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 E
