Exhibit 10.1

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is made and entered
into this 18th day of July, 2005, by and between OSI SYSTEMS, INC. (“Company”),
a California corporation, and DEEPAK CHOPRA (“Employee”), with reference to the
following facts:

 

A. Employee has been serving Company as President and Chief Executive Officer in
a satisfactory and capable manner pursuant to that certain Employment Agreement,
dated April 1, 2002, by and between Employee and Company (the “2002 Agreement”).

 

B. Company has requested that Employee enter into an amended and restated
employment agreement with Company with respect to matters relating to continued
employment with Company, and Employee has agreed to do so, upon the terms and
conditions set forth herein.

 

NOW, THEREFORE, in consideration of the terms and conditions and the mutual
agreements and covenants set forth herein, the parties hereto agree as follows:

 

1. SCOPE OF EMPLOYMENT.

 

1.1 Capacity. Company hereby continues to employ Employee, and Employee hereby
accepts continued employment, as President and Chief Executive Officer of
Company. Employee shall report to the Board of Directors of Company and perform
the services and duties customarily incident to such office.

 

1.2 Devotion of Services. Employee shall devote his entire productive time,
ability and attention exclusively to the business of Company during the term of
this Agreement, except for passive investments, charitable and non-profit
enterprises and any other business investments which do not interfere with his
duties hereunder and which are not competitive with Company’s activities
(including, without limitation, as the owner of less than 2% of the issued and
outstanding capital stock of a publicly traded corporation). Employee shall
perform and discharge well and faithfully those duties assigned him by Company.
Employee shall perform his services under this Agreement in Los Angeles County,
California, or such other location as is acceptable to Employee.

 

2. TERM. The term of this Agreement shall commence as of the date of this
Agreement and, unless sooner terminated pursuant to Section 6 of this Agreement,
shall end upon the later of: (i) the fifth anniversary of the date hereof; or
(ii) upon the close of business three (3) years following the date that either
party notifies the other in writing that the notifying party elects to end the
term of Employee’s employment.

 

 

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3. COMPENSATION.

 

3.1 Salary and Bonus. In consideration of the services to be rendered by
Employee hereunder, including without limitation, any services rendered as an
officer or director of Company or any subsidiary thereof, Company shall pay to
Employee the following during the term of this Agreement:

 

(a) A salary in the amount of $950,000.00 per annum, which salary shall be
reviewed no less frequent than annually by Company’s Board of Directors. The
Board of Directors may increase Employee’s salary but, in no event, may
Employee’s salary be reduced during the term of this Agreement.

 

(b) Company presently intends to continue its policy of establishing a fiscal
year end bonus pool for members of management of Company and/or its
subsidiaries, which may be up to ten percent (10%) of Company’s net income
before taxes as calculated in conformity with the Company’s past practices.
Employee shall be entitled to receive at least one-third (1/3) of the amount of
the bonus pool.

 

(c) All payments to Employee shall be subject to the applicable withholding
requirements of all appropriate governmental authorities.

 

(d) If Company’s Board of Directors and/or any committee thereof grants options
to senior members of management of Company and/or its subsidiaries, the Board of
Directors and/or such committee shall consider in good faith granting a
reasonable amount of options to Employee.

 

3.2 Other Benefits. During the term of this Agreement, Employee shall be
entitled to participate in all employee pension and welfare benefit plans and
programs made available to Company’s senior members of management or to its
employees generally, as such plans or programs may be in effect from time to
time, including without limitation, pension, profit sharing, savings and other
retirement plans or programs, accidental death and dismemberment protection,
flex plans, and any other pension or retirement plans or programs and any other
employee welfare benefit plans for programs that may be sponsored by Company
from time to time, including any plans that supplement the above-listed types of
plans or programs, whether funded or unfunded. Furthermore, Employee shall be
entitled to receive comparable automobile, life insurance policies and all other
benefits which he is presently receiving.

 

3.3 Expenses. Company will advance to or reimburse Employee for all reasonable
travel and entertainment required by Company and other reasonable expenses
incurred by Employee in connection with the performance of his services under
this Agreement in accordance with Company policy as established from time to
time.

 

3.4 Vacation. Employee shall be entitled to not less than four (4) weeks of
vacation during each fiscal year of the Company, during which time Employee’s
compensation shall be paid in full. Employee’s vacation allowance shall be
applied and extended under the same terms and conditions as are generally
applicable to other senior members of Company’s management.

