participation plans, and the extent of any such participation,
shall be at the Company’s sole discretion.
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3.2.2 Notwithstanding anything to
the contrary herein, all stock options and equity awards granted to
Executive by the Company shall become fully vested and
nonforfeitable upon a Change in Control (as defined
herein).
3.3 Bonuses
. Executive shall participate in the
Company’s bonus pool and Executive’s bonus (if any)
shall be determined and paid on the same or similar basis as the
bonuses of other similarly-situated executives. Each bonus payment
shall be made no later than September 30 of the calendar year
that contains the last day of the fiscal year or performance year
to which the bonus payment is attributable.
3.4 Fringe Benefits
. Executive shall be entitled to participate
in and receive benefits under any plan of the Company made
available from time to time to any other similarly situated
executive, provided he is otherwise eligible to participate. Such
benefits may include, without limitation, life insurance,
disability insurance, medical/dental/vision insurance, and
retirement benefits, including participation in the Company’s
deferred compensation plan.
3.5 Business Expenses
. Company shall advance to or reimburse
Executive for all reasonable, ordinary and necessary business
expenses incurred by Executive as a result of Executive’s
services hereunder, in accordance with Company policy as
established from time to time.
3.6 Vacation and PTO
. Executive shall be entitled to vacation
and paid time off in accordance with the Company’s policy
applying to other similarly-situated executives, but in no event
less than three weeks vacation and one week paid time off in each
year during the Term.
3.7 Relocation Package
. In the event of relocation, during the
Term, of Executive’s principal office location more than 25
miles from its location as of the Effective Date, and, as a result
thereof, Executive relocates his principal residence, the Company
shall offer Executive a reasonable relocation package.
4. TERMINATION OF
EMPLOYMENT .
4.1 By the Company For
Cause . The Company may terminate
Executive’s employment under this Agreement “for
cause” at any time upon notice to Executive.
“Cause” is defined as: (a) Executive’s
admission or conviction of, or entering of a plea of nolo
contendere as to any felony, or any lesser crime involving
fraud, embezzlement or theft; (b) Executive’s failure to
substantially perform his duties, which failure cannot be cured or
is not cured within ten (10) business days after written
notice from the Company, as long as Executive is not prevented from
performing or curing by actions outside his control; or
(c) Executive’s material breach of any provision of this
Agreement, which breach cannot be cured or is not cured within
thirty (30) business days after written notice from the
Company, as long as Executive is not prevented from performing or
curing by actions outside his control.
4.2 By the Company Other Than
For Cause . The Company may
terminate this Agreement at any time other than for cause, for the
following additional reasons:
4.2.1 Death
. In the event of Executive’s death,
this Agreement shall automatically terminate and all rights of
Executive and his heirs, executors and administrators to
compensation and other benefits under this Agreement shall cease
(except to the extent such benefits accrued prior to death);
provided, however, that Executive’s participation in the
Company’s employee benefit plans or programs shall cease in
accordance with the terms of such plans or programs as then in
effect.
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4.2.2 Disability
. The Company may, at its option, terminate
this Agreement upon written notice to Executive if Executive,
because of physical or mental incapacity or disability, fails to
perform the essential functions of his position required of him
hereunder for an aggregate period of 60 days within any six-month
period. Upon such termination, all obligations of the Company
hereunder shall cease; provided, however, that Executive’s
participation in the Company’s employee benefit plans or
programs shall cease in accordance with the terms of such plans or
programs as then in effect.
4.2.3 Without Cause
. The Company may terminate
Executive’s employment without cause upon 30 days’
written notice (“Notice Period”) to Executive. The
Company may elect whether or not Executive shall perform duties
under this Agreement during all or a portion of the Notice Period
but shall be required to pay Executive all wages and other
compensation as provided for in Section 3 until the end of
the Notice Period (“Notice Period
Compensation”).
4.3 Termination By
Executive . Executive may terminate
this Agreement at any time upon 30 calendar days’ notice
(“Executive Notice Period”) to the Company, whether or
not such termination is for Good Reason as described below. The
Company may elect whether or not Executive shall perform duties
under this Agreement during all or a portion of the Executive
Notice Period but shall be required to pay Executive all wages and
other compensation as provided for in Section 3 until the
end of the Executive Notice Period.
