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Exhibit 7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of November 11, 2000, is by and between
Philips Electronics North America Corporation, or a direct or indirect
subsidiary or division of Philips Electronics North America Corporation
("Philips") on the one hand, and Xxxx Xxxxxxxx ("Executive") on the other hand.
WHEREAS, the Executive's current employer, ADAC Laboratories, Inc. (the
"Company"), intends to enter into an Agreement and Plan of Merger ("the Merger
Agreement") with Philips whereby Philips will acquire the Company and Philips
will be the successor entity.
WHEREAS, Philips, as successor to the Company, desires to employ the Executive
commencing upon the Closing Date (as defined in the Merger Agreement), and the
parties desire to enter into an employment agreement describing the terms and
conditions of Executive's employment.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the Executive and
Philips agree as follows:
1. Position. On the Closing Date, Philips agrees to employ the Executive, and
the Executive agrees to serve as an employee of Philips on the terms and
conditions in this Agreement. This Agreement will not become effective unless
and until the transaction contemplated by the Merger Agreement is consummated.
The "Retention Period" shall commence on the Closing Date and end on the second
anniversary of the Closing Date. During the Retention Period, the Executive
shall serve as Senior Vice President and General Manager - RTP.
2. Salary. During the Retention Period, Philips shall pay the Executive a base
salary equivalent to that paid to the Executive by the Company at the Closing
Date. This amount will be subject to an annual merit review in accordance with
Philips' merit review program.
3. Annual Bonus. In accordance with Philips' prevailing bonus policies
applicable to similarly situated employees of Philips, the Executive shall be
eligible to participate in an annual cash bonus plan with a target amount equal
to (75) percent of the Executive's base salary, subject to the terms of such
bonus plan. The Executive may earn more (up to 150 percent) or less (including a
$0 bonus) than the target amount based on both business results and the
Executive's individual performance.
4. Welcome to Philips Stock Options. As soon as practicable following the
Closing Date, the Executive shall receive a special on-time grant of options to
acquire twenty-five thousand (25,000) shares of common stock of Royal Philips
Electronics. These options will vest ratably in two equal installments. The
first 50 percent shall vest upon the date that is eighteen months following the
date of the grant. The remainder will vest upon the date that is thirty six
months following the date of the grant.
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5. Regular Philips Stock Options. Beginning in 2002, the Executive shall be
eligible to participate in the Philips Electronics Global Stock Option Plan in
a manner consistent with similarly situated employees of Philips, subject to
the terms of the plan as may be modified from time to time.
6. Philips Retention Bonus. Philips shall provide the Executive with a cash
retention bonus equal to $250,000.00. Twenty five percent of the bonus will be
paid to the Executive within 60 days of the first anniversary of the Closing
Date, provided the Executive is an employee of Philips on that date, or within
60 days of Executive's termination of employment if the Executive's employment
has terminated prior to that date as a result of (1) Executive's death,
disability (as defined in Section 8(c) herein) or (2) Executive's involuntary
termination without Cause (defined as willfully engaging in conduct injurious
to Philips, which definition shall be deemed to include, but not be limited to,
the activities prohibited in Section 11 below). The remainder of the bonus will
be paid to the Executive two years following the Closing Date if the Executive
is an employee of Philips on that date, or within 60 days of the Executive's
termination if the Executive's employment has terminated prior to that date as
a result of Executive's death, disability (as defined in Section 8(c) herein)
or involuntary termination without Cause.
7. Employee Benefits. Executive shall be eligible to participate in such
employee benefit plans and insurance programs offered by Philips to its
similarly situated employees in accordance with the eligibility requirements
for participation in those programs.
8. Termination. This Agreement shall be terminated (a) upon the expiration
of the Retention Period, (b) upon the death of the Executive, (c) if the
Executive shall have been substantially unable to perform his or her duties for
a period of six consecutive months ("Disability"), (d) by Philips for Cause and
upon written notice, (e) by Philips without Cause and upon written notice, or
(f) voluntarily by the Executive.
9. Amounts Due Upon Termination. In the event the Executive's employment is
terminated by Philips during the Retention Period other than for Cause, Philips
shall pay Executive a cash lump sum within 60 days of termination equal to the
base salary for the remaining portion of the Retention Period, but not less
than twelve months of Executive's base salary in effect on the date of
Executive's termination. In addition, for the year in which Executive's
termination for a reason other than Cause occurs, Executive shall be paid a pro
rata portion of the Executive's annual bonus. The Executive shall not be
entitled to receive severance pursuant to any other severance plan maintained
by Philips if the Executive receives the payments above. The payments described
in this paragraph shall not be made in the event the Executive voluntarily
terminates his or her employment with Philips.
10. Confidential Information. The Executive shall hold in confidence all
secret or confidential information relating to Philips ("Confidential
Information") which shall have been obtained by the Executive during the
Retention Period. The Executive shall not disclose the Confidential Information
to third parties without the written consent of Philips. All Confidential
Information shall be returned to Philips after the termination of the
Executive's employment. The Executive shall sign the Philips standard agreement
relating to employee ethics and intellectual property assignment.
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11. NONSOLICITATION. Should the Executive's employment terminate during the
Retention Period, for the period remaining in such Retention Period Executive
shall not employ or seek to employ any person employed by Philips' medical
systems business, or otherwise encourage, or entice such person to leave such
employment. During the same period, Executive shall not (a) solicit any customer
or prospective customer of Philips' medical systems business to transact any
business whose product or activities directly compete with the products or
activities of Philips' medical systems business anywhere where Philips conducts
its medical systems businesses or to reduce, or refrain from doing any business
with Philips' medical systems business or (b) interfere with or damage (or
attempt to interfere with or damage) any relationship between Philips' medical
systems business and any such customer or prospective customer.
12. WITHHOLDING. All applicable taxes shall be withheld on all payments made
to the Executive under this Agreement.
13. TIMING OF ACCEPTANCE. Notwithstanding any other provision contained
herein, this Agreement shall expire and become null and void and shall not
create any rights or obligations with respect to either Philips or the
Executive unless the Executive shall have executed and delivered this Agreement
to Xxxx Xxxx by 8:00pm PST on November 12, 2000.
14. SIMILAR TERMS OR SUBSTANTIALLY EQUIVALENT POSITION. Executive covenants
and agrees that the terms and conditions contained in this Agreement constitute
(a) "similar terms" for purposes of the Executive Severance Agreement by and
between the Company and the Executive, and (b) a "substantially equivalent
position" for purposes of the Special Severance Agreement by and between the
Company and the Executive, when compared to the terms and conditions provided
to Executive by the Company immediately prior to the Closing Date.
15. MISCELLANEOUS. This Agreement shall be binding upon and shall inure to the
benefit of the parties, their successors, and assigns. This Agreement is
governed by the laws of the State of California. This Agreement may not be
amended, modified, or waived unless in writing signed by the parties. This
Agreement sets forth the entire agreement of the parties with respect to the
subject matter, and supersedes all prior agreements, whether oral or written.
Philips Executive
By: Xxx Xxxxx By: Xxxxx Xxxxxxx
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Title: V.P., Human Resources Date: 11/11/00
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Date: 11-11-00
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