 

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4. INVENTIONS.

 

4.1 Right to Inventions. Employee agrees that any discoveries, inventions or
improvements of whatever nature (collectively “Inventions”) made or conceived by
Employee, solely or jointly with others, during the term of his employment with
Company, that are made with Company’s equipment, supplies, facilities, trade
secrets or time; or that relate, at the time of conception of or reduction to
practice, to the business of Company or its subsidiaries or Company’s actual or
demonstrably anticipated research or development; or that result from any work
performed by Employee for Company, shall belong to Company. Employee also agrees
that Company shall have the right to keep any such Inventions as trade secrets,
if Company so chooses. In order to permit Company to claim rights to which it
may be entitled, Employee agrees to disclose to Company in confidence all
Inventions that Employee makes during the course of his employment and all
patent applications filed by Employee within three (3) years after termination
of his employment. Employee shall (a) assist Company in obtaining patents on all
Inventions deemed patentable by Company in the United States and in all foreign
countries and (b) execute all documents and do all things necessary to obtain
letters patent to vest Company with full and extensive titles thereto and to
protect the same against infringement by others. For the purposes of this
Agreement, an Invention is deemed to have been made during the period of
Employee’s employment if the Invention was conceived or first actually reduced
to practice during that period, and Employee agrees that any patent application
filed within three (3) years after termination of his employment with the
Company shall be presumed to relate to an Invention made during the term of
Employee’s employment unless Employee can provide evidence to the contrary.

 

4.2 Assignment of Inventions and Patents. In furtherance of, and not in
contravention, limitation and/or in place of, the provisions of Section 4.1
above, Company hereby notifies Employee of California Labor Code Section 2870,
which provides:

 

“(a) Any provision in an employment agreement which provides that an employee
shall assign, or offer to assign, any of his or her rights in an invention to
his or her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer’s equipment,
supplies, facilities, or trade secret information except for those inventions
that either: (1) Relate at the time of conception or reduction to practice of
the invention to the employer’s business, or actual or demonstrably anticipated
research or development of the employer; or (2) Result from any work performed
by the employee for the employer. (b) To the extent a provision in an employment
agreement purports to require an employee to assign an invention otherwise
excluded from being required to be assigned under subdivision (a), the provision
is against the public policy of this state and is unenforceable.”

 

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Employee acknowledges that he has been notified by the Company of this law, and
understands that this Agreement does not apply to Inventions which are otherwise
fully protected under the provisions of said Labor Code Section 2870. Therefore,
Employee agrees to promptly disclose in writing to the Company all Inventions,
whether Employee personally considers them patentable or not, which Employee
alone, or with others, conceives or makes during his employment with Company or
as is otherwise required and set forth under Section 4.1 above. Company shall
hold said information in strict confidence to determine the applicability of
California Labor Code Section 2870 to said Invention and, to the extent said
Section 2870 does not apply, Employee hereby assigns and agrees to assign all
his right, title and interest in and to those Inventions which relate to
business of the Company and Employee agrees not to disclose any of these
Inventions to others without the prior written express consent of Company.
Employee agrees to notify Company in writing prior to making any disclosure or
performing any work during the term of his employment with Company which may
conflict with any proprietary rights or technical know-how claimed by Employee
as his property. In the event Employee fails to give Company notice of such
conflict, Employee agrees that Employee shall have no further right or claim
with respect to any such conflicting proprietary rights or technical know-how.

 

5. CONFIDENTIALITY.

 

5.1 Restrictions on Use of Trade Secrets and Records. During the term of his
employment, Employee will have access to and become acquainted with various
trade secrets of Company, consisting of formulas, patterns, devices, secret
Inventions, processes, compilations of information, records and specifications
(collectively “Trade Secrets”), all of which are owned by Company and used in
the operation of Company’s business. Additionally, Employee will have access to
and may become acquainted with various files, records, customer lists,
documents, drawings, specifications, equipment and similar items relating to the
business of Company (collectively “Confidential Information”). All such Trade
Secrets and Confidential Information, whether they are designed, conceived or
prepared by Employee or come into Employee’s possession or knowledge in any
other way, are and shall remain the exclusive property of Company and shall not
be removed from the premises of Company under any circumstances whatsoever
without the prior written consent of Company. Employee promises and agrees that
he will not use for himself or for others, or divulge or disclose to any other
person or entity, directly or indirectly, either during the term of his
employment by Company or at any time thereafter, for his own benefit or for the
benefit of any other person or entity or for any reason whatsoever, any of the
Trade Secrets or Confidential Information described herein, which he may
conceive, develop, obtain or learn about during or as a result of his employment
by Company unless specifically authorized to do so in writing by Company.