4.3.1 Good Reason
. Executive may terminate this Agreement for
“Good Reason,” which shall mean the occurrence of any
of the following events unless the Executive specifically agrees in
writing that such event is not Good Reason provided that
(x) Executive terminates this Agreement within 6 months
following the initial existence of one or more of the following
events that occur without Executive’s consent and
(y) Executive provides written notice to the Company of the
existence of one or more of the following events within 90 days of
the initial existence of such event or events and the Company fails
to remedy such event or events within 30 days of receiving such
notice:
(a) Substantial Reduction in
Duties . Any substantial reduction
in duties whereby Executive’s job responsibilities are
markedly and significantly reduced in scope, complexity, and/or
importance to overall Company operations;
(b) Relocation
. Following a Change in Control, the
relocation of Executive’s principal office location more than
25 miles from its location as of the Effective Date;
(c) Reduction in
Salary . Executive’s Base
Salary is reduced from any prior year;
(d) Material Breach
. Any material breach of the Agreement by
the Company that is not cured within 10 business days after written
notice from Executive;
(e) Change in Title
. Any change in Executive’s titles
such that Executive no longer holds the titles (and duties and
privileges commensurate with such titles) set forth in Section
1.1 and instead is given a title with duties and privileges of
less importance and stature;
(f) Change in Reporting
Relationship . Any change in the
reporting relationship, such that Executive no longer reports to
the Company’s Chief Executive Officer; and
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(g) Change in Role
. In the event that, for whatever reason,
the Company is no longer the parent entity in its organizational
framework, such that Executive is no longer the Executive Vice
President of the parent entity or President of its security
products division.
4.3.2 Without Good
Reason . Executive may terminate
this Agreement without Good Reason as defined herein.
4.4 Payments Upon
Termination . Upon
expiration or termination of this Agreement for any reason by
either party as described in this Section 4, Executive shall
be entitled to receive payment of (a) Base Salary through the
Completion Date; (b) any unused vacation and paid time off
accrued through the Completion Date; and (c) applicable
employee benefits to which Executive is entitled upon the cessation
of employment with the Company, in accordance with the terms of the
plans or programs of the Company then in effect. In addition to the
above, and subject to Executive’s execution of a customary
and reasonable release of liabilities in favor of the Company, the
following shall apply:
4.4.1 In the event of termination of
Executive’s employment by the Company without cause pursuant
to Section 4.2.3 or by Executive for Good Reason pursuant to
Section 4.3.1 , subject to the provisions of
Section 4.4.2 below, Executive shall also be entitled to the
following in addition to the payments described in
Section 4.4 above: (a) an amount equal to 18
months’ salary at Executive’s then-current Base Salary;
(b) an amount equal to 1.5 times the average of bonuses paid
by the Company to Executive in the three years preceding such
termination; and (c) acceleration of vesting of all stock
options and equity grants from the Company to Executive, and an
extension of time to exercise such stock options such that
Executive’s right to exercise such stock options shall
continue until the first anniversary of the Completion Date, but in
no event later than the Expiration Date of the options, as defined
under the stock option agreement covering such options.
4.4.2 Within 90 days prior to or 12
months after a Change of Control, if there is either (A) a
termination of this Agreement by the Company without cause pursuant
to Section 4.2.3 , or (B) a termination of this
Agreement by Executive for Good Reason pursuant to Section
4.3.1 , then:
(a) Equity and stock options granted
by the Company to Executive shall, to the extent unvested,
immediately vest, and such stock options shall remain exercisable
by Executive for no less than 12 months after the date of such
termination.
(b) In addition to the provisions of
Section 4.4 above, and in lieu of the payments described in
Sections 4.4.1(a) and 4.4.1(b) above, Executive shall be entitled
to (a) an amount equal to 24 months’ salary at
Executive’s then-current Base Salary; and (b) an amount
equal to twice the average of bonuses paid by the Company to
Executive in the three years preceding such termination.
(c) If a termination of this
Agreement covered by this Section 4.4.2 is contingent upon a
change in ownership or effective control of Company or a change in
the ownership of a substantial portion of the assets of the Company
(within the meaning of Section 280G(b)(2)(i) of the Internal
Revenue Code of 1986, as amended (the “Code”), and the
regulations thereunder (collectively, a “280G Event”)),
then Executive, at his option, may elect to receive the
compensation and benefits otherwise payable under Sections
4.4.2(a) and (b) , or the Alternative Payment (as defined
below) in lieu of the compensation and benefits otherwise payable
under Sections 4.4.2(a) and (b) . In order to elect the
Alternative Payment, Executive must give written notice to Company
of such election: (i) within fifteen (15) days after his
resignation with good reason; or (ii) within fifteen
(15) days after he is terminated
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by Company without cause (each, a
“Alternative Payment Notice”). For purposes of this
Agreement, “Alternative Payment” means a lump sum
payment made by Company to Executive in immediately available funds
in an amount equal to the product of 2.99 (or, if Code
Section 280G(b)(2)(A)(ii) is amended providing for a multiple
other than 3, then the multiple as amended, less 0.01)
multiplied by Executive’s “base amount”
(as defined in Code Section 280G(b)(3)); provided, however,
that in the case of a 280G Event, the amount of the Alternative
Payment shall be reduced by the value of acceleration (as
determined under Code Section 280G and the regulations
thereunder) of any equity or