 

5.2 Non-Interference. Employee recognizes that Company has invested substantial
effort in assembling its present employees and in developing its customer base.
As a result, and particularly because of Company’s many types of confidential
business information, Employee understands that any solicitation of a customer
or employee of Company, in an effort to get them to change business
affiliations, would presumably involve a misuse of Company’s confidences, Trade
Secrets and Confidential Information. Employee therefore agrees that, for a
period of one (1) year from the later of the date of termination of Employee’s
employment with Company for any reason whatsoever or the receipt by Employee of
any compensation paid to Employee by Company, Employee will not influence, or
attempt to influence, existing employees or customers of Company in an attempt
to divert, either directly or indirectly, their services or business from
Company.

 

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6. TERMINATION OF AGREEMENT.

 

6.1 Termination for Cause. Company may terminate Employee’s employment at any
time for Cause by delivering written notice to Employee, and such termination
shall be effective upon the date such notice is deemed received by Employee
pursuant to this Agreement. In the event that Employee ceases to be employed by
Company as a result of Company’s termination of his employment for Cause, then
Employee shall only be entitled to the compensation, unpaid expenses, unpaid
vacation days, prorated bonuses and other benefits provided for in Paragraph 3
through the date of such termination. As used herein, “Cause” shall mean the
following events: (a) Employee is convicted, or pleads guilty or nolo contendre
to, a felony or a crime involving moral turpitude; (b) Employee engages in gross
negligence or gross or willful misconduct in connection with the performance of
his responsibilities under this Agreement; (c) After written notice to Employee,
Employee repeatedly fails to comply materially with any material Company policy;
or (d) Employee materially breaches any material term or provision of this
Agreement and fails to cure such breach within thirty (30) days after he
receives written notice thereof from Company.

 

6.2 Resignation With Good Reason; Termination Without Cause. Employee may resign
from his employment with Company with Good Reason (as defined below) by
delivering written notice to Company, and such resignation shall be effective
upon the date such notice is deemed received by Company pursuant to this
Agreement. In the event that Employee resigns from his employment with Company
with Good Reason, or Company terminates Employee’s employment without Cause,
then: (i) Employee shall be entitled to all of the compensation, unpaid
expenses, unpaid vacation days, prorated bonuses and other benefits provided for
in Paragraph 3 through the date of Employee’s resignation with Good Reason or
termination without Cause; (ii) Employee shall continue to be entitled to
receive all of the compensation, unpaid expenses, unpaid vacation days, bonuses
and other benefits provided for in Paragraph 3 for a period of three (3) years
from the date of such resignation with Good Reason or termination without Cause
without any deduction or offset for any compensation earned or received by
Employee from any other sources and without any further obligation by Employee
to render services to the Company; provided, however, that if Employee’s
resignation with Good Reason or termination without Cause 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”)), such
payments shall be subject to mitigation as provided in Treasury Regulations (as
defined below) Section 1.280G-1 Q&A 42(c)(5); and (iii) at Employee’s election
upon written notice to the Company within ten (10) days after his resignation
with Good Reason or termination without Cause, all of Employee’s unvested stock
options in the Company shall fully vest upon the date of such resignation with
Good Reason or termination without Cause; provided, however, that if there is a
280G Event, the value of such acceleration (as determined under Code Section
280G and the regulations thereunder) shall be taken into account to the minimum
extent necessary so as not to violate Treasury Regulations Section 1.280G-1 Q&A
42(c). As used herein, “Good Reason” shall mean the following events:

 

(a) Withdrawal by the Company from Employee of any substantial part of his
duties then being performed, or responsibility or authority then being carried
by him, or a material change in Employee’s reporting lines;

 

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(b) Assignment by the Company to Employee of substantial additional duties or
responsibilities which are inconsistent with the duties or responsibilities then
being carried out by Employee;

 

(c) Material reduction in the level of Employee’s responsibility, authority,
autonomy, title, compensation, executive perquisites, or other employee
benefits;

 

(d) Failure to keep Employee in office as President and Chief Executive Officer
of Company;

 

(e) Company materially breaches any material term or provision of this Agreement
and fails to cure such breach within thirty (30) days after it receives written
notice thereof from Employee;

 

(f) Fraud on the part of the Company; or

 

(g) Discontinuance of the active operation of business of the Company.

 

Notwithstanding anything to the contrary contained herein, in the event that
Employee resigns from the Company with Good Reason or Company terminates
Employee’s employment without Cause at any time upon or after the occurrence of
a Change in Control (as defined below), then Employee, at his option, may elect
to receive the Alternative Payment (as defined below) in lieu of the
compensation and benefits otherwise payable under this Section 6.2. In order to
elect the Alternative Payment, Employee must give written notice to Company of
such election: (i) concurrently with his resignation with Good Reason; or (ii)
within ten (10) days after he is terminated by Company without Cause (each, a
“Alternative Payment Notice”). Company shall pay the Alternative Payment to
Employee within five (5) days after its receipt of the Alternative Payment
Notice. Further, in connection with the Alternative Payment, Employee, in his
sole discretion, has the right to have all or any portion of his unvested stock
options in the Company accelerate as of the date of his resignation with Good
Reason or termination without Cause. If Employee desires to accelerate all or
any portion of such stock options, he shall notify the Company of such
acceleration in the Alternative Payment Notice by identifying the type and
amount of stock options to be accelerated. For purposes of this Agreement,
“Alternative Payment” means a lump sum payment made by Company to Employee in
immediately available funds in an amount equal to the product of 2.99 multiplied
by Employee’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 such acceleration (as determined under Code
Section 280G and the regulations thereunder) of any stock options accelerated
hereunder.

 

For purposes of this Agreement, “Change in Control” means the occurrence of any
of the following events: (i) any sale, lease, license, exchange or other
transfer (in one transaction or a

 

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series of related transactions) of all, or substantially all, of the business
and/or assets of the Company or assets the account for over fifty percent (50%)
of the operating revenue of the Company; (ii) a merger or consolidation of the
Company and the Company is not the surviving entity; (iii) a reorganization or
liquidation of the Company; and (iv) a merger, consolidation, tender offer or
any other transaction involving the Company if the equity holders of the Company
immediately before such merger, consolidation, tender offer or other transaction
do not own, directly or indirectly, immediately following such merger,
consolidation, tender offer or other transaction, more than fifty percent (50%)
of the combined voting power of the outstanding voting securities of the entity
resulting from such merger, consolidation, tender offer or other transaction.
For purposes of this Agreement, “Treasury Regulations” means the regulations
promulgated by the United States Treasury Department pertaining to income tax.

 

6.3 Death or Disability. Employee’s employment with the Company shall cease upon
the date of Employee’s death. In the event Employee becomes physically or
mentally disabled so as to become unable for more than one hundred eighty (180)
days in the aggregate in any twelve (12) month period to perform his duties on a
full-time basis with reasonable accommodations, Company may, at its sole
discretion, terminate Employee’s employment with the Company. Upon the date of
Employee’s death (if during the term of this Agreement) or upon the Company’s
termination of Employee’s employment due to a disability as provided above,
then: (i) Employee shall be entitled to all of the compensation, unpaid
expenses, unpaid vacation days, prorated bonuses and other benefits provided for
in Paragraph 3 through the date of Employee’s death or termination for
disability; and (ii) all of Employee’s unvested stock options in the Company
shall fully vest on such date.

 

7. EMPLOYEE’S REPRESENTATIONS. As an inducement for Company to execute this
Agreement, Employee represents and warrants to Company that the negotiation,
execution and delivery of this Agreement by Employee together with the
performance of his obligations hereunder does not breach or give rise to a
breach under any employment, confidentiality, non-disclosure, non-competition or
any other agreement, written or oral, to which Employee is a party.

 

8. EQUITABLE REMEDIES.

 

8.1 Injunctive Relief. Employee acknowledges and agrees that the covenants set
forth in Paragraphs 4 and 5 herein are reasonable and necessary for protection
of Company’s business interests, that irreparable injury will result to Company
if Employee breaches any of the terms of said covenants and that, in the event
of Employee’s actual or threatened breach of said covenants, Company will have
no adequate remedy at law. Employee accordingly agrees that in the event of
actual or threatened breach of any of such covenants, Company shall be entitled
to immediate injunctive and other equitable relief, without bond and without the
necessity of showing actual monetary damages. Nothing contained herein shall be
construed as prohibiting Company from pursuing any other remedies available to
it for such breach or threatened breach, including the recovering of any damages
which it is able to prove. Each of the covenants in Paragraphs 4 and 5 shall be
construed as independent of any other covenants or provisions of this Agreement.
In the event of any judicial determination that any of the covenants set forth
in Paragraphs 4 and 5 herein or any other provisions of the Agreement are not
fully enforceable, it is the intention and desire of the parties that the court
treat said covenants as having been modified to the extent deemed necessary by
the court to render them reasonable and enforceable and that the court enforce
them to such extent.

 

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8.2 Specific Enforcement. Employee agrees and acknowledges that he is obligated
under this Agreement to render services of a special, unique, unusual,
extraordinary and intellectual character, thereby giving this Agreement peculiar
value, so that the loss thereof could not be reasonably or adequately
compensated in damages in an action at law. Therefore, in addition to other
remedies provided by law, Company shall have the right, during the term of this
Agreement, to obtain specific performance hereof by Employee and to obtain
injunctive relief against the performance of service elsewhere by Employee
during the term of this Agreement.

 

9. GENERAL.

 

9.1 Entire Agreement. This Agreement contains the entire under-standing between
the parties hereto with respect to the subject matter herein and supersedes all
other oral and written agreements or understandings between them concerning the
subject matter herein, including without limitation, the 2002 Agreement.

 

9.2 Amendment. This Agreement may not be modified, amended, altered or
supplemented except by written agreement between Employee and Company.

 

9.3 Counterparts; Facsimile Signature. This Agreement may be executed in two (2)
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. This Agreement may be
executed and delivered by facsimile signature.

 

9.4 Jurisdiction. Each party hereby consents to the exclusive jurisdiction of
the state and federal courts sitting in Los Angeles County, California, in any
action on a claim arising out of, under or in connection with this Agreement or
the transactions contemplated by this Agreement. Each party further agrees that
personal jurisdiction over him or it may be effected by service of process by
registered or certified mail addressed as provided in Section 9.9 herein, and
that when so made shall be as if served upon him or it personally within the
State of California.

 

9.5 Expenses. In the event an action at law or in equity is required to enforce
or interpret the terms and conditions of this Agreement, the prevailing party
shall be entitled to reasonable attorney’s fees and costs in addition to any
other relief to which that party may be entitled.

 

9.6 Interpretation. The headings herein are inserted only as a matter of
convenience and reference, and in no way define, limit or describe the scope of
this Agreement or the intent of any provisions thereof. No provision of this
document is to be interpreted for or against any party because that party or
party’s legal representative drafted it.

 

9.7 Successors and Assigns. This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto and their heirs, successors, assigns and
personal representatives. As used herein, the successors of Company shall
include, but not be limited to, any successor by way of merger, consolidation,
sale of all or substantially all of its assets or similar reorganization. In no
event may Employee assign any rights or duties under this Agreement.

 

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9.8 Controlling Law; Severability. The validity and construction of this
Agreement or of any of its provisions shall be determined under the laws of the
State of California. Should any provision of this Agreement be invalid either
due to the duration thereof or the scope of the prohibited activity, such
provision shall be limited by the court to the extent necessary to make it
enforceable and, if invalid for any other reason, such invalidity or
unenforceability shall not affect or limit the validity and enforceability of
the other provisions hereof.

 

9.9 Notices. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if personally received by the party to
whom it is sent or delivered, or if sent by registered or certified mail,
postage prepaid, to Employee’s residence in the case of notice to Employee, or
to its principal office if to Company. A notice is deemed received or delivered
on the earlier of the day received or three (3) days after being sent by
registered or certified mail in the manner described in this Section.

 

9.10 Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.

 

9.11 Survival. Notwithstanding anything to the contrary contained herein, the
rights and obligations of each party under Paragraphs 4, 5, 6, and 8 herein
shall survive the expiration or termination of this Agreement and the
termination of the Employee’s employment with the Company.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

OSI SYSTEMS, INC. By:  

/s/  Ajay Mehra

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    Ajay Mehra, Vice President

/s/  Deepak Chopra

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DEEPAK CHOPRA

 

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